Emprove Holdings Pty Ltd v Tucker & Cowen Solicitors [2017] QCA 128

SUPREME COURT OF QUEENSLAND CITATION: Emprove Holdings Pty Ltd & Anor v Tucker & Cowen Solicitors [2017] QCA 128 PARTIES: EMPROVE HOLDINGS PTY LTD ABN 19 130 063 900 (applicant) JAMES ANDREW LOVEL (second applicant) v TUCKER & COWEN SOLICITORS ABN 98 723 496 817 (respondent) FILE NO/S: Appeal No 10053 of 2016 DC No 1775 of 2016 DIVISION: Court of Appeal PROCEEDING: Application for Leave s 118 DCA (Civil) ORIGINATING COURT: District Court at Brisbane – [2016] QDC 233 DELIVERED ON: 9 June 2017 DELIVERED AT: Brisbane HEARING DATE: 22 May 2017 JUDGES: Gotterson and Morrison JJA and Byrne SJA Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDERS: 1. Application refused. 2. The applicants to pay the respondent’s costs of the application to be assessed. CATCHWORDS: MAGISTRATES – HEARING – CONDUCT OF MAGISTRATES – POWER AND DUTY OF MAGISTRATE GENERALLY – where the first applicant sought an assessment of costs pursuant to s 335 of the Legal Profession Act 2007 in the Magistrates Court – where the first applicant objected to the appointment of a particular costs assessor – where the Magistrate held that there was no basis for the first applicant’s objection – where the applicants appealed the Magistrate’s decision to the District Court – where the District Court judge granted leave to appeal but dismissed the appeal – where the applicants seek leave to appeal under s 118(3) of the District Court of Queensland Act 1967 District Court of Queensland Act 1967 (Qld), s 118(3) Uniform Civil Procedure Rules 1999 (Qld), r 743G -- 1 of 9 -- 2 QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41; [2008] QCA 257, cited COUNSEL: C C Wilson for the applicants G W Dietz for the respondent SOLICITORS: Byrne & Lovel Lawyers for the applicants Tucker & Cowen Solicitors for the respondent [1] GOTTERSON JA: I agree with the orders proposed by Byrne SJA and with the reasons given by his Honour. [2] MORRISON JA: I have read the reasons of Byrne SJA and agree with those reasons and the orders his Honour proposes. [3] BYRNE SJA: Leave to Appeal sought [4] Emprove Holdings Pty Ltd (“Emprove”) and James Lovel seek leave to appeal against part of the decision of the District Court of Queensland (Jones DCJ) pursuant to s 118(3) of the District Court of Queensland Act 1967. [5] Emprove and Mr Lovel contend that the proposed appeal involves an important question of law and a question of general public importance concerning the proper application of UCPR 743G; that an appeal is necessary to correct a substantial injustice to Mr Lovel; and that there is a reasonable argument that there is an error to be corrected. Costs Assessment proposed [6] On 1 March 2016, Emprove filed an application in the Brisbane Magistrates Court seeking an order for the assessment of legal costs claimed by Tucker & Cowen Solicitors (“the Solicitors”). [7] The application was supported by an affidavit of Mr Lovel which deposed to circumstances surrounding the engagement of the Solicitors and exhibited the two bills of costs that Emprove sought to have assessed. Mr Lovel’s affidavit [8] According to Mr Lovel’s affidavit, he is Emprove’s sole director. He is also, he deposed, an employed solicitor and director of Byrne & Lovel Pty Ltd, “trading as Byrne & Lovel Lawyers”, a wholly owned subsidiary of Emprove. [9] Mr Lovel mentions a conversation he had with David Schwarz, a member of the Solicitors’ firm, about their acting for Emprove in an insolvent trading claim against a director of a company to which Emprove had lent money. The Solicitors accepted the engagement. [10] Mr Lovel’s affidavit made no mention of the terms of the retainer but did acknowledge that he had arranged to deposit $5,000 to the Solicitors’ trust account “for anticipated professional fees and disbursements”. -- 2 of 9 -- 3 [11] The two tax invoices that were the subject of the application for court-ordered assessment were exhibited. Both bills were addressed to “Mr James Lovel, Emprove Holdings Pty Ltd”. The first, dated 31 October 2015, claimed $2,309.42; the second, dated 24 December 2015, $5,072.67. [12] Mr Lovel deposed that Emprove disputed “all of the costs” on several stated grounds. [13] Two costs assessors had agreed to conduct the assessments. Their consents were exhibited to Mr Lovel’s affidavit. [14] Emprove “requires an assessment of all the costs…”, Mr Lovel said. Application for Costs Assessment [15] Where parties do not agree that a costs assessment be carried out by a particular assessor, UCPR 743F(2) provides that either party may apply for an appointment, by the registrar, of an assessor or else apply to the court for directions. [16] Emprove’s proceeding in the Magistrates Court was initiated by an application, in standard Form 60, which, on its face, notified the solicitors that Emprove “is applying…for an order for the assessment” of the costs in the two bills and that “there will be a directions hearing in relation to the application” on 15 April 2016. Respondent’s evidence [17] The omission from Mr Lovel’s affidavit of the terms of the retainer was addressed by an affidavit of Mr Schwarz exhibiting his letter dated 23 September 2015 to Mr Lovel. That letter had enclosed a form of Client Agreement and asked Mr Lovel to have the Agreement “signed by all parties…”. [18] The Client Agreement identified both Mr Lovel and Emprove, separately, as a “Client”. Other terms provided for time charging and nominated the hourly rates for legal professionals and paralegals. [19] Neither Mr Lovel nor Emprove executed the Agreement. However, on 24 September 2015, Mr Lovel emailed Mr Schwarz to say: “I accept the client agreement. I have transferred $5000 to your trust account with the reference ‘Emprove Holdings’. Sincerely, James Lovel” Hearing [20] On 15 April 2016, Emprove’s application came on for hearing before a Magistrate. Mr Lovel announced his appearance for Emprove; Mr Tucker for the Solicitors. [21] At the outset, Mr Lovel presented the Magistrate with a two page Outline of Submissions. The document mentioned what Emprove sought to achieve that day: “An assessment of legal costs pursuant to section 335 of the Legal Profession Act 2007”. And it identified the extent of the contest: that the parties had not agreed on which costs assessor should conduct the assessments. -- 3 of 9 -- 4 [22] Two named assessors were proposed by Emprove. The Solicitors had suggested a third. The Outline expressed three objections to the suitability of the assessor proposed by the Solicitors: that he was in Raceview – 34kms from the Solicitors and more than 100kms from Emprove and its solicitors; that he had not confirmed that, if appointed, there would be no conflict of interest, contenting himself with an assurance that he was “unaware of any conflict or other impediment” to his appointment; and that although on a Register of Approved Cost Assessors he had nominated his hourly rate at $326, he intended to charge $194.40 and the Solicitors had not explained how the lower rate had been secured – an omission alleged to evidence a “lack of transparency” that raised an adverse inference. [23] In advancing Emprove’s case in his Outline, Mr Lovel did not seek directions concerning steps to secure future orders for a costs assessment. Nor did the Outline suggest that there was any impediment to the immediate appointment of an assessor to conduct the assessments. [24] Mr Lovel’s Outline stated the “order sought”: that a named assessor – not the person proposed by the Solicitors – “be appointed as costs assessor to carry out a costs assessment of all legal costs” on the two bills, and that the costs of the application be reserved. [25] The Solicitors did not ask for directions to facilitate the subsequent determination of a contest concerning the identity of the assessor either. Mr Tucker submitted a draft order setting out his proposals for the resolution of the dispute. It provided for the bills to be assessed “by reference to the ‘Client Agreement’…”; that the assessor preferred by the Solicitors be appointed to conduct the assessments; and that Emprove pay the costs of the application on an indemnity basis. [26] Mr Lovel proceeded to argue his objections to the assessor Mr Tucker proposed. As things progressed, the Magistrate indicated that Emprove’s objections were presenting as insubstantial. [27] Mr Lovel then told the Magistrate that it was not agreed that the costs be assessed pursuant to the Client Agreement. He suggested that the bills be assessed “on a fair and reasonable basis, equivalent to a quantum merit”. The concern, as Mr Lovel expressed it, appeared to relate to the charging rates specified in the Agreement. [28] That indication that the contest had expanded beyond just a difference about the choice of assessor was not to be Mr Lovel’s only change of position. [29] Mr Lovel continued with his submissions about the unsuitability of the assessor nominated by Mr Tucker. When the Magistrate found “nothing” in those concerns, Mr Lovel again shifted ground, speaking of a “dispute over whether there’s a ‘client agreement’” which “becomes a triable issue” that “shouldn’t be dealt with at a directions hearing”. [30] To that stage, no one had suggested at the hearing that the parties were there for directions. [31] Mr Tucker responded by drawing the Magistrate’s attention to the Client Agreement and Mr Lovel’s emailed acceptance of it, relying on Mr Schwarz’s affidavit. [32] The Magistrate asked Mr Lovel how there could be a factual dispute about the Agreement. Mr Lovel replied that there was “authority” that “when a sole director assents to an agreement, there’s a question of fact as to whether they’re assenting” in a personal capacity or as sole director. -- 4 of 9 -- 5 [33] When the Magistrate inquired of Mr Lovel, “Are you serious?”, he was, he insisted, “caught off guard”, protested that the application had been listed as a directions hearing, asserted that he had prepared “as if it’s a directions hearing”, and claimed that there were “questions of fact” to be determined before an assessment was ordered. [34] The Magistrate rejected the notion that the Court had embarked on a directions hearing. The hearing concerned, he ruled, “an application for a costs assessment”: “it’s not a directions hearing”. [35] Mr Lovel was not suggesting that Emprove was not bound by the Agreement. He was troubled that an order for assessment by reference to the Agreement – which is what Mr Tucker’s draft envisaged – would expose him to liability for the costs. Making that plain, Mr Lovel said: “the point that I’m seeking to agitate on the costs agreement is whether I am personally a party to it”. [36] Mr Lovel was not a party to the application, had not sought to be joined, and Mr Tucker’s draft order did not purport to affect him. Nonetheless, Mr Tucker remarked that the Agreement was sent to Mr Lovel, and spoke of his emailed acceptance. [37] The Magistrate understood Mr Tucker to say that Mr Lovel was a “client” liable under the Agreement for the costs. Mr Tucker, however, also said that Mr Lovel’s liability was not a “live issue” that day. [38] Mr Lovel did not seek to withdraw Emprove’s application. Nor did he seek any directions to facilitate a subsequent determination of it. Determination [39] In his reasons, the Magistrate dealt with two questions. [40] First, his Honour held that Mr Lovel’s claim that he was not a client was no basis for declining to appoint a costs assessor, mentioning the emailed acceptance of the Agreement and the $5,000 deposit, saying: “There is no triable issue there”. This was, it seems, an expression of opinion that Mr Lovel was, beyond question, a party to the Agreement, which meant that no useful purpose could be served by deferring the appointment of an assessor while some process was put in place to try a question to which the answer was foretold.1 [41] Secondly, the Magistrate held that Mr Lovel’s objections to the assessor proposed by Mr Tucker were without foundation and decided that that assessor – the “cheapest” of the three – should be appointed. [42] An order was made in terms of Mr Tucker’s draft, including an award of indemnity costs against Emprove. Mr Lovel’s concern [43] Mr Lovel’s exposure to liability for the costs had been raised before the hearing. [44] On 8 April 2016, the Solicitors wrote inviting him to become another applicant in Emprove’s proceedings. The letter drew attention to s 339(2) of the Legal Profession 1 It may be that the Magistrate was intending to convey that a dispute about Mr Lovel’s liability, whatever the merits of his case that he was not a “client”, was not a good reason to decline to appoint an assessor since the appointment could not prejudice Mr Lovel in defending any later claim by the Solicitors, if ever it were to be advanced against him. -- 5 of 9 -- 6 Act 2007 and informed Mr Lovel that “you personally are taken to be a party to the assessment and…bound by” it. [45] On 12 April 2016, Mr Lovel swore an affidavit referring to the Solicitors’ 8 April letter. In it, he asserted that: he had “never provided any assent to be personally bound” by the Agreement; the retainer was “exclusively by and for” Emprove; and he was “never” the Solicitors’ “client”. [46] He did not rely on that second affidavit before the Magistrate. District Court appeal [47] Emprove sought leave to appeal to the District Court. Mr Lovel, claiming to be interested in the appeal, applied to be joined as an applicant and as an appellant.2 [48] The judge joined Mr Lovel, granted leave to appeal, allowed the appeal to the limited extent of substituting standard for indemnity costs, and otherwise dismissed the appeal with costs. [49] The amended notice of appeal to the District Court had raised several challenges to the Magistrate’s orders.3 Two remain relevant: contentions that appointment of an assessor at the “directions hearing” was “beyond power” “before a court had tried and determined the question whether” Mr Lovel was liable under the Agreement; and, alternatively, that the Magistrate had “acted beyond power” or else erroneously “in the exercise of his discretion” “in determining at the said directions hearing…” that Mr Lovel was liable for the costs. UCPR 743G [50] The applicants’ position that the Magistrates Court hearing was a “directions hearing” is related to UCPR 743G, which stipulates: “(1) The relevant court may hold a directions hearing in relation to an application for a costs assessment. (2) At a directions hearing, the relevant court may consider the following matters – (a) whether the application has been properly filed and served; (b) whether notice has been given as required under the Legal Profession Act 2007, section 339(1); (c) whether it is appropriate to refer the application to mediation; (d) whether it is appropriate for any question to be tried before the costs are assessed, including, for example – 2 The second affidavit was read before the judge to show that Mr Lovel should be added as an applicant/appellant. On the application for leave to appeal to this Court, Emprove and Mr Lovel accept that that affidavit is now irrelevant. 3 Emprove accepted that it is bound by the Agreement. Mr Lovel’s suggestion before the Magistrate that the costs could be assessed other than by reference to the charging provisions of the Agreement was not maintained. -- 6 of 9 -- 7 (i) whether a person claimed to be liable to pay costs is liable to pay those costs; and (ii) whether any costs agreement relied on by the lawyer concerned is void; and (iii) whether the lawyer concerned was negligent; and (iv) whether the lawyer concerned was in breach of the contract of retainer; and (v) whether the lawyer concerned acted without the instruction of, or contrary to the instructions of, the client; (e) whether anything else should be done before the costs are assessed. (3) Also, the relevant court may – (a) if the grounds of dispute relate only to the amount of costs – order that a particular costs assessor be appointed to carry out the costs assessment; or (b) otherwise – order that the application be heard by the relevant court.” Beyond power? [51] The Magistrate’s appointment of an assessor is said to be “beyond power” because the “ground of dispute” did not “relate only to the amount of costs”4. The proposition depends on the notion that the 15 April 2016 hearing was a “directions hearing” pursuant to UCPR 743G. Directions hearing? [52] Under the Uniform Civil Procedure Rules, it was open to the parties to agree that the Magistrate decide the proceeding on an application for directions.5 Even against the wishes of a party, the court may direct that a matter that starts as a directions hearing proceed to a consideration of the final relief sought in the proceeding.6 Moreover, UCPR 743G(1), by its use of the permissive “may”, shows that the court can dispense with directions on a day appointed for a directions hearing in an application for a costs assessment and proceed instead to appoint an assessor. [53] Emprove’s application had, in terms, been notified a “directions hearing”. As things eventuated, however, the hearing took a different course. [54] At the start, both sides sought the appointment of an assessor at that hearing.7 For his part, the Magistrate made it plain that he would not defeat such an expectation by confining the contest to directions; and he did not do so. 4 See UCPR 743G(2)(a). 5 See UCPR 369: “If the parties agree, the court may hear and decide a proceeding on an application for directions.” 6 UCPR 367(1) stipulates that “The court may make any order or direction about the conduct of a proceeding it considers appropriate, even though the order or direction may be inconsistent with another provision of these rules”. 7 Mr Lovel continued to press for an assessor to be appointed until – concerned for himself, not Emprove – he worried that an order to assess the costs in accordance with the Agreement could involve his personal liability. -- 7 of 9 -- 8 [55] The judge considered the form of the application, including its reference to a “directions hearing” on 15 April. His Honour also took into account the events at the hearing – in particular, Mr Lovel’s submissions, written and oral – and concluded that the hearing, as conducted, was not a “directions hearing” within the meaning of UCPR 743G.8 [56] As the course of events discloses, the judge had ample grounds on which to find that the parties appeared before the Magistrate for the purpose of securing – at that hearing, not some later one – the appointment of an assessor, and not for directions. [57] That view made it unnecessary for the judge to decide the contention that UCPR 743G(2)(a) operated to exclude appointment of an assessor. [58] The factual issue whether the hearing was a “directions hearing” raises no point meriting leave to appeal. In any event, there is not sufficient reason to doubt the correctness of the judge’s finding that the hearing was not a “directions hearing”. Discretion [59] The judge considered that no error infected the Magistrate’s decision that Mr Lovel’s denial of liability for the costs did not justify postponing the making of orders to facilitate prompt assessments of the bills. [60] The evidence before the Magistrate presented a strong case that Mr Lovel was a “Client” party to the Agreement. And there was no reason to suppose that other information, not adduced at the hearing, might yet put a different complexion on things. [61] Other considerations also favoured prompt assessment. [62] The judge adverted to s 339 of the Legal Profession Act 2007, which afforded Mr Lovel the opportunity to participate in the assessment.9 [63] His Honour also recognised that the Magistrate’s decision and reasons did not preclude Mr Lovel from afterwards maintaining that the assessment could not be enforced against him without a subsequent determination of his liability to pay the costs.10 The Magistrate’s adjudication was interlocutory in nature; and it was made in a contest in which Mr Lovel was not a party. [64] Moreover, if Emprove were to pay the amounts assessed, no occasion would arise for a curial determination of Mr Lovel’s liability. [65] The Magistrate’s decision – an exercise of discretion on a matter of procedure – that the assessment should not be deferred pending some determination of Mr Lovel’s liability is not shown to have been inappropriate. [66] There are insufficient prospects of success on the proposed challenge to the way in which the Magistrate chose to proceed to warrant leave to appeal.11 8 The judge characterised Mr Lovel’s late assertion before the Magistrate that he had “prepared as if it’s a directions hearing” as disingenuous. 9 Once Emprove gave him notice of its application: s 339(2)(a) of the Legal Profession Act. 10 Pursuant to UCPR 743H or otherwise. 11 cf. QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41, [6]. -- 8 of 9 -- 9 Disposition The application for leave to appeal should be refused. The applicants should pay the respondent’s costs of the application to be assessed. -- 9 of 9 --