SUPREME COURT OF QUEENSLAND CITATION: PARTIES: FILE NO: 6923 of 2003 DIVISION: PROCEEDING: ORIGINATING COURT: Holland & Anor. v. Queensland Law Society Incorporated & Anor. [2003] QSC 327 GREGORY IAN HOLLAND and MARK ANDREW HOLLAND trading as HOLLAND & HOLLAND SOLICITORS (applicant) v. QUEENSLAND LAW SOCIETY INCORPORATED (first respondent) and THE COUNCIL OF QUEENSLAND LAW SOCIETY INCORPORATED (second respondent) Trial Application Supreme Court, Brisbane DELIVERED ON: 26 September 2003 DELIVERED AT: Brisbane HEARING DATE: 21 August 2003 JUDGE: Helman J. CATCHWORDS: PROFESSIONS AND TRADES LAWYERS MISCONDUCT, UNFITNESS AND DISCIPLINE GROUNDS FOR DISCIPLINARY ORDERS SOLICITORS COSTS whether Queensland Law Society can make rulings or by-laws governing fees charged in no win, no fee litigation Queensland Law Society Act 1952 (Qld) ss. 4, 5, 5A, 48I Australian Conservation Foundation v The Commonwealth (1980) 146 CLR 493, cited Bateman s Bay Local Aboriginal Council v. Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247, cited Boyce v Paddington Borough Council [1903] 1 Ch 109, cited Healey v. Ballarat East Bowling Club [1961] VR 206 Onus v. Alcoa of Australia Ltd (1981) 149 CLR 27, cited Shop Distributive and Allied Employees Association v. Minister for Industrial Affairs (S.A.) (1995) 183 CLR 552, cited
2 COUNSEL: SOLICITORS: Mr P.J. Davis for the applicants Mr G.A. Shaw for the respondents Holland & Holland for the applicants McCullough Robertson for the respondents [1] The applicants, solicitors practising in Brisbane, seek four declarations concerning a ruling of the second respondent entitled Cap on Professional Fees in No Win, No Fee Speculative Personal Injury Claims which was to take effect from 22 August 2002. The declarations sought were: (d) That the ruling does not operate as a rule or by-law under the provisions of the Queensland Law Society Act 1952; That there is no legal obligation upon solicitors to comply with the ruling; That a failure by a solicitor to comply with the ruling, without more, does not constitute professional misconduct; and That the ruling has no legal effect. At the hearing the applicants sought to add, without objection, the words or unprofessional conduct after the word misconduct in. [2] The first respondent advised members of the ruling on 3 September 2002 in an email called a Managing Partner mail out. The email contained seven notices, the first being a message from QLS President Tom Sullivan review of QLS s regulatory function. Paragraph 6 of that notice was as follows: 6. The QLS has introduced a new ruling, effective from 22 August, prohibiting any solicitor, when acting on a no win no fee or speculative basis in personal injury matters, from charging a fee of more than half the nett award received by their client http//www.qls.com.au/mailout/m-frame-nowinnofees.htm. In effect, if the matter incurs professional fees much greater than the limit imposed by the new rule, the solicitor cannot claim more than the client takes home. Of course, every solicitor involved in such a case must have a signed client agreement before they can act, and the agreement must include a fair and reasonable fee. [3] The ruling, as it was promulgated on the first respondent s website, was as follows: Council Ruling Cap on Professional Fees in No Win, No Fee /Speculative Personal Injury Claims [new information 27 August 2002] The Council has formulated the following Ruling to direct practitioners and assist clients in personal injury claims conducted on a speculative or no win, no fee basis. A failure of compliance may render a practitioner liable to prosecution for professional misconduct or unprofessional conduct.
3 1.1 In any claim for damages for personal injuries in no win, no fee speculative personal injury claims, a solicitor (or firm) is entitled to charge reasonable professional fees pursuant to a written client agreement with the client. PROVIDED THAT If the solicitor s reasonable professional fees pursuant to the client agreement would exceed the amount ultimately receivable by the client, after the following deductions from the judgment or settlement monies:- any statutory or other refunds all disbursements incurred in the provision of the claim the solicitor s professional fees (including GST) then the solicitor shall reduce his fees in 1.1, so that those fees shall not exceed the amount ultimately paid to the client. EXAMPLE 1 If the settlement sum is $10,000 and the total of the expenses in 1.1 and above are $8,000 the solicitor shall not charge any more than $1,000 in 1.1. EXAMPLE 2 If the settlement sum is $10,000 and the total of expenses in 1.1 and above exceed that amount, the solicitor shall not charge anything for professional fees. 1.2 A solicitor of firm may in special circumstances apply to the Council of the Queensland Law Society for leave to raise a bill exceeding the amount permitted under this Ruling. 2. If an application is made pursuant to Paragraph 1.2, then the Society has the right to call upon the solicitor to present for inspection:- any client agreement and/or statement of account between the solicitor and his client the file relating to the claim any memos, notes or correspondence bearing in whole or in part upon the issue of costs in any claim for damages for personal injury conducted by the solicitor on a no win, no fee basis 3. When a solicitor receives instructions to settle a claim for damages for personal injuries, before he acts on those instructions he is obliged to inform his client of the minimum nett amount the client will receive from that settlement 4. This Ruling applies immediately and in respect of any settlement or judgment which occurs from 22 August 2002. COMMENTARY (NOT PART OF THE RULING) Legal Aid has not been available for personal injury claims for many years
4 Many solicitors now fund litigation for impecunious people who have good claims which would not otherwise be maintained. This is an important public service Most solicitors provide this service on a no win, no fee basis The Ruling is designed to ensure there is no potential for conflict of interest in duty For further inquiries in respect of this Ruling, please contact Bernie O Donnell, Deputy Secretary [Ph No: (07) 3842 5918] or Nick Masinello, Acting Director, Professional Standards Department [Ph No: (07) 3842 5939]. [4] At the hearing of the application, full submissions were made by Mr Davis on behalf of the applicants, and, on behalf of the respondents, Mr Shaw told me that his clients, while not consenting to the relief sought, were not going to offer any material or submissions opposing the applicants submissions. [5] Late last year a dispute arose between the applicants and the respondents concerning the application of the ruling to a bill rendered by the applicants. Mr Davis properly raised the question whether his clients have the requisite standing to pursue this application since that dispute was resolved in June this year. He submitted that his clients do have standing as they have a special interest in the class of work to which the ruling applies. They practise in an area of the law directly affected by the ruling, and it will have an impact upon the fees they may charge for work in small personal injuries claims. Their interest is then professional and pecuniary, so that, applying the principles explained in Boyce v. Paddington Borough Council [1903] 1 Ch 109, Australian Conservation Foundation v. The Commonwealth (1980) 146 C.L.R. 493, Onus v. Alcoa of Australia Ltd (1981) 149 C.L.R. 27, Shop Distributive and Allied Employees Association v. Minister for Industrial Affairs (S.A.) (1995) 183 C.L.R. 552, Bateman s Bay Local Aboriginal Council v. The Aboriginal Community Benefit Fund Pty Ltd (1998) 194 C.L.R. 247, I conclude that they do have standing to pursue this application. [6] Part 2 of the Queensland Law Society Act relates to the respondents. Section 4(1) provides that the first respondent is a body corporate and s. 4(3) that it is to have perpetual succession and may sue and be sued. Section 4(5) provides: (5) Subject to any restrictions by this Act expressed or implied, the society shall also be capable in law of doing all such other things as it may deem expedient for effectuating its objects. [7] Section 5(1) provides for the second respondent [f]or the good government of the society. Section 5(6) provides for the management of the first respondent by the second respondent: (6) Subject to the provisions of this Act, the council shall have the sole management of the society and of the affairs and concerns and the income and property thereof for the purposes and benefit of the society, and may exercise all powers vested in the society and do all such acts and things as are hereby directed or authorised to be done by the society. [8] Section 5A, so far as it is relevant, provides:
5 (1) The council may make rules for the following purposes to define the objects of the society; for the regulation and good government of the society and of the members and affairs thereof; (i) (j) to provide for additions to an alterations of the rules of the society; to empower the council to make by-laws of the society for any purpose with respect to which the society is authorised to make rules; (l) generally, to carry the objects of the society into full and complete effect. (2) A rule or by-law is subordinate legislation, and must be approved by the Governor in Council. [9] The applicants contentions are: (d) The ruling is in law a rule or by-law; There is no approval by the Governor in Council; therefore The ruling has no effect; and The ruling is inconsistent with s. 48I of the Act which prescribes the maximum amount of fees and costs that a practitioner may charge and recover. [10] Section 48I provides for the maximum sum a practitioner or firm may charge and recover from a client as fees and costs for work done. So far as it is relevant, it provides: 48I Maximum payment for work (1) The maximum amount of fees and costs a practitioner or firm may charge and recover from a client for work done is an amount calculated in accordance with the client agreement between the practitioner or firm and the client for the work; or 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 if there is no client agreement and there is no scale for the work provided under an Act an amount assessed
6 as a reasonable amount for the work by a tribunal costs assessor. [11] There is no doubt that the ruling is a rule or by-law. The preamble to it on the first respondent s website refers to the formulation of the ruling to direct practitioners and to the sanction of possible prosecution for failure to comply with it. Mr Sullivan, in his message, referred to the ruling as prohibiting any solicitor from charging a fee otherwise than in accordance with the ruling. The ruling then went beyond the category of suggestion, recommendation, or advice, and took on, and was intended to take on, the coercive character of delegated, or subordinate, legislation. ( The act of legislating may conveniently be defined as the creation and promulgation of a general rule of conduct without reference to particular cases : D.C. Pearce and R.S. Geddes, Statutory Interpretation in Australia, 5 th ed., 2001, para 1.2, p.1.) It was intended to be a rule, in the words of s. 5A(1), for the regulation of the members and affairs thereof. It follows that the ruling required the approval of the Governor in Council and, since it has not had that approval, it has no legal effect. The ruling was intended to regulate, for a certain class of work, the maximum payment for solicitors services and so was intended to amend s. 48I for that class of work. The first respondent clearly had no power to amend the Act and its power is restricted by the reservation in s. 4(5). [12] There are two further matters to which I should refer. The first arises from an outline of argument concerning the validity of the ruling prepared on behalf of the first respondent and sent to the applicants before a proposed meeting between the applicants and representatives of the respondents that was to take place on 15 April 2003. The argument was in essence that the ruling fell into a class of other directives i.e., other than rules or by-laws howsoever styled, for the advancement of the objects of the Society. The Solicitors Handbook, the argument continued, contains a significant number of rulings on a wide range of subjects of professional import, none of which possess the formal status of a rule or a by-law, but which are relevant to the determination of whether or not particular conduct is misconduct in the particular circumstances. Power to give such directives was, it was argued, ultimately derived from s. 4(5) in providing that the first respondent should be capable in law of doing all such other things as it might deem expedient for effectuating its objects. Among those objects was that provided for by rule 2(5) of the Rules of the Queensland Law Society Incorporated approved by the Governor in Council on 25 June 1987 (Qld Gov. Gaz., 27 June 1987, No. 82, pp. 2079-2122): To take such action as may be necessary to suppress dishonourable, improper, or unprofessional conduct or practices on the part of practitioners. An obvious response to that argument is that it overlooks the effect of the restriction on the first respondent s power provided for in the first words of s. 4(5), Subject to any restrictions by this Act expressed or implied, the effect of which would be to require a valid rule or by-law if a directive is to be binding on members in the way contemplated by the respondents, i.e., not as a suggestion or recommendation, or as advice, but as a general rule of conduct without reference to particular cases. That response was made to the first respondent in a letter to it dated 8 April 2003 from the applicants. But in any event, as there was no argument advanced before me on behalf of the respondents, I assume the argument recorded in the outline has been abandoned.
7 [13] Secondly, although the first respondent is a corporation the second is not, and it would appear to me that the members of the second respondent should have been joined, but as no objection was taken on their behalf in reliance on that irregularity I shall not pursue it further. In any event in the circumstances it is a defect in the proceeding capable of cure, if necessary: see Healey v. Ballarat East Bowling Club [1961] V.R. 206. I say if necessary because it may be that the members of the second respondent were, strictly speaking, unnecessary parties. [14] It follows that a case has been made out for making declarations,, and (d). Since the ruling has no legal effect the issue raised by declaration becomes hypothetical, and there is no need to consider it further; and I should record that Mr Davis did not press it. I shall invite the parties to make any further submissions on costs they wish to make.