D M Wright & Associates, Re [1999] QSC 250

I ·1 ( b76 5S- State Reporting S(C(Q):(5""O Bureau -('I'le TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND REVISED COPIES ISSUED State Reporting Bureau Date;tffl 'f I ~ =7 / , CIVIL JURISDICTION .1 \i SHEPHERDSON J Mise No 6511 of 1998 IN THE MATTER OF THE LEGAL PRACTITIONERS ACT and IN THE MATTER OF A BILL OF COSTS OF D M WRIGHT & ASSOCIATES, SOLICITORS DELIVERED TO HAL AND SYLVIA ARCHER BRISBANE .. DATE 16/07/99 JUDGMENT 1 I j. , 1111 nllllr, The L!lw COllrls, GCllr"c Slrcet, Brisballe, Q. .tOO() T I I (07) 12 '7 '11'1) J" 1)7 ~"7 l' .... e eplolI(,: • 'i 'i. II ':1:,(: ( ) .'_'i 5:'._ -- 1 of 13 -- 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) HIS HONOUR: This is an application by D M Wright & Associates, Solicitors, for an order that the taxation of costs by the taxing officer be reviewed. The present applicants prepared, in taxation form, a bill 10 of costs against a brother and sister named Hal Archer and Sylvia Archer. The bill was headed "In the matter of the winding up of Dunwingeri Pty Ltd and in the matter of a bill of costs between DM Wright & Associates and Hal Archer and Sylvia Archer. II The bill was taxed at the clients I 20(;, request. The bill was brought in at $11,739.72. Of that sum $11,168.24 was disallowed and the balance of $571.48 was allowed. On 10 February 1999 the applicant filed notices ! ;;. 30 of objection to the taxing officerls decision and applied for review by the taxing officer. By a document dated 25 May 1999 the taxing officer answered the objections and dismissed them. The application before me follows from 40 that dismissal. I should add that the application has sought to have a number of items in the bill allowed as well as an order that the respondents Hal Archer and Sylvia Archer do pay so the present applicantls costs of and incidental to the taxation (sic). The taxing officer has given detailed answers and it is apparent from the answers that a matter in issue before him 60 2 JUDGMENT -- 2 of 13 -- \ / iJ 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) was what is called lithe nature of the retainer". Before I go further I should say that according to the taxing officer's answers the taxation of the costs was set to proceed for 1.5 days commencing on 9 November 1998 but did not begin until 10 November. He writes: 10 II It soon became apparer~t from the diary notes which were produced to elaborate and support the claims made in the bill that much of the work performed by the respondent was not in accordance with their retainer which was to wind up Dunwingeri Proprietary Limited. 20 Consequently, the matter was stood down at 11.25 a.m. on 10 November to allow the respondents to consider their position and to lead evidence regarding the nature of the retainer. I An application was made when~ the matter resumed at 12.00 p.m. (sic) to have the taxation adjourned so as to have the bill of cots referred to a Judge for a direction as to how the taxation was to proceed. Clearly, this issue was a matter for the taxing officer and did not require the involvement of the Court. As a result, the application was refused. The matter was unable to be concluded on 10 November and therefore it was adjourned to 12 November. However, after a further 20 minutes of the hearing on 12 November the respondents, again, applied for an adjournment of the taxation. 3 JUDGMENT 30 40 50 60 -- 3 of 13 -- 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) The application ~as granted and the taxation was adjourned to 13 November. On 13 November, Mr Martin, the solicitor who appeared for the respondents throughout the taxation proceeding did not attend due to a dental condition. The taxation was- adjourned to 10 1 February 1999 for a further three days. During one of the adjournments mentioned above Ms Diane Wright, the principal of the respondent firm, appeared with Mr Martin. It was Ms Wri~ht who performed the work the 20 0subject of the respondent's retainer and it would have _ been desirable for her to have conducted the taxation as she would have been more familiar with the matter than Mr Martin. f 30 At the time I understood that Ms Wright had attended the taxation so that she would be available to give evidence of the terms 0f the firm's retainer but she chose not to lead any evidence. At the conclusion of the taxation hearing and after the receipt of the respondent's notice of objections for this review a further hearing was conducted on 5 , March 1999 to have the respondents provide documentary evidence which might tend to support the facts asserted in a number of the respondent'sobjections, namely that 'the clients ' instructions (were) to wind up the company Dunwingeri Proprietary Limited without the need to appoint a liquidator. I 4 JUDGMENT 40 50 o o o -- 4 of 13 -- 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) The respondent provided on 22 April 1999 the documents which are annexed to t~is response to their objections. It has be~n necessary to relate a history of the "proceeding to show that the respondent has been given every consideration to produce any evidence 10 which might establish the nature of the firm's retainer if it desired to do SO." Annexed to the taxing officer's answers are quite a large ( '. number of what are photocopies of handwritten, what I shall 20 call, diary notes. The taxing "officer then went on to consider the nature of the l:etainer and has quoted what he saw as relevant parts of thE diary notes in order to provide a true understanding of the nature of the matter. I do not propose to go through all those extracts which are 30 ,. reasonably extensive. As will have already been seen it was the contention of the solicitors that the instructions from the Archers were to wind up the company without the need to appoint a 40 liquidator. At page 5 of hjs answers the taxing officer said this: "From the evidence which is available it is obvious that the respondent was engaged to wind up the company Dunwingeri Proprietary Limited. From a perusal of the 50 bill it is equally obvious that the company has not been wound up. 60 5 JUDGMENT -- 5 of 13 -- 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) Despite the lapse of a period of almost three years from the receipt of the initial instructions and the incurrence (sic) of an amount of $11,739.72 (the amount at which the bil.l was delivered) the respondents have not performed their obligations under 10 the retainer. There iE no indication of a letter from the respondents to the applicant by which the scope of their retainer was confirmed. There are no diary notes and no affidavit or oral 20() evidence which might confirm that the respondentls retainer was, as is now asserted by the respondent, to owind up the company without the appointment of a liquidator. The only evidence which is available is I the diary notes and they do not disclose that the ~ 30 company was to be wound up without the appointment of a liquidator. The diary note which supports the claim at 213 refers to Hal Archer demanding the appointment () of a liquidator "now" but that does not confirm the respondentls assertion. 40 o It may indicate only that he wanted the appointment to occur immediately and this would not be surprising given that Hal Archerls demand was communicated to the respondent by Sylvia Archer on 6 June 199729 months 50 after the respondent was initially instructed to wind up the company by Sylvia Archer. II 60 6 JUDGMENT -- 6 of 13 -- \\ 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) Mr Gray, who appeared for the applicant's solicitors today did not dispute that the retainer was to wind up the company. His argument, as I understood it, .was that the taxing officer made an error of law in finding, in effect, that the only way the company could be wound up was by the 10 appointment of ~ liquidator. with respect I do not accept this correctly states the position. It will be clear from the extracts from the taxing officer's answers which I have quoted above that he W was well aware of the solicitor's contention that their retainer was to wind the company up "without the appointment of a liquidator". I However, as will be seen from the above extract the taxing~ ~.. officer found against this contention on the basis that there was no evidence to support that view. I should say that item number 2 on the bill of costs refers to a telephone attendance by the solicitors on Sylvia Archer on 26 January 1995. The bill merely says, liTo discuss the winding up of the company; discussing Hal Archer's opinion of same and matters in general and involvement of the company account." There is a diary note in respect of this attendance and as the taxing officer has noted and I quote: "She has tried to speak to Hal and cannot resolve issues at all. Hal has said that she cannot wind up the company without his permission. I advised her 7 JUDGMENT 40 50 flO -- 7 of 13 -- 160799 T1/JAP22 M/T 5091/99 (Shepherdson J) that as a director she could definitely wind up the company. In fact, if the company was insolvent she should not be trading and she had a duty, as a director, not to trade while company insolvent. She said she did not know that. She said if they sold 10 every thing- they could pay their bills but would not have a lot left. In any event, she cannot go on. She says she can see no alternative as she is desperate \ and wants me to explain to Hal that they must wind up Dunwingeri and go their separate ways." Although I have set this out in full the diary note contains abbreviations. I (J Th d ' t f d t b th t ' offl' cer show thaJ: 30 e lary no es re erre 0 y e aXlng .~ there was an entry on 6 February 1995: II Advised (the accountant) would be splitting up company. He is of view company must be wound up or 0 bankruptcy/insolvency is inevitable - apparently he has been telling them this for years." 40 C) Mr Gray has conceded that if he fails to have the findings made by the taxing officer as to the nature of the retainer overturned, then there is no point in considering any of the items in the bill, which are set out in the summons for so review. The taxing officer, in my vjew, was, on the material before him, entitled to reject the claim of the respondent 60 8 JUDGMENT -- 8 of 13 -- 160799 T2/JJD24 M/T 5091/99 (Shepherdson J) solicitors that the retainer was to wind up the company without the appointment of a liquidator. That being so, it seems to me that the taxing officer correctly interpreted what material he had before him as pointing to a winding up of the company with the appointment of a liquidator. At page 5 of his reasons, the taxing officer said this: "Clearly, Sylvia Archer approached the respondent firm with the view to having the company wound up according 10 to law, otherwise the assistance of a solicitor would 20 not have been required. Indeed, the respondent in his letter to Hal Archer, dated 23 January 1998, confirms the legal approach which was required. However, there has been, according to the evidence of the diary, a I distinct absence of legal direction and advice by the~ 30 respondents. One might have expected that the diary notes would have recorded advice to Sylvia Archer, such as" The taxing officer then went on to consider options 40 available to wind the company up, an explanation of a voluntary winding up, the essential elements for a voluntary winding up, including examples of the need to pass a special resolution and other matters and he said that those aspects appear not to have been canvassed with so Sylvia Archer or her brother. He made other criticisms of the solicitors. He then discussed the fact that Ms Diane Wright and Sylvia Archer £0 9 JUDGMENT -- 9 of 13 -- 160799 T2/JJD24 M/T 5091/99 (Shepherdson J) were friends who shared a common interest in the breeding of Arabian horses and at page 6, he said this: IIHad the respondent acted promptly to wind up the company in accordance with the instructions which had been received and had the respondent complied with the 10 Corporatiofis Law, substantial savings in legal costs would have been made, riot the least of which would have been the cost associated with these telephone conversations. II These were conversations between Ms Wright and Ms Archer. He went on: o"If the company was solvent and the available evidence seems to indicate that it was not, then the respondentI ought to have properly advised Sylvia Archer as to he; 30 legal rights and the course she might take to retire as a director and to ottain her share of the capital of the company. Beyond that, the solicitors should have advised that 40 they would only need to be approached for advice, or o legal work, when the need arose such as the preparation of any conveyancing documents for the individual directors when the time came (which costs are claimed in the bilJ. but which are not costs of the so winding up. There was no need for the solicitors to deal with the matter upon a daily basis in a hand holding capacity 60 10 JUDGMENT -- 10 of 13 -- 160799 T2/JJD24 M/T 5091/99 (Shepherdson J) (see as an example the diary notes for items 5 to 7 in the bill). Ms Archer was capable of obtaining valuation for the horses and/or properties to sell and of seeking accounting advice without the necessity for the respondent to be present or involved at all. The solicitors were under an obligation to advise Ms Archer that they did not need to undertake such attendances and it is only after such a warning is given but is not heeded by a client (that is specific instructions are given to undertake the work and to incur the costs) that a solicitor will be entitled to recover the costs of such unnecessary work. A solicitor has a duty to advise and to protect a client 10 20 from unnecessary expense. II ! ;,: 30 He cited a number of authorities, including re: Blyth & Fanshawe (1882) 10 QBD 207 and re: Windeyer, Falle and Co, ex parte Falle, 1930 (31SR) NSW (145). Now, I should perhaps say that this was not a case where witnesses were 40 called; there was no oral evidence led before the taxing officer and consequently, there is no question of credibility of witnesses. As I have said, Mr Gray concedes that there was a retainer 50 to wind up the company, but it is my firm view that there being as the taxing officer said - and this finding is not challenged by Mr Gray: 60 11 JUDGMENT -- 11 of 13 -- 160799 T2/JJD24 M/T 5091/99 (Shepherdson J) "The only evidence which is available is the diary notes and they do not disclose that the company was to be wound up without the appointment of a liquidator." That being so, it is my firm view that the applicant has 10 failed to persuade me that the decision of the taxing officer was incorrect or against the evidence or otherwise such that it should be set aside by me. Mr Robinson has appeared for the respondents today and I accept his submissions that it has been a long held Common Law pr~nciple that in a solicitor and own client taxation (as was the case here), the solicitor is unable to recover the C) cost of "unusual" expenses, unless he has given the client the appropriate warning. ! ;.:. 30 He refers to the principles set out in re: Blythe and Fanshawe, which was quoted by the taxing officer and he points out, correctly, that that principle has been upheld c=J in Queensland in re: Skinner and Smith's bills of costs (No 40 2) 1990, 1 Queensland Reports, 180, at page 181, which was a unanimous decision of the Full Court. (J He refers to the following extract in the judgment of Street,Chief Justice at page 149 in re: Windeyer, FaIle & Co, ex parte FaIle, (supra): :'0 " ... it is an equally well recognised principle in the taxation of costs between solicitor and client, that in the absence of special circumstances, a solicitor 60 12 JUDGMENT -- 12 of 13 -- 160799 T2/JJD24 M/T 5091/99 (Shepherdson J) cannot charge for work which is useless towards accomplishing the object his client has in view." In Hill v. Featherstonhaugh (7 Bingham 569), Tindall CJ said: (at pages 571-572): 10 "I've always thought tr.at if an attorney, through inadvertence or inexperience, incurs trouble which is useless to his client, he cannot make it a subject of remuneration, the meanjng of which is a reward for ("' useless labour." 20 \ In my respectful view, the taxing officer correctly approached this matter and I have come to the conclusion that for reasons which I have given, the summons must be dismissed. I so order. ! ~ 30 HIS HONOUR: I order the applicant, D M Wright & Associates, to pay the costs of the respondents, of and 40 incidental to the summons., to be taxed. so 00 13 JUDGMENT -- 13 of 13 --