Drew, Sharon --- "Costs column: The High Court considers the Chorley exception" [2019] PrecedentAULA 78; (2019) 155 Precedent 48

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UPDATE: THE HIGH COURT CONSIDERS THE CHORLEY EXCEPTION

By Sharon Drew

The High Court delivered judgment in the matter of Bell Lawyers Pty Ltd v Pentelow^[1] on 4 September 2019, with the central issues for determination being whether ‘the Chorley exception’^[2] should continue to be applied in Australia, and if so, whether it applies to barristers who represent themselves (as well as solicitors).

The High Court unanimously held that the principle should not be applied to barristers as well as solicitors, with the majority also concluding that it should not be recognised as good law in Australia. Justice Nettle did not see a ‘need or justification’ for deciding whether the Chorley exception should be abolished in Australia.^[3]

The plurality comprising Kiefel CJ, Bell, Keane and Gordon JJ described the Chorley exception as ‘an affront to the fundamental value of equality of all persons before the law’.^[4]

Similarly, Edelman J held that:

‘it is impossible to justify an exception that recognises costs for expenditure of time in litigation by an unrepresented solicitor litigant who performs work on the case but not by any other unrepresented litigant’.^[5]

According to the Court, the following factors supported the conclusion that the Chorley exception should not be recognised in Australia:

• The definition of ‘costs’ in s3(1) of the Civil Procedure Act 2005 (NSW).

• A self-represented solicitor lacks impartial and independent advice, and ‘may also lack objectivity due to self-interest’,^[6] potentially resulting in higher legal costs to an opposing party.

• It is undesirable for a solicitor to act for themselves in litigation from a professional ethics perspective, and should not be encouraged.^[7]

• The possibility of allowing a solicitor to profit from their participation in litigation was unacceptable.^[8]

The Court dismissed one rationale for the Chorley exception – that the professional skill and labour of a solicitor ‘can be measured by the law’^[9] – as insufficient to justify an exception to the rule that self-represented litigants are not entitled to compensation for time spent preparing and conducting their own cases.^[10]

The position of in-house lawyers is not affected by the High Court’s rejection of the Chorley exception, and it remains the case that an employer is entitled to recover costs in circumstances where an ordinary party would be entitled to costs.^[11] In his separate judgment, Gageler J characterised recovery of costs of in-house lawyers as an application of the general principle that party/party costs are a partial indemnity for legal costs incurred in the conduct of litigation, albeit that the legal costs are incurred in the form of an overhead.^[12]

In contrast, the position of an incorporated legal practice represented by a solicitor who is the sole director and shareholder remains in doubt.^[13]

There can no longer be any doubt that the Chorley exception is not good law within Australia, and the general principle that self-represented litigants are not entitled to compensation for time spent preparing and conducting their cases applies to the legal profession as to any other class of litigant.

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] [2019] HCA 29 (Bell Lawyers).

^[2] The rule of practice established by London Scottish Benefit Society v Chorley [1884] UKLawRpKQB 115; (1884) 13 QBD 872 (Chorley) at 877 that a self-represented litigant who happens to be a solicitor may recover their professional costs of acting in the litigation.

^[3] Bell Lawyers, [70].

^[4] Ibid, [3].

^[5] Ibid, [91].

^[6] Ibid, [18].

^[7] Ibid, [19], [92].

^[8] Ibid, [32].

^[9] Chorley, 877.

^[10] Bell Lawyers, [22].

^[11] Ibid, [50].

^[12] Ibid, [68].

^[13] Ibid, [51].