Bevan v Bingham & Ors

By an amended summons filed in Court (without objection) on 12 May 2022 Christopher John Bevan (the plaintiff) seeks the following orders:

Before setting out the evidence which was ultimately relied upon by the parties, it is necessary for me to make some preliminary observations.

Prior to the hearing, the plaintiff’s solicitor filed with the Court:

In the course of reading the material prior to the hearing, it became increasingly apparent that there was a considerable degree of duplicity within it. I also formed the preliminary view that much of it seemed surplus to what appeared would be likely to be necessary in order to allow the issues between the parties to be considered and determined.

These preliminary views and impressions were confirmed at the outset of the hearing when senior counsel for the plaintiff, in response to observations made by me about the amount of material which had been filed, commented that “not very much of it matters”. [1] Senior counsel for the first defendant took a similar view [2] , before observing that I would “never have to read the whole of the material”. [3] Subsequently, senior counsel for the plaintiff candidly acknowledged that there was “not only too much material, there (was) a duplication of it,” [4] to the point where I could “ignore the tender bundles”. [5]

These various observations beg the obvious question, although in saying that I emphasise that I level no criticism whatsoever towards senior counsel for the plaintiff, or senior counsel for the first defendant. Their respective assessments of the material, and the relevance of much of it, were completely in accordance with my own. I accept that neither had any input into this aspect of the preparation of their respective cases. Nevertheless, a number of matters need to be emphasised.

To begin with, when preparing any proceedings for hearing there is a fundamental obligation upon all legal practitioners to give careful consideration to, and to identify, the evidence which is necessary to put before the Court to allow the issue(s) to be determined. [6] That obligation was not discharged by the plaintiff’s solicitor in the present case. In SDW v Church of Jesus Christ of Latter-Day Saints [7] Simpson J (as her Honour then was) made a number of observations which are particularly apt:

The plaintiff’s solicitor engaged in the common practice to which her Honour referred. He failed to exercise the requisite clinical legal judgment, and he abdicated his responsibility to determine what evidence was actually necessary to allow the issue(s) to be determined. It is self-evident that the costs incurred in preparing such material, and the costs incurred as a result of counsel for each party having to read it, would have been significant. It is sadly ironic that all of this occurred in a case concerning costs of $349,360.00 which are said to be owing to a legal practitioner, in circumstances where it was originally estimated that such costs would be $60,000.00.

The extent of the failures on the part of the plaintiff’s solicitor in these respects can be gauged from the material which was actually relied upon at the hearing. In that regard:

I should also note that of the 32 authorities which were copied and provided to me, I was taken to 2 in the course of oral argument.

I am simply left to reiterate that the practice of burdening the Court with extraneous and unnecessary material is unacceptable. That is particularly so in a case such as the present where, as will be evident from the summary which follows, the facts are in relatively short compass, and where the primary issue for determination, although not without its complications, is essentially a narrow one.

The plaintiff is a Barrister who was admitted to practice in 1991. He was retained by the first defendant, a solicitor, to appear for the second defendant in proceedings seeking to annul an order made against her pursuant to the Bankruptcy Act 1966 (Cth).

The plaintiff executed a costs agreement dated 16 September 2019 (the plaintiff’s agreement) with the first defendant pursuant to s 180(1)(c) of the Legal Profession Uniform Law (NSW) (the LPUL). The preamble to the plaintiff’s agreement stated the following: [12]

The plaintiff’s agreement set out the terms of the plaintiff's retainer as follows: [13]

Clause 2 of the plaintiff’s agreement made provision for the plaintiff’s fees as follows: [14]

The estimate of the costs which were expected to be incurred was set out in Clause 3 of the plaintiff’s agreement in the following terms: [15]

It should be noted that these amounts total $56,000.00 and not $60,000.00 which was the plaintiff’s stated estimate of his fees.

Clause 4 of the plaintiff’s agreement was in the following terms: [16]

Clause 7 of the plaintiff’s agreement further provided as follows: [17]

The references in clauses 4 and 7 to “the respondent to the appeal, Scott Darren Pascoe” are to be ignored. They were obviously inserted into the plaintiff’s agreement in error.

Notwithstanding his original estimate of costs of $60,000.00, the plaintiff rendered the following Memoranda of Fees to the first defendant: [18]

It is common ground that having provided his original estimate of costs, no ongoing updates of his estimated costs were provided by the plaintiff at any time.

The first defendant executed a costs agreement with the second defendant (the first defendant’s agreement) [19] which set out the schedule of work to be performed as follows: [20]

The first defendant’s agreement nominated an hourly rate of $380.00 plus GST, and in addition stated the following: [21]

On 10 July 2020 in the Federal Court of Australia, Burley J ordered, upon certain conditions being satisfied, that the second defendant's bankruptcy be annulled pursuant to s 153B of the Bankruptcy Act 1966 (Cth). A significant breakdown in the professional relationship between the plaintiff and the first defendant followed, the nature and extent of which is clearly evident from exchanges of email correspondence between them. It is not necessary for me to canvass that any further.

On 29 July 2020, the plaintiff filed an application for an assessment of his costs of $349,360.00, naming the first defendant as the costs respondent. [22] He claimed an additional amount of $6,983.48 by way of interest. [23]

The plaintiff's application was referred to Michael Eagle, Barrister, for assessment. [24] On 6 November 2020, Mr Eagle advised the plaintiff and the first defendant that he had completed his assessment. [25] He issued a Certificate in respect of the plaintiff’s application which stated (inter alia) the following: [26]

In respect of the separate application brought by the first defendant, the certificate provided as follows: [27]

Mr Eagle provided a statement of reasons for his assessment. [28] Whilst it is not necessary, for present purposes, to canvass the entirety of those reasons, the following matters are relevant.

In addressing the rates charged by the plaintiff, Mr Eagle said the following: [29]

Mr Eagle went onto determine: [30]

By notice dated 10 December 2020, the plaintiff sought a review of Mr Eagle’s determination. [31] In doing so, he advanced a number of grounds in which were in the following terms: [32]

On 8 December 2020, the first defendant filed an application for a review of the Mr Eagle’s determination. [33] In doing so, the first defendant said the following in terms of the grounds of the application: [34]

The review applications were referred to John Levingston and Frances Hutley who are the third and fourth defendants respectively in the present proceedings (the Review Panel). On 16 April 2021, the Review Panel dismissed both applications.

Bearing in mind the issues for determination it is necessary to set out a number of aspects of the reasons of the Review Panel.

To begin with, the Review Panel found the following: [35]

Having cited the provisions of ss 174(1)(a) and (b) of the LPUL, the Review Panel concluded that there was no discretion in terms of the obligation imposed by s 174(1)(a), the consequence of which was that the first defendant’s agreement was void. [36] In this regard, and in terms of the plaintiff's agreement, the Review Panel further concluded: [37]

The Review Panel went on to find: [38]

The Review Panel found [39] that the plaintiff’s costs had been proportionately and reasonably incurred, except for the costs reduced or disallowed by Mr Eagle, before going on to state: [40]

The Review Panel also found: [41]

Finally, the Review Panel found that:

It is convenient at this point to set out a number of provisions of the LPUL.

To begin with, the objectives of the LPUL are set out in s 3 in the following terms:

Section 172 is in the following terms:

Section 174 sets out disclosure obligations in (inter alia) the following terms:

Section 175 is in the following terms:

Section 178 is in (inter alia) the following terms:

Section 184 is in the following terms:

Finally, s 185 is in (inter alia) the following terms:

Although senior counsel for the plaintiff articulated a number of issues for determination, the hearing proceeded on the basis that there was a principal issue, the resolution of which would largely determine those that remained. In these circumstances it is appropriate to address that principal issue at the outset.

The relevant parts of the reasons of the Review Panel have been previously set out.

In finding that the plaintiff’s agreement was void, and although not expressly stated, the Review Panel obviously concluded that the agreement was void ab initio.

Senior counsel for the plaintiff submitted that for a number of reasons, the provisions of the LPUL did not operate in the way in which the Review Panel found that they did.

To begin with, senior counsel emphasised that a valid disclosure of estimated costs had been made in the plaintiff's agreement at the time at which it was entered into. He submitted that, in accordance with s 184 of the LPUL, such an agreement could be enforced in the same way as any other contract, such that in all of the circumstances, any failure by the plaintiff to provide updated estimates of his fees could not result in the plaintiff's agreement being declared void ab initio.

Senior counsel further submitted that on its proper interpretation, the effect of s 178(1)(a) of the LPUL was that the plaintiff's agreement could only be regarded as void ab initio if the contravention of the relevant obligation occurred at the same time as the agreement was entered into. Senior counsel submitted that this interpretation was supported by the objectives of the LPUL set out in s 3, and particularly that in s 3(e).

Finally, senior counsel submitted that the Review Panel's findings reflected an approach which was repugnant to established principles of statutory interpretation, because there was nothing in the text, purpose or context of s 178(1)(a) of the LPUL to suggest that it should operate retrospectively, so as to strike down the entirety of the plaintiff’s agreement.

Senior counsel for the first defendant submitted that no error on the part of the Review Panel had been established. He submitted, by reference to s 178(1)(a) of the LPUL, that no distinction was to be drawn in terms of the time at which any disclosure obligation was breached, and that upon any breach being made out, the proper conclusion was that the agreement was void ab initio.

Senior counsel for the first defendant also relied on the objectives set out in s 3 of the LPUL, and particularly emphasised that in s 3(d). He submitted that this particular objective reflected an intention that a person be placed in a position to make an informed decision, in terms of legal services and costs, in their own interests at any time. He submitted that, viewed in this way, that there was no basis on which to conclude that the necessity for a person to be able to make an informed choice did not endure for the entirety of the period of the relevant contractual relationship.

Whether the Review Panel erred in concluding that the plaintiff’s agreement was void ab initio raises a question of statutory construction. In that regard, the relevant principles may be summarised as follows.

First, the primary objective of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all of the provisions of the statute. The meaning of the provision must therefore be determined by reference to the language of the statute as a whole. [44]

Secondly, the task of statutory construction begins and ends with a consideration of the text, which must be considered in light of its context, its legislative purpose, the relevant legislative history, and any relevant extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. [45]

Thirdly, context should be considered in the first instance, and not merely when ambiguity is said to arise. [46]

Fourthly, although the legal meaning of a particular provision will ordinarily correspond with its grammatical meaning, the context of the words, the consequences of a literal or grammatical construction, and the purpose of the statute, may require the provision to be read in a way that does not correspond with the literal or grammatical meaning. [47]

Fifthly, a construction that promotes the purpose of the legislation is to be preferred over one which does not. [48]

Finally, it is a circular, and erroneous, approach to statutory construction to construe the words of a definition by reference to the term defined. [49]

There is no issue in the present case that the plaintiff was under an obligation to disclose updated estimates of his costs, nor is there any issue that he failed to do so. Pursuant to s 178(a) of the LPUL, if a law practice contravenes the prescribed disclosure obligations (as the plaintiff accepts that he did) the relevant costs agreement is void. Although not expressly stated, it is evident that the Review Panel came to the conclusion that the plaintiff's agreement was void ab initio. For the reasons that follow, I am of the view that that conclusion was correct.

I accept that at common law, a contract can only be construed as at the date on which it was made, and without regard to subsequent events. [50] However, the present issue turns on a question of statutory construction. Bearing in mind the principles I have set out, there is nothing in the text of s 178(1)(a) of the LPUL which supports the proposition that the plaintiff’s agreement could only be determined to be void ab initio if the relevant contravention occurred at the time at which the agreement was entered into. Section 178(1)(a) draws no distinction whatsoever as to the time at which the relevant contravention might have occurred.

It is difficult to see how the construction which was advanced on behalf of the plaintiff promotes the objective in s 3(e) of the LPUL, which is directed towards the efficient, effective, targeted and proportionate regulation of the legal profession. More importantly, such a construction runs entirely contrary to the objective in s 3(d), namely that of empowering a person to make an informed choice about the legal services that he or she might access, and the costs involved. Nothing in the LPUL draws a distinction between a person being so empowered when considering whether to initially enter into a costs agreement on the one hand, and when considering whether to continue to access the legal services to which the agreement relates once it has been entered into, on the other. In the latter case, it is not possible for a person to make any informed choice unless the proper disclosures are provided. The present case serves as a stark example of why that is the case. The plaintiff's fees were, in the end result, almost 6 times his original estimate, a circumstance of which the second defendant was entirely unaware in the absence of the plaintiff providing updated estimates. Absent provision of that information, no person could ever be in a position to make an informed choice as contemplated by the objective in s 3(d). It follows that the construction submitted on behalf of the plaintiff fails to advance, and indeed is entirely inconsistent with, the stated objective in s 3(d) of the LPUL.

I should note that following the hearing, and prior to delivering this judgment, I was referred to a judgment of Walton J in Bevan v Bingham, [51] the facts of which had some similarities to the present. However, an important point of distinction was that in that case, there was no issue as to the costs assessor’s conclusion that the particular costs agreement was void. [52] In these circumstances, his Honour was not required to determine the issue which confronts me.

It was accepted that if I came to the view that there was no error on the part of the Review Panel in relation to its determination that the plaintiff’s agreement was void, the majority of the remaining issues would not require determination. The one remaining issue raised by the plaintiff is that the reasons of the Review Panel were inadequate. It is that issue which I now turn.

The essence of the complaint made by the plaintiff is that the Review Panel failed to properly disclose its reasoning process in determining the amount of costs to which he was entitled. In considering this issue, it is necessary to bear firmly in mind that the reasons of an administrative decision maker are not to be scrutinised by overzealous judicial review seeking to discern whether some inadequacy may be gleaned from the way in which the reasons have been expressed, nor are such reasons to be minutely construed with an eye keenly attuned to the perception of error. [53]

It is evident that in reaching its decision, the Review Panel expressly took into account the various matters set out in s 172(2) of the LPUL, [54] and in doing so, agreed with, and adopted, the conclusions reached by Mr Eagle. [55] Whilst Mr Eagle's reasons were brief, it is apparent that he concluded (inter alia) that the complexity, novelty and difficulty of the issues involved warranted the daily and hourly rates which were determined as being appropriate.

It is also plain from the Review Panel's reasons [56] that in reaching its determination, it considered and took into account:

In those circumstances, and bearing in mind the principles to which I have referred, I am of the view that the reasons of the Review Panel were adequate.

For the foregoing reasons I make the following orders: