DISTRICT COURT OF QUEENSLAND

1. [1]
   This an appeal from a decision by a magistrate at Brisbane on 29 October 2001 to give judgment in favour of the plaintiff respondent in the plaintiff’s claim against the defendants (appellants), and to dismiss the defendants’ counterclaim. The plaintiff is a solicitor who was suing for legal work done for the defendants. The solicitor had delivered an account for fees and costs which had not been referred to an assessor under s.6ZA of the Queensland Law Society Act 1952 (“the Act”).

2. [2]
   The magistrate found that there had been some dealings between the defendants and an employee of the solicitor, but that the defendants had refused to enter into the usual client agreement, and that no client agreement was ever entered into. The magistrate held that that did not mean that the costs were not recoverable; pursuant to s 48I(1)(b) of the Act, the solicitor was entitled to an amount calculated in accordance with an applicable scale. He held that there were two scales applicable, one of the Federal Court and one of the Supreme Court.

An error by the magistrate

3. [3]
   On p 4 of his reasons he referred to a bill of costs having been sent by the solicitor and that “no response was received from that bill within the prescribed time such that no challenge to the bill was made as to the amount and in my judgment no challenge to that can be made now.” In my opinion however this involved a misinterpretation of the effect of the Act. I considered the effect of the failure of a client to refer an account to the tribunal for assessment under s 6ZA in Dibb v Hopgood & Ganim [2001] QDC 153. I will not repeat in detail what I said there. In effect, if the matter is litigated in court there is power in s 48K to appoint a costs assessor to assist the court by providing an assessment, but that assessment is not conclusive (s 48L) and therefore if necessary the court has to determine issues of quantum of the costs itself. An absence of challenge to the account is of no significance.

4. [4]
   This was a change from the previous system, under which the court could if necessary and after deciding disputed questions of fact refer the actual process of quantification of the costs to a taxing officer. Under that system the precise quantification of the costs was dealt with by a specialist in that field, although the ordinary rights to appeal decisions of the taxing officer to a court were preserved. That however is not the express mechanism provided under the Act. More importantly perhaps there is nothing in the Act which makes the quantum of the costs statement conclusive if not challenged under s 6ZA. The Act provides that if an application is made under that section it is not open to the client to dispute anything other than the amount payable under the client agreement: s 6ZB(1). But obviously a situation could easily arise where there is a broader dispute; the client may dispute the retainer, or may allege that there was negligence on the part of the solicitor which rendered some or all of the work done by the solicitor worthless, a matter which also is a defence to an action for costs.

5. [5]
   If a client wishes to take either of these points, it is plainly inappropriate to secure assessment under s 6ZA, and therefore the costs dispute has to be resolved by a proceeding in court. This is obviously not a convenient mechanism, but it seems to me fairly clear that it is the mechanism in fact established by the 1998 amendments to the Act. For present purposes, it is clear that the magistrate took a different view of the operation of the Act. Notwithstanding the submissions by counsel for the respondent, I am not persuaded that my analysis in Dibb was in error. In my opinion it was the magistrate who was in error, and it was evidently this error which led him to conclude, in my opinion wrongly, that many of the matters sought to be raised by the defendants could not be raised in the proceeding before him.

6. [6]
   The magistrate went on to say that there was a limited exception to the proposition that no challenge could be made to the account, in that by s 48A a client agreement could be challenged, but that that situation did not arise because there was no client agreement in the present case. But that does not alter the situation; in my view it was wrong to conclude in the first place that the account as delivered was binding as to quantum.

The respondent’s case

7. [7]
   The plaintiff proceeded on the basis of a Notice to Admit Facts and Notice to Admit Documents, neither of which were responded to by the defendants. The magistrate treated the admissions in those notices as sufficient not only to prove the plaintiff’s case but also to exclude any triable issue. Indeed, the magistrate went further, to conclude that there was nothing raised in any of the material put forward on behalf of the defendants to amount to a triable issue. He then went on to conclude that there was nothing in the counterclaim to suggest that anything might be recoverable by the defendants from the plaintiff, and there was no legitimate issue raised by the counterclaim. There was however no analysis of the matter sought to be raised by the counterclaim.

8. [8]
   In order to consider whether the magistrate’s conclusion may well have been right even if his view as to the effect of the account not having been referred to assessment was wrong, it is necessary to set out a little more about the history and background of this matter.

Background

9. [9]
   The appellants own land at Redland Bay in Queensland which adjoins land which in 1992 a company Paradise Grove Pty Ltd sought to develop for residential purposes. For this purpose a change in the zoning of the land was sought by the company, and as a result on 2 October 1991 the relevant local authority made an application for re-zoning to the relevant minister. The appellants objected to this rezoning and appealed to the Planning and Environment Court which on 22 November 1991 dismissed the appeal. They appealed to the Court of Appeal, and on 5 June 1992 that Court declared that the application for rezoning by the local authority was invalid: Stubberfield v Redland Shire Council [1993] 2 Qd R 104.

10. [10]
    Subsequently^[1] the company made two fresh applications to the local authority in June 1992, for it to subdivide the northern part of the land which was in a Residential A Zone, and to re-zone certain public open space land to Residential A and subdivide that part into allotments. In effect what was proposed was a two-stage subdivision of the land. The local authority approved the first stage on 5 August 1992, and the appellants brought no appeal against that decision. On 23 September 1992 the local authority decided to approve the rezoning and subdivision of the second stage, and on 28 October 1992 Mr Stubberfield appealed to the Planning & Environment Court against that decision. On 25 January 1993 he filed an application in that appeal seeking a declaration of invalidity of the application for the first stage of the subdivision. That application was dismissed on the merits on 17 February 1993, an appeal to the Court of Appeal was unsuccessful on 23 June 1993^[2], and in May 1994 the High Court refused special leave to appeal.

11. [11]
    On 15 June 1994 the appeal against the second stage of the subdivision was brought on in the Planning & Environment Court. The appeal was withdrawn after a ruling that that appeal did not concern the first stage. Because Mr Stubberfield declined to confine the appeal to the second stage of the subdivision his argument was said to be doomed to failure, so that the further continuation of the appeal was frivolous and vexatious for the purposes of s 7.6 of the Local Government Planning & Environment Act 1990, and the court ordered costs against Mr Stubberfield: Stubberfield v Redland Shire Council & Anor [1995] QPLR 152.

12. [12]
    On 19 September 1996 the company, Paradise Grove Pty Ltd, issued a writ against the appellants seeking damages for malicious prosecution or abuse of process. The statement of claim was delivered on 17 October 1996, and a defence, evidently prepared without legal assistance, was delivered on 14 November 1996. There was a period of inactivity after which steps began to be taken in September 1999 with a view to bringing the action on for trial. For a time the appellants were represented by a different solicitor, who however subsequently took proceedings to recover unpaid fees, and after judgment was obtained in the Magistrates Court obtained a sequestration order against Mr Stubberfield on 28 July 1999.

13. [13]
    There were subsequently various interlocutory proceedings in the company’s actions, including an application heard on 10 February 2000 to have the statement of claim struck out.  That application was dismissed. An appeal was filed against that decision, which however did not come on for hearing until 23 March 2001^[3]. In April 2000 an application was filed by the company seeking an order that the defence be struck out, which application was due to be heard in the Supreme Court on 9 May 2000. It was in this context that on 4 May 2000 Mr Stubberfield consulted a solicitor employed by the respondent.

Subsequent proceedings

14. [14]
    Before dealing with the allegations as to what occurred between the plaintiff and the defendants, it is convenient to deal with the subsequent history of the proceedings between Paradise Grove Pty Ltd and the defendants. On 2 June 2000 an application for various forms of relief was filed in the Court of Appeal by the first defendant; it was amended on 23 June 2000. It came on for hearing^[4] on 3 July 2000 when Mr Stubberfield appeared in person. There was some discussion as to whether he was entitled to bring the application in view of his status as a bankrupt, but ultimately the court did not deal with the matter on that basis. It considered his application to re-open the decision of the Court of Appeal in 1993, sought on the ground that the application for subdivision of the land was inconsistent with the development control plan of the area, so that it was necessary for that plan to be amended before any subdivision could be approved.

15. [15]
    Ultimately the court declined to reopen its earlier decision, for a number of reasons including that there was no fundamental rule such as that upon which Mr Stubberfield was relying. It also considered a lengthy written submission which was said to be “apparently inspired by R v Hughes (2000) 74 ALJR 802” to the effect that the company had never been validly incorporated because certain provisions of the Corporations Law were invalid under s 109 of the Constitution. The court described this as “an interesting and carefully considered argument” with which it was unnecessary to deal, since that was never an issue in the original proceedings and therefore provided no ground for re-opening the 1993 decision. The court declined to allow leave to appeal from the 1994 decision of the Planning & Environment Court on costs, on the ground of the very substantial and inadequately explained delay since that decision was given. It declined to consider allegations of an illegal conspiracy between the company and officers of the local authority or to stay any of the orders which had been made in the trial division, including the order of 14 February 2000 which was subject to appeal. Accordingly the application was dismissed with costs.

16. [16]
    The appeal from the decision of the chamber judge of 10 February 2000 came before the Court of Appeal on 23 March 2001 and was successful.^[5]  The court held that a claim for damages for malicious prosecution was not available because there had been no criminal charge brought, this being an essential element of the cause of action: Butler v Simmonds, Crowley & Galvin [2000] 2 Qd R 252. As for the claim for abuse of process, it was necessary to show that the court proceedings had been pursued for an improper purpose and that there was some overt actual threat distinct from the proceedings themselves in furtherance of that collateral purpose. Neither of these were alleged in the statement of claim. Accordingly the appeal was allowed and the statement of claim was struck out, albeit with liberty to re-plead, although comments by some of the members of the court during argument suggested that the action was, to say the least, unpromising.^[6] 

17. [17]
    On 27 September 2001 an application by the appellants to dismiss the company’s action against them came on before the Supreme Court.^[7]   The application to that extent was not opposed by the plaintiff, and the action was dismissed. In addition the plaintiff did not oppose an order that it pay the defendants’ costs of the action, except the costs already dealt with by orders of the court. Her Honour detailed the chronology of the action and the various costs orders which had been made in the course of it. Her Honour declined to order that the costs of the action be assessed on an indemnity basis. Her Honour also, under Rule 668 of the UCPR, stayed enforcement of costs orders made against the appellants in respect of other interlocutory applications where no appeal had been brought from the orders made, but declined to interfere with any orders for costs made by the Court of Appeal. Her Honour noted that part of the costs covered by the order were costs incurred while the respondent was acting for the appellants.

The retainer – the plaintiff’s claim

18. [18]
    It appears to be common ground that on 4 May 2000 the first defendant^[8] at least consulted the solicitor, and asked him to act for them. According to the notice of defence, he wanted that solicitor to act, but as he was an employee this was in effect an attempt to retain the plaintiff. The defence alleged that the retainer was to act for:

(a)the defendants in the Supreme Court action, including the appeal from the order of 10 February 2000;

(b)the first defendant in making an application to the Federal Court for annulment of his bankruptcy.

19. [19]
    The plaintiff’s case was however that the retainer was somewhat narrower, both in the statement of claim and, particularly, in the reply. According to the statement of claim, the defendants retained the plaintiff to appear on an urgent^[9] basis for them in the Supreme Court proceedings, to respond to the application to strike out their defence. On the following day he forwarded to each of them a standard contract of retainer which was expressed to constitute an agreement pursuant to s 48 of the Act and which identified the matters in respect of which the retainer was given as, in the case of Mr Stubberfield: 

1. “Matters arising from the bankruptcy of John Stubberfield including the investigation of whether it is possible to make an application for annulment and/or composition;
2. The defence of the Supreme Court of Queensland proceedings 7852 of 1996 brought by Paradise Grove Pty Ltd but not appeal proceedings 2071 of 2000 save as might be instructed to discontinue same or remove Dorothy May Stubberfield as a party.”

20. [20]
    A separate retainer agreement was drawn in relation to Dorothy May Stubberfield; the matters the subject of this retainer were identified as:

1. “The defence of the Supreme Court of Queensland proceeding 7852 of 1996 brought by Paradise Grove Pty Ltd.
2. Appeal proceedings 2071 of 2000 to extricate Dorothy May Stubberfield as an unintended party thereto.”

21. [21]
    The client agreements which were forwarded provided for the solicitor to charge in accordance with the Federal Court of Australia scale in the case the bankruptcy matter, and the Supreme Court of Queensland scale in relation to the Supreme Court proceedings, subject only to the qualification that care and consideration was fixed at 30% of the amount of professional costs otherwise determined in accordance with the scale. They also provided that $2,000 was to be paid into his trust account on account of costs.

22. [22]
    The statement of claim alleged that the plaintiff “continued to perform services for the defendants, namely to continue to act on [their] behalf in Supreme Court proceedings 7852 of 1996, to continue to act on behalf of the first defendant in or about matters arising from his bankruptcy include[ing] the investigation of whether it was possible to make an application for annulment thereof and or composition, and to continue to act on behalf of the second defendant in the Court of Appeal proceedings 2701 of 2000 for the purpose of extricating her” from the appeal.

23. [23]
    The pleading alleged that in these circumstances the defendants were estopped from denying that the contracts were client agreements that existed for purposes of s 48, or that they had been partly performed and hence were valid and enforceable for the purposes of s 48.

24. [24]
    In an affidavit on the file the plaintiff said that in the alternative he was entitled to recover on a quantum meruit for the work done. It is recognised that if parties negotiate with a view to entering into a contract but no contract is ever entered into, and in the meantime services are rendered by one party which are accepted by the other in the knowledge that they were to be paid for, that party is bound to pay reasonable remuneration in respect of the services, on a quantum meruit: Goff & Jones “The Law of Restitution” 4^th edition (1993) p 554. That a solicitor is entitled to remuneration on a quantum meruit in circumstances where the contract of retainer ceases to be applicable was confirmed by the Court of Appeal in McGowan & anor v Commissioner of Stamp Duties [2001] QCA 236. There is therefore nothing wrong in principle with the notion that a solicitor may be entitled to recover on a quantum meruit where there is no applicable contract. A claim by a solicitor to recover remuneration for legal work undertaken may be pursued either in contract or in quasi-contract:  Adamson v Williams [2001] QCA 38. In the present case the plaintiff’s claim was expressed to be from “monies due and owing pursuant to certain retainers, together with interest and costs.”  In the statement of claim the plaintiff relied on the proposition that the defendant was estopped from denying that a contract of retainer existed in accordance with the documents even though they were unsigned, or in the alternative that they were valid and effective on the ground of part performance, or in the further alternative that there were valid oral contracts of retainer (presumably on the same terms) in existence and enforceable. On its face therefore in the present action the plaintiff was suing expressly in contract, not on a quantum meruit.

Notice of intention to defend

25. [25]
    On 11 January 2001 the defendants filed a notice of intention to defend to which was attached a defence and counterclaim. The defendants alleged that the written retainer agreements were not signed because they were not consistent with the defendant’s instructions, and in any case did not comply with the requirements of the Act and were therefore void under s 48F. Given that the plaintiff’s claim was based on the proposition that one way or another the written agreements were valid and enforceable, that would seem to be, in point of pleading, a legitimate ground of defence, and was an issue which ought to have been addressed by the magistrate before giving judgment for the plaintiff. Whether or not this ground of defence can be made out is another question, and one on which I need not say anything.

26. [26]
    The defence then pointed out that there had been a failure to comply with one provision of the unexecuted agreements, that by cl 4: “the solicitor shall render an interim memorandum of fees and disbursements during each 30 day period during the duration of the retainer.” That allegation was not denied in the reply filed 7 February 2001, although it was said that it did not meet or answer the case pleaded by the plaintiff. That may be right, although it is a proposition which is difficult to reconcile with the plaintiff’s allegation that the contracts of retainer had been partly performed notwithstanding the failure of the defendants to execute them.

27. [27]
    The defendants then alleged that the plaintiff had prepared and delivered amended defences which contained “serious errors, omissions and admissions damaging to our cause” without the instructions or approval of the defendants, and that these were further amended without correcting their concerns. In reply the plaintiff said that the defence of the first defendant was in accordance with his instructions and advices rendered to him as to what defence if any would be likely to meet with some possible success in the circumstances that had been outlined to the plaintiff, and that the defence of the second defendant, alleging that she was at all relevant times suffering from a lack of capacity because of dementia, and had been acting under the undue influence of the first defendant, was drawn “pursuant to the ethics of his profession and in the interests of the female defendant and not pursuant to the undue influence of the male defendant, pending the appointment of a legal friend to the estate of the female defendant.”

28. [28]
    He also alleged that he had advised that the defendants would “in due course” require separate representation because of the apparent undue influence of the male defendant. That appears to be consistent with the allegation in para 10 of the defence that on 9 May the male defendant was advised by the employed solicitor that he could not act for him in the Supreme Court action as they would be acting for the second defendant because of a conflict of interest, that he was not prepared to act in relation to the appeal except to extricate the second defendant from it, and that he was not prepared to act for the defendants in the proposed application to the Court of Appeal inter alia to seek to reopen the decision in 1993. In response the plaintiff admitted that “at various times during the course of the retainer” he advised the male defendant that he could not continue to act for both defendants and separate representations should be arranged by the male defendant, admitted that he was not prepared to act for the male defendant in the appeal from the refusal to strike out the statement of claim, and that he was not prepared to act for the male defendant in his attempts to reopen the decision of the Court of Appeal of June 1993.

29. [29]
    The difficulty with this is that it seems as if some of the things claimed in the bill of costs relate to some of the matters where according on the face of the pleadings, the plaintiff was refusing to act. For example, the plaintiff charged for preparing and serving on all Attorneys-General notices under s 78B of the Judiciary Act, apparently in relation to the s 109 ground, and subsequent correspondence in relation to this, and at item 362 the provision of updated submissions on the constitutional issue^[10], which were then engrossed at item 364, perusing various documents which appear to be relevant only to the Court of Appeal proceeding, and at item 399 perusing the transcript of the proceedings before the Court of Appeal on 10 June 1993. All this work was apparently related to the attempt to reopen the Court of Appeal decision of June 1993, the very thing the plaintiff had denied accepting any retainer to do.

30. [30]
    It is unnecessary to deal further with the factual complexities, but it seems to me that the bill is, on its face at least, inconsistent with the case of the plaintiff as it appears in the pleadings as to what instructions he would or would not accept from one or other of the defendants. It may well have been appropriate to distinguish between the position of the two defendants, but if that was the case it was scarcely appropriate to send both a bill in respect of all the work ever done for either of them. If he had formed the opinion that the first defendant ought not to be giving instructions on behalf of the second defendant, how did any retainer on behalf of the second defendant arise at all? If he distinguished between the retainers on behalf of the first and second defendants, why was that distinction not reflected in his account for costs? The plaintiff appears, in relation to any distinction in interest between the first and second defendants, to have been blowing hot and cold.

31. [31]
    It ought to have been apparent from this brief consideration of part of the pleadings, without going any further into the factual issues, that there were significant and difficult issues raised in this action as to just who was retaining the solicitor to do what at what time, and just what work was done by the solicitor on behalf of one defendant or the other defendant or both defendants, or possibly done without any proper instructions from either defendants. This difficulty appears entirely to have escaped the magistrate who conducted the trial.

32. [32]
    In para 12 of the defence there are various allegations including sub-para (v), that the defendants have obtained no benefit from the claimed costs. Whether or not legal work is of benefit to the client is a fairly complicated question, and an absence of benefit is not necessarily an answer to a claim for costs. This was an issue touched on by McPherson JA in McGowan & Anor v Commissioner of Stamp Duties [2001] QCA 236 at [11]. It is recognised that if legal work is done negligently so that it is of no benefit to the client the solicitor cannot charge for it.^[11]  That is a matter which is a defence to an action to recover the fees, and not simply a matter which arises on a counterclaim. Although the word “negligent” was not used, the defence contained allegations which, if made out, would amount to negligence on the part of the plaintiff. On the face of it therefore para 12(v) raised an issue which ought to have been determined before judgment was given. The defence also denied that the work claimed for had been done, or that it was required to be done, or requested, by the defendants. These are also valid issues which ought to have been considered at the trial.

The counterclaim

33. [33]
    The counterclaim contained some unnecessary allegations, but essentially alleged that the plaintiff (or rather the solicitor employed by the plaintiff) was retained to make an application to the Federal Court for an order annulling the first defendant’s bankruptcy, that the proposed application had not been pursued with reasonable expedition (or indeed at all), and that as a result the first defendant had suffered loss or damage, specifically in the sum of $20,000 being taken by the trustee in bankruptcy.

34. [34]
    In response to the allegation that there had been a retainer to apply to the Federal Court for annulment for bankruptcy, the plaintiff denied that any such agreement existed and relied on para 3 of the reply, which contained a similar denial and alleged that any retainer was one by which “the plaintiff would render such advices as might enable the male defendant to make a successful application to the Federal Court of Australia for an order annulling his bankruptcy, and further advices as to what step the male defendant should first take himself before any such application could be filed”. It was then alleged that the male defendant disclosed certain facts in response to which the plaintiff “rendered advices to the male defendant that any application to the Federal Court of Australia for an order annulling his bankruptcy would be unlikely to succeed or attract adverse comment from the relevant judge of the Federal Court of Australia, and may even attract a costs order against the solicitors involved in bringing any such fatuous application.” It went on to allege that there was advice forthwith to file a statement of affairs and disclose to the trustee in bankruptcy the existence of certain real property in which he had an interest. That on its face seems to be a fairly clear pleading that the only retainer the plaintiff ever had in relation to bankruptcy was a retainer to give some advice and he gave that advice.

Quantum of the bill

35. [35]
    In the bill of costs, or account for work done and services rendered, forwarded by the plaintiff on 12 September 2000, care and consideration was charged as item 432 in accordance with the “retainer agreement sent to you on 5 May 2000, which, we note, you have not returned to us” at 30% to produce the figure claimed in the bill of $2,967. On the face of it therefore the bill delivered was one which expressly purported to be in accordance with the client agreement rather than in accordance with the scale, although it may well be that a figure which happens to coincide with 30% of the professional fees under that bill is a reasonable allowance for care and consideration. This is significant if the plaintiff could only recover costs on the scale, under s.48I(1)(b) of the Act, as discussed below.

36. [36]
    The matter is complicated because part of the bill was charged in accordance with the Federal Court scale, apparently beginning at item 110. Unfortunately it is not clear from this bill at what point the items ceased to be charged in accordance with the Federal Court scale and the bill reverted to the Supreme Court scale. Possibly the change was with item 179, although this is simply an inference from the use of the term “first defendant”, a term not ordinarily used in the Federal Court. There were subsequently in the bill references to doing various things in the Supreme Court or in the Court of Appeal, but it is by no means clear to me which of the subsequent items in this bill were purportedly charged on the Supreme Court scale and which were purportedly charged on the Federal Court scale. That may give rise to a question as to whether the bill of costs was sufficient to comply with the requirements of section 48J(1)(b) of the Act, if it does not contain sufficient detail to enable the client to make up his mind on the subject of taxation and to enable those advising him to advise effectively as to whether taxation is desirable or not: Malleson Stewart Stawell and Nankivell v Williams [1930] VLR 410; Re: Walsh Halligan Douglas’ Bill of Costs [1991] QdR 288 at 294; Re: Bailey’s Bill of Costs [1994] 1 QdR 576 at 579; Jackson v Creswick Middleton Solicitors [2000] QDC 46. However that is not an issue which arises at present, it has not been argued, and it is unnecessary for me to consider it further.

37. [37]
    It is difficult to reconcile the proposition that the retainer was confined as alleged in the plaintiff’s pleadings with the work charged for, such as items 110-178 of the bill. On its face it claimed for work done outside the retainer pleaded. The matter is further complicated by the fact that those items were said in the bill to be related to advices sought about various matters not confined to the retainer in relation to bankruptcy which is expressly pleaded in para 3 of the reply. Apart from anything else, it refers to seeking advices in relation to any rights of recovery against a former solicitor for damages for professional negligence. There is nothing in the pleadings to allege any such retainer, and it is therefore difficult to see how a charge for such costs could validly form part of the claim in this action. It follows that there are necessarily problems with claiming the total amount of this bill in this action. Even if there was some retainer to do something which is admitted on the pleadings, and even if there was some work done by the plaintiff pursuant to that retainer, it is clear that the bill the plaintiff was suing to enforce extended to matters which go beyond the scope of that retainer. Unfortunately, there was no way in which the magistrate could, on the material before him, determine what items of the bill were properly within the scope of the retainer, and no basis upon which I can do so.

38. [38]
    It was also not possible to determine what work had been done pursuant to the separate and different retainers of the first and second defendants. In para 11 of the reply the plaintiff admitted that he declined to act on behalf of the male defendant in Court of Appeal proceedings 2071 of 2000 and 4796 of 2000. These were the appeals dealt with on 23 March 2001 and 28 July 2000 respectively. It seems to me however that the bill contained a good deal of material apparently concerning these appeals, or at least the latter of them, and it is by no means clear how on the pleadings the plaintiff was entitled to recover in respect of that work.

39. [39]
    There was a further difficulty with the bill, which emerged during argument, and that was that it included a claim for GST for the full amount of the bill as delivered, even though 374 of the 432 items were in respect of work done prior to 1 July 2000. As far as I know, services rendered prior to 1 July 2000 are not subject to GST. But apart from that, this bill is supposed to be drawn in accordance with the scales. I do not know whether the Federal Court scale was adjusted on 1 July 2000 to accommodate the introduction of the GST, but I know the Supreme Court scale was not. The introduction of GST did not entitle solicitors to charge 10% above the Supreme Court scale. It simply meant that they had to remit as tax 1/11^th of the amount they recovered. That gave rise to valid complaints by the Law Society about the need to adjust the scale, but it did not give any entitlement to put an extra 10% on the bill. Subject to the possibility that some part of this may have been recoverable because of some provision of the Federal Court scale, no part of the 10% charged for GST was recoverable if these bills were to be assessed according to scale.

Absence of client agreement

40. [40]
    In the forefront of the defendants’ submission before me was the argument that the effect of the Act, and in particular s 48(2) of the Act, was that in the absence of a client agreement it was not open to the solicitor to sue the client for fees for work done. It is convenient to deal with this argument at this stage, because it is fundamental to the plaintiff’s claim. The argument is that, subject to any statutory exception,^[12] the use of a client agreement was compulsory, so that a solicitor simply should not do work for a client who refused to enter into a client agreement with him or her. Section 48(2) provides^[13]:

“Within a reasonable time after starting work for a client, a practitioner or a firm must make a written agreement with the client expressed in clear plain language and specifying the following matters –

1. (a)
   the work the practitioner or firm is to perform;
2. (b)
   the fees and costs payable by the client for the work.

41. [41]
    There is no express statutory provision in the Act which indicates what consequences flow from any breach of this provision, which is on its face expressed in mandatory terms. However, s 48I(1) provides:

“The maximum amount of fees and costs a practitioner or firm may charge to and recover from a client for work done is –

1. (a)
   an amount calculated in accordance with a client agreement between the practitioner or firm and the client for the work; or

2. (b)
   if there is no client agreement and there is a scale for the work provided under an Act – an amount calculated in accordance with the scale; or

3. (c)
   if there is no client agreement and there is no scale for the work provided under an Act – an amount assessed as a reasonable amount for the work by a tribunal costs assessor.”

42. [42]
    It was submitted on behalf of the respondent that this provision indicated the effect of a failure to comply with the mandatory requirement of s 48: costs will be assessed under paragraph (b) or (c), rather than under paragraph (a). That submission assumes that ordinarily the costs provided for under a client agreement will be higher than the costs provided by any scale, or where there is no scale a reasonable amount. There are situations in the Act where a liability for costs can arise without there being a breach of s 48(2), and accordingly there is scope for
    s 48I(1)(b) and (c) to operate even if one interprets s 48(2) as a mandatory provision a breach of which will result in the solicitor being barred from recovering anything in respect of any work done. For example, paragraphs (b) and (c) would apply where s 48(1) applied, or where work had been done before the expiration of a reasonable time after the solicitor started work for the client, and therefore before the point had been reached where s 48(2) made a client agreement mandatory.

43. [43]
    I was told that there was no decision of a court which has directly decided this question, and I have not found one myself. Nevertheless, there are decisions which assume the answer to be as contended for by the respondent. It seems to have been assumed in National Australia Bank Limited v Clanford Pty Ltd [2002] QSC 261 that the effect of the absence of a client agreement was that the solicitor was entitled to charge and recover fees and costs in accordance with the applicable scale. In Campbell v Jones [2002] QCA 332 in the joint judgment of Fryberg and Mullins JJ at [75] where a question arose as to whether a client agreement which had been entered into covered the litigation which subsequently took place, their Honours appear to have formulated the alternatives as the agreement applying as a matter of construction to the litigation, or (if it did not) the solicitors being limited to charging in accordance with the District Court scale. Such a proposition seems to me to be inconsistent with the notion that if the client agreement did not apply the solicitors were not entitled to charge and recover anything. Although it is not clear that their Honours were directly considering that issue, in my opinion I should be wary about departing from an assumption which was so clearly endorsed by the majority of the Court of Appeal in that case.

44. [44]
    There are similar cases where it has been assumed that the effect of a failure to comply with s 48(2) is merely that the costs are confined to the amount of the scale under s 48I(1)(b). It is however unnecessary to multiply examples. The position appears to be that it is generally accepted that that is the effect of the 1998 amendments to the Act.^[14]  To interpret the Act in that way provides some meaningful consequence for a failure to comply with the mandatory requirements of s 48(2) but in a way which involves minimal change from the pre-existing law. Had the legislature really intended to deprive a solicitor of any right to remuneration as a result of a failure to enter into a client agreement, in my opinion it ought to have said so in clearer terms than the terms which were used in this Act. Not having done so, it appears to me that the interpretation contended for on behalf of the plaintiff was correct, and a failure to comply with s 48(2) is not a bar to recovering anything. It simply means that the solicitor is confined to recovering fees and costs in accordance with some applicable scale, or, if no scale is applicable, quantified as a reasonable amount under para (c). A failure to comply with s 48(2) does not provide a complete defence to the defendants. Nevertheless, as the issue affected the amount recoverable, the magistrate ought to have considered and decided whether s.48 had been complied with.

Course of the Trial

45. [45]
    The action in the Magistrates Court followed a somewhat unusual course. After the pleadings were closed and there had been disclosure, at least by the plaintiff, the plaintiff on 1 August 2001 filed an application for judgment under Rule 292, or in the alternative that the matter be set down for trial notwithstanding that the defendants had failed to sign a request for trial date. Two days later the first defendant applied to the court for judgment under Rule 293 or in the alternative for an order that the bill be referred to a costs assessor. Both of these applications came on on 8 August 2001 before a magistrate, who dismissed the first defendant’s application but allowed the plaintiff’s application in respect of the alternative relief sought, and set the matter down for hearing on 29 and 30 October 2001. Accordingly when the matter came before a different magistrate on 29 October 2001 he had before him the trial of the plaintiff’s claim and the defendants’ counterclaim.

46. [46]
    On 29 October the male defendant appeared on behalf of the defendants, and applied for an adjournment of the proceedings, which was refused. Counsel for the plaintiff then advised that on 12 October the plaintiff’s solicitors had forwarded to the defendants at the address for service a notice to admit facts and a notice to admit documents. These were handed up together with an affidavit of service. It does not appear from the transcript that these were made exhibits, nor do they appear on the magistrate’s court file although they have been forwarded to this court with it. According to the affidavit of service, they were served by posting on Friday 12 October 2001. Accordingly by s. 39A(1)(b) of the Acts Interpretation Act 1954 the notices are taken to have been served “at the time of which the letter would be delivered in the ordinary course of post, unless the contrary is proved”. The first defendant admitted that he received the notices through the mail, p 17. The letter was sent to an address in Redland Bay from somewhere in Brisbane, so I think it fair to assume that it could well have been delivered on the next business day, but as 12 October 2001 was a Friday the next business day was 15 October 2001. Accordingly at the earliest the notices were served on 15 October 2001.

47. [47]
    By Rule 189(2) “If the other party does not within fourteen days serve a notice on the first party disputing the fact or the authenticity of the document, the other party is taken to admit, for the proceeding only, the fact or the authenticity of the document specified in the notice.” It follows that the defendants had 14 days after 15 October 2001 within which to respond to the notices. The last date for a response was 29 October, but they had the whole of that day within which to respond. In my opinion Rule 189(2) produces a deemed admission only after the expiration of the 14 day period within which the other party may respond. It is only after the 14 day period has expired that the other party can be said to have failed to respond within 14 days. For that reason obviously enough such notices should be given upwards of 14 days prior to trial.

48. [48]
    In the Magistrates Court, Counsel for the plaintiff somewhat optimistically submitted that service was “deemed to take effect, if not on 12 October then certainly the 13^th. Today is the 29^th.”^[15]  However plainly the letter would not have been delivered on 13 October, since that was a Saturday. Given that the affidavit of service to which the notices were exhibited plainly identified 12 October 2001 as a Friday, this submission was somewhat surprising. It was however successful in inducing in the magistrate the belief that the absence of response to these notices was of some significance, a belief which in my opinion was incorrect. In fact the notices were of no effect.

49. [49]
    Counsel for the plaintiff then submitted that there ought to be judgment for the plaintiff on those admissions pursuant to Rule 190, and that there was no issue remaining to be tried. He then appears to have closed his case with a submission that the counterclaim should be dismissed on the basis that it did not comply with the rules or that it sought relief not within the jurisdiction of the court. Indeed Counsel for the plaintiff went further and submitted that the defendant ought not to be heard because he could not contradict the plaintiff’s case in any particular since he was taken to have admitted it. The magistrate however wisely agreed to hear what the first defendant had to say.

50. [50]
    The defendant sought to give evidence by affidavit, on the ground that he was unable simply to go into the witness box and recite all the relevant facts from memory, and sought to rely on an affidavit which had been filed by him in the Supreme Court. The plaintiff objected to evidence being given other than orally, and relied on Rule 390 of the UCPR. The defendant being the deponent, he could of course have gone into the witness box, verified the affidavit was his statement and tendered it pursuant to s 92 of the Evidence Act, but not being a lawyer he did not appreciate that he was able to meet this objection in this fashion. Fortunately the magistrate agreed to accept the evidence and affidavit subject to cross examination. In fact the defendant did go into the witness box and verify his affidavit, p 26.

51. [51]
    With the file there is a copy of an affidavit by the first defendant filed in the Supreme Court, and I have seen that document. It is not marked as an exhibit, but I assume it was the one before the magistrate. Counsel for the plaintiff then took objection to the whole of this affidavit: p 24. There followed a fairly lengthy process by which Counsel for the plaintiff went through his objection to each part of the affidavit and the objections were ruled on, and generally disallowed. The defendant was then cross examined beginning at p 45. The defendant was the only witness.

52. [52]
    Counsel for the plaintiff then made submissions relying on the notices to admit: p 68. The defendant then had the opportunity to make submissions. Counsel for the plaintiff in reply went further and submitted that the defendant had, in oral evidence, in effect admitted that he continued to give instructions throughout May and June: p 100. Reference was again made to Rule 189 on p 101, and on p 102 it was again submitted that in the ordinary course of mail the notices were delivered on 13 October. It is clear therefore that the plaintiff persisted before the magistrate in relying specifically on the notices to admit.

The significance of the notices

53. [53]
    The significance of the notice to admit documents, even if it had been effective, is somewhat obscure. It listed a very large number of documents, but so far as I can see none of them was ever tendered on behalf of the plaintiff at the trial. Had Rule 189(2) operated in respect of the notice to admit documents, it would have been open to the plaintiff to tender any of the documents at the trial on the basis of that admission, but the plaintiff did not do so. The notice does not have the effect of putting those documents into evidence unless they are tendered, and as none of them was tendered the notice to admit documents served no useful purpose at all.

54. [54]
    Turning to the notice to admit facts, that is also a curious document, particularly in circumstances where on the face of the pleadings there was a differentiation between the retainer of the first defendant and the retainer of the second defendant. One of the facts alleged was that “the second defendant has suffered and presently suffers from a condition of the mind and body so as to render her incompetent to know or fully understand the nature and consequence of actions undertaken on her behalf by the first defendant or to be able to confidently instruct the first defendant.” If that is so, it is difficult to see how the plaintiff can have any claim against the second defendant in respect of any retainer of the second defendant. It is not a question of whether the first defendant is liable in respect of any work done for the benefit of the second defendant, either because of a retainer by the first defendant or because of a breach of warranty of authority. Neither of these were relied on in the pleadings.

55. [55]
    Although the statement of claim does not provide any particulars as to how the plaintiff was retained on behalf of the second defendant, it clearly distinguishes between what it was the plaintiff was retained to do on behalf of the first defendant and what it was the plaintiff was retained to do on behalf of the second defendant. Accepting that the retainers were different, albeit overlapping, I cannot see why it does not necessarily follow that the work for which the first defendant is liable would be limited to that part of the work charged for which was within the scope of the first defendant’s retainer, and the work for which the second defendant would be liable would be limited to that part of the work which was within the scope of the second defendant’s retainer. But there has been no attempt on the part of the plaintiff to differentiate the work in some appropriate way.

56. [56]
    This unsatisfactory situation is aggravated by the content of the reply where it is alleged in effect that, having seen the female defendant on 4 May 2000, the plaintiff declined to accept instructions to act for her through the first defendant. In these circumstances, it is difficult to see how there could possibly be any liability on the part of the second defendant in this action. Indeed, in para 8 of the reply it is alleged among other things that “the plaintiff intimated to the male defendant that he was not prepared to allow him to personally interfere with and alter the defence of the female defendant pending the appointment of a legal friend to the estate of the female defendant.” That seems to be an allegation that the plaintiff was refusing to accept instructions from the first defendant purporting to act on behalf of the second defendant. In the light of the pleading, and with the plaintiff purporting to rely on an admission that the second defendant was incompetent to contract, I cannot see how the plaintiff could have been entitled to judgment against the second defendant for anything.

Effect of what happened

57. [57]
    It is however unnecessary to consider what the position would have been had the notices to admit been effective. They were not. The plaintiff was therefore left in the unhappy position of having closed his case without having proved anything. Unfortunately neither he nor the magistrate realised this. It is not even clear that the bill was put into evidence, although how it is possible to sue on a bill without doing that is beyond me. Presumably the magistrate was relying on the admissions in giving judgment, so the judgment was unjustified, unless it can be supported on the basis of admissions on the pleadings, or by the first defendant in evidence. I have already said enough about the pleadings to show that they could not justify any judgment in favour of the plaintiff.

58. [58]
    There was no finding by the magistrate on the basis of any of the oral evidence of the first defendant, nor does it appear that any such finding was sought on behalf of the plaintiff at the trial. In these circumstances, I do not think the plaintiff can now rely on anything the first defendant said by way of admission as enlarging anything said as to the scope of the retainer in the pleadings, or as otherwise supporting the plaintiff’s case.

59. [59]
    The defendants’ case essentially was that the first defendant was trying to retain the plaintiff to do a wider amount of work than what was specified in the retainer agreements but that the plaintiff was refusing to accept such retainer, and that case receives a good deal of support from the plaintiff’s reply. In my opinion the plaintiff could not and cannot seek to make a case which is inconsistent with the allegations or admissions in the reply. Even an effective notice to admit facts cannot go beyond the case pleaded. It is not at all clear that the itemised account was even properly in evidence before the magistrate, but if it was there was no evidence on the basis of which the magistrate could identify what items of work had been done within the scope of the retainer. On the face of the document much of it was outside the pleaded retainer. There were additional difficulties to which I have referred with any liability on the part of the second defendant.

60. [60]
    It is also difficult to see that the plaintiff has met the defence allegations, which do appear to have been supported by Mr Stubberfield’s evidence, that the work was of no value because of the negligence of the plaintiff. It is difficult to see that anything the plaintiff did was of the slightest use to the defendants. This issue was not, as far as I can see, addressed by the magistrate, and if it had been it is difficult to see why the allegations of negligence were not made out, at least in relation to the work done in respect of the amended defences. There were fundamental legal deficiencies in the statement of claim, which Moynihan J said “screams at you”.^[16]   Apparently the plaintiff failed to detect them, and failed to advise the defendants about them, but these deficiencies produced such a clear result when the matter came before the Court of Appeal on 23 March 2001.

61. [61]
    As for the defence which the plaintiff pleaded, officiously and (according to Mr. Stubberfield) without instructions, about the incompetence and dementia of the second defendant, the only evidence before the magistrate was that of Mr. Stubberfield, that his wife’s dementia became significant only in 1997. It therefore could not possibly have afforded a defence to the claim by the company, which was concerned with actions at a much earlier time. On this basis^[17] Mr. Stubberfield is entitled to feel aggrieved at the actions of the plaintiff in putting on this false and insulting pleading, and in justifying it in the pleadings in this action in such a high-handed way. To be expected to pay for it as well is to add injury to insult.

62. [62]
    It is by no means clear that the plaintiff ever did anything useful to extricate the second defendant as a party (unintended or otherwise) from Appeal 2071 of 2000. The judgment indicates that she remained a party when that appeal was heard and determined by the Court of Appeal. On the face of the pleadings there was almost nothing done pursuant to the investigation of whether it was possible to make an application for annulment other than the giving of two pieces of advice, presumably orally. On the face of the account the plaintiff did a huge amount of work which was outside the retainer pleaded and relied on. No basis is made out in the pleadings upon which the plaintiff might have been entitled to recover for that work. Some of it appears to have been done notwithstanding a refusal to act. Little of it could have been justified on the basis of any element of urgency.

63. [63]
    Overall the position is thoroughly unsatisfactory. Far from justifying a judgment of the full amount of the claim, I cannot see how, on the material before the magistrate, he was entitled to give judgment for the plaintiff for any amount against either defendant. He was certainly not entitled to give judgment for any amount against either defendant on the basis relied on by the plaintiff. It follows that the appeal must be allowed, the judgment set aside and judgment entered for the defendants on the plaintiff’s claim. This will mean that the plaintiff will not be able to recover payment for any of this legal work done or purportedly done for the defendants. That is no more than he deserves. There is nothing about this action which reflects any credit on the plaintiff.

The counterclaim

64. [64]
    With regard to the counterclaim, there was evidence in the affidavit tendered by the first defendant that he retained the plaintiff to make application to the Federal Court for annulment of the bankruptcy, and the plaintiff did not make that application. There was also enough evidence that because the application was not made, an additional financial loss was suffered in consequence of $20,000 being withdrawn from the first defendant’s savings account in December 2000. On the face of the evidence before the magistrate therefore the position was that he had instructed the plaintiff to make the application and one was not made and there was no evidence of any justification for not making it. There was however one deficiency in the plaintiff’s case: there was no evidence that if the application had been made it would have succeeded and the loss of the $20,000 from the savings account in December 2000 would have been avoided.

65. [65]
    The first defendant’s affidavit proceeds on the assumption that if an application for annulment of his bankruptcy had been made it would have succeeded, but there is no evidence of that and I am not prepared to assume it, and neither should have the magistrate. Section 153B of The Bankruptcy Act 1966 (Cwth) provides:

“If the [Federal] Court is satisfied that a sequestration order ought not to have been made … the Court may make an order annulling the bankruptcy.”

In determining whether the order ought not to have been made, the court is entitled to consider all that facts that existed at the time when the order was made, whether or not they were before the court at the time that the order was made: Stankiewicz v Plata [2000] FCA 1185. In addition, the court has a discretion as to whether or not to annul the bankruptcy, and may take into account the conduct of the applicant during the period since the sequestration order was made: Ozer v Australian Liquor Marketers Pty Ltd [2000] FCA 291. In this context whether or not a statement of affairs has been filed in a timely way is a relevant consideration.

66. [66]
    In these circumstances it was not shown by the material which was before the magistrate that if an application to annul the bankruptcy under this section had been made promptly after May 2000 it would have succeeded. In those circumstances, a necessary part of the proof of the counterclaim was missing: there was no evidence that the first defendant’s position would have been any better had his instructions been complied with.

67. [67]
    In my opinion however there was a more fundamental difficulty with the counterclaim. The relief claimed in the counterclaim was:

“Restitution in full to the position the defendant would have been in but for the breaches of the plaintiff; if restitution is not possible compensation in money terms for the direct financial loss suffered -  $20,000; compensation for loss of interest - to be assessed; damage for mental anguish, stress - to be assessed; special damages - to be assessed; punitive or exemplary damages - to be assessed; interest at the rate of 9% per annum pursuant to the provisions of section 47 of the Supreme Court Act of Queensland 1995; and costs.”

The difficulty is that the Magistrates Court has jurisdiction only in an action of this nature when the amount claimed is not more than $50,000: Magistrates Courts Act 1921 s 24(a). In the District Court there is special provision for a counterclaim which is beyond the limited jurisdiction of the District Court (District Court Act 1967 s 86) but there is no equivalent provision in the Magistrates Courts Act. So far as I can see there is no specific provision in the Act for a counterclaim, but a counterclaim can be brought in the Magistrates Court pursuant to Division 2 of Part 5 of Chapter 6 of the Uniform Civil Procedure Rules. These permit a defendant to bring a counterclaim against a plaintiff instead of bringing a separate proceeding: Rule 177.

68. [68]
    However, the rules do not extend the jurisdiction of the various courts to which they apply, and the question of whether a court has jurisdiction to entertain a particular claim or counterclaim depends on the statute which establishes it. The effect of Rule 177 is that, in the absence of some statutory provision which expands the jurisdiction as to counterclaims, a defendant may pursue by way of counterclaim a claim which could otherwise be the subject of a separate proceeding. But the first defendant could only have brought a separate proceeding against the plaintiff in the Magistrates Court if claiming not more than $50,000. On its face the counterclaim did not claim an amount which did not exceed $50,000, and therefore it was not a claim within the jurisdiction of the Magistrates Court: Startune Pty Ltd v Ultratune Systems (Aust) Pty Ltd [1991] 1 Qd R 192. Although the question of jurisdiction was not raised by the answer to the counterclaim, the point was taken before the magistrate, and even if it had not been taken, if the court has no jurisdiction it was not entitled to proceed with the counterclaim. Accordingly the counterclaim must be dismissed for want of jurisdiction.

69. [69]
    Accordingly the appeal is allowed, the judgment of the Magistrates Court of 29 October 2001 is set aside, and in lieu thereof the plaintiff’s claim against each defendant is dismissed with costs (if any) to be assessed, and the first defendant’s counterclaim is dismissed for want of jurisdiction. I order the respondent to pay the appellants’ costs of the appeal (if any) to be assessed.