Abdul-Karim v Attorney General's Department [1999] NSWSC 79 (10 February 1999)

Last Updated: 25 February 1999

NEW SOUTH WALES SUPREME COURT

CITATION: Abdul-Karim v Attorney General's Department [1999] NSWSC 79

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): 4948/98

HEARING DATE{S): 10 February 1999

JUDGMENT DATE: 10/02/1999

PARTIES:

Michael Abdul-Karim (1st plaintiff)

John McEncroe (2nd plaintiff)

Attorney General's Department (1st defendant)

Anthony Hamod (2nd defendant)

JUDGMENT OF: Young J

LOWER COURT JURISDICTION: Not Applicable

LOWER COURT FILE NUMBER(S): Not Applicable

LOWER COURT JUDICIAL OFFICER: Not Applicable

COUNSEL:

Plaintiff: M Hilbery

2nd Defendant: P Finch

SOLICITORS:

Plaintiff: McKells

2nd Defendant: W G McNally & Co

CATCHWORDS:

Procedure [673]

Costs

Cost agreement

Barrister to receive 20% of monies recovered

Unenforceable

Legal Profession Act

Professions [151]

Costs

Barrister

Unenforceable costs agreement

Effect

Professions [172]

Lien

Claim on sum recovered by client for costs under Costs in Criminal Cases Act

Whether barrister has lien

ACTS CITED:

Legal Profession Act 1987 (NSW) s 18

Costs in Criminal Cases Act 1967 (NSW) ss 4(2), 6

DECISION:

Claim for lien refused

JUDGMENT:

THE SUPREME COURT

OF NEW SOUTH WALES

EQUITY DIVISION

YOUNG, J

WEDNESDAY 10 FEBRUARY 1999

4948/98 - MICHAEL ABDUL-KARIM & ANOR v ATTORNEY GENERAL'S DEPARTMENT & ANOR

JUDGMENT

1 HIS HONOUR : The first plaintiff is a member of the Bar. The second plaintiff is a solicitor who instructed the first plaintiff. Moneys are allegedly owing to them. For reasons set out later moneys for legal costs were to be paid by the Attorney General's Department to the second defendant in respect of costs in the same matter as the plaintiffs were acting for the second defendant. The plaintiffs sought to restrain the payment. However the payment was made and an interim injunction was granted to restrain the second defendant from dealing with part of the money until the matter could be heard.

2 The second defendant had the misfortune to be charged with various criminal offences in respect of which he was acquitted by Magistrate Horler. The second defendant may have claims against the State or other people in connection with the charges that were brought and the month's imprisonment he suffered pending his acquittal. The second defendant was associated, to use a neutral word, with a company Hamock Investments Pty Ltd.

3 On 17 October 1996, at a date when it would seem that Mr Hamod himself was bankrupt (though I am not aware of whether that bankruptcy was later annulled, and, if it was, what effect that might have) a document headed "Legal Profession Act Conditional Costs and Disclosure Agreement" was entered into between Hamock Investments Pty Ltd and the first plaintiff.

4 That agreement said that Mr Abdul-Karim was briefed to attend court when and as required, advise, negotiate and draft documents, and that the assessment of fees was to be twenty percent of the amount recovered in the proceedings or negotiated settlement with any of the "above parties", which presumably meant the Director of Public Prosecutions and the Fraud Enforcement Agency, or the New South Wales Government. The agreement concluded by saying, "all other terms, whether oral or implied, are excluded".

5 The document is an extremely peculiar one. It does not name the parties. It is only executed by Mr Abdul-Karim, on the one part, and Hamock Investments, on the other part. Other evidence before me shows this was deliberately done because of Mr Hamod's bankruptcy. In his affidavit Mr Abdul-Karim cursorily refers to this agreement as being made by Mr Hamod through his company, but that hardly accords with what is on the document, especially when one has to exclude all implied terms.

6 The agreement is contrary to the Legal Profession Act 1987. This is for at least two reasons. The first is that s 188 of the Legal Profession Act 1987, as amended, provides that a costs agreement is not to fix costs as a proportion of the amount recovered in any proceedings. Secondly, the provisions in the Act do not apply to criminal proceedings. There may be some room in criminal proceedings to apply the Common Law where one could have a costs agreement on the basis of no win no pay, but otherwise proper and normal costs. Whether one can do that or not, the latent breach of s 188 of the Act is something which means that the costs agreement is at least unenforceable, if not illegal and void.

7 There is a very interesting point here which has not been argued, and I do not wish to be taken as having decided it, as to whether the agreement can operate so as to make it clear that Mr Abdul-Karim agreed to be paid by the company and only the company and thus remove Mr Hamod's personal liability.

8 Against that proposition can be put the well-known case of Head v Kelk (1961) 63 SR (NSW) 340, that one does not draw that inference unless one really has to, and it may be also said that if this agreement is void one cannot imply the inference from it. On the other hand, the argument is open and should be left for the proper occasion.

9 The proceedings before the Magistrate were very protracted. It is very difficult to reconstruct from the evidence exactly what happened, but it would seem that between 17 March 1997 and 4 June 1997 the matter was before the Magistrate on at least nine hearing days whilst the prosecution case was presented, and that on each of those days Mr Abdul-Karim appeared for the second defendant, instructed by John McEncroe & Co.

10 On 4 June the Magistrate found a prima facie case. There was then discussion between Mr Abdul-Karim and the second defendant as to the way the proceedings should continue. It would seem that the second defendant rejected Mr Abdul-Karim's advice and terminated his retainer.

11 Thereafter either Mr Hamod appeared for himself or was represented by Mr Paul Finch of counsel. The case went on in September and October 1997, for five days in January 1998 and for five days in March 1998, and on 3 April 1998 the Magistrate at a summary trial found Mr Hamod not guilty.

12 Magistrate Horler then considered an application for a certificate under the Costs in Criminal Cases Act 1967, and on 30 July 1998 granted such a certificate to Mr Hamod in the sum of $98,489. She gave brief reasons for that view, which are in evidence before me. She says that a claim was made for costs of over $300,000; that the prosecutor had said that only $40,000 should be allowed, but that having considered the suggested guidelines of daily rates for barristers and solicitors employed by the Director General of the Attorney General's Department to the Department of Public Prosecutions she would allow $98,489.

13 The provisions of the Costs in Criminal Cases Act state that when such a certificate is given the person to whom it has been granted may under s 4(2) apply to the Attorney General's Department for payment of the costs and the Act, subject to certain exceptions, requires the officer of the Attorney General's Department to process the claim and refer it to the Treasurer and for the Treasurer to pay it to the person named in the certificate.

14 I should note that s 6 of the Costs in Criminal Cases Act for some extraordinary reason says:

"No certificate granted pursuant to this Act shall be admissible in evidence in any proceedings."

15 The certificate in the instant case was tendered by consent and without objection, for the obvious reason that without the certificate the first plaintiff could not succeed and without the certificate the second defendant could not base his arguments.

16 If somehow or other there was an error in admitting the certificate then the result would be that the first plaintiff's claim would fail in limine. However, I merely make this statement so no-one can say the matter was overlooked.

17 The plaintiffs moved as a matter of urgency for the second defendant to be restrained from dealing with the moneys. This was originally granted ex parte by Windeyer J on 8 December 1998 and has been continued up to today.

18 The first plaintiff submitted a "bill" which is attached to Mr Hamod's affidavit of 20 January 1999 and based on an hourly rate of $300. It claims $52,690, that being nine hearing days in court at $1500 per day, and the remaining amount of approximately $40,000 for reading documents and conferring and reviewing evidence.

19 The solicitor Mr McEncroe has submitted a much lower bill for some $3,700. Although both the barrister and the solicitor have claimed a lien, Mr Paul Finch counsel for the second defendant has agreed that his client will, for a reasonable time, retain in his current solicitor's trust account the amount claimed by Mr McEncroe pending the delivery of a bill in taxable form.

20 It would seem to me that such an undertaking removes consideration of any further order having to be made to secure Mr McEncroe's position. However, as against Mr Abdul-Karim there is no such undertaking for, I would think, fairly obvious reasons.

21 Mr Finch puts that there is no case here for continuing the injunction freezing the $52,000-odd claimed by Mr Abdul-Karim. As I understand his submissions there are six points:

(1) A lien presupposes a debt, and there is no debt here because the costs agreement is void;

(2) If there is a debt it is the company that owes it and not Mr Hamod personally;

(3) That the agreement made is completely void so can give no rights at all to Mr Abdul-Karim;

(4) Mr Abdul-Karim cannot apply for a lien because his hands are unclean;

(5) Mr Abdul-Karim's efforts did not, on the balance of probabilities, produce the fund in question; and

(6) A whole series of legal advisers were involved and it is not possible on the evidence to work out what sum is attributable to Mr Abdul-Karim's participation.

22 There is no doubt, as I have said, that the agreement is void, or at least unenforceable, so that it can give of itself no rights to Mr Abdul-Karim. As Mr Hilbery, Mr Abdul-Karim's counsel submits, it may well be open to Mr Abdul-Karim to submit a bill in taxable form so that it can be accepted by Mr Hamod, or, alternatively, assessed by a costs assessor. That process may involve some embarrassment for Mr Abdul-Karim, but it is a course that is open to him.

23 I should make it plain that although the present application is really to secure a solicitor's lien, the word "lien" in the current context is a bit of a misnomer. As is pointed out in the cases which are summarised in Fisher & Lightwood's Law of Mortgage Australian Ed (Butterworths, Sydney, 1995) p 60, the current right does not have the characteristic of a lien because there is no actual property in the hands of the barrister which he can retain pending something happening. The property is in someone else's hands and all that the solicitor or barrister has is a right to claim the intervention of the Equity Court so that the fund will stand as security for costs.

24 Courts have over the centuries considered that they should aid members of the legal profession and others whose work has brought into existence a fund of money, where the person who has possession of that fund of money is going to take the benefit of it without acknowledging the real burdens that should be over it in the claim of the person whose efforts secured it. So if as a result of strenuous negotiations by a solicitor a matter is settled for £50 then Equity will charge that £50 with the proper costs of the solicitor in the negotiations; see Ross v Buxton (1889) 42 Ch D 190.

25 The court will come to the aid of the barrister or solicitor even before the bill is taxed; see for instance Johns v Cassel (1993) 6 BPR 13, 134, though Hodgson J said in that case that before taxation of costs the court will only intervene to the extent of what it considers reasonable and not necessarily for the full amount of the costs claimed by the solicitor.

26 The cases show that the remedy is a very flexible one, as Jordan CJ said in Ex parte Patience; Makinson v The Minister (1940) 40 SR 96 at 108:

"The remedy provided by the inherent jurisdiction is a flexible one. It is available whenever a right to receive money has been established as a result of legal proceedings, notwithstanding that the costs have not yet been taxed and that there is not any formal judgment. ... It will be made available whenever it is shown that there is some risk that the solicitor may otherwise go unpaid." (I have omitted reference to authorities)

27 There is certainly a risk in the present case that Mr Abdul-Karim will not be paid if he does not get some sort of lien, but other matters need to be considered before an order can be made.

28 The authorities show that in a proper case the jurisdiction will cover orders for costs that are made in favour of the person who is retaining the money. This appears clearly from Re Wedgwood; Ex parte Bank of New Zealand [1993] FCA 368; (1993) 116 ALR 153, and see Re Fuld (No 4) [1968] P 727.

29 However, in Fuld's case the court thought that where there were a whole series of solicitors, whose collective efforts had brought about the verdict, it was not appropriate to make an order for a lien, and it merely froze the funds for a couple of weeks whilst the solicitors forwarded bills.

30 In the instant case, two months have passed from 10 December 1998 to 10 February 1999 and a bill in taxable form could have been put on, but the claim has always been, up until Mr Hilbery modified it this morning, for the full $52,000 pursuant to the costs agreement, so it would not seem to me that it is appropriate to make the lesser order as in Fuld's case.

31 The question is whether the court should, at the suit of Mr Abdul-Karim, grant the lien in the sense referred to in the authorities to which I have referred. A very good reason for not doing that would be the entering into and attempted enforcement of a costs agreement which is unenforceable under the Legal Profession Act and which is completely contrary to the policy of that Act.

32 I think another good reason for not granting the lien is that the costs agreement deliberately put the liability on the company for the costs and not Mr Hamod personally. I think a third good reason for not granting the lien is that Mr Abdul-Karim's evidence does not show on the balance of probabilities that he did produce the fund.

33 There is no doubt at all that Mr Abdul-Karim did considerable work on behalf of Mr Hamod, and in particular was in court for him for nine days. The evidence appears to be that what Mr Abdul-Karim did benefited Mr Hamod, in that at least it ate away at the credibility or reliability of the prosecution case.

34 However, when one turns to see the Magistrate's reasons for her certificate, she does seem to say that it is what came out in the defence case that made her reach the conclusion that the certificate should be granted. It should be observed that under the Costs in Criminal Cases Act the Magistrate just does not make an order because she finds that the defendant should be acquitted, rather she has to direct her mind as to whether the prosecution was reasonable and whether any act or omission of the defendant contributed to the prosecution.

35 She seems to have considered that it was the material put in the defence case that brought her to that conclusion. Furthermore, there is evidence from Mr Hamod that the matter was argued, so far as costs were concerned, on the basis of a claim for the costs for the time when Mr Hamod represented himself, or was represented by Mr Paul Finch, or Mr Paul Finch's instructing solicitor, and not the costs that were incurred towards Mr Abdul-Karim.

36 Although cases like Fuld (supra) make it clear that one can deal with the situation where more than one legal adviser contributes to the result, it is in practice difficult to do that. It is singular in the instant case that Mr Abdul-Karim and Mr McEncroe are the only ones who are making any claim. I would draw the inference that everybody else has been satisfied. Thus, even if all else were satisfied, I would not be satisfied on the balance of probabilities that Mr Abdul-Karim's efforts produced the fund.

37 Accordingly, the present proceedings must fail.

38 It is still open, of course, for Mr Abdul-Karim to proceed to have his costs assessed and to sue either Mr Hamod or the company in the ordinary course of litigation, but that is another matter.

39 There has been an interim injunction with an undertaking for damages, so the second defendant is entitled to refer the matter to a Master to assess the damages he has suffered through the fund having been frozen.

40 Accordingly, I dismiss the proceedings with costs. The second defendant is at liberty, provided he files a notice of motion not later than 11 March 1999, to apply to a Master to assess the damages that flow pursuant to the undertaking as to damages.

41 I should add that when I say that the proceedings are dismissed with costs I believe that the first plaintiff should pay the costs and there should be no costs by or against Mr McEncroe because the matter has been resolved between those parties, and the real dispute was between Mr Abdul-Karim and Mr Hamod.

42 The existing injunction is dissolved.

oOo

LAST UPDATED: 24/02/1999