Julstar Pty Ltd v Lynch Morgan Lawyers
[2012] QDC 272
To print this judgment please return to the case and click on the PDF icon
next to the
case name. For court use, a full PDF copy is required or preferred.
Exit Distraction Free Reading Mode
Please Note: You are about to print a copy of the onscreen
version of
this judgment. For court use, a full PDF copy of the judgment is required or preferred. Please
return to
the case for PDF printing options.
- Unreported Judgment
- Julstar Pty Ltd v Lynch Morgan Lawyers[2012] QDC 272
- Add to List
Julstar Pty Ltd v Lynch Morgan Lawyers[2012] QDC 272
Julstar Pty Ltd v Lynch Morgan Lawyers[2012] QDC 272
DISTRICT COURT OF QUEENSLAND
CITATION: | Julstar Pty Ltd & Anor v Lynch Morgan Lawyers [2012] QDC 272 |
PARTIES: | JULSTAR PTY LTD (ACN 122 620 400) (First applicant) & JULIANNE STARIHA (Second applicant) v PAUL G LYNCH & WILLIAM A MORGAN (TRADING AS LYNCH MORGAN LAWYERS) (ABN 16 846 277 834) (Respondent) |
FILE NO/S: | 2466/12 |
DIVISION: | Civil |
PROCEEDING: | Application in an existing Originating Application proceeding |
ORIGINATING COURT: | Brisbane |
DELIVERED ON: | 5 September 2012 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 31 August 2012 |
JUDGE: | Dorney QC, DCJ |
ORDER: |
|
CATCHWORDS: | Procedure – costs – costs assessment – whether inspection of file available where lien claimed – evidence for preliminary issue of factors relevant to discretionary decision to order assessment – whether grounds to be stated where full assessment sought Legal Profession Act 2007 (Qld) s 325 Supreme Court of Queensland Act 1991 (Qld) Uniform Civil Procedure Amendment Rule (No. 4) 2007 (Qld) Uniform Civil Procedure Rules 1999 (Qld) Chapter 7 Division 1 Part 1, rr 209, 222, 223, 743A Australian Receivables Ltd v Tekitu Pty Ltd & Ors [2012] NSWSC 170 Hammerstone Pty Ltd v Lewis [1994] 2 Qd R 267 Tabtill No. 2 Pty Ltd & Ors v DLA Phillips Fox (a firm) & Anor [2012] QSC 115 In the matter of an application by Weedman & Ors (1996) BC9606375 |
COUNSEL: | M S Trim for the first and second applicants |
SOLICITORS: | DGT Costs Lawyers for the first and second applicants |
Introduction
- [1]This proceeding came before me on 31 August 2012, pursuant to the applicants seeking by an Originating Application filed 20 June 2012 that the Court order that there be an assessment of costs, pursuant to rule 743A of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), with consequential directions.
- [2]The matter had been before Judge Clare SC on 2 August 2012, where an application for an adjournment was allowed and the matter was listed for a one-half day hearing on 31 August 2012, with directions as to further affidavit material being filed and written submissions being exchanged.
- [3]On 31 August 2012 the applicants sought leave – which was unopposed – to file an Application and a supporting affidavit in the proceeding for various orders, including an adjournment of this hearing, to enable inspection of the relevant respondent Solicitors’ files, on the contended basis of enabling the applicants to better prepare affidavit material for the purposes of the contested application for that assessment.
Background
- [4]As already noted, the Originating Application was filed on 20 June 2012.
- [5]The return date of that application was 2 August 2012.
- [6]On 27 July 2012, the respondent offered the second applicant the opportunity to inspect the legal files maintained by it. It also provided certain further details of the “disputed” legal costs to her.
- [7]Before any response was received by the respondent, on 30 July 2012 the applicants terminated the retainer of the respondent in the Federal Court proceeding relevant to the costs in issue here, as a result of engaging Shand Taylor Lawyers to act on their behalf in that litigation.
- [8]From the material before me, the respondent was not informed of the termination of its retainer until 3 August 2012 after the court had made directions (already referred to) on 2 August 2012.
- [9]On 3 August 2012 the respondent notified Shand Taylor Lawyers that it was exercising a lien over the property of the applicants in its possession until payment of its unpaid fees in full.
- [10]On 17 August 2012 the applicants attempted to file the above referred to application in the proceeding but the Court Registry refused to accept the application as returnable on 31 August 2012 (although stamping it with the date 17 August 2012). There was, also, an affidavit of Wendy Ann Blucher sworn 17 August 2012 which was attempted to be filed concurrently with the application – but it was also so refused (although again being stamped with the date 17 August 2012).
Present issue to be considered
- [11]Although the submissions before me ranged far wider in order to understand all issues, the narrow issue to be decided here is whether I should order that inspection of the relevant costs files be permitted by the applicants in order to prepare affidavit material for the strongly contested hearing pursuant to rule 743A of the UCPR. If so, then an adjournment would be necessary.
- [12]Relevant sub-issues for determination are:
- jurisdiction;
- the scope that the affidavit material must cover for the contested application; and
- whether it is necessary for such scope that the applicants have access, by way of inspection, of the costs files held by the respondent and the subject of the claimed lien.
Jurisdiction
- [13]Although it was originally contended by the respondent that there was no jurisdiction to even entertain the application for adjournment, it was conceded, at least for the purposes of my determination, that the respondent would not contest the issue of jurisdiction.
- [14]Consequently, I will proceed to consider the other sub-issues.
Scope of hearing for costs assessment application
- [15]The first matter to be decided is whether rule 743A(5) requires that the applicants’ affidavit material must state the grounds on which the applicants dispute the amount of the costs charged or their liability to pay them where they simply seek an assessment of all of them.
- [16]By way of Uniform Civil Procedure Amendment Rule (No. 4) 2007 (Qld) , effected by Subordinate Legislation 2007 No. 315 and made under the Supreme Court of Queensland Act 1991 (Qld), a “new” Part 4 of Chapter 17A “Assessment of costs under the Legal Profession Act 2007” (“Legal Profession Act”) (which includes rule 743A) commenced on 10 December 2007.
- [17]The background to the rules is, of course, the relevant provisions of the Legal Profession Act. For this proceeding, section 335(1) provides, relevantly, that a client may apply “for an assessment of the whole or any part of legal costs”. By section 335(10) a costs application under section 335(1) “must” be made in the way provided under the UCPR.
- [18]Consequently, when an application is made pursuant to rule 743A of the UCPR, the relevant affidavit in court “must” comply with rule 743A(5). Rule 743A(5)(a) requires the affidavit to state “whether the applicant disputes or requires assessment of all or what part of the costs”. Rule 743A(5)(b) provides that “if the applicant disputes all or part of the costs, (the affidavit must) state the grounds on which the applicant disputes the amount of the costs or liability to pay them”.
- [19]The applicants contend that the first paragraph treats “disputes” and “requires assessment of” as separate notions, consequently contending that in the proceeding in question the applicants need only require an assessment of all or a part of the costs and that, if they do, then they are not required to state any grounds as a basis for requiring such an assessment.
- [20]There is no authority that has considered the point. Considering the source of the drafting of the UCPR, it can only be thought that the choice of the words used in rule 743A(5) has been deliberate. They are certainly clear in limiting the stating of grounds to the circumstances where the applicant “disputes” all or part of the costs.
- [21]Accordingly, although it appears rather anomalous that in such proceeding as this, in contrast to most other proceedings, it is not necessary to state the grounds relied upon, that would appear to be the ordinary common understanding of the words used. There is nothing in the context of Part 4, including rule 743C, which assists in determining what the interpretation should be if it is not this.
- [22]Thus, unaided by any consideration by any other court on this issue, I am driven to conclude that the applicants’ contention is right and that it is not required, for the relevant affidavit material, that the applicants must state other than they “require an assessment” “of all ... of the costs”.
- [23]The next matter to be canvassed in discussing the scope of the application for costs assessment is the principle that the right to assessment depends upon a consideration of discretionary factors. In Tabtill No. 2 Pty Ltd & Ors v DLA Phillips Fox (a firm) & Anor [2012] QSC 115 Applegarth J referred to “factors favouring a refusal of the application on discretionary grounds”: at [77].
- [24]It is unnecessary, at this time, to consider whether the discretionary factors identified in the Submissions made on behalf of the respondent (see, for example, [50] and [52]) are correct, or complete. Nevertheless, it is clear that evidence going to discretionary factors is an important aspect of determining whether an order for assessment ought to be made.
Material relevant to scope
- [25]The applicants contend that they cannot properly prepare, and file, affidavit material relevant to such discretionary factors without having available to them the costs file over which the respondent claims its lien.
- [26]It has become unnecessary to consider the further issue of whether the applicants would need that file in order to identify the “grounds” for “disputing” the costs (for the reasons that I have already given).
- [27]The respondent’s contention is that the affidavit of Michael Anthony Graham filed 27 July 2012, in paragraphs 13 and 14, identifies the boundaries of what the applicants need to have access to in order to address the scope of the necessary inquiry. In particular, that affidavit refers to an assumption about the correctness of matters deposed to by Paul Gerard Lynch in his affidavit filed 2 August 2012. In the latter affidavit, the deponent deposes to “the knowledge” of the applicants by reference to paragraphs 10 to 15 (inclusive), 90 to 109 (inclusive) and 118 and 119.
- [28]Reference to those particular paragraphs in the affidavit of Mr Lynch, on its face, appears to support the lack of need to have reference to the particular files for the purposes of so responding.
- [29]Nevertheless, in her affidavit, filed by leave at the hearing before me, and sworn 21 August 2012, the second applicant, as sole director of the first applicant, deposes to disagreements with some parts of the identified paragraphs of Mr Lynch. In particular, with respect to paragraph 12, she states that she cannot recall specific conversations, with details as to location, date and time, where such conversations took place and where such identified words were used, stating that she would like the opportunity of reviewing the files: see paragraph 15. Further, with respect to paragraph 15, she states that she is of the view that instructions, on occasions, were not followed; but that, without access to the files, she cannot provide more details: see paragraph 17. Although outside the respondent’s self-imposed “range”, with respect to paragraph 16, she states that she disagrees with the assertion that she was “concerned about legal fees but did not make any specific complaint”, stating that she did make a complaint: at paragraph 18. The affidavit then states that, in December 2010, the deponent decided to discuss the issue of the first invoice with Mr Lynch. She states the substance of the conversation (in paragraphs 21 and 22) to her “recollection”. It may well be unfortunate if there are, in fact, notes on the costs files made by the respondent’s representatives with respect to such a conversation and the second applicant is denied recourse to them.
- [30]With respect to the second set of paragraphs in the affidavit of Mr Lynch, the second applicant’s relevant affidavit asserts that, with respect to paragraphs 93(a) and 93(b), neither she nor the first applicant was “copied in” on all correspondence and, therefore, without inspecting the file, she cannot respond further: see paragraph 223. There are further such assertions in following paragraphs.
- [31]With respect to the third set of paragraphs in the affidavit of Mr Lynch, there is no specific reference to them in the relevant affidavit of the first applicant.
- [32]Necessarily, the respondent cannot limit the applicants’ concerns about the need to inspect the file simply to those paragraphs identified by Mr Graham. To do so would be to decide that it was simply the matters set out in paragraphs 13 and 14 of Mr Graham’s affidavit which would be necessary, and sufficient, for the court to make the relevant finding about whether it should allow the assessment sought, even if an informed decision as to whether or not to seek an assessment of legal costs claimed in the relevant Tax Invoices is just a subsidiary part of this investigation: see, for example, Tabtill No. 2 Pty Ltd, where an order under rule 743C depended on first holding that there should be an assessment (at [79]).
- [33]The applicants, for their part, rely upon an affidavit of Robyn Anne Nichols Davis, filed by leave before me and sworn 16 August 2012. In that, the deponent seeks to address the question of the applicants making an informed decision about whether they should seek an assessment. In direct contrast to Mr Graham, Ms Davis states that an inspection of the relevant costs files would allow her to offer a “complete opinion” in response to the affidavit material filed by the respondent: see paragraph 2. Without deciding whose evidence should be preferred, it is clear that Ms Davis had read the affidavit of Mr Graham as well as that of Mr Lynch.
- [34]For the purposes of making this interlocutory decision, I am not required to reach final conclusions about what evidence might be accepted and what might not. It is sufficient for me to conclude that there is reason to move to decide both whether an inspection of the relevant costs files is necessary for the purposes identified and, if so, whether there is any legal impediment to me ordering that outcome.
Need for access
- [35]As for the first part of the enquiry, while there is some force in the respondent’s argument that the applicants should presently be able to depose to relevant facts which go to the relevant discretionary factors, even the brief survey that I have done indicates that the applicants would be at a significant disadvantage in any examination of that relevant evidence without having the opportunity to look at entries in the costs files, particularly where they have raised concerns about the detail of recollection and the need for reference to such files for the purposes of refreshment for accurate recollection or dispute. To this limited extent, the inspection would not be fishing but, rather, checking or seeking illumination.
- [36]Hence, as a preliminary conclusion, I find that the applicants have established a case for an inspection by the second applicant herself. Given the applicants’ determination to have a “whole” assessment, it is my further conclusion that it is unnecessary, at this time, for the inspection to be any wider than that which can be provided to the second applicant, with the assistance of her own legal advisors and, for the moment at least, to the exclusion of any expert such as Ms Davis.
Possible impediments
- [37]The respondent has raised the potential impediment of the limited circumstances in which the lien would be “ignored”, even for the purposes of inspection only.
- [38]In In the matter of an application by Weedman & Ors (1996) BC9606375, Drummond J (in the Federal Court of Australia) considered the wider issue of “delivery up” of the relevant former solicitors’ file, notwithstanding the lien claimed over the papers as security for unpaid fees. In dealing with the position – as adheres here – where it is the client who discharges the solicitor other than for the latter’s misconduct, it was held, by reference to cited authority, that the general rule is that the solicitor is entitled to keep asserting the lien and that the court has no power to interfere with the exercise of it: at 7.
- [39]In dealing with that position, after expressing doubt whether there is any residual discretion in the court to order a former client have access to the relevant documents in the face of the lien, Drummond J held that even where the denial of access to the documents may leave the client facing what can truly be regarded as a catastrophic disruption of his litigation, such a discretion could only be justified on the basis that the interests of justice may require such an order to be made in “some cases”, amplifying on why he saw difficulties in such an approach: at 9. As he added, it was unnecessary for him to reach, in that case, a concluded view with respect to such power, or discretion: also at 9.
- [40]In response to the respondent’s reliance upon Weedman, the applicant drew the court’s attention to Hammerstone Pty Ltd v Lewis [1994] 2 Qd R 267. There, Shepherdson J, in a case in which the plaintiffs sued the defendants (who were their former solicitors) for damages for negligence, held that, despite the existence of a lien, documents subject to it could be ordered to be produced by a party to an action in the court for inspection by another party whenever that production is “necessary to do justice” in the particular case: at 270. Shepherdson J went on to hold that the claim of lien cannot be allowed to embarrass the prosecution of the action (which involved the solicitors as the other party on the record): at 271.
- [41]Importantly for present purposes, Shepherdson J referred to the fact that inspection only was sought and (consequently) the lien would continue: at 271. In dealing with the contention that, once inspection is given, the lien, in effect, becomes worthless, Shepherdson J considered ordering the plaintiffs in that case to bring the amount of the fees claimed, or at least part thereof, into court as a condition of making the order for inspection, noting that there was a precedent for such an order: also at 271.
- [42]Very recently, Ward J in the Equity Division of the New South Wales Supreme Court had occasion to consider both Weedman and Hammerstone. In Australian Receivables Ltd v Tekitu Pty Ltd & Ors [2012] NSWSC 170, he referred to the “interests of justice” but noted that it needed to be balanced against the competing proposition that a court will protect the lien unless it is shown to be unfounded: at [20]. Again, like Weedman, it was unnecessary to finally determine any outcome about the competing principles: at [21].
- [43]The respondent in this proceeding has not advanced any case suggesting the payment into court of a specific sum, or the giving of security in a form satisfactory to the registrar of the court. Even if it had, given the limited right of inspection that I intend to order, if permissible, it is unnecessary to consider that matter further, particularly in the absence of any argument that a consideration of it should be undertaken.
- [44]I do consider, for the reasons that I have outlined already, that the interests of justice in this particular case can only be served if the second applicant, on her own behalf and on behalf of the first applicant, has a right to limited inspection in this proceeding where the opposing party is the very solicitors’ firm asserting the lien.
Relevant rules in the UCPR
- [45]Division 1 of Part 1 of Chapter 7 of the UCPR deals with disclosure and inspection of documents.
- [46]By rule 209, Part 1 applies, relevantly, to a proceeding started by application “if the court directs”: see rule 209(1)(c). Thus, although rule 222 of the UCPR states that a party may, by written notice, require another party in whose affidavit mention is made of the document to both produce the document for inspection and permit copies of the document to be made, it first depends upon the court making an appropriate direction in a case such as this.
- [47]Because I have determined that the interests of justice require some kind of inspection, I intend to hold that Part 1 of Chapter 7 of the UCPR applies here.
- [48]By rule 223(1) of the UCPR, the court has power to order a party to a proceeding to disclose, by producing the same “for the inspection of the other party” in accordance with Part 1, of the document, or each document in the class. To the extent to which rule 223(4) states that an order mentioned in rule 223(1) may be made only if there are special circumstances and the interests of justice require it [see rule 223(4)(a)], I have already determined that the interests of justice do require it and that, for present purposes, constitutes the special circumstances in this instance.
Conclusion
- [49]In summary, for all the reasons canvassed, I conclude that it is appropriate, in this proceeding and for this particular issue, that inspection be ordered of the relevant costs file held by the respondents which is the subject of the application formulated by the Originating Application. I also conclude that that “disclosure” should be by way of inspection only and that that inspection be limited to an inspection by the second applicant in the company, should she wish it, of her solicitors engaged for the purpose of this application. Given the limited nature of that inspection, I would have thought that one day should be sufficient. As it is impossible, at the time of handing down these reasons, to determine what is an appropriate day and what the exact nature of the orders should be, I intend to order that the parties prepare minutes of the relevant orders in accordance with these reasons.
- [50]It will also be necessary for the orders to deal with the hearing of the application for assessment that has been adjourned because of this outcome in the existing proceeding.
- [51]Because of the complexity of this case and the interim nature of the decision I have made, I intend to order, subject to hearing submissions about it, that the costs of and incidental to this application in this proceeding be reserved.