Drew, Sharon --- "Costs column: The High Court considers the scope of the Chorley exception - Sharon Drew" [2019] PrecedentAULA 50; (2019) 153 Precedent 48

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THE HIGH COURT CONSIDERS THE SCOPE OF THE CHORLEY EXCEPTION

By Sharon Drew

Self-represented litigants generally speaking are not entitled to compensation for time spent preparing and conducting their cases.^[1] The nature of a party/party costs order is a partial indemnity for legal costs incurred in the conduct of litigation, and does not extend to other loss or expenses incurred by a party.^[2]

Australian courts have followed an exception to this general principle for solicitors who represent themselves, known as the ‘Chorley exception’ following the 1884 UK decision of London Scottish

Benefit Society v Chorley.^[3] In the matter of Guss v Veenhuizen (No. 2), the High Court noted that the basis of the Chorley exception ‘is not one of privilege to a solicitor ... but is that work done by a solicitor can be quantified on a taxation of costs’.^[4]

The High Court in Cachia v Hanes described the exception as ‘somewhat anomalous’ and ‘limited and questionable’, the justification for the exception as ‘somewhat dubious’ and commented that, ‘If the explanations for allowing the costs of a solicitor acting for himself are unconvincing, the logical answer may be to abandon the exception in favour of the general principle’.^[5]

However, the application of the exception has not been adopted by Australian courts without question. As noted by Professor Dal Pont, the issue awaits definitive High Court authority but the Chorley exception may have a limited lifespan.^[6]

The opportunity has now arisen for the High Court to consider the application of the Chorley exception to barristers, in the matter of Bell Lawyers Pty Ltd v Pentelow & Anor.

Ms Pentelow, a barrister, successfully sued Bell Lawyers for unpaid fees and was awarded costs of the proceedings. The costs claimed included $28,258.90 in costs for work performed by Ms Pentelow herself. Those discrete costs were disallowed by the costs assessor on the basis that she was legally represented by a solicitor and senior counsel, and that in NSW the Chorley exception did not apply to barristers. A review panel upheld the assessor’s determination, also concluding that the Chorley exception did not apply to barristers. The review panel’s determination was upheld in the District Court by Judge Gibson.^[7] However, on appeal to the Court of Appeal Ms Pentelow’s application was allowed in part.^[8]

The majority of the Court of Appeal (Beazley ACJ and Macfarlan JA) noted that the rationale of the Chorley exception was based on the ability to quantify the type of legal work generally undertaken by solicitors. As barristers now also undertook such legal work and their fees were subject to costs assessment, the majority held that the Chorley exception ought to apply to barristers in Ms Pentelow’s circumstances. However, Meagher JA would have dismissed Ms Pentelow’s application, as the ‘costs’ to be considered for partial indemnification by costs orders were those actually incurred and payable, based on the statutory power to award costs^[9] and the definition of ‘costs’ as ‘costs payable in or in relation to the proceedings, and includes fees, disbursements, expenses and remuneration’.^[10]

Leave was granted to Bell Lawyers to appeal to the High Court on 14 December 2018, and the appeal was heard before the Full Court of the High Court on 9 May 2019.

The issues for determination by the High Court include whether the Chorley exception should continue to be applied, and if so, whether it applies to barristers as well as solicitors, and whether it applies in circumstances where the lawyer litigant has retained legal representatives.

Both parties raise the historical basis of the Chorley exception (and whether it is properly an ‘exception’). Policy considerations are also cited – including possible cost-savings, professional conduct rules and conflict of interest where a lawyer litigant is self-represented, whether there is any proper basis for distinguishing between solicitors and barristers in legal practice, and the basis on which in-house legal costs are recovered.

Judgment has been reserved, and as at the time of writing has not yet been delivered by the High Court.

Sharon Drew is Principal of Blue Ribbon Legal – specialising in legal costs disputes. PHONE [phone] EMAIL [e-mail] WEB www.blueribbonlegal.com.au.

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^[1] Cachia v Hanes (1994) 179 CLR 403 (Cachia).

^[2] Ibid, [11].

^[3] [1884] UKLawRpKQB 115; (1884) 13 QBD 872.

^[4] [1976] HCA 57; (1976) 136 CLR 47, [8].

^[5] Cachia, [12], [14].

^[6] G Dal Pont, Law of Costs, 4th edition, LexisNexis Australia, 2018, 7.40.

^[7] Pentelow v Bell Lawyers Pty Ltd (ACN 114 524 724) trading as Bell Lawyers [2016] NSWDC 186.

^[8] Pentelow v Bell Lawyers Pty Ltd [2018] NSWCA 150.

^[9] Civil Procedure Act 2005 (NSW), s98(1).

^[10] Ibid, s3(1).