Casey v Quabba & Anor [2006] QCA 187 [2007] 1 Qd R 297

SUPREME COURT OF QUEENSLAND CITATION: Casey v Quabba & Anor [2006] QCA 187 PARTIES: DANIEL CHARLES CASEY (plaintiff/respondent) v ALLIANZ AUSTRALIA INSURANCE LIMITED (ACN 000122 850) (defendant/appellant) FILE NO/S: Appeal No 10881 of 2005 SC No 36 of 2002 DIVISION: Court of Appeal PROCEEDING: General Civil Appeal ORIGINATING COURT: Supreme Court at Cairns DELIVERED ON: 2 June 2006 DELIVERED AT: Brisbane HEARING DATE: 9 May 2006 JUDGES: Williams and Jerrard JJA and Philippides J Separate reasons for judgment of each member of the Court, each concurring as to the orders made ORDER: 1. Appeal allowed 2. Declare that the costs agreement between Daniel Charles Casey and Roarti & Firth Lawyers of 10 July 2000 is void by operation of s 48F(1) of the Queensland Law Society Act 1952 (Qld) 3. Order that the respondent pay the appellant’s costs of the proceedings at first instance and of this appeal to be assessed on a standard basis CATCHWORDS: CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – ILLEGAL AND VOID CONTRACTS – EFFECT OF ILLEGALITY OR INVALIDITY – IN GENERAL – where the respondent (plaintiff) recovered damages for personal injuries against the appellant (defendant), with costs to be assessed on an indemnity basis – where the assessment came before the Registrar of the Supreme Court at Cairns – where the respondent submitted that the Registrar should have regard to a “costs agreement” between the respondent and his solicitors, when assessing the quantum of costs – where the appellant contended that the “costs agreement” was void pursuant to s 48F(1) Queensland Law Society Act 1952 (Qld) – whether the “costs agreement” is a valid agreement -- 1 of 6 -- 2 Queensland Law Society Act 1952 (Qld), s 48(2), s 48(5), s 48A, s 48C, s 48F(1), s 48F(2) Uniform Civil Procedure Rules 1999 (Qld), r 704(3)(b), r 706(3), r 717(2)(c), r 742 National Acceptance Corporation Pty Ltd v Benson & Ors (1988) 12 NSWLR 213, applied Parker v Borg [2002] QSC 215 (unreported, 12 July 2002, Rockhampton S22/01), considered Re Rosemac Pty Ltd’s Caveat [1994] 1 Qd R 137, applied COUNSEL: S W Couper QC, with G V Robinson, for the appellant J A Griffin QC, with A R Philp SC, for the respondent SOLICITORS: McInnes Wilson for the appellant Roati & Firth for the respondent [1] WILLIAMS JA: After a trial the present respondent, the plaintiff in the original proceeding, recovered damages for personal injuries against the first and second defendant. After hearing further submissions the trial judge ordered that the second defendant, the present appellant, pay (with a minor exception) costs to be assessed on an indemnity basis. When the assessment came before the Registrar of the Supreme Court at Cairns the respondent submitted, referring to Rule 704(3)(b) of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), that the Registrar should have regard in assessing the costs to a "costs agreement" between the respondent and his solicitors, Roati & Firth Lawyers, dated 10 July 2000 relating to the subject litigation. The appellant objected to the Registrar so doing, contending that the agreement in question was void pursuant to s 48F(1) of the Queensland Law Society Act 1952 (Qld) ("the Act"). That resulted in the Registrar acting pursuant to r 706(3) of the UCPR and referring to a judge of the Supreme Court the question of the validity of the costs agreement. [2] At first instance it was held that in certain respects (not challenged on the appeal) the agreement did not comply with s 48 of the Act; but it was further held that the appellant did not have standing to challenge the validity of the agreement and that the want of compliance with s 48 only meant that the agreement was voidable at the option of the respondent. It followed from that decision that the Registrar, in assessing costs, was entitled pursuant to Rule 704(3)(b) to have regard to that agreement. [3] It is from that decision that this appeal is brought. [4] Section 48(2) of the Act relevantly provides that "a practitioner . . . must make a written agreement with the client expressed in clear plain language and specifying the following matters . . ." It is then provided by subs (5) that the "agreement must not be inconsistent with the notice in the schedule." Section 48A provides that a "client agreement may be enforced in a court of competent jurisdiction in the same way as another contract." Then one comes to s 48F which provides: "(1) If a client agreement to which section 48 applies does not comply with that section, the client agreement is void. -- 2 of 6 -- 3 (2) If a provision is included in a client agreement and inclusion of the provision is prohibited by this part, the provision is void." [5] As already noted, there has been a finding that the agreement in question did not comply with s 48 and that finding is not challenged on appeal. The first issue for this Court to determine is whether such non-compliance results in the agreement being "void" in the strict sense, or merely "voidable". [6] The relevant law is well summarised by Kirby P in National Acceptance Corporation Pty Ltd v Benson & Ors (1988) 12 NSWLR 213 at 214 where he said: "The word used is ‘void’. Although that word may, in particular contexts, invite a more limited construction, normally (as it seems to me) it should receive the meaning which ordinarily attaches to it in everyday speech, viz, having no legal effect for any purpose as against the world so that it is as if the transaction which is ‘void’ has not occurred, at least so far as the eye of the law is concerned: see Mercredits Finance Ltd v Ramsey (1979) 1 NSWLR 354 at 362; cf Brady v Stapleton (1952) 88 CLR 322. This is the starting point. Other considerations may require a more limited meaning to be given to the word. But because Parliament from time to time uses ‘voidable’ in statutes or expressions such as ‘void as against the liquidator’ . . . it should be presumed, at least to begin with, that where Parliament refers to ‘void’ it intends a more radical consequence, both in terms of effect and in respect of the parties affected." [7] A search of Queensland Statutes reveals that on numerous occasions Parliament has differentiated between "void" and "voidable" by using the latter expression particularly where it was conferring a right on a party to elect to avoid certain legal consequences or obligations. Unless the context here clearly indicated to the contrary, Parliament must be taken to have intended that the term "void" was used in its strict legal sense. [8] To my mind it would be unrealistic to conclude that the word "void" had a different meaning in s 48F(2) to that which it had in the first subsection. Clearly in subs (2) "void" means void. That can be readily demonstrated. Section 48C of the Act provides that a client agreement may not include a provision preventing civil liability attaching to a practitioner. Assume a client agreement containing such a provision. Section 48F(2) would then apply; there had been a provision included in a client agreement which was prohibited by a section in the relevant part of the Act. When the statute says that such a provision is "void", it can only mean just that. It could not mean that the provision was voidable at the option of the client; that would have the consequence that a provision which the Act said could not be contained in such a contract was enforceable unless the client opted to avoid it. As already noted, "void" in that subsection must mean void. [9] That is then a powerful argument in favour of construing the word "void" in subs (1) as also meaning void, and not voidable. [10] The judge at first instance was influenced in reaching his conclusion that the agreement was only voidable because, in his view, the obvious purpose of the -- 3 of 6 -- 4 statute was the protection of the client. That was clearly a purpose, but not the only purpose. There was protection for the practitioner, for example s 48C, and the statutory provisions also facilitated the practitioner recovering costs from the client. Further, as demonstrated later, there were also implications for a person ordered to pay costs arising out of litigation the subject of the client agreement. It follows that a consideration of the purpose of the statute does not support a conclusion that "void" should be construed as having anything other than its ordinary meaning. [11] There is nothing else in the context which would support anything other than that "void" was used in its ordinary sense. [12] It follows, given the unchallenged finding that the agreement in question did not comply with the provisions of the statute, that the agreement in question was "void". [13] The term "costs agreement" in r 704(3)(b) of the UCPR is not defined, but it was conceded on the hearing of the appeal that it must be taken as referring to a "client agreement" as provided for in s 48 of the Act. That was held to be so by the Chief Justice in Parker v Borg [2002] QSC 215 (unreported, 12 July 2002, Rockhampton S22/01). [14] The next question is whether the appellant has standing to ask the Court for a declaration that the agreement entered into between the respondent and his solicitors is void. At first instance the judge was strongly influenced by the general rule that a stranger to a contract has no standing to challenge its validity or scope of operation. There is no doubting the validity of that principle as a general proposition. [15] But there are, in my view, a number of considerations which distinguish the present situation from the usual situations in which that principle is applied. Here, the Court is concerned with a contract which is regulated in a very detailed way by statute. It is an agreement which by statute a legal practitioner must enter into with the client (with certain limited exceptions). Then the contract must specify certain matters and must not be inconsistent with other specified matters. Finally, a specified procedure must be followed before the client signs the agreement. Failure to comply with those specifications renders the agreement void in the strict sense. [16] The law then recognises that an agreement so entered into is not limited to protecting the client. The law, namely r 704(3)(b) of the UCPR, provides that such an agreement may be taken into account when a costs assessor is determining the quantum of costs recoverable on an indemnity basis against a party ordered to pay such costs. In my view when the UCPR so provides, it can only be referring to a valid and enforceable costs agreement. If an agreement is void because of the operation of s 48F(1) of the Act then it could not be referred to at the stage of assessing costs payable on an indemnity basis. [17] Counsel for the respondent could not refer to any authority suggesting in that situation, or an analogous situation, a party so affected by a contract entered into between other persons could not challenge its validity as against himself. [18] Much of the argument advanced by counsel for the respondent was concerned with procedural issues. He submitted that the Registrar, acting as costs assessor, did not have the jurisdiction to determine whether or not the costs agreement was void by operation of s 48F(1) of the Act. The Registrar is given wide powers by r 706, -- 4 of 6 -- 5 including the power to conduct a hearing, examine witnesses, and require the production of documents. That the Registrar's jurisdiction extends to determining issues of law is made clear by r 717(2)(c); where the Registrar is dealing with an objection he must "concisely state the reasons for the objection identifying any issue of law or fact the objector considers the Registrar must consider to make a decision in favour of the objector." The powers of the Registrar would seem wide enough to cover the situation where the validity of a costs agreement was put in issue. If the Registrar made a decision, one way or the other, and then proceeded to assess costs on that basis, his decision on the validity of the agreement could ultimately be reviewed by a judge pursuant to r 742. [19] But there is another course clearly open to the Registrar where an issue such as the validity of a costs agreement is raised. The Registrar may refer the question to the court pursuant to r 706(3). That is what was done here. [20] Once the question of the validity of such an agreement was referred to a judge then the judge had all necessary jurisdiction to determine the matter. It may be necessary in some cases to direct that pleadings be exchanged before the issue can be determined. The judge would, in the light of submissions made to him, give all such directions as would ensure that there was a fair trial of the proceedings. [21] Counsel for the respondent made the point that it would be unfair for a judge to declare that a costs agreement was void without all parties to the costs agreement having the opportunity of being heard. That is undoubtedly correct as a general proposition. If the court declared the agreement to be void at the insistence of a third party, such as the appellant here, then the practitioner would not be able to rely on the agreement in seeking to recover costs from the client. For that reason the solicitor should be notified of the challenge to the validity of the agreement and be given the opportunity to be heard. [22] Here at all times Roati & Firth Lawyers were acting for the respondent. That firm instructed counsel to appear for the respondent at first instance and again on the hearing of the appeal. The firm at all times was fully appraised of all arguments being addressed to the court with respect to the validity of the agreement. If that firm had any concerns that its position was being unfairly prejudiced, it was clearly in a position to raise such issues with the judge so that necessary steps could be taken to ensure a fair trial. The fact that no such submission was made clearly indicates that all relevant arguments supporting the validity of the agreement from the perspective of both the practitioner and the client were before the court. [23] In light of all those considerations, it is clear that the appellant had the necessary standing to challenge the validity of the costs agreement the respondent was seeking to rely on before the Registrar assessed costs on an indemnity basis. [24] The appellant is therefore entitled to a declaration that the costs agreement is void by virtue of s 48F(1) of the Act. The costs assessment should then proceed before the Registrar on the basis that there is no valid costs agreement to which he could have regard pursuant to r 704(3)(b). [25] The orders of the court should therefore be: (i) appeal allowed; -- 5 of 6 -- 6 (ii) declare that the costs agreement between Daniel Charles Casey and Roati & Firth Lawyers of 10 July 2000 is void by operation of s 48F(1) of the Queensland Law Society Act 1952; (iii) order that the respondent pay the appellant's costs of the proceedings at first instance and of this appeal to be assessed on a standard basis. [26] JERRARD JA: In this appeal I have read the reasons for judgment of Williams JA and the orders proposed by His Honour, and respectfully agree with those reasons and orders. I also agree with the observation by White J in Re Rosemac Pty Ltd’s Caveat [1994] 1 Qd R 137 at 141, that there are not degrees of voidness; and that in this matter, as in the legislation considered by White J in Re Rosemac, the meaning of the words used in s 48F(1) and (2) is so plain that there cannot be scope for searching for legislative intent to displace it.1 [27] PHILIPPIDES J: I have had the advantage of reading the reasons for judgment of Williams JA and agree with those reasons and the orders proposed. [28] I agree for the reasons explained by Williams JA that the word “void” used in s 48F(1) of the Queensland Law Society Act 1952 (Qld) (“the Act”) does not mean “voidable”. No basis was demonstrated for construing it other than in accordance with its ordinary meaning; that is, having no legal effect for any purpose. That conclusion is reinforced by the fact that the term is used elsewhere in the same section of the Act (s 48F(2)) in circumstances where it is clearly intended to mean “void” and not “voidable”. [29] I also agree that the appellant had sufficient standing in the present case to seek a declaration that the costs agreement entered into between the respondent and his solicitors was void. The appellant, being liable to pay indemnity costs to the respondent, has a real interest in the determination of the validity of the costs agreement. 1 Wilson J also applied those remarks by White J in Jimmy Chee Mee Wan v NPD Property Development Pty Ltd [2004] QSC 232 at [24]. -- 6 of 6 --