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Jefferis v Gells Pty Ltd trading as Gells Lawyers [2018] NSWDC 288 (9 October 2018)

Last Updated: 9 October 2018





District Court New South Wales

JUDGMENT

In this matter the plaintiff, Mr Richard Jefferis, sues the defendant corporation Gells Pty Ltd trading as Gells Lawyers (“Gells”), for certain moneys which he claims are owed to him by Gells for legal services provided by him in relation to a number of matters in the Supreme Court of New South Wales concerning the rights and entitlements of a Mr John Steiner in relation to the Estate of the late Dorothy Steiner who was Mr Steiner’s mother. The amount sought is $71,790.90 together with interest. Mr Jefferis claims that he is entitled to the moneys as fees which are owed to him pursuant to a number of costs agreements which were entered into by the parties in 2012 and 2014. The defendant Gells denies that it is liable to the plaintiff Mr Jefferis as claimed on the bases that: (a) This court has no jurisdiction to hear the matter;

(b) The work was agreed to be performed by Mr Jefferis on a speculative basis;

(c) Mr Steiner has not received his completed entitlements in relation to the Estate of his late mother. In other words, the condition of the conditional costs agreements entered into has not yet occurred;

(d) In the alternative, Mr Jefferis waived his rights to insist on a strict compliance with the terms of the costs agreements entered into. Further, he is estopped from pursuing those rights;

(e) In the alternative, Gells pleads that it had an agreement or agreements as to costs with Mr Jefferis “which were an agreement or agreements which did not entirely comply with the requirements of the Legal Profession Act 2004 but is or are nevertheless enforceable in law in accordance with their terms”: paragraph 118 of the Amended Defence filed 2 July 2018;

but is or are nevertheless enforceable in law in accordance with their terms”: paragraph 118 of the Amended Defence filed 2 July 2018; (f) In the further alternative, Mr Jefferis has engaged in misleading or deceptive conduct which entitles the defendant to damages. Mr Jefferis denies: (a) This court does not have jurisdiction to hear the matter;

(b) There can be any oral terms to a conditional costs agreement;

(c) The representations alleged in Gells’ Cross-Claim;

(d) There was any waiver by him;

(e) There was any estoppel; and

(f) There was any alleged misleading or deceptive conduct by him falling within s 18 of the Australian Consumer Law. The matters in issue in the proceedings require a close examination of the terms of Part 3.2 of the Legal Profession Act 2004 (NSW) (“LPA"). The LPA has been repealed. However, the LPA remains relevant because the costs agreements entered into by Mr Jefferis were all entered into before 1 July 2015 and relate to legal proceedings commenced before that date. The Legal Profession Uniform Law commenced on 1 July 2015: see the Legal Profession Uniform Law Application Act 2014 (NSW) s 167(a); Clauses 2 and 18 of Schedule 4 of the Legal Profession Uniform Law (NSW); see also Ferella v Stomo [2017] NSWCA 268 at [15]- [29] per White JA (with whom Macfarlan JA and Sackville AJA agreed) and Gilles v Palmieri [2017] NSWCA 370 at [37]. On the third day of the final hearing, the defendant raised by way of Notice of Motion an issue concerning the jurisdiction of the District Court to hear the plaintiff’s claim. I will refer to this in some detail further below.

The pleadings

The plaintiff relies on a Further Amended Statement of Claim filed on 21 July 2017. In the Further Amended Statement of Claim, Mr Jefferis pleads as follows: (a) At all material times he was a barrister within the meaning of s 4 of the LPA;

(b) At all material times the defendant Gells was an incorporated legal practice under the LPA;

(c) On various occasions in May 2012 and November 2014, the plaintiff and the defendant entered into a costs agreement about the payment of legal costs in relation to legal services concerning Supreme Court actions involving Mr Steiner;

(d) The terms of the costs agreements included the payment of specified rates in relation to legal services provided by the plaintiff and the payment of interest on those amounts if not paid after 30 days from the date of memoranda of fees which were provided;

(e) The plaintiff provided legal services and issued invoices;

(f) The plaintiff applied for the relevant invoices to be assessed by a cost assessor appointed by the Supreme Court under the LPA;

(g) The Supreme Court appointed a cost assessor and the relevant invoices were assessed by the cost assessor;

(h) The cost assessor issued certificates of determination of costs and certificates of determination of costs of costs assessment;

(i) The defendant Gells has failed to pay the assessed costs;

(j) The defendant Gells has not sought a review of the costs assessed under the LPA;

(k) The plaintiff alleges that the defendant is indebted to him for the amounts stated in the Further Amended Statement of Claim and claims the balance of the fees owing together with certain costs of the costs assessment. In the Further Amended Statement of Claim, the plaintiff particularises that the costs agreements are in writing and were set out in disclosure letters from the plaintiff to Gells and the costs agreements were accepted by the defendant continuing to instruct the plaintiff barrister in the matters after receipt of the relevant costs disclosure letters with the proposed terms. The defendant filed an Amended Defence to the Further Amended Statement of Claim on 2 July 2018. The Defence pleads a positive case as well as pleading to the Further Amended Statement of Claim. Overall, Gells denies that it is indebted as alleged by the plaintiff in the Further Amended Statement of Claim. In the Defence, Gells also sets out extensive specific pleadings in relation to the Steiner matters (paragraphs 2-82). In essence, the defendant pleads: (a) that in the various matters the plaintiff was briefed on a speculative basis;

(b) the plaintiff agreed with a solicitor Mr Noss in a conversation on or about 9 May 2012 to accept the first relevant brief on a speculative basis and that the defendant “would not be liable of itself for fees of the Plaintiff and the entitlement of fees for the Plaintiff would only arise where Steiner received money from the Estate under his bequest or a Family Provision Claim (“ the Terms ”)” (paragraph 16);

”)” (paragraph 16); (c) that at all material times experienced counsel of the Sydney bar were prepared to act on a contingency basis in claims “under family provisions principles and on contests of bequests or of Estates” (paragraph 19);

(d) the defendant would not have delivered a brief to the plaintiff relating to Mr Steiner unless the plaintiff had agreed with Mr Noss to accept a brief to act for Mr Steiner on a speculative basis (paragraph 18); and

(e) that although some moneys were paid to the plaintiff by Gells on behalf of Mr Steiner, at no time whilst he was briefed did Mr Jefferis the plaintiff seek to be paid the balance (see for example paragraphs 36 and 48). The defendant further: (a) Denies that it entered into costs agreements with the plaintiff as alleged in the Further Amended Statement of Claim;

(b) Says the plaintiff was aware at all times of the applications by Mr Steiner for interim payments under the will to cover his pressing financial circumstances;

(c) Says all work was completed by the plaintiff on the Terms set out in the Defence; and

(d) Says in paragraph 117 of the Defence, that although payments were made to the plaintiff from time to time from the trust account of the defendant, the payments “were accepted by the Plaintiff but the agreements with the Plaintiff otherwise were on the Terms pleaded ...” (paragraph 117(b)). It is also pleaded in the alternative, that in the circumstances the plaintiff waived reliance on the cost agreements (paragraph 117(c)) and that the plaintiff in the further alternative is estopped from relying on the costs agreements as alleged because the defendant changed its position in that the plaintiff would not have continued to be retained “if the Defendant had been made aware of the demand for payment from the Defendant rather than from John Steiner” (paragraph 117(d));

(e) Says in paragraph 118 that even though conditional costs agreements entered into with the defendant did not entirely comply with the LPA, they are nevertheless enforceable at law in accordance with their terms. Mr Jefferis filed a Reply on 30 July 2018. The Reply essentially repeats the plaintiff’s claims: (a) The agreements upon which the plaintiff sues Gells are costs agreements (paragraphs 1-4);

(b) The oral terms and conduct pleaded by Gells in its Amended Defence do not form part of any costs agreement upon which the plaintiff sues the defendant as they are not in writing or evidenced in writing under s 322 of the Legal Profession Act 2004 (paragraphs 5-8);

(paragraphs 5-8); (c) The costs agreements are not conditional costs agreements within the Legal Profession Act 2004 . The terms relied on by Gells do not set out the circumstances that constitute the successful outcome of the matter. If they are, the condition pleaded by Gells has been satisfied (paragraphs 9-15) through the making by the Supreme Court of considerable interim distributions to Mr Steiner;

. The terms relied on by Gells do not set out the circumstances that constitute the successful outcome of the matter. If they are, the condition pleaded by Gells has been satisfied (paragraphs 9-15) through the making by the Supreme Court of considerable interim distributions to Mr Steiner; (d) The costs agreements alleged by Gells are void as not complying with ss 322-328 of the Legal Profession Act 2004 . Legal costs under a void costs agreement are recoverable under the legislation according to the reasonable value of the legal services provided (paragraphs 16-21);

. Legal costs under a void costs agreement are recoverable under the legislation according to the reasonable value of the legal services provided (paragraphs 16-21); (e) A legal practitioner cannot rely on anything beyond the four corners of a costs agreement in writing to contradict the documentation (paragraph 22);

(f) Gells is estopped by the assessments made in favour of Mr Jefferis by the costs assessor from asserting Mr Jefferis is entitled to be paid a different amount than determined by the costs assessor (paragraphs 27-29). On 22 August 2018, the court granted leave to the defendant to file a Rejoinder. This disputed a number of matters pleaded in the Reply. In a Cross-Claim filed on 3 May 2018, the defendant pleads misleading or deceptive conduct by the plaintiff in breach of s 18 of the Australian Consumer Law (being Schedule 2 to the Competition and Consumer Act 2010 (Cth)) based on an alleged representation and conduct by the plaintiff that he would undertake the work on a speculative basis (see in particular paragraphs 17-19 and 43-44) and that the defendant relied on the relevant representation and conduct. Damages are sought against the plaintiff by the defendant under s 236 of the Australian Consumer Law. In a Defence filed 15 June 2018, Mr Jefferis in essence denies the allegations in the Cross-Claim. In particular, it is pleaded that the issuing of invoices by the plaintiff constituted demands for payment of fees. Any liability under the Australian Consumer Law is expressly denied. As stated above, on the third day of the trial the defendant raised an issue relating to the jurisdiction of this court to hear the plaintiff’s claim. The defendant was granted leave to file in court a Notice of Motion dated 22 August 2018 seeking an order that the case be transferred to the Local Court of New South Wales. In support of that Motion the defendant relied on an affidavit of Michael Gerard Coffey sworn 21 August 2018 which attached correspondence between the parties’ solicitors concerning the question whether this court has jurisdiction. The matter was raised by the defendant in the light of a number of recent cases which have considered the jurisdiction of this court in commercial cases following the decision of Parker J in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194. There was considerable discussion between the court and counsel in relation to the appropriate course which the court should take. Submissions were made by both parties in relation to this issue. In the end, I determined that having regard to the indications from the bar table that the remaining evidence would be of short duration, that the appropriate course to adopt, consistent with ss 56-59 of the Civil Procedure Act 2005 (NSW), was to complete the hearing of the evidence and hear submissions on all matters including as to jurisdiction. The court could then determine the matter in its ultimate reasons for decision. This approach was taken because of the potential for further delay and cost if the court heard the jurisdiction argument, decided it and there was an appeal to the Court of Appeal which necessitated the matter either being sent back to this court some considerable time in the future or being reheard by another judge. I consider the jurisdiction issue in some detail further below.

The relevant provisions of the LPA

As indicated above, the LPA continues to apply to the costs in a matter if the brief was delivered, or the proceedings to which the costs relate commenced, before 1 July 2015. That is the case in the present matter. Numerous provisions of the LPA are relevant to the current matter. The LPA relevantly provides as follows:

“Part 3.2 Costs disclosure and assessment

Division 1 Preliminary

301 Purposes

The purposes of this Part are as follows:

(a) to provide for law practices to make disclosures to clients regarding legal costs,

(b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements,

(c) to regulate the billing of costs for legal services,

(d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.

302 Definitions

(1) In this Part:

bill means a bill of costs for providing legal services.

...

conditional costs agreement means a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate, as referred to in section 323 (Conditional costs agreements), but does not include a costs agreement to the extent to which section 324 (Conditional costs agreement involving uplift fees) or section 325 (Contingency fees are prohibited) applies.

costs includes fees, charges, disbursements, expenses and remuneration.

costs agreement means an agreement about the payment of legal costs.

...

(2) In this Part, a reference to a law practice includes a reference to:

(a) in the case of a person who was a sole practitioner when the legal services concerned were provided:

(i) the former sole practitioner, or

(ii) the executor of the will of the former sole practitioner, or

(iii) the trustee or administrator of the estate of the former sole practitioner, and

...

Division 3 Costs disclosure

...

310 Disclosure if another law practice is to be retained

(1) 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.

(2) 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).

(3) This section does not apply if the first law practice ceases to act for the client in the matter when the other law practice is retained.

Note. 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.

311 How and when must disclosure be made to a client?

(1) Disclosure under section 309 must be made in writing before, or as soon as practicable after, the law practice is retained in the matter.

(2) Disclosure under section 310 (1) must be made in writing before, or as soon as practicable after, the other law practice is retained.

(3) Disclosure made to a person before the law practice is retained in a matter is taken to be disclosure to the person as a client for the purposes of sections 309 and 310.

...

315 Form of disclosure

(1) Written disclosures to a client under this Division:

(a) must be expressed in clear plain language, and

(b) may be in a language other than English if the client is more familiar with that language.

(2) If the law practice is aware that the client is unable to read, the law practice must arrange for the information required to be given to a client under this Division to be conveyed orally to the client in addition to providing the written disclosure.

...

317 Effect of failure to disclose

(1) Postponement of payment of legal costs until assessed

If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed, the client or associated third party payer (as the case may be) need not pay the legal costs unless they have been assessed under Division 11.

Note. Under section 369, the costs of an assessment in these circumstances are generally payable by the law practice.

(2) Bar on recovering proceedings until legal costs assessed

A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 11.

...

(7) Non-disclosure capable of constituting unsatisfactory professional conduct or professional misconduct

Failure by a law practice to comply with this Division is capable of being unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian-registered foreign lawyer involved in the failure.

...

Division 4 Legal costs generally

319 On what basis are legal costs recoverable?

(1) Subject to the provisions of this Part, legal costs are recoverable:

(a) in accordance with an applicable fixed costs provision, or

(b) if paragraph (a) does not apply, under a costs agreement made in accordance with Division 5 or the corresponding provisions of a corresponding law, or

(c) if neither paragraph (a) or (b) applies, according to the fair and reasonable value of the legal services provided.

(2) However, the following kinds of costs are not recoverable:

(a) the costs associated with the preparation of a bill for a client,

(b) the costs associated with the making of disclosures for the purposes of Division 3,

(c) the costs associated with the making of a costs agreement with a client.

...

Division 5 Costs agreements

322 Making costs agreements

(1) A costs agreement may be made:

(a) between a client and a law practice retained by the client, or

(b) between a client and a law practice retained on behalf of the client by another law practice, or

(c) between a law practice and another law practice that retained that law practice on behalf of a client, or

(d) between a law practice and an associated third party payer.

(2) A costs agreement must be written or evidenced in writing.

(3) A costs agreement may consist of a written offer in accordance with subsection (4) that is accepted in writing or by other conduct.

Note. Acceptance by other conduct is not permitted for conditional costs agreements—see section 323(3)(c)(i).

(4) The offer must clearly state:

(a) that it is an offer to enter into a costs agreement, and

(b) that the client may accept it in writing or by other conduct, and

(c) the type of conduct that will constitute acceptance.

(5) Except as provided by section 395A, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment under Division 11.

Note. If it attempts to do so, the costs agreement will be void—see section 327(1).

(6) A reference in section 328 and in any prescribed provisions of this Part to a client is, in relation to a costs agreement that is entered into between a law practice and an associated third party payer as referred to in subsection (1)(d) and to which a client of the law practice is not a party, a reference to the associated third party payer.

323 Conditional costs agreements

(1) A costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate.

(2) A conditional costs agreement may relate to any matter, except a matter that involves criminal proceedings or proceedings under the Family Law Act 1975 of the Commonwealth.

(3) A conditional costs agreement:

(a) must set out the circumstances that constitute the successful outcome of the matter to which it relates, and

(b) may provide for disbursements to be paid irrespective of the outcome of the matter, and

(c) must be:

(i) in writing, and

(ii) in clear plain language, and

(iii) signed by the client, and

(d) must contain a statement that the client has been informed of the client’s right to seek independent legal advice before entering into the agreement, and

(e) must contain a cooling-off period of not less than 5 clear business days during which the client, by written notice, may terminate the agreement.

(4) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made under section 322(1)(c) (Costs agreements between law practices).

(4A) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement if disclosure under:

(a) section 309 (Disclosure of costs to clients), or

(b) section 310(1) (Disclosure if another law practice is to be retained),

in relation to the agreement was not or would not be required in the circumstances referred to in section 312(1)(c) or (d) (Exceptions to requirement for disclosure).

(4B) Subsection (3)(c)(iii), (d) and (e) do not apply to a conditional costs agreement made with a sophisticated client.

(5) If a client terminates an agreement within the period referred to in subsection (3)(e), the law practice:

(a) may recover only those legal costs in respect of legal services performed for the client before that termination that were performed on the instructions of the client and with the client’s knowledge that the legal services would be performed during that period, and

(b) without affecting the generality of paragraph (a), may not recover the uplift fee (if any).

...

327 Certain costs agreements are void

(1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this Division is void.

(2) Subject to this section and Division 11, legal costs under a void costs agreement are recoverable as set out in section 319(1)(a) or (c) (On what basis are legal costs recoverable?).

(3) However, a law practice is not entitled to recover any amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.

(3A) A law practice that has entered into a costs agreement in contravention of section 324(2)–(5) (Conditional costs agreements involving uplift fees) is not entitled to recover the whole or any part of the uplift fee and must repay any amount received in respect of the uplift fee to the person from whom it was received.

(4) A law practice that has entered into a costs agreement in contravention of section 324(1) (Conditional costs agreements involving uplift fees) or 325 (Contingency fees are prohibited) is not entitled to recover any amount in respect of the provision of legal services in the matter to which the costs agreement related and must repay any amount received in respect of those services to the person from whom it was received.

(5) If a law practice does not repay an amount required by subsection (3) or (4) to be repaid, the person entitled to be repaid may recover the amount from the law practice as a debt in a court of competent jurisdiction.

328 Setting aside costs agreements or provisions of costs agreements

(1) On application by a client, a costs assessor may order that a costs agreement or a provision of a costs agreement be set aside if satisfied that the agreement is not fair or reasonable.

Note. Section 317(2) also enables a client to make an application under this section for an order setting aside a costs agreement or a provision of a costs agreement where the law practice concerned has failed to make the disclosures concerning costs required by Division 3.

...

331 Legal costs cannot be recovered unless bill has been served

(1) Subject to section 332A (Person may request itemised bill), a law practice must not commence 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 sections 332 (Bills) and 333 (Notification of client’s rights).

(2) The Supreme Court may make an order authorising a law practice to commence legal proceedings against a person sooner if satisfied that:

(a) the law practice has given a bill to the person in accordance with sections 332 and 333, and

(b) the person is about to leave this jurisdiction.

(3) A court or tribunal before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party, or on its own initiative.

(4) This section applies whether or not the legal costs are the subject of a costs agreement.

...

Division 11 Costs assessment

Subdivision 1 Applications

349A Definition

In this Division:

client means a person to whom or for whom legal services are or have been provided.

350 Application by client or third party payers for costs assessment

(1) A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs.

(2) A third party payer may apply to a costs assessor for an assessment of the whole or any part of legal costs payable by the third party payer.

(3) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid.

...

Subdivision 2 Assessment

357 Referral of matters to costs assessors

(1) The Manager, Costs Assessment is to refer each application for costs assessment to a costs assessor to be dealt with under this Division.

(2) A costs assessor who has an interest in an application must, as soon as practicable after becoming aware of that fact, refer the application to the Manager, Costs Assessment for referral to another costs assessor.

(3) If the Manager, Costs Assessment is satisfied that it is inappropriate for a costs assessor to determine a particular application that has been referred to the costs assessor, the Manager, Costs Assessment may:

(a) revoke the referral of the application, and

(b) refer the application for assessment to another costs assessor.

(4) An application that has been referred to another costs assessor under this section is to be dealt with as a new assessment or, if the Manager, Costs Assessment so directs, by continuing the assessment.

(5) When a referral has been revoked, the costs assessor to whom the application was initially referred must return all documents relating to the assessment of the application to the Manager, Costs Assessment. This includes documents relating to any work done on the assessment and a statement of the amount calculated for costs in respect of any work done on the assessment.

...

359 Consideration of applications by costs assessors

(1) A costs assessor must not determine an application for assessment unless the costs assessor:

(a) has given both the applicant and any law practice or client or other person concerned a reasonable opportunity to make written submissions to the costs assessor in relation to the application, and

(b) has given due consideration to any submissions so made.

(2) In considering an application, a costs assessor is not bound by rules of evidence and may inform himself or herself on any matter in such manner as he or she thinks fit.

(3) For the purposes of determining an application for assessment or exercising any other function, a costs assessor may determine any of the following:

(a) whether or not disclosure has been made in accordance with Division 3 (Costs disclosure) and whether or not it was reasonably practicable to disclose any matter required to be disclosed under Division 3,

(b) whether a costs agreement exists, and its terms.

...

363 Criteria for costs assessment

(1) In conducting an assessment of legal costs, the costs assessor must consider:

(a) whether or not it was reasonable to carry out the work to which the legal costs relate, and

(b) whether or not the work was carried out in a reasonable manner, and

(c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs.

...

365 Effect of costs agreements in assessments of party/party costs

(1) A costs assessor may obtain a copy of, and may have regard to, a costs agreement.

(2) However, a costs assessor must not apply the terms of a costs agreement for the purposes of determining appropriate fair and reasonable costs when assessing costs payable as a result of an order by a court or tribunal.”

The general regime relating to costs set out in the LPA and its predecessor legislation applied from 1 July 1994. As is seen, the LPA sets out a comprehensive regime in relation to cost disclosure, costs agreements and the recovery of legal costs including on assessment. Lead counsel for the plaintiff, Mr Doyle Gray, gave an extensive opening at the commencement of the final hearing. That opening covered numerous aspects of the plaintiff's case. As part of the opening, counsel for the plaintiff made a number of submissions in relation to the LPA which included in summary the following: (a) The LPA provides an extensive regulatory regime in relation to costs disclosure, costs agreements and the recovery of legal costs on assessment;

(b) Its provisions apply in varied terms to costs disclosure and costs agreements between clients and solicitors and between solicitors and barristers who are briefed by the solicitors: see ss 309 and 310(2);

(c) The importance of compliance by lawyers with the regime set out in the LPA is emphasised by the fact that the Act states that a failure to comply with aspects of its requirements can constitute unsatisfactory professional conduct or professional misconduct: see for example ss 312(4); 317(7);

(d) In relation to disputes as to costs, the LPA sets out a regime for costs assessment following an application made to the Manager, Costs Assessment of the Supreme Court who appoints an assessor to assess the costs. That assessor determines an assessment on the papers taking into account the application form and the submissions of the parties. The fact that an assessment occurs on the papers emphasises the importance of costs disclosures and costs agreements being in writing under the Act. As the cost assessment process does not contemplate any oral hearing or determination of disputed matters with witnesses, the importance of complying with the terms of the LPA in relation to costs disclosure and costs assessment is crucial: see ss 354, 357-8, 359(1);

(e) The central principle of Part 3.2 of the LPA is the protection of the client by requiring legal practices to make disclosures to clients regarding legal costs, to regulate the making of costs agreements in respect of legal services and to provide a mechanism for disputes to be resolved by an assessment including the setting aside of certain costs agreements: see for example s 328(1);

(f) The LPA contemplates a number of stages of the legal relationship. In the case of a barrister and solicitor it involves the briefing of the barrister, a costs disclosure by the barrister to the solicitor (except in the case of marked briefs), a costs agreement between the barrister and solicitor, the issuing of bills of costs for providing legal services by the barrister to the solicitor and, in the case of disputes, an assessment process see s 301;

(g) Part 3.2 of the LPA frequently uses the terms “must” and “may”. The word “must” in general terms denotes a mandatory requirement which must be complied with by the legal professional involved;

(h) Where a solicitor retains a barrister on behalf of a client, the barrister must disclose to the solicitor details of the barrister's legal costs and billing arrangements to enable the solicitor to disclose the details provided by the barrister directly to the client: s 310;

(i) Section 311(2) which places an obligation on the solicitor to make a disclosure to the client in writing of details in relation to the other law practice shows that the obligation is placed on the barrister to disclose those details promptly to the solicitor;

(j) It is not suggested that any of the exceptions in s 312 of the LPA applied in the present case. It is noted that in s 315 written disclosures to a client must be expressed in clear plain language. There is an ongoing obligation to disclose in writing any substantial change to anything included in a disclosure: s 316. The effect of a failure to disclose is set out in s 317. In that circumstance, a relevant lawyer cannot seek payment of legal costs including in proceedings, until the costs have been assessed;

(k) Section 322 relates to the making of costs agreements which includes between a solicitor and a barrister: s 322(1)(c). Section 322 makes clear that a cost agreement must be written or evidenced in writing: s 322(2). However, a costs agreement may consist of a written offer that is accepted in writing by a solicitor or “by other conduct”: s 322(3). The note under s 322(3) of the Act indicates that acceptance “by other conduct” is not permitted for conditional costs agreements: see s 323(3)(c)(i) of the LPA. Section 322(4) notes the requirements that the offer forming part of a costs agreement must clearly state that it is an offer to enter into a costs agreement, that the client may accept it in writing or by other conduct and the type of conduct that will constitute acceptance;

(l) Except in the case of sophisticated clients, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment: s 322(5);

(m) Conditional costs agreements are covered by s 323 of the LPA. Conditional costs agreements are defined in s 302 of the LPA as meaning “a costs agreement that provides that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate, as referred to in section 323...” Conditional costs agreements are what are alleged by the defendant in the present case. Conditional costs agreements are permissible except in limited circumstances which are not relevant here: s 323(1) and (2) of the LPA;

(n) Section 323(3) provides that a conditional costs agreement must set out the circumstances that constitute the successful outcome of the matter to which it relates and may provide for disbursements to be paid irrespective of the outcome of the matter and must be in writing in clear plain language. Where the conditional costs agreement is between a solicitor and a barrister it need not be signed by the solicitor: s 323(3) and (4). Similarly, the requirement for the conditional costs agreement to be signed by a client does not apply to a conditional costs agreement made with a sophisticated client such as a bank, government department or insurance company. The purpose of this is that a sophisticated client which includes a solicitor is taken to be able to understand the nature of the conditional costs agreement. The importance of the requirement for a conditional costs agreement to set out the circumstances that constitute the successful outcome of the matter to which it relates and the requirement for it to be in writing were emphasised;

(o) A costs agreement that contravenes or is entered into in contravention of any provision of ss 322-328 is void: s 327(1). However, legal costs under a void costs agreement are recoverable following an assessment in which the fair and reasonable value of the legal services provided are assessed: s 327(2) and s 319;

(p) Legal costs cannot be recovered unless a bill has been served by the relevant law practice or practitioner. The Act has requirements in relation to bills: ss 331-334. A costs assessment is covered by Division 11 of the LPA in which there are detailed provisions. This includes an application for a costs assessment by a law practice retaining another law practice and by a law practice giving a bill: ss 351-352 of the LPA;

(q) It is noted that the effect of a costs agreement subject to certain provisions is that a costs agreement may be enforced in the same way as any other contract: s 326;

(r) The importance of having a valid costs agreement is emphasised by the fact that a cost assessor must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if a relevant provision of the costs agreement specifies the amount or a rate or other means for calculating the amount of the costs and the agreement has not been set aside: s 361 of the LPA. A costs assessor may have regard to a costs agreement but is not bound by the rates specified in the costs agreement: s 365(1). Counsel for the plaintiff emphasised that what appears to be argued on the pleadings by the defendant is a conditional costs agreement with oral terms. He submitted that a conditional costs agreement cannot have oral terms and must be in writing and must set out the circumstances that constitute the successful outcome of the matter to which it relates: s 323(3) of the LPA. Reliance was placed on the decision in the Supreme Court in WKA Legal Pty Ltd v Gleeson [2018] NSWSC 318 where Kunc J, in an application to restrain a costs assessment from continuing, concluded that proceeding on the papers in an assessment would not afford the parties procedural fairness: at [29]. At [33] Kunc J stated as follows:

“[33] Fifth, and again not in and of itself a determinative consideration, but nevertheless informing the exercise of the Court’s discretion, I am unable to identify any material prejudice to Mr Gleeson in not being permitted to pursue the Assessment. In particular, I found Mr Gleeson’s legal contention in the Assessment to be rather odd. This is because Mr Gleeson’s primary case (in both the Assessment and the Local Court Proceedings) is that the relevant costs agreement contained both written and oral terms. If that is correct, then it is not a costs agreement under the Act because s 322(3) provides that “a costs agreement must be written or evidenced in writing”. Mr Gleeson’s counsel, to maintain the consistency of his client’s position, had to concede that, in pressing for the Assessment to continue, Mr Gleeson had to accept that the costs assessor might find that there was no costs agreement under the Act.”

Counsel for the plaintiff in particular relied on the view of Kunc J that a costs agreement is not a costs agreement under the LPA where it allegedly contains both written and oral terms because s 322(3) provides that “a costs agreement must be written or evidenced in writing”. This is a fortiori in the case of an alleged conditional costs agreement under s 323 of the Act. It was submitted in opening that the alleged conditional costs agreement put forward on the pleadings by the defendant could not be valid but is void as the requirements of s 323 of the Act had not been complied with.

Evidence on behalf of the plaintiff

The plaintiff read three affidavits of Mr Kenneth Harrison, solicitor, sworn 27 October 2017, 22 December 2017 and 12 February 2018. In the first affidavit sworn 27 October 2017, Mr Harrison, who is the solicitor for the plaintiff, states that he acted for the plaintiff in regard to the assessments of the tax invoices which the plaintiff rendered to the defendant Gells in various matters. Mr Harrison states that on 19 October 2016 he lodged various applications for costs assessments on behalf of the plaintiff. This process was undertaken initially as a result of certain defences which had been raised by the defendant. Mr Harrison, in the exhibit to his 27 October 2017 affidavit, exhibits the relevant documents relating to the four cost assessments which were undertaken, one of which is no longer relevant, being that related to the client Wong. The other three assessments all relate to the Steiner matters. The first relevant assessment related to bills forwarded by the plaintiff to the defendant arising from a disclosure letter dated 16 May 2012 (affidavit exhibit page 70). The disclosure letter on the letterhead of the plaintiff is addressed to Mr Stephen Noss and is headed: “Re: John Steiner - Strang and Tang: The Estate of Dorothy Steiner - Further provision claim under the Succession Act 2006 (NSW): Application for interim distribution from Estate - Supreme Court of New South Wales”. The disclosure letter purports to be made under the LPA and is directed to Gells Lawyers. The costs agreement terms provide in paragraph 1: “This agreement is between you and me only and your client is not a party to it”. The letter provides in paragraph 2: “This agreement commences when, after having received this document from me: you give me any work or further work to do in the matter and, upon that commencement, this agreement applies to any work I have done in the matter prior to that commencement”. It is clear from the bills later sent, that work was completed by the plaintiff after the date of the letter. The letter provides that the plaintiff will send to Gells a memorandum of fees for his costs from time to time at his discretion or upon Gells' request. Paragraph 6(ii) of the letter terms provides: “You will pay the costs within thirty (30) days from the date on which I send my memorandum of fees to you” (exhibit page 71). It is stated in paragraph 10 of the letter that an estimate of legal costs cannot be given. There is no mention in the letter or the written agreement, which the letter is a part of, that the work was to be completed by the plaintiff on a conditional or speculative basis. Also included in relation to the first costs agreement are the following relevant documents: (a) A certificate of determination of costs issued on 10 May 2017 and sent on 16 June 2017 by the costs assessor which provides that the balance owing by Gells to the plaintiff is $23,632.09 (exhibit page 28);

(b) A statement of reasons from the cost assessor. This includes a determination by the costs assessor that proper disclosure of the plaintiff's fees and costs was made by the letter dated 16 May 2012 and was sent to Gells. It is also stated that Gells continued to instruct the plaintiff after the cost disclosure was issued and hence a cost agreement existed between the parties. The assessor found that the terms of the costs agreement were fair and reasonable and that the bill was drawn in accordance with the terms (exhibit pages 29-31);

(c) A certificate of determination of costs of costs assessment in the sum of $1,503.26 which was to be paid by Gells. This was issued on 10 May 2017 and was sent on 16 June 2017 (exhibit page 32);

(d) The submissions of the parties (exhibit pages 33-44 and 49-52);

(e) The invoices in question (exhibit pages 59-69). These invoices cover the period from 22 April 2012 to 28 May 2013. The second relevant assessment relates to a disclosure letter dated 5 July 2012 from the plaintiff to the defendant addressed to Mr Michael Coffey and headed: “Re: John Steiner and Robyn Webster: The Estate of Dorothy Steiner - Application for appointment of administrators in respect of proceedings in Utah in right of Maggie Sottero Designs LLC share sale agreements with L Midgley Irrevocable Trust and Lesley Webster Irrevocable Trust: Supreme Court of New South Wales proceedings”. The disclosure letter is in similar terms to the first matter. It is clear that it amounted to a costs agreement as the defendant gave further work to the plaintiff to do after the letter was sent. A determination by the assessor was made in relation to the matter, who found that there was no sum owing by Gells to the plaintiff: Certificate of Determination of Costs issued on 1 May 2017 (exhibit page 90). There was a Certificate of Determination of Costs of Costs Assessment which found that Mr Jefferis was to pay the sum of $900 for the costs (exhibit page 91). The memoranda of fees show that work was completed from 15 June 2012 by the plaintiff (exhibit page 111). The third relevant matter relates to a costs disclosure letter dated 16 November 2014 from the plaintiff to the defendant addressed to Mr Coffey. That letter is headed: “Re: Steiner - Strang and Tang and Ors - Summons seeking relief in relation to Assets of the Estate: Supreme Court of New South Wales matter number: 2014/10747”. The disclosure letter further provides: “Thank you for the brief in the above matter relating to the Summons issued her [sic] by Mr Steiner claiming in respect of various aspects of the Estate of his late mother, where there is some issue as to whether the Executors have acted appropriately in getting in assets of the Estate.” The letter is in similar terms to the disclosure letter in the previous two matters. The 16 November 2014 letter from Mr Jefferis does provide an actual estimate of fees in the matter to be in the vicinity of $16,000-$22,000 to the completion of the matter (exhibit page 177). Again, there is no reference to the brief being on a speculative or conditional basis. The documents in the exhibit to the affidavit include: (a) A certificate of determination of costs issued on 7 May 2017 and dated and sent 16 June 2017 providing that Gells was to pay the plaintiff the sum of $44,859.46 (exhibit page 142);

(b) A Certificate of Determination of Costs of Costs Assessment providing that Gells was to pay to the plaintiff the costs of $1,796.09 which was issued on 7 May 2017 and sent on 16 June 2017 (exhibit page 143);

(c) The statement of reasons of the assessor includes a consideration of three invoices and related documents. It was accepted by the assessor that an appropriate costs disclosure was made by the plaintiff to the defendant dated 16 November 2014. It was determined that as Gells instructed the plaintiff thereafter a costs agreement was made between the parties. The assessor found that the terms of the agreement were fair and reasonable and that the bills were drawn in accordance with the terms (exhibit pages 144-147);

(d) Submissions were included from both parties as well as the costs assessment application with the related invoices (exhibit pages 164-174). In his affidavit sworn 22 December 2017, Mr Harrison gives the background to the proceedings including that on 7 January 2016 the plaintiff commenced these proceedings against the defendant Gells for unpaid fees in four matters (paragraph 4). Mr Harrison again refers to the costs assessment process which was undertaken (paragraphs 6-10). The various Certificates of Determination issued by the costs assessor are referred to and exhibited (paragraphs 15-21). It is stated that neither the plaintiff nor the defendant filed and served an application for review of any of the cost assessor’s determinations or any related legal proceedings (paragraph 22). It is stated by Mr Harrison that the plaintiff filed and served a Further Amended Statement of Claim on 1 July 2017 which incorporated details in relation to the assessments (paragraphs 23-24). In his third affidavit sworn 12 February 2018, Mr Harrison corrects an aspect of his earlier affidavit and notes that the plaintiff paid the costs in three of the matters even though the defendant was obliged under the determinations to pay those costs (paragraph 4). Filing fees are also noted as being paid by the plaintiff (paragraph 6). Mr Harrison was not required for cross-examination.

Evidence on behalf of the defendant

Mr Michael Coffey

In support of its case, the defendant read the affidavit of Michael Gerard Coffey sworn 4 May 2018. The affidavit: (a) Notes that Mr Coffey is the solicitor for the defendant Gells and a director of it;

(b) Provides Mr Coffey's professional background including that he has undertaken considerable advocacy work in the course of his career as a solicitor (paragraphs 7-10);

(c) States that he became familiar with the practice of claims under the principles of the previous Family Provision Act . Mr Coffey states that he observed that “many barristers who practised in the family provisions and succession areas would accept work on a contingency basis for plaintiffs claiming further provision from an Estate” (paragraphs 24-25). Mr Coffey states that over the years he has briefed a number of counsel for plaintiffs and defendants in family provision matters and that the other counsel briefed in the Steiner matter were briefed “on a contingency basis” (paragraph 27);

. Mr Coffey states that he observed that “many barristers who practised in the family provisions and succession areas would accept work on a contingency basis for plaintiffs claiming further provision from an Estate” (paragraphs 24-25). Mr Coffey states that over the years he has briefed a number of counsel for plaintiffs and defendants in family provision matters and that the other counsel briefed in the Steiner matter were briefed “on a contingency basis” (paragraph 27); (d) States that Stephen Noss, solicitor, became a consultant to the defendant in 2007 and was an experienced practitioner having been admitted to the Supreme Court in about 1975. Mr Coffey states that whilst at Gells, Mr Noss had carriage of his own litigation matters and matters including family relationships and family law cases. Mr Coffey states that Mr Noss left Gells in mid-2016 and that he was friendly with the plaintiff Mr Jefferis (paragraphs 29-34);

(e) Mr Coffey gives evidence in relation to his instructions from Mr Steiner received in March 2012 in relation to the Estate of the late Dorothy Steiner, his mother. It is noted that under the terms of Mrs Steiner's will, John Steiner received a bequest of $2 million and was one of two residuary beneficiaries of the Estate with his sister Robyn Webster. Mr Coffey exhibits a copy of the will to the affidavit (paragraphs 36-37);

(f) Mr Coffey states that he was on leave between 14 April and 6 May 2012 and that Mr Noss had carriage of the Steiner claim between 18 April and mid-May 2012. Mr Coffey exhibits to his affidavits various emails passing between Mr Noss and the plaintiff in April-May 2012 (paragraphs 36-40);

(g) Mr Coffey states that in May 2012 and at all material times Mr Steiner lived in Townsville and was under extensive pressure from his creditors to pay money. Mr Steiner had various creditors at the time. A decision was made to make an application for an interim award of family provision on behalf of Mr Steiner. The plaintiff Mr Jefferis was briefed as the barrister on the application for Mr Steiner (paragraphs 41-44);

(h) Mr Coffey gives evidence that on the Gells file was a copy of a memorandum which Mr Noss wrote which he put on the file. The note states: “Richard Jefferis barrister will do on spec”. The memorandum is exhibited to Mr Coffey's affidavit. He states that he read the handwritten memorandum and he recognised it to be in the writing of Mr Noss. Mr Coffey states that before he sent a brief to the plaintiff he had a conversation with Mr Noss about the case. Mr Coffey says that had he been aware that the plaintiff was not prepared to do work on a contingency basis he would not have briefed the plaintiff and that there were other barristers he could brief on a contingency basis as counsel (paragraphs 45-46);

(i) Mr Coffey states that on 10 May 2012 Gells sent Mr Steiner a letter and costs disclosure document which he exhibits. This also does not appear expressly to be on a conditional or speculative basis as stated in the document (paragraph 48);

(j) Mr Coffey provides the history of the Steiner matter in his affidavit (paragraph 50 and following);

(k) In May 2012 Gells sent to Mr Steiner a letter enclosing the plaintiff’s costs disclosure document and costs agreement document and Gells’ trust account statement (paragraph 68);

(l) In relation to the various matters, Mr Coffey repeats that had he been aware that the plaintiff was not prepared to do work on a contingency basis he would not have briefed the plaintiff (paragraph 76);

(m) Mr Coffey gives details of interim distributions made to Mr Steiner following appearances by the plaintiff. On 17 July 2012, Justice White ordered an interim distribution to Mr Steiner of $300,000 (paragraph 80);

(n) Evidence is given by Mr Coffey in relation to the plaintiff rendering various invoices and some payments being made to the plaintiff (see paragraphs 81-86);

(o) Mr Coffey notes that the plaintiff did not demand payment for more of his invoiced fees (paragraph 89);

(p) Mr Coffey gives evidence of a meeting on 9 October 2012 between the plaintiff, Mr Steiner and Mr Coffey at the plaintiff's chambers in which the discussion included a discussion in relation to Mr Steiner's dire financial circumstances. Mr Coffey states that during the meeting Mr Steiner said to the plaintiff and him words to the effect: “The judge better grant my application for money or I cannot pay you”. Mr Coffey understood Mr Steiner to mean by the use of the word “you” his lawyers, and noted that the plaintiff did not reply to Mr Steiner or say anything to Mr Coffey about the terms of his retainer (paragraph 99). Mr Coffey states that he relied upon the lack of reply from the plaintiff as an acknowledgement of his understanding that his retainer was that he was doing work on a “spec” or contingency basis. Mr Coffey says that if he had understood the plaintiff was not doing the matter on a contingency basis he would have ceased the retainer (paragraphs 98-100);

(q) Mr Coffey gives evidence of further part distributions from the Executors to Mr Steiner including one of $85,000 on 5 April 2013 (page 110) and on 20 June 2013 in the sum of $250,000 (page 116). Mr Coffey states that on 23 June 2014 Rein J ordered a further distribution of $50,000 to Mr Steiner (paragraph 132);

(r) Further references are made to part payments made to the plaintiff in respect of his fees. The absence of complaint from the plaintiff is noted (paragraphs 135-139);

(s) Further appearances by the plaintiff and Mr Blackburn Hart SC on behalf of Mr Steiner instructed by Mr Coffey are referred to (paragraphs 144-148);

(t) Mr Coffey gives evidence of the plaintiff appearing on a Notice of Motion for a further interim distribution from the estate before Justice Ball (paragraphs 152-157). This application was rejected;

(u) The final hearing of the application for family provision by Mr Steiner was heard by Justice Kunc in the Supreme Court in 2017 and his Honour handed down his reasons for judgment on 23 April 2018. Kunc J indicated that further provision should be provided to Mr Steiner under the will of his late mother (paragraphs 166-168). I have already referred to some of the more important documents which are exhibited to Mr Coffey's affidavit. These include: (a) The will of the late Dorothy Steiner which sets out the bequests to Mr Steiner (exhibit pages 1-5);

(b) Initial email correspondence between Mr Noss and Mr Jefferis in May 2012 that does not refer to the brief being on a speculative or conditional basis (exhibit pages 6-9);

(c) Various documents referring to Mr Steiner's urgent need for money and for an interim payment (see for example the letter dated 1 May 2012 which commences at page 18 of the exhibit). This letter included a request for money to fund Mr Steiner's current legal fees (exhibit page 24);

(d) Correspondence from Mr Steiner in relation to briefing a barrister. This does not refer to the brief being on a speculative basis (see email dated 8 May 2012 at exhibit page 28);

(e) The memorandum referred to above, which is apparently in Mr Noss' handwriting, which states: “Richard Jefferis barrister will do on spec” (exhibit page 29);

(f) The letter from Mr Coffey to Mr Steiner attaching Gells’ costs disclosure letter which, as indicated above, does not state the retainer is to be on a speculative basis (exhibit pages 30-34). The letter includes a notation of Gells’ rights to seek interest if unpaid costs are not paid within 30 days of receipt by Mr Steiner of a bill of costs from Gells. The letter refers to the possibility of an engagement of another law practice including for advocacy services. There is no reference to a speculative or conditional costs agreement in this paragraph (exhibit page 33);

(g) There is an email dated 18 May 2012 from Mr Jefferis to Mr Coffey suggesting an initial amount for an interim distribution of $475,000 which included $50,000 for legal expenses (exhibit page 39);

(h) The letter from Mr Coffey to Mr Steiner enclosing Mr Jefferis' costs disclosure and costs agreement document (exhibit page 47). The specific costs disclosure letter and agreement are not identified but only the first agreement dated 16 May 2012 was in existence at this time;

(i) Various letters relating to part payment of the plaintiff's fees are included. None of these state that the brief is on a speculative basis (see for example exhibit page 51);

(j) There is an email dated 30 May 2013 from the plaintiff to Mr Coffey which states: “Please find enclosed my memorandum of fees for attendances in this matter since July 2012” (exhibit page 71);

(k) There is extensive documentation showing the complexity of some of the issues in the legal proceedings involving Mr Steiner. Some of these are set out in an email message from the plaintiff to Mr Coffey dated 30 April 2014 (exhibit page 97);

(l) Mr Coffey also exhibits to his affidavit various Summons and affidavits filed in the various proceedings. These affidavits primarily relate to the dire financial circumstances of Mr Steiner, his lack of income, the health issues relating to himself and his wife and the fact that he was being pressed by numerous creditors including in relation to the mortgage on his residence. At this time Mr Steiner was in his mid-60s. The main Summons in the Supreme Court sought both interim and final relief in relation to family provision payments (see exhibit “MC T2” pages 1-5);

(m) One factor which is not given prominence in the affidavits from Mr Steiner is his obligations to pay legal fees to the defendant and the plaintiff. The affidavits focus on his own requirements for living expenses and to meet his other various liabilities (see exhibit “MC T2” at pages 19-20). There is a similar lack of reference to legal fees’ obligations in affidavits prepared by Mr Coffey (see exhibit “MC T2” at pages 26-28 and 40-41). An affidavit of Mr Steiner sworn 9 October 2012 does refer to the use of some funds advanced to him including some of the $300,000 to meet “some of my legal fees” (exhibit page 50, paragraph 3). There is no reference in the application for further payments from his mother's estate by Mr Steiner to it being used to pay legal fees (exhibit page 51, paragraph 11). See also Mr Steiner's affidavit sworn 18 March 2013 at paragraph 6 (exhibit page 59). Mr Coffey gave further oral evidence in chief with the leave of the court. He was directed to paragraph 47 of his affidavit sworn 4 May 2018. Mr Coffey stated that he returned from leave by about 8 May 2012. He said he read the Steiner file to update himself as to what had occurred. He said he had a conversation with Mr Noss who came to see him. Mr Coffey states that Mr Noss said to him words to the effect: “We need to brief counsel. I have spoken to Richard Jefferis, he’s prepared to do it “on spec””. Mr Coffey then said “Okay” and he wrote to Mr Steiner with Gells’ costs letter: see T77.20. Mr Coffey was subject to cross-examination by lead counsel for the plaintiff. The cross-examination of Mr Coffey extended to his understanding of a number of relevant provisions in the Legal Profession Act 2004. Mr Coffey agreed that as an experienced solicitor he knew in general terms for many years prior to the events giving rise to the current dispute of his obligations as set out in s 311 of the LPA as a solicitor to make disclosure to a client in relation to costs: T115.9. He also agreed that he knew of it being a normal part of practice to send a written document to a client which addressed the amount by which his firm would be remunerated: T115.14. Mr Coffey agreed that he was familiar with the obligations to disclose costs to a client in general terms as set out in s 309 of the LPA: T115.36. In relation to s 310 of the LPA, Mr Coffey agreed that a solicitor had an obligation to disclose to a client how much a barrister briefed by the solicitor on behalf of the client proposed to charge for their legal services: T116.9. Mr Coffey was taken to paragraph 48 of his 4 May 2018 affidavit, in which he states that on 10 May 2012 Gells sent to Mr Steiner a letter and costs disclosure document. He agreed that these were the documents at Court Book 428 and following: see Exhibit “MC T1” to Mr Coffey’s affidavit. Mr Coffey agreed that the document commencing at Court Book 429 was the costs disclosure document of Gells. Mr Coffey agreed that this was sent to Mr Steiner partly because of the obligations of Gells under ss 309 and 311 of the LPA: T116.30. In re-examination, Mr Coffey said that the documents were also partly sent to set up the contractual relationship between the client and Gells and to inform the client of the terms of the retainer with Gells: T130.6. Mr Coffey agreed that there was no reference in the costs disclosure letter and document to counsel's fees apart from the reference in paragraph 11 of the costs disclosure document to the possibility of the firm retaining another law practice such as a barrister who would be briefed for the client: T116.34. Mr Coffey was taken to an email dated 18 May 2012 from Mr Jefferis, the plaintiff, in which Mr Jefferis suggested an amount to be sought from the Supreme Court on behalf of Mr Steiner as an interim distribution and which included “5. $50,000 being for legal expenses for 12 months – this matter and the appeal in Queensland”: T117.22; T117.43. Mr Coffey agreed that this email was received after the conversation between Mr Jefferis and Mr Noss: T117.26. Mr Coffey stated that “the plan” at that time was to use part of the interim distribution to fund future legal expenses for the work he and Mr Jefferis were doing: T117.49. This email and Mr Coffey’s evidence was relied on by the plaintiff as being inconsistent with a conditional costs agreement. If the lawyers were acting conditionally, particularly Mr Jefferis, why would $50,000 be needed for legal expenses? It was submitted this could not be explained away as applying to filing fees and photocopying costs only. Mr Coffey was taken to paragraph 68 of his 4 May 2018 affidavit where he states that on 25 May 2012 Gells sent Mr Steiner a letter enclosing Mr Jefferis' cost disclosure document and costs agreement and a Gells Trust Account statement. The letter is at page 47 of Exhibit “MC T1” to Mr Coffey's affidavit: Court Book 445; T118.18. Mr Coffey agreed that neither of the enclosures to the 25 May 2012 letter were exhibited to his affidavit following the letter: T118.23. The enclosures as sent by Gells with the letter dated 25 May 2012 were confirmed by Mr Coffey and became part of Exhibit A in the proceedings: T119. Mr Coffey agreed that part of the reason for sending the letter at Court Book 445 with the document from Mr Jefferis was to comply with Gells’ obligations in ss 310-311 of the LPA: T120.22. In re-examination, Mr Coffey said that the other reason was to disclose to Mr Steiner the general terms of retainer of Mr Jefferis as sent by him to Gells. This answer was heavily relied on by the plaintiff. It was submitted that it was inconsistent with the defendant’s case. Either what was sent by Mr Coffey was misleading to his knowledge or Mr Jefferis had an unconditional costs agreement as reflected in the document sent by Gells to Mr Steiner. Mr Coffey agreed that Mr Jefferis forwarded a number of letters to him in relation to the payment of fees: T120.28. Letters from Mr Jefferis in relation to fees became Exhibit B in the proceedings. Mr Coffey said he did not recall receiving the one dated 16 June 2015 (T120.36) but accepted that the letter from Mr Jefferis dated 16 June 2015 which was part of Exhibit B was correctly addressed to him. Mr Coffey agreed that the other letters were sent by Mr Jefferis to him. The letters cover a period from 16 June 2015 to 25 August 2015. The letters are ones in which Mr Jefferis, in summary, referred to fees alleged to be owing to him from Gells and requested payment of part of them or a response from Gells in relation to the issue of payment. Mr Coffey agreed that a firm of solicitors named KeyPoint Law had taken over the handling of Mr Steiner's matters from Gells after Mr Coffey had ceased acting for Mr Steiner: T122.2. A letter from Mr Coffey to Ms Ross-Maranik dated 28 March 2017 became part of Exhibit C in the proceedings and made reference to certain legal costs and disbursements said to be outstanding to Gells as well as referring to certain invoices from Counsel, including the plaintiff, which were said to be partly unpaid. The amounts unpaid concerning Mr Jefferis referred to in the 28 March 2017 letter were $27,460.07 and $41,031.46. The letter included the following comment: “Payments for professional fees came from interim distributions”. Mr Coffey stated that according to his calculations the balance of the fees to Mr Jefferis not stated to be unpaid had already been paid by Gells: T124.35. The plaintiff relies on this letter. He submits that if the costs agreement between Gells and him was conditional then there would have been no reason for Gells to have partly paid Mr Jefferis’ fees. Mr Coffey was then asked questions in relation to paragraphs 16-19 of the Defence and the Amended Defence filed by the defendant in the proceedings. Mr Coffey agreed that paragraphs 16-19 summarised in part the allegations concerning the conversation between Mr Jefferis and Mr Noss as had been communicated to Mr Coffey: T125.27. Mr Coffey said that he knew Mr Noss had a conversation with Mr Jefferis and was aware of what he regarded as the substance of the conversation as he had spoken to Mr Noss: T126.10. Mr Coffey agreed that between the swearing of the affidavit verifying the Defence and the swearing of the affidavit verifying the Amended Defence he had discussed with Mr Noss the nature and content of the evidence that he would give in relation to the conversation he had had with Mr Jefferis: T126-127. This was particularly in relation to the allegation in paragraph 16 of the Amended Defence: T127.13. Mr Coffey agreed that on 18 June 2018 on the first day of the hearing, that he had spoken with Mr Noss although he could not recall whether it was in person or by telephone: T127.45. He denied that Mr Noss had informed him that what was pleaded by the defendant at paragraph 16 of the Defence was incorrect: T128.11. In answer to questions from the court, Mr Coffey confirmed that the cost disclosure document forwarded with his 10 May 2012 letter to Mr Steiner did not refer to the retainer being conditional: T129.21. He also stated that his understanding was that the cost disclosure document of Mr Jefferis which he sent to Mr Steiner did not include all the terms of the arrangement between Mr Jefferis and Gells: T130.31. The plaintiff relied on this answer. It was submitted that either Mr Coffey sent an agreement which was wrong and thus it was misleading or he had sent a document which was unconditional and properly reflected the true position between Gells and Mr Jefferis.

Mr Stephen Noss

Mr Noss was not called as a witness by either party. The plaintiff submitted that a Jones v Dunkel inference should be drawn against the defendant in relation to Mr Noss. The defendant said a Jones v Dunkel inference should be made against Mr Jefferis as the plaintiff is a friend of Mr Noss. In the light of the evidence, particularly the evidence at T126-128, in my view I am able to draw that inference against the defendant and should draw it. Mr Noss was previously a consultant at the defendant firm for nine years. For part of the early relevant period, he had day to day carriage of Mr Steiner’s matter. Mr Noss was obviously willing to speak to the defendant in relation to his evidence and did so. He was a crucial witness in relation to the early May 2012 conversation with Mr Jefferis and paragraph 16 of the defendant’s Amended Defence. Prior to his conversation with Mr Coffey and counsel for the defendant, the defendant proposed to call Mr Noss as a witness in its case: T72.28; T77.46; T79.26; T93.26-.32; T105.38-.42; T110.30. The conversation was crucial to the defendant’s case as the plaintiff relied on the terms of the 16 May 2012 written agreement and denied a conditional costs agreement. The defendant’s claim that the file note was clear enough and this was the reason Mr Noss was not called should not be accepted. The file note was very short and undated. I accordingly am of the view that I should, in all the circumstances, draw the inference that the evidence of Mr Noss would not have assisted the defendants’ case: Payne v Parker [1976] 1 NSWLR 191 at 201-202; Newell v De Costi [2018] NSWCA 49 at [78]- [80]. However, my findings in the present case would have remained the same even if that inference had not been drawn in favour of the plaintiff. I am not willing to draw the Jones v Dunkel inference against the plaintiff through his failure to give evidence, even though Mr Noss and the plaintiff were on friendly terms. I would have considered drawing that inference if Mr Noss had given evidence as to the relevant conversation in May 2012 and Mr Jefferis had not given evidence. No evidence was led in reply on behalf of the plaintiff. No further evidence was led for the plaintiff/cross-defendant in relation to the Cross-Claim.

Submissions

Findings of fact

Taking into account the evidence and the submissions of the parties, I make the following findings of fact: (a) At all relevant times, Mr Jefferis was a barrister, Gells was an incorporated legal practice under the LPA and Mr Coffey was a solicitor and a director of Gells;

(b) Mr John Steiner has been a party from 2012 in a number of disputes in the Supreme Court of New South Wales in relation to his rights and entitlements concerning the will and the estate of his late mother;

(c) Mr Steiner consulted the defendant firm in March 2012 for legal advice in relation to his rights and potential causes of action; Coffey affidavit [36], Court Book 385;

(d) The plaintiff was one of the barristers being considered by the defendant firm to be retained to act for Mr Steiner;

(e) Mr Steiner was in dire financial circumstances despite paying a small amount on account of disbursements on trust to the defendant. He was left a substantial legacy under his late mother’s will but his entitlement to the entire legacy was unclear;

(f) As at early 2012, Mr Stephen Noss, solicitor, was a consultant to the defendant firm and was an experienced practitioner. Mr Noss, whilst at the defendant firm, had carriage of his own litigation matters including family law cases, family relationship matters and family provision cases. At all relevant times, Mr Noss was friendly with Mr Jefferis;

(g) Between 14 April and 6 May 2012 Mr Coffey, the relevant partner at the defendant firm acting for Mr Steiner, was on leave and Mr Noss had carriage of the Steiner matter;

(h) A decision was made by the defendant to make an application to the Supreme Court of New South Wales for an interim award of substantial family provision on behalf of Mr Steiner;

(i) Mr Noss had consulted Mr Jefferis in relation to the matter in April 2012: Court Book 404-417. Mr Noss had a conversation with the plaintiff, probably in early May 2012, in which he (the plaintiff) said he would do the matter “on spec”: Court Book 427. What was precisely said in the entirety of this conversation was not established on the evidence. It is not entirely clear what Mr Jefferis was referring to by saying this. At that time, an application for an interim award of family provision was contemplated. Mr Coffey gave evidence in relation to a conversation with Mr Noss when he returned from leave on this issue: affidavit paragraphs 45-46, Court Book 386. He also read the file note. The plaintiff submitted I should strike out Mr Coffey’s oral evidence at T77.20-.25. I reject that application. Although a challenge was made on the basis of hearsay, the evidence is admissible at least as evidence as to what was said. It must be considered in the light of the file note and paragraphs 45-46 of Mr Coffey’s affidavit. I will consider this issue further below;

(j) If Mr Coffey had been aware that the plaintiff was not prepared to do work on a contingency basis in early May 2012 he would not have briefed the plaintiff. There were other barristers he could brief who were likely to do the matter on a contingency basis as counsel. I accept Mr Coffey’s evidence on this issue;

(k) On 10 May 2012, Gells sent Mr Steiner a letter and costs disclosure document and agreement. This does not state that the retainer of Gells by Mr Steiner was to be on a conditional or speculative basis or say what any condition was: Court Book 428 and following. Despite this, the defendant asserts the agreement was conditional;

(l) A brief was sent by Gells to the plaintiff. The plaintiff read the brief and drafted an affidavit for Mr Steiner in the period 1423 May 2012: Court Book 230-1;

(m) Written disclosure letters and costs agreements were forwarded by the plaintiff to the defendant firm dated 16 May 2012, 5 July 2012 and 17 November 2014. The first was addressed to Mr Noss and the last two to Mr Coffey. The first was received by Gells on 17 May 2012: Exhibit A. None of the documents was conditional. I have set out the detail of the documents above;

(n) After each letter was sent, Gells continued to have Mr Jefferis undertake work on the matters thereby accepting the costs agreements. See Court Book 242 clause 2 in relation to the 16 July 2012 agreement. I reject the defendant’s submission that there was no acceptance by Gells of the 16 July 2012 costs agreement. That is inconsistent with the evidence establishing further work being requested of Mr Jefferis by Gells;

(o) On 16 and 18 May 2012 Mr Steiner paid Gells $500 on account of disbursements: Exhibit A. I accept the submission of counsel for the defendant that this does not by itself negate the possibility of a conditional costs agreement;

(p) On 18 May 2012 Mr Jefferis sent an email to Mr Coffey relating to the proposed interim application, recommending an amount to be sought which included $50,000 for legal expenses for the next 12 months: Court Book 437;

(q) By letter dated 25 May 2012, Mr Coffey on behalf of the defendant sent to Mr Steiner Mr Jefferis’ 16 May 2012 costs disclosure and costs agreement document which was not conditional: Court Book 445; Exhibit A. No comment was made by Mr Coffey about its non-conditional status or that in fact the arrangement was conditional;

(r) Various applications were made on behalf of Mr Steiner at various times for interim awards of family provision and substantial provision was awarded by the Supreme Court. The initiating summons was filed on 13 June 2012. Justice White ordered $300,000 to be paid to Mr Steiner on 17 July 2012: Court Book 389 paragraph 80. Justice Hallen ordered $85,000 to be distributed on 25 March 2013: Court Book page 457. Justice Rein ordered $50,000 to be paid on 23 June 2014: Coffey affidavit paragraph 132, Court Book 393. Some of the distributions were used to pay part of Gells’ and Mr Jefferis’ fees for acting for Mr Steiner at Mr Steiner’s instructions: Court Book 389 paragraphs 81-86;

(s) On 9 October 2012 a conversation occurred at a conference at which Mr Blackburn Hart SC, Mr Jefferis, Mr Coffey and Mr Steiner attended. I accept paragraphs 96-100 of Mr Coffey’s affidavit at Court Book 390-391 on this issue. He was not challenged on this evidence. There is no suggestion Mr Coffey communicated his private views as set out in paragraph 100 of his affidavit to Mr Jefferis. The defendant relies on this as being consistent with a conditional retainer;

(t) There were protracted proceedings before Slattery J in relation to disputed issues concerning the estate in 2014-15;

(u) In the period 16 June 2015 to 25 August 2015, Mr Jefferis forwarded various letters to Mr Coffey in relation to outstanding fees: Exhibit B. I am satisfied the first letter dated 16 June 2015 was sent and received. It was sent to the correct address;

(v) Certificates of determination of costs have been issued in relation to costs claimed by the plaintiff in acting for Mr Steiner including the costs of costs assessments. These are referred to above and are annexed to the affidavit of Mr Harrison sworn 27 October 2017;

(w) The various amounts in the certificates of determination of costs and certificates of determination of costs assessment relating to Mr Steiner’s first and third matters remain unpaid by the defendant to the plaintiff. The amount in the matter is agreed by the parties as being $71,790.90. Interest on that amount is claimed by the plaintiff;

(x) The final hearing of the application for family provision by Mr Steiner was heard by Justice Kunc in the Supreme Court in 2017 and his Honour handed down his reasons for decision on 23 April 2018. Kunc J decided that further provision should be provided to Mr Steiner in relation to the will of his late mother. Final orders have not been made by Kunc J ordering the amount of provision to Mr Steiner. A further hearing occurred concerning related matters before Kunc J: Webster v Strang; Steiner v Strang [No. 2] [2018] NSWSC 1411. His Honour did not make final orders as to payment of an amount of provision in that hearing. Further, his Honour stayed the orders relating to Mr Steiner pending an appeal: at [118]-[120].

Issues

The issues arising for consideration in the proceedings appear to be as follows: (a) Does the court have jurisdiction to hear the plaintiff’s claim?

(b) On the assumption that there was a conditional costs agreement between the plaintiff and the defendant as alleged, did any such agreement comply with the provisions of the LPA?

(c) If the answer to (b) is no, what are the consequences of that lack of compliance with the LPA?

(d) Did the parties enter into conditional costs agreements?

(e) If a conditional costs agreement was oral, what is the consequence of entry into subsequent written costs agreements which do not refer to any conditional costs agreement?

(f) Did the plaintiff waive his rights under the written costs agreements?

(g) Is the plaintiff estopped from relying on his rights under the written costs agreements?

(h) Did the plaintiff engage in misleading or deceptive conduct in breach of s 18 of the Australian Consumer Law?

Consideration

(a) Jurisdiction of the District Court to hear the matter

As stated above, the defendant submits that this Court does not have jurisdiction to hear the plaintiff’s claim in the present matter as set out in the Further Amended Statement of Claim. The action involves the plaintiff suing the defendant firm for legal fees for services provided under two costs agreements. It is submitted by the plaintiff that he is entitled to the payment of the fees and that there is no reason why the payment should not be made. It is claimed that this Court has jurisdiction to determine the plaintiff’s claim in debt under the costs agreements. The claim is an action in debt in the light, at least, of the issue of the certificates of determination as to costs relied upon. The District Court’s jurisdiction is statutory: Mahommed v Unicomb [2017] NSWCA 65 at [38]. The District Court’s primary grant of jurisdiction is found in s 44(1) of the District Court Act which provides as follows:

“44 Actions

(1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions:

(a) any action of a kind:

(i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and

(ii) in which the amount (if any) claimed does not exceed the Court’s jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise,

other than an action referred to in paragraph (d) or (e),

(b) (Repealed)

(c) any action brought to recover an amount not exceeding $20,000, which is the whole or part of the unliquidated balance of a partnership account, or the amount or part of the amount of the distributive share under an intestacy or of a legacy under a will,

(d) any motor accident claim, irrespective of the amount claimed,

(d1) any work injury damages claim, irrespective of the amount claimed,

(d2) any substituted proceedings within the meaning of Part 3A of the Civil and Administrative Tribunal Act 2013, so long as the amount (if any) claimed does not exceed the Court’s jurisdictional limit,

(e) any proceedings transferred to the Court under section 146(1) of the Civil Procedure Act 2005, irrespective of the amount (if any) claimed in those proceedings.

(2) Where the amount claimed in an action includes interest (being interest which the Court could, under section 100 (1) of the Civil Procedure Act 2005, order to be included in the amount for which it could give judgment), that interest shall be disregarded for the purposes of:

(a) determining whether the maximum amount for which the action is authorised by this Act to be brought has been exceeded or not, and

(b) determining whether or not the Court has jurisdiction to hear and dispose of the action.

(3) Where:

(a) an amendment to subsection (1) which is enacted after, or was enacted before the commencement of Schedule 3 to the District Court (Procedure) Amendment Act 1984 has or had the effect of increasing the amount specified in paragraph (a) or (b) of that subsection, and

(b) an action in which an amount of money is claimed is pending at the time when the amendment has effect or, as the case may be, an action in which an amount of money is claimed was pending at the time when the amendment had effect and has not been finally determined,

the Court may, on the application of the claimant, make an order altering the amount specified in the claim to an amount not exceeding that specified in paragraph (a) or (b) of that subsection, as in force immediately after the amendment has or had effect.”

The amount in issue here is clearly within the court’s jurisdiction. In Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; (2007) 231 CLR 531 the High Court considered s 44 of the District Court Act. The court held in a joint judgment as follows at paragraph 45:

“[45] For all these reasons, the appellant's construction must be rejected. Subparagraph (i) of s 44(1)(a) of the District Court Act must be construed as referring to actions which would have been assigned to the Common Law Division of the Supreme Court as at the time when the 1997 Amendment Act was enacted.”

The relevant amendment to the District Court Act referred to came into effect on 2 February 1998. An early consideration of the potential for Forsyth to cause problems for the District Court’s jurisdiction was by Judge Taylor SC in Abbott v Klein [2015] NSWDC 45 at [53]- [72] especially at [59]-[64]. In The NTF Group, above, Parker J stated as follows at paragraphs 42-46 where his Honour set out the relevant legislation and rules:

“[42] Section 44(1)(a)(i) was introduced in its current form into the DCA with effect from 2 February 1998. In Forsyth v Deputy Commissioner of Taxation [2007] HCA 8; (2007) 231 CLR 531, the High Court rejected the view that the provision operated in an ambulatory way so that the question whether a particular action would have been allocated to the Common Law Division is to be answered by reference to the provisions governing assignment in force at the time the claim is made. Instead, the High Court held that the District Court’s jurisdiction depends upon whether the action would have been assigned to the Common Law Division according to the assignment rules which existed as at 2 February 1998.

[43] The Supreme Court Act 1970 (NSW) (“SCA”) as at 2 February 1998 provided for the assignment of the business of the Court into a number of Divisions, including Common Law, Equity, and Commercial Divisions. The Act relevantly provided:

52 Arrangements for despatch of business

The business of the Court, other than the Court of Appeal, shall, for convenient despatch, be assigned in accordance with this Division.

53 Assignment of business

(1) Subject to the rules, there shall be assigned to each Division, other than the Family Law Division, the Administrative Law Division, the Criminal Division and the Commercial Division, all proceedings:

(a) which are required by or under any Act from time to time in force to be commenced, heard or determined in that Division or in the corresponding former jurisdiction, or

(b) which would have been commenced in the corresponding former jurisdiction if this Act had not been passed.

...

(3E) Subject to the rules, there shall be assigned to the Commercial Division all proceedings of a commercial nature which are required by or under any Act, or by or in accordance with the rules, from time to time in force to be commenced, heard or determined in that Division.

...

(4) Subject to the rules, there shall be assigned to the Common Law Division all proceedings not assigned to another Division by the foregoing provisions of this section.

[44] In relation to the Commercial Division, the Supreme Court Rules 1970 (NSW) (“SCR”) at the relevant time provided in Pt 14:

Assignment of business

2. (1) Subject to subrule (2), there shall be assigned to the Commercial Division proceedings in the Court:

(a) arising out of commercial transactions; or

(b) in which there is an issue that has importance in trade or commerce.

(2) Subrule (1) does not apply to any proceedings:

(a) assigned by the Act or by or in accordance with the rules or by or under any other Act to the Court of Appeal, the Equity Division, the Admiralty Division, the Family Law Division, the Protective Division, the Probate Division, the Administrative Law Division or the Criminal Division;

(b) which may be entered in the Construction List; or

(c) for defamation.

(3) In subrule (1), “issue” includes any question or issue in any proceedings, whether of fact or law or both, and whether raised by pleadings, agreement of parties or otherwise.

[45] Although the claim was a simple contractual claim in debt, it appears to me that the proceedings would not have been assigned to the Common Law Division. The principal claim in the proceedings is between two corporate entities and, on the face of it, the goods in question were leased for business purposes. Accordingly, the proceedings fall within the description of proceedings “arising out of commercial transactions” in SCR Pt 14 r 2(1)(a) and would have been assigned to the Commercial Division.

[46] Accordingly, the District Court would not have had jurisdiction. This is (as it seems to me) a surprising and unwelcome result. But I see no alternative to it given the decision in Forsyth and the wording of the rules at the relevant time.”

Accordingly, Parker J held that the District Court in that case did not have jurisdiction to hear what he described as a “simple contractual claim in debt”: at [45]. In Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWDC 160, Judge Taylor SC considered the jurisdiction of the court in a case where the plaintiff sought an amount under a guarantee for breach of a commercial lease. His Honour considered the authorities relating to jurisdiction at [3]-[14] and held that there was doubt whether the District Court had jurisdiction to deal with the matter. His Honour’s careful reasoning should be reviewed in detail. His Honour expressed the opinion in the case that a claim for damages under a commercial lease arises out of a commercial transaction, and that as at 2 February 1998, that was sufficient for the matter to be statutorily assigned to the Commercial Division of the Supreme Court and not to the Common Law Division: at [6]. Judge Taylor referred to New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 where the Court of Appeal stated at [71] as follows:

“[71] Mr Quinn’s focus is on the source of the debt claimed — whether one arising under statute as a consequence of a decision of a public body (the s 57(5) Housing Act claim) or one imposed by the Tribunal (which he described, incorrectly, as a “statutory fee” under the Residential Tenancies Act — T 14.9). That is not warranted by the terms of the Supreme Court Act or rules. Housing NSW’s “action”, for the purposes of s 44, is an action to recover monetary sums. That is the kind of action that is typically, and was at the relevant time, assigned to the Common Law Division. There is no reason to think that the underlying source of the debt should make any difference to that result.”

His Honour noted that no reference was made by the Court of Appeal to Part 14.2 of the Supreme Court Rules 1970 (NSW) as at 2 February 1998 in Quinn. In Mega-Top Cargo Pty Ltd v Moneytech Services Pty Ltd [2015] NSWCA 402 an issue was raised in relation to the jurisdiction of the District Court in a commercial matter in an action for money said to be owed. Leeming JA (with whom Gleeson JA and Emmett AJA agreed) stated as follows at [47]-[49]:

“[47] The gravamen of the pleading alleges a claim in debt arising from the terms of the contract between Mega-top and Moneytech, or alternatively arising out of the fact that Mega-top as agent paid taxes and charges on behalf of Moneytech. There are two qualifications to that. The first is that one paragraph in the pleading alleges that “the entitlement to GST ... is a credit, the value or amount of which it holds beneficially for Megatop”. The second is that the statement of claim seeks, in the alternative, equitable compensation. Neither the allegation of beneficial ownership nor the claim for equitable compensation would have withstood a strike-out application, and neither appears to have been advanced by Mega-top in any way at the trial. Those matters do not distract from essential accuracy of the description of the causes of action as described in Mega-top’s written submissions at trial:

Quite apart from principles of agency, the obligation for Moneytech to make restitution to Megatop is a common law obligation, arising from the fact of receipt of the payment itself.

[48] Mega-top’s claim for reimbursement of amounts paid by it as agent of, or for the benefit of, Moneytech, was a common law claim. It was, as French J observed in Re Clune; Ex parte Verge v Isabella Nominees Pty Ltd (in liq) (1988) 14 ACLR 261 at 266, either a claim in contract or quasi-contract. Mega-top’s claim to be repaid $233,989.62 was therefore an action within the jurisdictional limit of the District Court. That court’s jurisdiction is relevantly defined by s 44(1) of the District Court Act, which (omitting exclusions not presently relevant) is as follows:

[T]he Court has jurisdiction to hear and dispose of the following actions: (a) any action of a kind (i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court ....

[49] Section 44(1)(a) is to be construed in the manner indicated by Forsyth v DCT [2007] HCA 8; 231 CLR 531 at [45], which is to say, historically, as at 2 February 1998. Had the claim been brought in the Supreme Court in 1998, it would have been assigned to the Common Law Division, because claims for contract or quasi-contract were not specifically assigned to any other Division of the Supreme Court, and so, pursuant to s 53(4) of the Supreme Court Act 1970 (NSW) as it then stood, were assigned to the Common Law Division: see Forsyth at [29].”

Accordingly, the Court of Appeal held that this Court had jurisdiction in claims in contract or quasi-contract within the jurisdictional limit of the District Court. Again, the Court of Appeal did not consider Part 14.2 of the Supreme Court Rules 1970 as at 2 February 1998. In Nova 96.9 Pty Ltd v Natvia Pty Ltd, above, Rein J considered the jurisdiction of the District Court in a commercial matter. After a detailed consideration of jurisdictional issues, his Honour followed the approach of Parker J in The NTF Group case. For similar reasons, his Honour held that the District Court did not have jurisdiction in that matter which involved an action for fees said to be due pursuant to advertising contracts entered into by the parties. At [34]-[37] his Honour stated as follows:

“[34] It follows that, in my view:

(a) Parker J was, with respect, correct to consider whether the proceedings in NTF Group arose out of a commercial transaction without considering whether the proceedings involved an issue of importance in trade or commerce, and his Honour did not fail to take into account any relevant principle of statutory interpretation;

(b) Parker J’s conclusion that the proceedings fell within SCR Rule 14.2(1)(a), and hence, would not have been assigned to the Common Law Division, but rather to the Commercial Division, and hence, was not a matter in respect of which jurisdiction was conferred on the District Court by s 44 of the DCA, was correct.

(c) Taylor DCJ was, with respect, correct to follow and apply NTF Group; and

(d) The proceedings brought by Nova arise out of a commercial transaction, and hence, applying NTF Group, are not proceedings which the District Court has jurisdiction to hear.

[35] Like Parker J and Taylor DCJ, I regard the conclusions in NTF Group, Sapphire Suite and this case as to the limits of the District Court’s jurisdiction as a most inconvenient and unfortunate outcome for litigants in this State. If, as I understand may be the case, consideration is presently being given to legislative reform in this area, hopefully steps can be taken in the very near future to remove the lacuna identified.

[36] It follows that, in my view, there is a compelling reason to order, pursuant to s 140 of the CPA, the transfer of the District Court proceedings from the District Court to this Court.

[37] In relation to the second prayer for relief, namely, that the matter be transferred back to the District Court pursuant to s 146 of the CPA, it is necessary to consider the same issues to which I have already referred because an order can only be made pursuant to that provision if this Court is satisfied that the proceedings could properly have been commenced in the District Court. Obviously, in view of my conclusions expressed above, I am not satisfied that the proceedings could be properly have been commenced in the District Court. Therefore, it is not appropriate to make an order pursuant to s 146 of the CPA.”

The real issue is whether the matter involves an issue which is of “importance” in trade or commerce. As Part 14.2(3) makes clear the word “issue” when used in Part 14.2(1) includes “any question or issue in any proceedings, whether of fact or law or both, and whether raised by pleadings, agreement of parties or otherwise”. It appears to me that it is not a proper approach to characterise the current dispute as one of importance not in relation to trade or commerce but of importance in relation to the regulation of the legal profession. In my view, the matter is one of importance in trade or commerce as it involves the question of whether there can be oral terms qualifying an unconditional costs agreement between professionals. This would appear to be a matter of significance to the legal profession where there is no authority. Accordingly, in my view the proceedings do involve an issue that has importance in trade or commerce within Part 14.2(1)(b) of the Supreme Court Rules 1970 as at 2 February 1998.

The fact that there are complex issues involved in the proper construction of Part 14.2 including the meaning of “arising out of commercial transactions” and the role of Part 14.2(1)(b) of the Supreme Court Rules 1970, confirms my opinion that I should follow the decisions of the Court of Appeal on the question of jurisdiction of the District Court until the matter is clarified. For the above reasons, I find that this court has jurisdiction to determine the claim in debt in the Further Amended Statement of Claim. The defendant submitted that if I found a lack of jurisdiction I should only make findings on that issue and not determine the other issues in dispute. That is because a lack of jurisdiction finding is different to a finding on a factual question or that an element of a legal cause of action has not been established. As I have found that I have jurisdiction to determine the matter, it is unnecessary to deal with that argument. However, I would still have proceeded to determine the other matters to assist the Court of Appeal if the matter were appealed. Also findings of fact need to be made in order properly to exercise the court’s jurisdiction as to costs.

Contractual construction principles

The issues in this case include a consideration of the contractual position between the plaintiff and the defendant. It is important to set out some of the general principles relating to contractual construction. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7, the majority of the High Court said the following at paragraph [35]:

“[35] Both Verve and the Sellers recognised that this court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the com