A costly decision for self-represented solicitors and barristers: High Court rules the “Chorley exception” is not part of the common law of Australia

In the recent decision of Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, the High Court ruled the Chorley exception, which allows self-represented litigants who are solicitors to recover costs incurred for their professional services in acting for themselves in any litigation, does not extend to barristers and, more broadly, is not part of the common law of Australia.

 

Background

The respondent, a barrister, was retained by the appellant, an incorporated legal practice, to appear in a family provision matter in the Supreme Court of New South Wales. At the conclusion of the proceedings, a dispute arose between the parties about professional fees, as the appellant paid the respondent only part of her fees.

In the first instance, the respondent sued the appellant for the balance of her fees in the Local Court of New South Wales but was unsuccessful. She then appealed to the Supreme Court of New South Wales where the appellant was ordered to pay the respondent the balance of the respondent's fees, as well as her costs for both the Local Court and Supreme Court proceedings.

Pursuant to the costs orders, the responded forwarded a memorandum of costs to the appellant, which included costs incurred on her own behalf. The appellant refused to pay the costs claimed for work undertaken by the respondent herself and made an application for assessment of costs. The costs assessor decided in favour of the appellant and rejected the respondent's claim for the costs of work she had performed herself on the ground that in New South Wales the Chorley exception does not apply to barristers. The respondent was unsuccessful in both her appeal to the Review Panel, and then to the District Court of New South Wales.

The respondent sought judicial review of the District Court decision in the Court of Appeal. The Court of Appeal held that the respondent, as a barrister, was entitled to rely on the Chorley exception as her costs were quantifiable by the same processes as solicitors.

The appellant appealed the decision of the Court of Appeal to the High Court of Australia.

The Chorley exception

The general rule is that self-represented litigants are not able to recover costs for any time or work performed in the course of the litigation. However, an exception to this rule, commonly referred to as "the Chorley exception," is that self-represented litigants who are solicitors may be able to recover their professional costs of acting in the litigation.

The two principal issues determined by the Court was whether the Chorley exception applies to barristers who represent themselves in legal proceedings and, more broadly, whether it should be recognised as part of the common law of Australia.

The Chorley exception is not part of the common law in Australia

In the lead judgment of Kiefel CJ, Bell J, Keane J and Gordon J, their Honours determined the Chorley exception should not be recognised as part of the common law of Australia for reasons including the following:

  • As recognised by the majority in Cachia v Hanes (1994) 179 CLR 403, the Chorley exception is "anomalous" as it does not treat all litigants in the same manner. The exception affords a privilege to solicitors only, which is inconsistent with the principle that all persons are equal before the law. Further, because the exception is "anomalous", the Court held that it should not be extended, by judicial decision, to apply to barristers.
  • If self-represented solicitors are permitted to recover costs for work undertaken themselves, there is the possibility a solicitor may profit for his or her participation in the litigation. This is contrary to the principle of costs orders, which are awarded by way of indemnity and not to compensate for lost earnings or reward a litigant's success.
  • The Chorley exception is also inconsistent with the statutory definition of "costs" under s 3(1) of the Civil Procedure Act, which is a "means and includes" definition. The "means" part of the definition purports that costs are awarded for professional services actually incurred, and the "includes" part of the definition, which refers to "remuneration", encompasses remuneration for professional services rendered under a contract for services. "Remuneration" does not cover the concept of payment to a person by himself or herself for services performed by himself or herself. Accordingly, as the definition of "costs" is otherwise exhaustive, it does not allow for self-represented solicitors to recover costs incurred on their own behalf.

What about a solicitor employed by an incorporated legal practice of which they are its sole director and shareholder?

It is well established that where in-house lawyers employed by governments and other agencies represent their employers in legal proceedings, the employer is entitled to recover costs in circumstances where an ordinary party would be so entitled by way of indemnity.

However, as the Court in these proceedings highlighted, there is still a question whether this view would also apply to solicitors employed by an incorporated legal practice of which he or she is its sole director and shareholder. As the Court noted, the resolution of this question may require close consideration of the legislation which provides for incorporation of solicitors' practices and the intersection of that legislation with the provisions of the Civil Procedure Act in light of the general rule. Ultimately, the Court held that this is a matter for the legislature.

Implications

As the Chorley exception is not recognised as part of the common law of Australia, a self-represented litigant who happens to be either a barrister or solicitor will not be able to recover his or her professional costs for acting for himself or herself in any litigation.

Solicitors and barristers should now think twice about representing themselves in litigation. While solicitors may have in the past chosen to self-represent to save costs, this will not necessarily be the cost-effective option as they will no longer be recompensed for their time and effort by way of costs orders. Besides, as the Court highlighted, it is often undesirable of legal practitioners acting for themselves in legal proceedings. This is because a self-representing solicitor, lacking impartial and independent advice, may also lack objectivity due to self-interest.

It will be interesting to see if the legislature would follow the course which has been taken in England and abolish the general rule to allow self-represented litigants, whether legal practitioners or not, to recover costs for their time and effort in litigation. Any such change, in my view, is unlikely in the near future.

McCabe Curwood's litigation and dispute resolution team is experienced in advising on and acting in all aspects of litigation, and regularly represents members of legal and other profession in disputes in different Courts. Do not hesitate to contact us if you require any assistance.

This article is not legal advice. It is intended to provide commentary and general information only. Access to this article does not entitle you to rely on it as legal advice. You should obtain formal legal advice that is specific to your particular circumstances.

Contributors

Liliana Freeman Law Graduate