Bechara trading as Bechara and Company v Bates

1. [1]

   THE COURT: On 27 May 2016 the Court, comprising Meagher and Payne JJA dismissed Ms Bechara’s amended summons seeking leave to appeal from a judgment and orders of Adamson J made on 29 October 2015.

2. [2]

   The orders of the Court were that the summons be dismissed with costs. Ms Bechara did not appear at the hearing on 27 May 2016 and was not present in Court at the time the orders were made. The respondent, Mr Bates, was present and appeared for himself as counsel.

3. [3]

   On 27 May 2016, the respondent, Mr Bates, made an oral application for a lump-sum costs order. The Court directed that he file written submissions by 4 pm on 10 June 2016 and that Ms Bechara respond to those written submissions by 4 pm on 24 June 2016. The Court indicated that it would determine the application on the papers. Given the importance of the matter and the increasing number of such applications, the Court was reconstituted comprising Beazley P, Meagher and Payne JJA to consider the application.

4. [4]

   In compliance with those orders submissions were filed by Mr Bates on 10 June 2016. An affidavit of service of Alix Calais, Managing Clerk at Bannister Law, the solicitor for the respondent, sworn 17 June 2016, was also filed.

5. [5]

   That affidavit establishes that:

   1. (1)

      on 30 May 2016 on behalf of the respondent Ms Bechara was made aware of the orders of the Court, both by email and by delivery of a letter to her business premises; and

   2. (2)

      on 10 June 2016 a copy of the respondent’s written submissions as to costs were delivered to the business address of Ms Bechara.

6. [6]

   No submission or other material has been filed by Ms Bechara.

7. [7]

   The Court is satisfied that its orders have been complied with and that the respondent has brought sufficiently to Ms Bechara’s attention the orders of the Court and the orders and submissions in relation to the present question.

8. [8]

   On 7 July 2016, the Court was informed that Ms Bechara had on 5 July 2016 been made bankrupt on a petition by a creditor.

9. [9]

   On 15 August 2016 Mr Bates made further written submissions, the effect of which was that this Court should reach the same result as the earlier decision in Wilkie v Brown [2016] NSWCA 128 at [49] about the present question.

Application for a lump-sum costs order

1. [10]

   The respondent’s application made orally on 27 May 2016 was for a lump-sum costs order to be specified in the gross sum $21,016.50 pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW). That sum comprised:

   1. (1)

      $8,916.50 for solicitors’ costs and disbursements (other than counsel’s fees); and

   2. (2)

      $12,000 for counsel’s fees for professional work performed by the applicant himself in opposing the summons seeking leave to appeal.

Section 98 of the Civil Procedure Act

1. [11]

   Section 98 of the Civil Procedure Act relevantly provides:

Should the Court exercise its discretion to make a gross lump-sum costs order pursuant to s 98(4)(c) of the Civil Procedure Act?

1. [12]

   The power to award a lump-sum should only be exercised when the Court considers that it can do so fairly between the parties and where an appropriate sum can be determined from the available materials: Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at 742-723 [21]-[22]; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123.

2. [13]

   The power may also be exercised where a party's conduct has unnecessarily contributed to the costs of the proceedings, especially where the costs incurred have been disproportionate to the result of the proceedings: Hamod v New South Wales [2011] NSWCA 375 at [818] per Beazley JA (Giles and Whealy JJA agreeing).

3. [14]

   A “broad brush” approach is appropriate. To require the same or similar level of detail as in a formal costs assessment would defeat the purpose of the lump sum order: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; [1999] FCA 673 at 5 [16]; Penson v Titan National Pty Ltd (No 3) [2015] NSWCA 121 at [7].

4. [15]

   The courts have typically applied a discount in assessing costs on a gross sum basis: Hamod v New South Wales at [814].

5. [16]

   Subject to considering the question of the barrister’s own costs in appearing for himself which is addressed below, the Court is satisfied that this is an appropriate case in which to make a lump-sum costs order. The applicant has litigated a number of interlocutory steps including in this Court since the statement of claim was filed in the Local Court on 27 May 2014. The applicant has been wholly unsuccessful.

6. [17]

   Those unsuccessful steps, together with the applicant’s breaches of court orders have increased the amount claimed in the statement of claim of $83,178.12 including costs to a total amount of $148,000, which is the amount the applicant was ordered by Emmett AJA on 8 March 2016 to pay into court, but did not pay.

7. [18]

   The Court is satisfied that the total costs of this litigation will become even more disproportionate if the costs are referred for assessment and a lump-sum costs order is not made. The reasoning in Hamod v State of New South Wales at [816]-[817] is apposite.

The solicitors’ costs and disbursements

1. [19]

   The Court received evidence in the form of an itemised tax invoice prepared by Bannister Law dated 26 May 2016 totalling $8,916.50 (including GST). That amount was comprised of $8,684.50 in professional fees and $232 in non-counsel disbursements. Work done by a senior solicitor was charged at $500 per hour exclusive of GST and by a paralegal at $300 per hour exclusive of GST. These rates seem, on their face, to be reasonable.

2. [20]

   The Court is entitled to take into account that if assessed the usual rule would be that only a proportion of total costs would be recovered. Having regard to the broad discretion available in making a lump-sum costs order the Court allows an amount of $5,000 on behalf of solicitors’ costs and disbursements as a lump sum under s 98(4)(c) of the Civil Procedure Act.

The barristers’ costs and disbursements

1. [21]

   A quite different question arises in relation to the fees charged by Mr Bates to Bannister Law, whose client was Mr Bates.

2. [22]

   As a general rule a self-represented litigant is unable to claim professional costs, even if they win their case. As the plurality observed in Cachia v Hanes (1994) 179 CLR 403 at 410-411, costs are awarded by way of indemnity or partial indemnity for professional legal costs actually incurred and were never intended to be comprehensive compensation for any loss suffered by a litigant, and in particular any loss of time.

3. [23]

   There is, however, a recognised (and somewhat controversial) exception in the case of a litigant in person who is a solicitor.

4. [24]

   That exception is usually known at the “Chorley exception”, a reference to London Scottish Benefit Society v Chorley, Crawford and Chester (1884) 13 QBD 872. In that case, based on the statute there under consideration, solicitors who were parties to litigation and did not retain another firm of solicitors to represent them were held to be entitled to claim their own professional costs as costs from the losing party, even though they had no liability to pay a solicitor for acting for them.

5. [25]

   The High Court accepted the “Chorley exception” in Guss v Veenhuizen (1976) 136 CLR 34. Guss was a case decided under s 26 of the Judiciary Act 1903 (Cth) which provided:

6. [26]

   In Guss Gibbs ACJ, Jacobs and Aickin JJ said at 51:

7. [27]

   Their Honours went on to cite with approval various passages of Brett MR and Bowen LJ in Chorley.

8. [28]

   The Chorley exception has been widely criticised over more than two decades: see Cachia at 411-412; Dobree v Hoffman (1996) 18 WAR 36 at 41 (Parker J); Khera v Jones [2006] NSWCA 85 at [3] (Mason P and Ipp JA); McIlraith v Ilkin (Costs) [2007] NSWSC 1052 at [16] (Brereton J); Murphy v Legal Services Commissioner (No 2) [2013] QSC 253 at [16] (Daubney J); and Beling v Sixty International SA (2015) 228 FCR 194; [2015] FCA 250 at [56] (Mortimer J).

9. [29]

   Nonetheless, this Court is bound by the decision in Guss, to the extent that current legislative provisions are materially similar to those considered by the High Court in that case.

10. [30]

    There is no authority of the High Court or an intermediate Court of Appeal as to whether the Chorley exception applies to a self-represented barrister. Unlike the cases concerning solicitors acting for themselves, this case concerns a barrister acting for himself as the client with an independent firm of solicitors briefing him.

11. [31]

    The following passages from the decision of the plurality in Cachia v Hanes provide a caution against extending the Chorley exception (at 412-414):

12. [32]

    There is some first instance authority suggesting that the Chorley exception should not be extended to barristers appearing for themselves. In Winn v Garland Hawthorn Brahe (No 1) [2007] VSC 360 Kaye J said (at [10]-[15]):

13. [33]

    In Murphy v Legal Services Commissioner (No 2) Daubney J said:

14. [34]

    On the other hand, there is some first instance authority that supports the extension of the Chorley exception to barristers acting on their own behalf. Ada Evans Chambers P/L v Santisi [2014] NSWSC 538 concerned an appeal from a Magistrate’s decision that the Chorley exception does apply to self-represented counsel. In refusing leave to appeal that decision Adamson J commented (at [29]):

15. [35]

    In Bechara v Bates (No 4) [2015] NSWSC 1722, the costs judgment arising out of the decision the subject of the application for leave to appeal in these proceedings, Adamson J granted Mr Bates a gross sum costs order in respect of an invoice that he raised which included the work he had done as counsel in his own case. Her Honour said (at [13]-[14]):

16. [36]

    In Wang v Farkas (2014) 85 NSWLR 390; [2014] NSWCA 29 Basten JA said the following at [29] after referring to the costs provision at s 26 of the Judiciary Act extracted above:

17. [37]

    In the present case s 98(1) of the Civil Procedure Act apples, and has been set out at [11] above.

18. [38]

    Section 3 defines “costs” and “ordinary basis” as follows:

19. [39]

    The definition of “ordinary basis” in s 3 of the Civil Procedure Act uses the phrase “legal costs”. That phrase is not defined in the Civil Procedure Act. The definition (of “ordinary basis” in s 3) directs attention to Division 3 of Part 7 of the Legal Profession Uniform Law Application Act 2014 (NSW). The phrase “legal costs” is not defined in that Act, and does not even appear in Division 3 of Part 7. However, Division 3 of Part 7 requires a costs assessor to determine what is a fair and reasonable amount of costs for the work concerned (s 76(1)). In making that determination the costs assessor may have regard to the factors in section 172(1) and (2) of the Legal Profession Uniform Law (NSW) (s 76(2)). It is only in that Act – the Legal Profession Uniform Law (NSW) itself, rather than the Legal Profession Uniform Law Application Act – that the phrase “legal costs” is defined, as follows, in s 6:

20. [40]

    As Basten JA noted in Wang v Farkas at [28], the introduction of the word “payable” in the definition of “costs” in the Civil Procedure Act may be a significant distinguishing feature from the provision the subject of the decision in Guss. It is also relevant that the definition in s 3 is exhaustive.

21. [41]

    Documents attached to Mr Bates’ submissions about costs in these proceedings indicated that Mr Bates, as client, instructed Bannister Law in two matters. The first (matter 143126) is the present proceedings. The second (matter 155353) involved bankruptcy proceedings against Ms Bechara.

22. [42]

    In relation to the present matter, Mr Bates was both client and barrister, both instructing and being instructed by Bannister Law.

23. [43]

    It is likely that there was a fees and costs disclosure agreement between him (as client) and Bannister Law in relation to the subject matter of the present case. At paragraph [10] of Adamson J’s judgment in Bechara v Bates (No 4) her Honour refers to a costs agreement between Mr Bates (as client) and Bannister Law dated 27 May 2014 (although her Honour’s statement cannot be treated as evidence of the existence of that fact: Evidence Act 2005 (NSW) s 91(1)).

24. [44]

    Mr Bates has not put before this Court any costs agreement between him (as barrister) and Bannister Law. The only evidence that may be taken to indicate the existence of a retainer as counsel are two tax invoices issued by Mr Bates to Bannister Law.

25. [45]

    The first tax invoice is dated 5 January 2016. It is for $7,612 (incl GST). It is annexed to the affidavit of Alix Calais (of Bannister Law) sworn on 19 February 2016. It bears the following notation:

26. [46]

    The first tax invoice also bore the following additional note:

27. [47]

    The second tax invoice is dated 27 May 2016. It is for $12,100 (incl GST). It is annexed to statutory declaration of Alix Calais (of Bannister Law) dated 27 May 2016. It bears the following notation:

28. [48]

    The second tax invoice also bore the following additional note:

29. [49]

    Both tax invoices refer to a “costs agreement applicable to this bill”. If there is such a costs agreement, it has not been tendered to this Court. As explained at [43] above, findings about these issues in other cases cannot be treated as evidence of the existence of that fact: Evidence Act s 91(1).

30. [50]

    There are many possible consequences of the absence of a fees and costs disclosure agreement in the present case. For present purposes it is sufficient to refer only to s 178(1) of the Legal Profession Uniform Law [1] which provides:

Consideration

1. [51]

   Returning to the significance of the introduction of the word “payable” in the definition of “costs” in the Civil Procedure Act, that word in ordinary parlance describes money or an amount which is liable or due to be paid by one person or entity to another.

2. [52]

   The question here is whether the introduction of the word “payable” in the definition of “costs” in s 3 has the effect that “costs” refers only to amounts which answer that description which are liable or due to be paid by one or other of the parties to the proceedings, and in relation to them. Such a liability will usually only arise between a party and their lawyer if there has been compliance by the lawyer with the relevant statutory rule – here either the Legal Profession Act or the Legal Profession Uniform Law.

3. [53]

   The binding application of Guss must take account of any statutory provision which is relevantly different from that considered by the High Court: Wilkie v Brown at [28].

4. [54]

   In Wilkie Beazley P (McColl and Gleeson JJA agreeing) noted that the definition of costs in the Civil Procedure Act is different from the previous definition in the Supreme Court Act 1970 (NSW) and is materially different from the provisions under consideration in Guss: at [49].

5. [55]

   The starting point of statutory construction is the language of the provision in the context in which it appears in the statutory scheme: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 381-384.

6. [56]

   The language of s 3 of the Civil Procedure Act and the context in which it appears in the statutory scheme support the conclusion that the introduction of the phrase “costs payable in or in relation to the proceedings” defines the subject matter of the scope or existence of the power.

7. [57]

   As Beazley P also noted in Wilkie at [42]:

8. [58]

   The definition of “ordinary basis” in the Civil Procedure Act presently refers to the costs assessment provisions in the Legal Profession Uniform Law Application Act. Previously, the definition referred to the equivalent provisions in the Legal Profession Act.

9. [59]

   Section 364 of the Legal Profession Act governed assessment of party and party costs ordered by a Court. It provides for assessment of legal costs only and speaks of legal costs being payable as a result of an order made by a court or tribunal: s 364(1).

10. [60]

    It requires a cost assessor to consider whether or not it was reasonable to carry out the work to which the costs relate; whether or not the work was carried out in a reasonable manner; and what is a fair and reasonable amount of costs for the work concerned: s 364(1)(a)-(c).

11. [61]

    Section 4 of the Legal Profession Act defined “costs” as requiring cross-reference to the term “legal costs” which in turn was defined as:

12. [62]

    A virtually identical definition of legal costs is now found in s 6 of the Legal Profession Uniform Law.

13. [63]

    In discussing this almost identical definition, Beazley P (McColl and Gleeson JJA agreeing) noted in Wilkie at [43] that:

14. [64]

    The statutory language now used is arguably inconsistent with the judicial rationale for Chorley prior to 2005, which was that a solicitor representing himself is entitled to be compensated not for fees which are payable to another solicitor, but rather the opportunity lost by the self-represented solicitor to bill other clients for his time: see Atlas v Kalyk [2001] NSWCA 10 at [9] per Handley JA, (Meagher and Sheller JJA agreeing).

Conclusion

1. [65]

   In Wilkie Beazley P (McColl and Gleeson JJA agreeing) said:

2. [66]

   The same conclusion should be reached here. It is not appropriate to finally determine the important questions of construction raised in this case.

3. [67]

   In the absence of any submissions put by Ms Bechara, she may be taken to have conceded the point.

4. [68]

   The Court received evidence in the form of an itemised tax invoice prepared by Mr Bates dated 27 May 2016 totalling $12,100.00 (including GST). The work was charged at $400 per hour exclusive of GST. This rate, on its face, seems to be reasonable.

5. [69]

   The Court is entitled to take into account that if assessed the usual rule would be that only a proportion of total costs would be recovered. Having regard to the broad discretion available in making a lump-sum costs order the Court allows an amount of $7,000 on behalf of barristers costs as a lump sum under s 98(4)(c) of the Civil Procedure Act.

6. [70]

   Together with the amount allowed for Mr Bates’ solicitor, a total lump sum award of $12,000.00, being approximately 60% of the total claimed, should be made.

Order

1. [71]

   The Court orders that:

   1. (1)

      the lump-sum costs order payable by the applicant to the respondent in the sum of $12,000 pursuant to s 98 of the Civil Procedure Act 2005 (NSW) be payable by the applicant within 28 days.