Supreme Court New South Wales Medium Neutral Citation: Leamey v Evatt [2018] NSWSC 498 Hearing dates: 13 April 2018 Decision date: 27 April 2018 Jurisdiction: Equity Before: Robb J Decision: See paragraphs [92] to [97] Catchwords: COSTS — Interpleader proceedings — solicitor stakeholder – distribution of costs paid by unsuccessful party to successful party for barristers' fees to barristers briefed by the successful party —entitlement of three barrister claimants to fund held on trust as between the three claimants – whether the claimants expressly or impliedly agreed how the fund should be divided EQUITY — General principles — Rules and maxims of equity — "equity is equality" –– fund to be distributed in fair proportions between three claimants Legislation Cited: Uniform Civil Procedure Rules 2005 (NSW) Civil Procedure Act 2005 (NSW) Legal Profession Act 2004 (NSW) Legal Profession Uniform Law (NSW) Cases Cited: Burrell Solicitors Pty Ltd v Reavill Farm Pty Ltd [2016] NSWSC 303 Lutheran Church of Australia South Australia District Incorporated v Farmers' Co-operative Executors and Trustees Ltd (1970) 121 CLR 628; [1970] HCA 12 Re Baden's Deed Trusts; McPhail v Doulton [1971] AC 424 Amir Ashrafinia v Mohammad Reza Ashrafinia; Parvaneh Karami Fakhrabadi v Mohammad Reza Ashrafinia (No. 4) [2014] NSWSC 676 Australian Incentive Plan Pty Ltd v Attorney-General for Victoria (2012) 44 VR 661; [2012] VSCA 236 Texts Cited: Meagher, Gummow and Lehane's Equity Doctrines & Remedies, fifth edition (2015) Category: Procedural and other rulings Parties: David Leamey (Plaintiff) Clive Evatt (First Defendant) Roger Rasmussen (Second Defendant) Christopher Dibb (Third Defendant) Representation: Counsel: J T Johnson (First and Second Defendants) E Graham (Third Defendant) Solicitors: David Leamey Solicitor and Barrister (Plaintiff) Sanford Legal (First and Second Defendants) File Number(s): 2017/290080 Judgment 1. At the end of 12 years of what appears to have been litigious warfare involving a defamation claim by three restaurateurs against John Fairfax Publications Pty Ltd (Fairfax) and a journalist, a solicitor, Mr David Leamey, found himself in the possession of $21,000 in legal costs paid to his client by Fairfax, which has become the subject of competing claims by three barristers who had been briefed for the clients. Those barristers are Mr Clive Evatt and Mr Roger Rasmussen in the one corner, and Mr Christopher Dibb in the other corner. They were named in the summons as the first to third defendants respectively. 2. In circumstances that I will explain below, Mr Leamey filed a summons by way of interpleader on 25 September 2017. The proceedings were described as being: In the matter of Funds Held by stakeholder in trust section 138(1) and (2) Legal Profession Uniform Law (NSW) 2014 and Uniform Civil Procedure Rules 2005 (NSW) Part 43. The summons was subsequently amended in a minor way. 3. The operative relief claimed was in the following paragraphs of the amended summons: 3. Order as to who David Leamey, solicitor is to pay the sum of $15,000 held in his Law Firm Trust Account on account of Clive Evatt as between Clive Evatt and Christopher Dibb, being claimed by both of them. 4. Order as to who David Leamey, solicitor pay the sum of $6000 held in his Law Firm Trust Account on account of Roger Rasmussen as between Roger Rasmussen and Christopher Dibb, being claimed by both of them. 1. Mr Leamey has been excused from taking any further steps in the proceedings, and he has submitted to the order of the court save as to costs or damages. 2. The $21,000 referred to in the two orders had been paid to Mr Leamey by Fairfax in satisfaction of a costs order made against it. The money was part of claims made in tax invoices submitted by Mr Evatt and Mr Rasmussen, which was allowed on an assessment and a subsequent review. On a basis that will be explained below, Mr Dibb claimed that, as against Mr Leamey and the clients, Mr Dibb was entitled to $15,000 of the money attributed to Mr Evatt, and $6000 of the money attributed to Mr Rasmussen. Mr Dibb has subsequently adjusted his claim in a minor respect as I will explain below. 3. It seems that Mr Leamey decided to record the two amounts of $15,000 and $6000 in his trust account as being held on account of Mr Evatt and Mr Rasmussen respectively. As will be seen below, any decision made by Mr Leamey as to how he should hold the sums on trust is not determinative of who as between the barristers is entitled to that money, and Mr Leamey has not claimed that any decision made by him has been determinative as to the entitlement to the monies held in his trust account. 4. Mr Leamey's summons was met by a notice of motion filed on 13 October 2017 by Mr Evatt and Mr Rasmussen seeking orders that it be struck out or dismissed as an abuse of process and certain other relief, including an order that the matter proceed on pleadings. That notice of motion was dismissed by order made by me on 24 October 2017. I made directions for the claimants to serve submissions and affidavits in support of their claims to the money by 1 November 2017. I also ordered Mr Evatt and Mr Rasmussen to pay Mr Leamey's costs of the notice of motion. 5. Mr Leamey's amended summons came on for hearing before me in the Applications List on 13 April 2018. Mr Evatt and Mr Rasmussen were represented by Mr JT Johnson of counsel. Ms Graham of counsel appeared for Mr Dibb. 6. The Applications List is a somewhat curious recent addition to the administrative structure of the Equity Division. It was introduced following the end of the long history of Masters and then Associate Judges as judicial officers of the Equity Division of the Supreme Court. The subject matter of the Applications List is "everything else" that does not have a natural place in the General List and cannot be dealt with by a Registrar. There is a somewhat greater air of informality in dealing with matters compared with fixed hearings; detailed reasons for judgment cannot always be expected, and s 56 of the Civil Procedure Act 2005 (NSW) rules more noticeably than in other circumstances. Be that as it may, applications must be dealt with in a relatively summary way. 7. When the hearing commenced, it was not immediately apparent what the issues were between the contesting parties. 8. Mr Evatt and Mr Rasmussen initially submitted that the matter should be adjourned, because Mr Dibb had not filed any claim for relief against them to establish an entitlement to what they described as their money in Mr Leamey's trust account. Counsel suggested that there needed to be points of claim and defence. 9. I was informed by counsel for Mr Dibb that the Judge who administers the Applications List had ruled that pleadings were not warranted because of the small amount at issue, and that the claims of the contesting parties were sufficiently exposed in their affidavits and the written submissions that had already been exchanged. 10. I accepted that position, and as the amended summons had been set down for hearing, I ruled that the matter would proceed. I ruled that if any party perceived any unfairness, I would deal with any application when it was made. No application was made. The matter had been set down with an estimate of two hours. Applications List matters are expected to finish within the day, so I advised the parties that the hearing would have to proceed in a summary way. In the event it finished after 4 PM. 11. It will be convenient to set out briefly the essence of the dispute between the barristers. All three barristers accepted that they had accepted a brief in respect of which they did not make costs disclosures or enter into costs agreements. The arrangement as to their fees was, to begin with, "no win, no fee". If the clients won, then the barristers' entitlement would be limited to the amount of fees either agreed with Fairfax or payable by Fairfax after an assessment. The barristers would only be entitled to the amount actually paid by Fairfax, and they would not be entitled to any additional amount from the clients or the solicitor, or out of any damages that were paid. 12. The point of departure between the barristers was as follows. Mr Evatt and Mr Rasmussen contended that the arrangement entitled each barrister to the precise amount that would be allowed on any assessment that took place in respect of that barrister's tax invoices, and when the amount that was allowed in respect of that barrister's tax invoices was actually paid to the solicitor, it was to be held by the solicitor on account of the individual barrister. In the events that happened, there was an assessment process that included the amounts to be payable by Fairfax to the clients in respect of each barrister's tax invoices, and the total amount that was paid by Fairfax included the amounts so assessed. That is the way that Mr Leamey came to hold separate amounts that he attributed to Mr Evatt on the one hand and Mr Rasmussen on the other. 13. Mr Dibb contested the argument that the assessment process was determinative of the amount to which each barrister was entitled. He said that the assessment process only determined the amount of the party/party costs that Fairfax was obliged to pay to the clients. The amount allowed in the assessment process for each barrister's fees was not determinative of the entitlement of the barrister. Mr Dibb accepted that, in the ordinary case, given the nature of the fee arrangement that each barrister had with the solicitor and the clients, the assessment of each barrister's claim for fees might be a reasonable proxy for what was reasonable as between the solicitor and the clients and the barrister. However, the present case was special, because, with minor exceptions, the whole of Mr Dibb's claim for fees was rejected, not because the work was not done or the fees were excessive, but because the costs assessor ruled that it was not fair and reasonable for the clients to have briefed a third counsel. In these circumstances, it was Mr Dibb's case that the total amount available to be paid to the barristers should be divided between them on a fair and reasonable basis. I will explain the basis suggested by Mr Dibb more fully below, but it involved a proportional division, based upon the amount allowed for each barrister in the assessment process as a proportion of the total amount allowed for barristers' fees. 14. It will now be necessary to outline the facts that have led to the present dispute. 15. As mentioned, the litigation was between three restaurateurs and Fairfax and a journalist in respect of an article concerning the clients' restaurants which they claimed, ultimately successfully, was defamatory of them. The relevant part of the litigation was described for the purposes of the costs assessment as Gacic v John Fairfax Publications Pty Ltd. 16. As stated by Mr Evatt in his primary affidavit, there have been two s 7A jury trials, three appeals to the Court of Appeal, two applications for special leave to appeal before the High Court, an appeal to the High Court, and two trials, one before Harrison J and the other before Hall J, in addition to numerous interlocutory applications. 17. Initially, Mr Evatt was briefed as lead counsel and Mr Rasmussen as his junior. The solicitor for the clients was Mr Philip Beazley of Beazley Singleton. Mr Beazley has not given any evidence concerning the terms of the fee arrangement between himself or the clients and Mr Evatt and Mr Rasmussen. 18. Mr Dibb became involved as counsel for the clients from August 2009 onwards. 19. After a period, Mr Beazley ceased to be the instructing solicitor, and was replaced by Mr Leamey as a partner of McKenzie Leamey, and later by Mr Leamey as a sole practitioner. 20. The present dispute only involves the costs of the barristers in respect of the Supreme Court proceedings. In respect of the proceedings before the Court of Appeal and the High Court that led to costs orders in favour of the clients, the amount of costs payable was determined by agreement, and then each barrister came to some arrangement with the solicitor as to the amount of fees that would be paid to that barrister. 21. Eventually, following their success against Fairfax, the clients were not able to reach an agreement as to the amount of costs that would be payable to them, and it was necessary for an assessment to take place. For that exercise, each of the barristers submitted formal tax invoices. Following the assessment, the costs assessor substantially reduced the amounts of the fees that the clients would be allowed in respect of each of the barristers, as against the amount of fees claimed in the tax invoices. Relevantly, as I have mentioned above, the assessor effectively disallowed the fees claimed by Mr Dibb on the basis that it was not fair and reasonable for the clients to have retained a third counsel. 22. Following a costs review, the amount of fees assessed in favour of the clients was increased slightly, and a small amount allowed in respect of Mr Dibb's fees. However, the position remained that the clients were not allowed any substantial amount in respect of Mr Dibb's fees on the basis that an allowance should not be made for third counsel. 23. It should be recorded that Mr Evatt strongly asserted in his affidavit that the retainer of a third counsel could easily have been justified if Mr Leamey had strenuously attempted to provide that justification. Mr Evatt claimed in effect that Mr Leamey's effort in that regard was derisory. The real reason, according to Mr Evatt, why Mr Dibb was not entitled to receive a reasonable proportion of the fees claimed in his tax invoices was the failure of Mr Leamey to contest the position adequately. Mr Evatt's view was that Mr Dibb should look to Mr Leamey for any additional amount in respect of his fees claimed, rather than to seek portions of the fees to which Mr Evatt and Mr Rasmussen were entitled. 24. After the assessment process had been completed, and after Mr Dibb was not able to come to a satisfactory arrangement with Mr Evatt and Mr Rasmussen as to how the total amount received by the clients for barristers' fees should be divided between them, Mr Dibb commenced an assessment process against Mr Leamey. That led to a compromise agreement that was implemented by deed dated 20 September 2017 between Mr Dibb, Mr Leamey, Mr Beazley and the clients. Under that deed, each of Mr Leamey, Mr Beazley and the clients (together) agreed to pay Mr Dibb $4000, giving a total of $12,000. There was otherwise a release of all claims. 25. Recital D to the deed recited that Mr Dibb "was engaged at the request of Clive Evatt to assist in the litigation". Recital D stated that the basis of Mr Dibb's retainer was disputed. 26. The recitals included: I. The releasor is not satisfied with the amount that was assessed for his costs during the assessment process. He has made a claim on part of the funds held by Leamey on trust on the basis some are for him and he claims on the basis that he did work for Beazley and then Leamey for which the clients received a benefit. J. The releasor claims to be entitled to some of the funds assessed for other Counsel, Evatt & Rasmussen, upon the basis that he helped them. K. Evatt & Rasmussen say that the releasor should be paid nothing over the amount that his costs were assessed at on a party/party basis. L. A dispute arose in relation to the amount of costs payable to the releasor. M. The parties to this deed have agreed to settle the dispute upon the terms disclosed in this deed. Evatt & Rasmussen have not settled and are not included in this deed or the release. 1. The evidence suggests that the deed was entered into on the basis that Mr Leamey would retain the amount of $21,000, which was claimed by Mr Dibb in addition to the $12,000 payable under the deed. The agreement was that Mr Leamey would institute these proceedings as an interpleader so that the entitlement of the barristers to the additional $21,000 could be determined by the Court. 2. I have no hesitation in concluding that each of the barristers genuinely believes that their understanding as to the true effect of the arrangement reached as to their fees was the one for which they contend. The difference that has arisen has been a result of the particular circumstances in which Mr Dibb's services as third counsel were retained, and the failure of all parties concerned to address the issues that have led to the present dispute at that time. 3. An appropriate starting point to attempt to resolve the dispute is to consider the evidence concerning the retainer of all three barristers. 4. As I have mentioned above, Mr Beazley has not given any evidence on this subject. 5. Neither Mr Evatt nor Mr Rasmussen has given any precise evidence of the terms of their retainer by Mr Beazley, in the sense of the substance of their conversations with him. 6. It may well be that both barristers had appeared in matters instructed by Mr Beazley before, so that there was an informal understanding between all three lawyers as to what the basis of the barristers' entitlement to fees would be. Both barristers were clear, and it was no doubt clear to Mr Beazley, that the arrangement was "no win, no fee", and that the barristers would only be entitled to be paid the amount that was actually received for barristers' fees by agreement or assessment, if the proceedings were successful. It is also likely to be the case that both barristers and Mr Beazley assumed that, if there was an assessment process, then the amount of fees allowed by the assessor or the review panel for each barrister would be a reasonable basis for determining the entitlement of that barrister. 7. The problem arose because part way through the lengthy series of proceedings, Mr Dibb became involved as the third counsel. Mr Dibb gave the following evidence in his affidavit: 7. I do not recall any specific conversation about fees with any of the solicitors at this stage. 8. I also do not recall any detailed discussion of fees with Mr Evatt or Mr Rasmussen. 9. It was a long-standing practice of Mr Rasmussen and myself to appear with Mr Evatt in defamation matters on an understood "no win, no fee" basis under which there would be no contribution towards Counsels' fees sought from the solicitors, the clients or the verdict monies: we would accept in settlement of our fees the amount recovered from the defendants. Inevitably, this meant we did not recover our full fees. 10. It was my belief that Mr Evatt had discussed the basis of our engagement with the solicitors and I was reinforced in that belief by the fact that I understood Mr Evatt had worked on matters with both Mr Beazley and Mr Leamey (among a number of other solicitors) on that basis before. 11. Initially, I was asked to assist by interviewing the plaintiffs for their answers to interrogatories, which I did. 12. The matter was scheduled for trial before Harrison J commencing on 9 November 09. About a month or so before that date, in the corridor outside one of the courts in the Supreme Court building, I met Mr Evatt and Mr Rasmussen, who were robed. I believe they had been appearing together in another matter. 13. I had a conversation with them to the following effect: Mr Evatt: "Gacic is on for trial from 9 November. We need you in it." Me: "Does it need three Counsel? And won't that spread things a bit thin on fees?" Mr Evatt: "There is a lot to do and I can't be there the whole time. There are three plaintiffs, so there will be no trouble getting enough fees for all of us." 14. At some point in this conversation, Mr Rasmussen interjected: "We need you, Mr Dibb." As I recall, he said this more than once. 15. I agreed to appear with them in the matter and began participating in preparation for the trial. 1. There is no suggestion by Mr Evatt or Mr Rasmussen that Mr Dibb did not do all of the work the subject of his subsequent tax invoices, or that for any reason Mr Dibb was not deserving of his fees. Indeed, Mr Evatt related the fact that Mr Dibb appeared for the clients on a number of days when Mr Evatt was not available to appear. 2. There is no evidence of what Mr Evatt said to Mr Beazley or Mr Leamey on the subject of Mr Dibb's retainer for the clients, or indeed whether he said anything. Mr Evatt did not give evidence on this subject. 3. It is quite possible that both solicitors and the clients simply relied upon Mr Evatt's decision as to how the clients should be represented, given in particular the agreed or assumed basis of the entitlement of each of the barristers to fees. 4. In short, there is a high probability that no one who was concerned addressed in any specific way, or at all, what would happen if the clients' entitlement to costs to cover their barristers' fees did not include any allowance for third counsel. 5. Mr Dibb was cross-examined. He was not challenged about the precise conversations that he set out in his affidavit. He was challenged as to the question of whether there was any specific agreement between the three barristers that they would pool their fees. He agreed that there was not such a specific agreement. It was put to Mr Dibb that he was really claiming money to which the other barristers were entitled, by reason of the fact that the other barristers' tax invoices had been accepted in the assessment process, to the respective amounts that had been paid by Fairfax to Mr Leamey in respect of their claims. Mr Dibb was also cross-examined on the basis that in an email that he wrote to Mr Leamey on 21 July 2017 he said: "My moral claim is indeed, ultimately, to be entitled to a pro rata distribution of the moneys received from the other side in respect of Counsel" (emphasis added). Mr Dibb in effect denied that his claim was purely a moral one, but it was one that he was entitled to in all of the circumstances of the way that he was brought into the case. 6. A point was reached in the cross-examination of Mr Dibb, during which I recall thinking that Mr Dibb had given his evidence in an exemplary manner that should be a model for all witnesses, when he was confronted with the following cross-examination: Q. Leaving everything else aside, under your retainer with the plaintiffs you were only entitled to recover what was agreed or assessed in the circumstances? A. We collectively-- Q. No, you were only entitled to receive under your retainer, which was no win no fee, that is correct? A. No win no fee. Q. And only to the extent that your fees had been either agreed or assessed by a costs assessor or a review panel, that is correct? A. No, that is not correct. Q. I put to you that that is false and you are telling a lie now? A. No. Q. I put that to you. A. No, I am not. 1. I have no hesitation in accepting all of Mr Dibb's evidence. 2. Mr Evatt and Mr Rasmussen were also called to the witness box. The only substantive evidence that Mr Evatt gave was that nothing was said between the three barristers on the subject of the pooling between them of any amount of costs received by the clients to cover barristers' fees. 3. When I invited cross-examination of Mr Evatt, I was told that no questions would be asked. 4. The same occurred after Mr Rasmussen gave the following evidence in chief: Q. Have you ever had a conversation with Mr Dibb agreeing to pool the fees in the Gacic proceedings? A. I have not. 1. It may be that counsel for Mr Evatt and Mr Rasmussen was of the view that Mr Dibb's case was exploded by unchallenged evidence from his clients that there had been no explicit agreement between the barristers that all of the funds received by the clients for barristers' fees would be pooled between them. 2. It may be that counsel for Mr Dibb took a contrary view that the evidence given by Mr Evatt and Mr Rasmussen missed the point, because it was not Mr Dibb's case that there was an explicit agreement for pooling the funds received for barristers' fees. His case was one of entitlement to the fund arising from the objective circumstances. 3. On the issue of the entitlement of the barristers to the fund held by Mr Leamey from the amount paid by Fairfax following the assessment process, in a letter addressed to Mr Leamey dated 29 April 2003, the clients stated: We confirm the above request [being a request by Mr Leamey to Fairfax that all costs be paid to Mr Leamey]. The lawyers can divide the costs received between themselves as they agree including Clive Evatt, Mr Dibb, Mr Rasmussen, Mr Beazley, Mr Leamey & McKenzie Leamey Solicitors. 1. That evidence seems to establish that, so far as the clients were concerned, any costs representing lawyers' fees paid by Fairfax to Mr Leamey could be divided by the lawyers by agreement between themselves. 2. As to Mr Leamey's position, counsel for Mr Evatt and Mr Rasmussen read the following part of Mr Leamey's affidavit in support of the amended summons, without objection: 42. My belief and understanding of the terms of the engagement of all of the lawyers in this set of matters was oral and as follows: – (a) The clients would pay the disbursements excluding counsels fees; (b) The clients were each either bankrupt or about to go bankrupt at different times; (c) The matter was done on a spec basis; (d) The only costs to be paid to a lawyer was that which was actually recovered from John Fairfax; (e) Assessment costs would be deducted from the costs; (f) If costs were agreed with John Fairfax and paid, then the lawyers would agree between themselves the division of the costs received. This had happened in one of the High Court matters involving Mr Evatt and Mr Dibb. 1. The legislation relevant to the barristers' retainer was the Legal Profession Act 2004 (NSW) (the Act). Apparently because of the "no win, no fee" nature of the arrangement between the barristers and the solicitors, a fee disclosure was not given in the terms that would be required by s 309 of the Act. Consequently, s 317 of the Act had the effect that the clients were not required to pay the fees claimed by the barristers unless the fees had been assessed under Division 11 of the Act. As I understand the submissions made to the Court, this position was accepted by all three barristers. As none of the barristers had a costs agreement, the effect of s 319(1)(c) of the Act was that each barrister was entitled "to the fair and reasonable value of the legal services provided", with that amount to be determined by an assessment. 2. It will be convenient at this point to describe the way that Mr Dibb claims is the appropriate way for the amounts allowed in the costs assessment against Fairfax after the cost to review, for barristers' fees to be divided between the three barristers. 3. Mr Dibb explained his calculation by reference to the manner in which the clients' costs claim had been divided into three bills, being Bill A, Bill B and Bill C. The legal work done by Mr Dibb only formed part of Bills A and B. 4. As to Bill B, the amount claimed by Mr Evatt was $197,890, by Mr Rasmussen $78,511 and Mr Dibb $35,310. The total claim was $311,711. The amount allowed on the assessment was $166,953, which was 53.6% of the total claimed. 5. In the case of Bill C, the amount claimed by Mr Evatt was $190,300, by Mr Rasmussen $64,780 and Mr Dibb $24,227. The total claim was $279,307. Of this amount, $173,427, or 62.1 % was allowed. 6. Mr Dibb's case is that the appropriate way to divide the whole amount allowed for barristers' fees is separately for each Bill the proportion of the total amount claimed by each barrister multiplied by the percentage allowed of all barristers' fee claims. Applying the percentages in the above paragraphs, for Mr Dibb that would give in respect of Bill B $35,310 × 53.6 % = $18,912. For Bill C the amount would be $24,227 × 62.1 = $15,043. The total amount of Mr Dibb's share for the two Bills would therefore be $33,955. 7. Mr Dibb has already received $3317 from the costs recovered from Fairfax. As Mr Dibb accepts that he should in addition bring to account the $12,000 he has already received under the settlement deed, the balance owing to him out of the $21,000 held on trust by Mr Leamey is $18,638. Mr Dibb has substituted this amount for his original claim that he be paid the whole of the $21,000. 8. The effect of this mechanism for dividing the whole amount allowed in the cost assessment for barristers' fees would be to ignore the rejection of almost all of Mr Dibb's claim on the sole ground that the retainer of a third counsel was not fair and reasonable. It would, however, apply the average percentage recovery of claims for each Bill to each barrister. This approach involves ignoring the possibility that the individual barristers' claims were allowed at different percentages, which only gave rise to the percentages of 53.6 % and 62.1 % by a process of averaging. 9. The position of Mr Evatt and Mr Rasmussen was, however, limited to the submission that each barrister was entitled to the total allowed in the assessment for that barrister's fees, and they did not suggest to the Court any alternative mechanism for dividing the total amount allowed in the assessment for barristers' fees to that suggested by Mr Dibb, if the Court did not accept their primary position. 10. I add that, although the evidence before the Court may be sufficient to enable a calculation of the separate percentages allowed in respect of each barrister's fee claims, that would be a significant arithmetical exercise that has not been undertaken by the parties. The Court has no means of knowing whether the exercise would demonstrate individual percentage allowances that differed significantly from the averages. 11. I will now address the primary question of which of the claimants is entitled to the amounts the subject of the interpleader. 12. I do not accept Mr Evatt's and Mr Rasmussen's submission that Mr Dibb's only remedy is to pursue a claim against Mr Leamey for breach of some duty of care owed to Mr Dibb that required Mr Leamey to be more effective in persuading the costs assessor or the review panel that the retainer of a third barrister was fair and reasonable. I regard it to be an entirely unrealistic suggestion that for the small claim involved Mr Dibb was required to sue Mr Leamey, which would involve among other things attempting to establish the existence of a novel duty of care or implied term of the retainer between Mr Leamey and Mr Dibb. 13. The present matter does not warrant the Court delving into the issue in detail, but once it is understood that Mr Dibb's entitlement to be paid his fees required an assessment process, Mr Dibb would not be able to quantify his damages in any claim against Mr Leamey without first engaging in that process. 14. The waste that that approach would involve would surpass even the waste involved in the present application. 15. I reject the contention made on behalf of Mr Evatt and Mr Rasmussen that the effect of the certificate issued by the costs assessor, after review by the review panel, is determinative of the amount of fees to which each of the barristers is entitled. As there was no further appeal, the effect of the assessment was to determine conclusively the amount of costs payable by Fairfax on a party/party basis to the clients in respect of all of the legal costs and disbursements incurred by them. The assessment process between the clients and Fairfax did not lead directly to the barristers becoming entitled to any particular sum of money. 16. That follows from the terms of s 372 of the Act, which provided: A costs assessor's determination of an application is binding on all parties to the application and no appeal or other assessment lies in respect of the determination, except as provided by this Division. 1. The determination of the amount of costs payable by the costs respondent binds the parties to the application, being the clients, Fairfax and the other defendant. The barristers were not parties to the application, so nothing found as part of the determination binds the clients or the solicitor in favour of the barristers: see Burrell Solicitors Pty Ltd v Reavill Farm Pty Ltd [2016] NSWSC 303 at [148]. If there were an enforceable agreement between the barristers and the clients or the solicitor that the barristers would be entitled to the fees allowed by the costs assessor, that would be a different matter, but the entitlement would flow from the contract and not from the operation of the Legal Profession Act, as then in force. 2. I accept that, in a simple case, the parties to a fee arrangement of the type entered into by Mr Evatt and Mr Rasmussen in this case might be content to treat the determination by the assessor of the amount to be allowed to the clients for each barrister's fees in an assessment between the clients and Fairfax as being a reasonable basis for determining the amount that should be paid to each barrister. However, to the extent that that is so, it is not because of the operation of the Act, but would only be a reasonable basis for a consensual determination of each barrister's entitlement, or alternatively it might be an implied incident of the informal fee agreement between the barristers and the solicitor. It may have been relevant to any assessment process instituted by each barrister against Mr Leamey for the determination of the "fair and reasonable value of the legal services provided" by that barrister. 3. The issue may be tested by considering what would have happened if the solicitor had succeeded on behalf of the clients in coming to an agreement with Fairfax as to the amount of costs to be paid. All three barristers appeared to accept that the informal fee arrangement entitled the clients to come to an agreement with Fairfax concerning the amount of costs to be paid. Such an agreement may have included a component for barristers' fees, or it may not. If an amount for barristers' fees had been agreed, there would have been no alternative but for the barristers to come to an agreement as to how to split the amount between them. Failing agreement, there would need to be some mechanism to determine how the amount should be split. If a separate agreement as to the amount payable by Fairfax for barristers' fees had not been reached, but the clients and Fairfax had reached agreement as to a lump sum to be paid, the position would have been more complicated and it would have been necessary first for agreement to be reached as to the proportion of the costs to be treated as being in respect of barristers' fees, and then there would need to be an agreement as to how those fees should be split between three barristers. 4. In his affidavit, Mr Dibb gave a telling example. If it be imagined that a fee arrangement of the type entered into in this case is entered into in a matter involving one senior counsel and one junior counsel, there will always be a possibility that the opposing party who is ordered to pay the barristers' client's costs will object to two counsel having been briefed. The costs assessor may allow only one counsel, and it could be the senior counsel or the junior counsel. Mr Dibb's point was that it could not reasonably be inferred that the true nature of the agreement, in so far as it involved the two counsel, was that each barrister was taking a complete risk that he or she would receive no fees at all, if that barrister happened to be the one whose fees were rejected by the assessor. 5. It must be remembered, in determining the fees to which each barrister is entitled, that while there may have been a firm understanding by each barrister from the beginning as to that barrister's entitlement to fees, and that understanding may have extended to a belief that any assessment process would quantify the amount of the entitlement, none of the barristers had the benefit of enforceable costs agreements. I have already accepted the genuineness of each barrister's belief concerning his entitlement, but by reason of the operation of the Act, in truth each barrister was only entitled to make a claim against the solicitor or the clients for the fair and reasonable value of the legal services provided. The determination of the amount of that entitlement would have to be constrained by the admitted terms of the agreement to the effect that the total amount payable to all three barristers could not exceed the total paid by Fairfax for barristers' fees. 6. The position is made conceptually more difficult because the actual entitlement of each of the three barristers will only arise following an assessment. It is agreed that no assessment will take place. Neither Mr Leamey nor the clients have required an assessment. Mr Leamey, who holds the funds, accepts that the barristers between them are entitled to the money. 7. That gives rise to the question of how the Court should determine the entitlement of the three claimants to the fund that the stakeholder accepts is held on trust as between the three claimants, in circumstances where there is no legally enforceable formula for determining their respective entitlements. 8. The Court has no power under the Act to determine the entitlement of each of the barristers to share in the fund as if on an assessment. 9. There is a question as to whether, as between themselves, the three barristers expressly or impliedly agreed how the fund available to pay barristers' fees should be divided between them, and if so, whether such an agreement would be a proper basis to determine each barrister's share in the fund. 10. The evidence satisfies me that there was no express agreement on this subject. I have no reason to reject the evidence given by Mr Evatt and Mr Rasmussen to that effect, and Mr Dibb did not assert any such express agreement. The issue of the effect of there being three counsel was specifically raised in the conversation deposed to in Mr Dibb's affidavit. Mr Evatt, who was the leader, expressed the unqualified opinion that "there will be no trouble getting enough fees for all of us". That opinion turned out to be too optimistic. I am satisfied that all three barristers proceeded on the basis that each of their tax invoices would be dealt with on any assessment on its merits, and that no barrister's claim would be rejected substantially in its entirety because of no other consideration than the number of barristers that had been briefed. 11. Consequently, the Court in the present circumstances is required to decide the respective entitlements of the three barristers to a portion of the fees that they claimed on a basis that all of the barristers assumed would never occur. 12. I do not think that it is realistic to analyse the events related to Mr Dibb's retainer in terms of any implied agreement between them, because I do not think they made an agreement except in the loosest of terms. Rather, each barrister formed his own belief as to the effect of his own retainer by the solicitors, and incorporated in that belief was a belief that fees for three counsel would be allowed. 13. Should it be relevant, however, I do not accept that, had the three barristers at the time addressed the possibility that one of their fees would not be allowed at all, they (and in particular Mr Dibb, who was the candidate most likely to miss out entirely) would have proceeded upon the basis that, notwithstanding that the case was successful and Fairfax paid an amount for barristers' fees, any barrister whose tax invoices were rejected entirely for reasons unconnected with the reasonableness of the rates and work done would be entitled to nothing. 14. Mr Evatt and Mr Rasmussen would have me conclude that, had the three barristers addressed this possibility, they would have proceeded upon the basis that one of them might receive no fees for all of the work done, but I decline to reach that conclusion. 15. The consequence is that the Court must determine the entitlement of the three barristers to the fund in circumstances that all three assumed would not occur, and where, had they addressed the issue, they would not actually have expected Mr Dibb to work for nothing. 16. The solution to the present problem is in my view a uniquely equitable one. It is an application of the maxim "equity is equality". 17. The following circumstances of this case are in my view significant to its resolution: 1. Mr Leamey holds $21,000 in his trust account, which is part of the money paid by Fairfax to the clients to cover the clients' obligation to pay counsels' fees. 2. That money was part of an amount paid directly to Mr Leamey, by direction of the clients, to be divided between the clients' lawyers, so the clients do not maintain any claim to the money, provided it is used to satisfy the clients' obligations to pay fees to their lawyers. 3. Mr Leamey does not make any claim to the money, which is held in his trust account for whichever barristers are entitled to receive it. 4. Although Mr Leamey may have the implied authority of the clients to come to agreements with the barristers concerning their respective shares to the money, he has decided that he should not do so. 5. Each barrister entered into an informal "no win, no fee" agreement with the solicitors, but by reason of the absence of any cost disclosure each barrister will only have a legal entitlement to receive a particular amount from Mr Leamey following a cost assessment between the barristers and Mr Leamey. 6. There is no proposal that any cost assessments take place between the barristers and Mr Leamey, so the position is that a trust fund exists without any legal mechanism that will be implemented to determine how the fund should be divided between the three barristers. 7. In the present case, there is no basis for the court to discern any intention by any relevant person, whether it be the clients, or the solicitors, or the barristers as to the mechanism for dividing the trust fund between the three barristers, because events have occurred (being the substantial disallowance of Mr Dibb's tax invoices) that no relevant person considered would occur. 8. Mr Dibb has received $12,000 on account of his fees by a separate arrangement with the solicitors and the clients under the deed of compromise, and he accepts that he must bring this sum to account for the benefit of all three barristers in the determination of how the trust fund should be divided between them. 1. In my view, an analogy can be drawn in this situation with the manner in which equity administers a fund that is the subject of a trust power whereby the trustee is required to appoint the trust fund to members of a class of beneficiary, when for some reason the trustee does not exercise the trust power of appointment. In such a case, equity will not allow the trust to fail, but will, as a general principle, administer the trust itself. The principle was explained by Windeyer J in Lutheran Church of Australia South Australia District Incorporated v Farmers' Co-operative Executors and Trustees Ltd (1970) 121 CLR 628; [1970] HCA 12 at 657 in the following terms: An analogy, not complete but nevertheless instructive, is to be found in what are often called "powers in the nature of trusts". These have usually arisen when a special power of appointment among a class of objects has been given without any express provision for a default of appointment and the donee of the power has died without exercising it. In such cases the non-exercise of the power of appointment and selection among the nominated class of objects does not necessarily prevent them benefiting. The court will construe the power as in the nature of a trust and the possible beneficiaries will be held entitled to the subject property in equal shares. 1. In Re Baden's Deed Trusts; McPhail v Doulton [1971] AC 424, Lord Wilberforce said at 451, in relation to how the Court may distribute property the subject of a discretionary trust, when the trustee has not exercised its discretion: … Equal division may be sensible and has been decreed, in cases of family trusts, for a limited class; here there is life in the maxim "equality is equity," but the cases provide numerous examples where this has not been so, and a different type of execution has been ordered, appropriate to the circumstances. 1. Further, at 452, his Lordship said "that a discretionary trust can, in a suitable case, be executed according to its merits and otherwise than by equal division" (emphasis in original). 2. Recent decisions dealing with the Court's powers in the context of the exercise of trust powers include Amir Ashrafinia v Mohammad Reza Ashrafinia; Parvaneh Karami Fakhrabadi v Mohammad Reza Ashrafinia (No. 4) [2014] NSWSC 676 at [34] (Slattery J), and Australian Incentive Plan Pty Ltd v Attorney-General for Victoria (2012) 44 VR 661; [2012] VSCA 236 at [36] and [53]. 3. The learned editors of Meagher, Gummow and Lehane's Equity Doctrines & Remedies, fifth edition (2015), describe the maxim in the following way: The purpose of this maxim was best summarised by Pettit: The maxim that equality is equity expresses in a general way the object both of law and equity, namely to effect a distribution of property and losses proportionate to the several claims or to the several liabilities of the persons concerned. Equality in this connection does not necessarily mean literal equality, but may mean proportionate equality. This doctrine of equality, however, operated more effectually in a court of equity than a court of law, and is exemplified in many departments of equity jurisdiction. 1. In my view, although the present circumstances do not involve the existence of a trust which is the subject of a trust power to effect a distribution of the trust property to a class of beneficiaries, it is proper for the Court to draw an analogy with that situation. The principles that underpin the trust power cases should generally extend to any fund that is held on trust for identifiable beneficiaries in circumstances where there is no enforceable rule or other mechanism for ascertaining the entitlements of the individual beneficiaries and ensuring that they receive those entitlements. The ability of the beneficiaries to enjoy their shares in the fund held on trust for them should not be denied simply because of their own inability to enforce the trust for their individual benefits. 2. Here, there is a fund that is held on trust by Mr Leamey, which he received on behalf of the clients, but the clients have given him the fund on the basis that it will be distributed as agreed between the lawyers. There is no agreement between the lawyers, and the circumstances in which the fund was ascertained and paid included one that the barristers expressly excluded from their contemplation, being that one of the barrister's claims for fees would almost totally be rejected for no other reason than he was the third counsel. The barristers do not claim to have reached any enforceable agreement between them concerning the division of the total amount received by the clients from the assessment process for barristers' fees. 3. It is clear, given the disparity between the work done and the rates chargeable by the three barristers that it would not be appropriate to divide the fund equally, and instead the appropriate course is for the Court to determine a proportional basis for distribution that is equitable in the circumstances. It may have been possible to make a case that the distribution should be made in proportion to the total amounts claimed by each barrister, in proportion to the individual amounts allowed in respect of each barrister's claims, or (as Mr Dibb seeks to do) the average allowed for each Bill of the individual claims by each barrister. The first alternative may be excluded on the basis that the individual barristers accept that their entitlement to fees depends upon the proportion of their claims that have been allowed in the assessment. It is arguable that the second alternative is the preferable one, as each barrister's entitlement would be calculated having regard to their own level of success, and not the average of all three barristers. However, no attempt has been made to support this alternative, and the Court does not know what the effect of adopting it would be. Given the small amount of money involved, it may be surmised that the difference from the adoption of the third alternative will not be great. 4. In the circumstances I rule that the appropriate order for the Court to make concerning the distribution of the $21,000, which is the remainder of the fund, after Mr Dibb has brought to account the $12,000 that he has already received, is that the adjusted claim of Mr Dibb of $18,638 should be born rateably between the $15,000 attributed to Mr Evatt and the $6000 attributed to Mr Rasmussen. 5. On my calculation, the result is that, subject to what follows, out of the $21,000, $18,638 should be paid to Mr Dibb, $1687 should be paid to Mr Evatt, and $675 should be paid to Mr Rasmussen. I can only wonder as to what the claimants in this matter will think about an equity lawyer determining a dispute which apparently is of existential importance to some common lawyers by applying a principle derived from equity's exclusive jurisdiction. 6. In the circumstances, in my view, Mr Leamey acted properly in commencing these interpleader proceedings. As I have said above, I have already ordered Mr Evatt and Mr Rasmussen to pay Mr Leamey's costs of the notice of motion, so Mr Leamey's residual costs of the proceedings should be calculated separately from those costs. To avoid the spectre of an assessment being required to determine the amount of Mr Leamey's costs of both the proceedings and the notice of motion, I would invite Mr Leamey to submit a claim to the Court for a lump sum amount, which should be claimed having regard to the principle of proportionality. 7. I will hear the claimants concerning what costs order should be made in respect of Mr Leamey's costs, and the costs as between the claimants. 8. Again, to avoid the possibility of assessments, any claimant who claims a costs order in his favour should make a claim for a lump sum, with brief justification, and having regard to the principle of proportionality. 9. All of the applications concerning costs should be made in writing provided to my associate, and final orders will be made in chambers. ********** 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: 05 June 2018