Local Court New South Wales Medium Neutral Citation: Dupree v Russo t/as Russo & Partners [2016] NSWLC 8 Hearing dates: 6 April 2016 Decision date: 13 May 2016 Jurisdiction: Civil Before: Assessor Olischlager - Small Claims Division Decision: Verdict for the defendant. Plaintiff to pay defendant's costs of $729 within 28 days. Catchwords: CIVIL PROCEEDINGS - statute of limitations - part payment of debt - acknowledgement of debt - legal profession - contract Legislation Cited: Legal Profession Act 2004, ss 309, 310, 315, 321 Limitation Act 1969, ss 14, 54 Limitation of Actions Act 1958 (Vic), s 24 Cases Cited: Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 Chethams v Remington & Co [1999] VSC 150 James Dupree v Salvatore Russo trading as Russo and Partners and Carlos Anuncibay (unreported, Local Court, 2 December 2015) Nunzio Berardi v Salvatore Russo t/as Russo & Partners [2015] NSWSC 1520 Surrendra Overseas Limited v Government of Sri Lanka (The Apjakash) [1977] 2 All ER 481 Category: Principal judgment Parties: James Dupree (plaintiff) Salvatore Rosso (defendant) Representation: Counsel: Mr Pullinger (for the plaintiff) Mr Eardley (for the defendant) File Number(s): 2015/90547 Publication restriction: None Judgment 1. The plaintiff, Mr Dupree, is a barrister at law and sues Mr Russo, a solicitor, for legal fees incurred in proceedings in the Supreme Court involving Mr Russo's client, Mr Mura. 2. Mr Dupree states that on or about 29 April 2008 he entered into a costs agreement with both Mr Russo and Mr Mura, jointly and severally, to be retained to advise and appear in respect of the proceedings on behalf of Mr Mura. The offer of legal services is contained in a letter dated 29 April 2008 directed to Russo & Partners. The final paragraph of that letter states: "Your further instructions in the matter will constitute an acceptance of this offer by you and your client". 3. Mr Dupree states that he subsequently provided legal services based on instructions provided to him by Mr Russo. Mr Dupree attaches email communications between himself and Mr Russo's office in early May 2008 as evidence of the provision of instructions. 4. On 19 May 2008 Mr Dupree sent to Mr Russo his memorandum of fees seeking payment of the sum of $5,775.00 for the legal services provided. 5. On 26 May 2008 an employee of Mr Russo forwarded an email seeking confirmation of the amount on the invoice. A further email from Mr Russo's employee dated 28 July 2008 states: "Sal said that Mario Mura has paid you $2500 direct – can you confirm this?" 6. Mr Dupree responded stating no payment had been received. On 19 September 2008 Mr Dupree made a further inquiry as to when Mr Russo's client would be making payment. 7. On 31 March 2010 Mr Russo forwarded to Mr Dupree a draft statement of claim naming Mr Dupree as the plaintiff and Mr Russo as the defendant pleading the recovery of the legal cost of $5775.00 related to these proceedings. The covering email from Russo Partners to Mr Dupree states "Please find enclosed Statement of Claim for settling". 8. Despite the peculiarity of a solicitor apparently drafting a statement of claim against himself, the statement of claim was not filed at that time. 9. On 3 June 2010 the bookkeeper employed by Mr Russo emailed Mr Dupree stating "Mura has deposited $500 into the Trust Account today. When these funds are clear we'll organize the transfer." On 16 June 2010 the employee of Mr Russo emailed Mr Dupree to confirm payment of $500 being banked into Mr Dupree's account. 10. No further payments were made to Mr Dupree. On 2 May 2012 a spreadsheet referred to as a summary reconciliation listing numerous clients including Mr Mura showing a balance of $5275 was forwarded to Mr Dupree by email from Mr Russo's employee. 11. A further email dated 23 May 2013 referring to the reconciliation states "There were a number of accounts that were on the list that Sal believes are unrecoverable." 12. Mr Dupree subsequently commenced these proceedings seeking to recover the balance due of $5275 against Mr Russo by statement of claim filed in the Local Court on 25 March 2015. 13. Mr Russo disputes liability on three grounds: 1. Firstly, that he is not personally liable for payment of Mr Dupree's fees. 2. Secondly, that Mr Dupree has failed to comply with his obligations to disclose costs under the Legal Profession Act 2004, and 3. Thirdly, that Mr Dupree is statute barred from commencing these proceedings. Was Mr Russo Personally Liable for Payment of Fees? 1. Mr Russo states that as a matter of practice it was agreed that his firm would not be personally liable for the plaintiff's fees. Mr Russo gives evidence of a conversation that is said to have taken place between himself and Mr Dupree in 1995: Mr Russo: James, I'll brief you only if I'm not liable for your fees and you'll get most of my firm's briefs. Mr Dupree: Sal, that's how I'll operate with you if you give me most of your work. 1. In relation to the question of whether Mr Russo was a party to the agreement to pay Mr Dupree's fees, I am satisfied that he was a party and that he entered into the agreement as both principal and as agent for Mr Mura. I am satisfied that he agreed to be personally liable for Mr Dupree's fees. I form this view for the following reasons: 2. Firstly, the written letter of offer forwarded to Mr Russo was unambiguously worded as an offer to both Mr Russo and to his client Mr Mura. If Mr Russo intended only to accept the offer as agent for his client then the Court would have expected Mr Russo to take issue with the form of the letter of offer. He did not. After receipt of the letter he gave further instructions to Mr Dupree which was conduct that constituted acceptance on behalf of himself and Mr Mura. 3. Secondly, the defence filed by Mr Russo admits that the agreement was in writing and dated 29 April 2008. There is no pleading of additional oral terms or reliance on a pre-contractual representation. It is not open for Mr Russo to now assert a conversation that took place in 1995 operates as an estoppel against the costs agreement. 4. Thirdly, there is no evidence to suggest that Mr Dupree had any dealings directly with Mr Mura or that he had knowledge of his personal circumstances or capacity to pay legal fees. There is no evidence that moneys were held in trust by Mr Russo for payment of Mr Dupree's fees. It would unusual for a barrister having any commercial sense to accept a retainer without any security for costs from their instructing solicitor. 5. Finally, Mr Russo gives no explanation as to why he forwarded a draft statement of claim to Mr Dupree recording himself as the defendant. While the subjective views of the parties is irrelevant to the question of who was a party to an agreement, it is conduct inconsistent with the proposition put forward by Mr Russo that he had an arrangement with Mr Dupree that his firm would not be personally liable for payment of fees. Compliance with the Legal Profession Act 2004 1. Mr Russo submits that the plaintiff has failed to comply with the cost disclosure requirements of Part 3.2 of the Legal Profession Act 2004. In particular, Mr Russo claims that the plaintiff failed to comply with the following requirements: 1. section 309 2. section 310(2) 3. Failed to provide signed bills of costs 4. Failed to provide an estimate of legal fees 5. Failed to comply with section 316 by failing to provide any update of estimate of costs 6. Failed to comply with section 315 in that no written disclosures were made to the defendant 7. Breached section 321(3) of the Act in that the bills of costs did not contain a statement that interest or of the rate that interest was payable 1. I will deal with each of the alleged contraventions of the Act: 2. At the outset, it is worth noting the Part 3.2 of the Legal Profession Act 2004 is a legislative regime intended to protect the recipients of legal services from excessive and unexpected legal costs. It is designed to provide protection to clients who may otherwise be unfamiliar with the likely cost of legal services. 3. Section 309 of the Act deals with the disclosure of costs to clients. A "client" is defined in Part 1.2, section 4 of the Act as including a person to whom or for whom legal services are provided. Section 309 requires a law practice to disclose to a client various matters including the basis on which legal costs will be calculated, an estimate of the total legal costs if reasonably practicable or if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variable that will affect the calculation of those costs and the details of the intervals (if any) at which the client will be billed. 4. Section 310 is directed to the obligation of disclosure if another law practice is to be retained. Section 310(1) provides that if a law practice intends to retain another law practice on behalf of the client, the first law practice must disclose to the client the details specified in section 309(1) (a), (c) and (d) in relation to the other law practice, in addition to any information required to be disclosed to the client under section 309. Section 310(2) provides that a law practice retained or to be retained on behalf of a client by another law practice is not required to make disclosure to the client under section 309, but must disclose to the other law practice the information necessary for the other law practice to comply with subsection (1). The note to the section provides an illustration of the operation of the section stating: An example of the operation of this section is where a barrister is retained by a firm of solicitors on behalf of a client of the firm. The barrister must disclose to the firm details of the barrister's legal costs and billing arrangements, and the firm must disclose those details to the client. The barrister is not required to make a disclosure directly to the client. 1. In the present case it is clear that section 310 is applicable. Mr Russo retained Mr Dupree on behalf of the client, Mr Mura. Mr Russo (being the first law practice) bears the obligation to disclose to the client the details specified in section 309(1) (a), (b) and (c) that relate to Mr Dupree (being the other law practice). Section 309 imposes the obligation to disclose costs to the client, being Mr Mura, upon Mr Russo. Section 309 does not impose an obligation upon Mr Dupree to disclose costs directly to the client. 2. In relation to Mr Dupree's obligation under section 310 to disclose to his instructing solicitor Mr Russo those matters contained in 309(1) (a), (b) and (c), I am satisfied that he has fulfilled those requirements. 3. Mr Dupree's letter dated 29 April 2008 indicates that fees would be charged at the rate of $370 per hour plus GST or part thereof. Interlocutory applications of not more than one half day would be charged at the rate of $3,000 plus GST and hearing days would be charged at $3750 plus GST per day. At paragraph 4 Mr Dupree estimates his fees on the basis of 4 hours conferences and preparation and one day hearing. Paragraph 7 provides that fees will be charged at convenient intervals and are payable at the expiration of 7 days from the date of the relevant memorandum of fees. 4. In relation to section 310(2) it is worthy to note that at no time did Mr Russo raise concern with Mr Dupree of the inadequacy of Mr Dupree's cost disclosure. There is no suggestion that Mr Russo was not provided sufficient information to allow Mr Russo to fulfil his obligations of disclosure to his client under section 309. 5. Section 331 of the Act prohibits a law practice from commencing legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person in accordance with section 332 and 333 of the Act. 6. Section 332 requires, inter alia, a bill to be signed on behalf of a law practice by an Australian legal practitioner. Section 332(3) provides that it is sufficient compliance for a letter signed by an Australian legal practitioner to be enclosed with the bill. Mr Dupree provides a copy of the letter which is unsigned; however, he gives evidence to the effect that he believes that the memoranda of fees was signed by him. 7. Mr Russo states that given the lapse of time he is no longer in possession of many of the documents relating to these proceedings. He is unable to produce a copy of either the memorandum of fees or the letter enclosing the memorandum of fees received from the plaintiff. At paragraph 33 of his statement Mr Russo states that the plaintiff had a practice not to sign any bills of costs and not to sign the accompanying letter if there was one attached. Mr Russo does not provide any other bills of costs received from Mr Dupree as evidence of the asserted practice notwithstanding that Mr Russo continued to instruct Mr Dupree and presumably would have in his possession more recent bills. On the evidence I am not satisfied that there was a breach of the requirement by Mr Dupree to sign the bill of costs dated 19 May 2008. 8. Mr Russo complains that Mr Dupree did not provide an adequate estimate of his fees or an update of the estimate. Mr Dupree was briefed only in relation to a notice of motion already filed in proceedings. Given that Mr Dupree charged for services on a time basis the estimates of the time to be allocated to the matter provided an adequate disclosure of costs. The memorandum of fees due charged for fees of 4 hours for briefing and conference and one day hearing on the application. The fees accord with the estimate provided and there was no requirement upon Mr Dupree to update the original estimate. 9. Mr Russo states that Mr Dupree was in breach of section 315 of the Act. That section requires written disclosures to a client to be expressed in clear plain language. Section 315 is directed to disclosure to the client, that is, Mr Mura. It is apparent from an understanding of Part 3.2 and section 309 that it is the obligation of the solicitor, that is, Mr Russo, to make disclosures to the client in respect of costs. In that context, it is incumbent upon Mr Russo to make those disclosures in a form that Mr Mura would understand and meet the requirements of section 315. Mr Dupree is not under an obligation to make disclosures directly to Mr Mura. Section 315 has no relevance to Mr Dupree in the present circumstances. 10. Mr Russo states that Mr Dupree issued a bill that did not contain a statement that interest or of the rate that interest was payable as required by section 321(3) of the Act. The interest that is to be charged on outstanding bills is referred to by Mr Dupree in his letter of offer dated 29 April 2008. 11. The requirement to disclose the rate of interest on overdue legal costs to a client is contained in section 309(e) of the Act. It is the obligation of the solicitor, in this instance, Mr Russo, to inform his client, Mr Mura, of any interest payable. There is no requirement in section 310 of the Act for a barrister to disclose to a solicitor matters contained in section 309(e) although such disclosure may be necessary only to facilitate the solicitor meeting his or her obligation of disclosure to the client. Presumably, Mr Russo made proper disclosures to the client Mr Mura regarding any payment of interest that has regard to the interest that may be charged by Mr Dupree. Mr Russo has not produced evidence of the bills that he rendered to Mr Mura that no doubt included Mr Dupree's fee. Given the disclosure of interest by Mr Dupree in his letter dated 29 April 2008 it is reasonable to infer that Mr Russo, as a competent legal practitioner, would have included a claim for interest in the bills rendered to Mr Mura. 12. The obligation contained in section 321 is imposed on the legal practice issuing a bill to a client. This is apparent from both the understanding of Part 3.2 which is intended to protect lay person clients and section 321(5) which provides that section 321(1) applies even if the client requests an itemised bill. In my view section 321 does not apply to memorandum of fees rendered by a barrister to an instructing solicitor. 13. It is clear that Mr Dupree was not in breach of his obligations of disclosure of costs under the Legal Profession Act. There is no impediment to Mr Dupree maintaining these proceedings and recovering legal fees. 14. Finally, comment should be made of the merits of Mr Russo raising issues regarding Mr Dupree's compliance with the Legal Profession Act only after the commencement of legal proceedings and many years after the legal services were rendered. In Nunzio Berardi v Salvatore Russo t/as Russo & Partners [2015] NSWSC 1520, Rothman J dealt with an appeal from a decision of the Local Court involving the question of compliance with various provisions of the Legal Profession Act. In dismissing the arguments of non-compliance Rothman J stated at paragraph [66]: It seems somewhat unjust that the plaintiff could successfully defend the defendant's claim for outstanding legal fees on the basis that the costs disclosure was inadequate when, in the eight years since receiving the benefits of the defendant's legal services, he has not sought a costs assessment under the Act, nor has he contended that the legal costs are unreasonable. The costs disclosure requirements under the Act are important as they ensure that clients receiving legal services are properly informed about the legal costs that they will be obliged to pay. The requirements were never intended by the legislature to be a technical obstacle to a lawyer receiving payment for legal services performed and about which the client has been properly informed. 1. The comments of Rothman J could equally apply to the present case. Is the Plaintiff's claim statute barred? 1. It is apparent that Mr Russo is liable to pay Mr Dupree's legal costs and that obligation may only be avoided if Mr Dupree is prevented from bringing the claim on the basis that it is statute barred. 2. Section 14 of the Limitation Act 1969 provides the following general limitation: (1) An action on any of the following causes of action is not maintainable if brought after the expiration of a limitation period of six years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims: (a) a cause of action founded on a contract (including quasi contract) not being a cause of action founded on a deed, 1. Mr Dupree issued a memorandum of fees claiming legal costs of $5,775.00 on 19 May 2008. Paragraph 7 of the costs agreement provided that fees are payable within seven days of the date of the relevant memorandum of fees. The fees were payable on 16 May 2008 and the six year limitation period commenced from that date. In the ordinary course the limitation period expired in May 2014. The plaintiff commenced these proceedings by way of statement of claim on 25 March 2015. 2. The plaintiff disputes that he is statute barred by reason of section 54(4) of the Limitation Act which provides: (1) Where, after a limitation period fixed by or under this Act for a cause of action commences to run but before the expiration of the limitation period, a person against whom (either solely or with other persons) the cause of action lies confirms the cause of action, the time during which the limitation period runs before the date of the confirmation does not count in the reckoning of the limitation period for an action on the cause of action by a person having the benefit of the confirmation against a person bound by the confirmation. (2) For the purposes of this section: (a) a person confirms a cause of action if, but only, if, the person: (i) acknowledges, to a person having (either solely or with other persons) the cause of action, the right or title of the person to whom the acknowledgment is made, or (ii) makes, to a person having (either solely or with other persons) the cause of action, a payment in respect of the right or title of the person to whom the payment is made, … (4) An acknowledgment for the purposes of this section must be in writing and signed by the maker. 1. The plaintiff submits that the defendant acknowledged the debt in two ways. Firstly, the plaintiff submits that Mr Russo acknowledged the debt in an email dated 2 May 2012 forwarded on behalf of Mr Russo by his bookkeeper sent to Mr Dupree's bookkeeper and, secondly, by making a part payment of $500 which was paid by Mr Russo to Mr Dupree on 16 June 2010. 2. In relation to the email dated 2 May 2012 said to constitute an acknowledgment of the debt content is as follows: Hi Lindy Sal has reviewed James' accounts and attached is the Summary Reconciliation. Can you please forward me what you have? Regards Lita Russo & Partners 1. Attached to the email is a pdf document that contains a schedule that includes the following relevant details: James Dupree Client Russo Balance Mura 4622/08 $5,275 1. The schedule contains the details of 19 other clients who owed money to Mr Dupree. 2. The defendant submits that the email communication dated 2 May 2012 does not constitute an acknowledgment of the debt. The defendant states that the same email dated 2 May 2012 was the subject of judicial consideration by Magistrate Bradd in earlier proceedings before the Local Court. In the unreported decision dated 2 December 2015 in James Dupree v Salvatore Russo trading as Russo and Partners and Carlos Anuncibay (2015/00012657) his Honour dealt with a similar argument that the email dated 2 May 2012 constituted an acknowledgment of the debt. Mr Anuncibay's name appears on the Summary Reconciliation schedule along with Mr Mura. Magistrate Bradd dismissed the claim on the basis that they were statute barred. Magistrate Bradd rejected the submission made on behalf of Mr Dupree that the email dated 2 May 2012 constituted an acknowledgment of the debt within the meaning of section 54 of the Limitation Act. In the transcript of those proceedings Magistrate Bradd concludes: It merely reconciles the list of outstanding debtors in relation to the amounts owed [to] Mr Dupree by those clients of Mr Russo who Mr Russo asked and briefed Mr Dupree to appear for those clients, so I do find the statute of limitations has been exceeded and the notice of motion is upheld. 1. In my view the principle of issue estoppel operates to prevent this Court from reconsidering the question as to whether the same email constitutes an acknowledgment within the meaning of section 54 of the Limitations Act in these proceedings. In Blair v Curran [1939] HCA 23; (1939) 62 CLR 464 Dixon J said: A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion, whether that conclusion is that a money sum be recovered or that the doing of an act be commanded or restrained or that rights be declared. 1. In the present case the dispute involves the same parties and the same question of fact and law. It is not open for this Court to make a determination that is inconsistent with the Court's earlier determination. 2. Even if it were open to the Court to reconsider the issue, in my view there is much force in the argument that the proper construction of the email is that it is no more than a representation made on behalf of Mr Russo that, according to Mr Russo's records, Mr Mura owes Mr Dupree the amount of $5,275.00. 3. This leaves the question as to whether the part payment of $500 in June 2010 revives the cause of action. I am satisfied that the part payment was sourced from money provided by Mr Mura and applied in reduction of the debt. An email from Mr Russo's bookkeeper dated 3 June 2010 to Mr Dupree indicates: "Mura has deposited $500 into the Trust Account today. When these funds are clear we'll organize the transfer." 4. A further email from Mr Russo's bookkeeper dated 16 June 2010 to Mr Dupree states: "Attached is a receipt for $500 banked into your account today. This is the $500 paid into Trust by Mura that I mentioned to you last week. I will let you know when Mura pays more". 5. The circumstances surrounding the part payment are almost identical to those considered by the Supreme Court of Victoria in Chethams v Remington & Co [1999] VSC 150 where Balmford J found that a part payment made by a law firm, using trust moneys held on behalf of a client, in respect of a debt owed by the law firm to an overseas law firm that had provided work for the client, was not an acknowledgment or part payment by the law firm within the meaning of section 24 of the Limitations of Actions Act 1958 (Vic). The section is the Victorian equivalent of section 54 of the Limitations Act. 6. In that case reference was made to the decision of Surrendra Overseas Limited v Government of Sri Lanka (The Apjakash) [1977] 2 All ER 481 (at 490) that: A part payment, like an acknowledgement, can only revive the cause of action and start time running afresh if it provides evidence in the form of an admission by the debtor that the debt remains due despite the passage of time … a part payment, like an acknowledgement must be evidence of an admission of liability for the debt claimed. 1. In my view there is no material difference between section 54 of the Limitation Act 1969 and the equivalent provision contained in section 24 of the Limitation of Actions Act 1958 (Vic). The decision in Chethams v Remington & Co is applicable in the present case. Mr Russo made payment on behalf of Mr Mura and upon his instructions. It was not a payment made on behalf of Mr Russo. The payment was conduct that was ostensibly attributable to Mr Mura acknowledging the debt. It is only Mr Mura who could be bound by the confirmation of the debt. The part payment did not bind other persons who may be otherwise liable in respect to the debt. 2. Accordingly, I am satisfied that the claim by the plaintiff is statute barred. 3. The Court will enter a verdict in favour of the defendant. The plaintiff is to pay the defendant's costs in the sum of $729.00 within 28 days. Assessor Olischlager Small Claims Division 13 May 2016 ********** 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: 22 March 2018