The recent High Court decision in the case of Bell Lawyers Pty Ltd v Pentelow[1] will have significant ramifications for solicitors (and barristers) being self-represented in their own personal matters. But the question must now become: what does this mean for legal practices and in-house counsel?

Pay me my money!

The High Court of Australia in the Bell Lawyers Pty Ltd v Pentelow case has ruled that self-represented lawyers are not entitled to recover costs ‘incurred’ on their own behalf in their own legal proceedings.

As a General Rule, a self-represented litigant cannot obtain recompense for the value of their services in a litigation. The exception to this General Rule is the Chorley[2] exception which was derived from common law in the UK and allowed solicitors to recover their professional costs for acting in a litigation on their own behalf.

The High Court in this case has ruled that the Chorley exception is not part of the common law of Australia because it was an anomaly that represented an affront to the fundamental value of equality of all persons before the law.

Costs? Chorley not

In reaching their decision, the Justices of the High Court considered the definition of costs in Section 3(1) of the Civil Procedure Act 2005 (NSW) and interpreted the definition of costs payable to mean professional legal costs actually incurred in the conduct of the litigation. In this regard they concluded that the Chorley exception was inconsistent with statutory legislation in Australia and it was determined that the ‘costs’ of Ms Pentelow were not actually incurred during the proceedings.

They further reasoned that solicitors acting for themselves cannot be independently and impartially advising themselves, which often results in higher legal costs to be passed on to the other party in the event of an order for their costs.

Furthermore, it was determined that there was no reason to treat solicitors differently from other self-represented litigants and suggested that exempting lawyers in the past had given rise to an “undesirable” practice.

Lawyers, brace yourselves

A lot of the commentary by the Justices in the case surrounded what the implication of their decision, and their determination that the Chorley exception does not apply in Australia, would have on legal practices and in-house solicitors.

Chief Justice Kiefel and Justices Bell, Keane and Gordon held the view that in-house solicitors should be treated as acting outside the General Rule because it is accepted that the recovery of the professional costs of in-house solicitors enures by way of indemnity to the employer. However, although Justice Nettle agrees that the abolition of the Chorley exception should not disturb the well-established understanding in relation to in house-solicitors, he goes on to say that there are many forensic and social considerations that are relevant to determining whether an employed solicitor should be able to recover their costs in litigating for their employer.

In relation to legal practices, Chief Justice Kiefel and Justices Bell, Keane and Gordon held that the fact that an employed practitioner has acted for a successful party is not a sufficient reason for denying that party an award for costs as, after all, the time of a salaried employee has been occupied. However, they go on to query whether such a solicitor has sufficient professional detachment to be characterised as acting in a professional legal capacity when doing work for the (incorporated) legal practice. They also query whether the costs claimed by an incorporated legal practice for the work of its sole director and shareholder are within the expansive view of indemnity that has been adopted in the authorities.

Conclusion

In light of the commentary by the Justices in this case, it appears evident that the interpretation of this case in relation to legal practices and in-house solicitors would need to be tested.

A message for solicitors and barristers: the only way to guarantee you will recover your legal costs if you or your employer is awarded an order for costs is by engaging an external firm and/or counsel.

If you would like to read the full judgement of the Bell Lawyers v Pentelow case, please click here.

[1] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29.

[2] London Scottish Benefit Society v Chorley (1884) 13 QBD 872.

About the Author

Aleksandar Kovaceski

Associate
Aleksandar has experience working across an array of disputes including contractual, retail and commercial leasing, employment law, property, shareholder, and trust disputes with a particular interest in building and construction disputes. Aleksandar also has insolvency experience.

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