The Blackstone Legal Costing team wishes you a safe and happy festive season and looks forward to bringing you news on costs in 2020. Looking back at one of the most significant decisions in legal costs in 2019, Brett Linsdell, one of our stellar Melbourne lawyers, looks at the abolishment of the Chorley exception. What are the implications for Australian lawyers from this landmark decision?

In Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 the High Court of Australia abolished a legal rule held for more than a century, when finding the Chorley exception is no longer part of the Australian common law.

The General & Chorley Exception

An award for costs is considered a partial indemnity for the legal costs incurred in litigation. Following from this, partial indemnity is the general rule that self-represent litigants are not able to recover costs for the work and time expended during litigation. The exception to this rule was, of course, what become known as ‘the Chorley exception’.

This exception dates back to 1884 when the Court of Appeal of England and Wales in London Scottish Benefit Society v Chorley[1] held that successful self-represented solicitor litigants were entitled to recover professional costs incurred for legal work carried out by themselves during the proceeding.

An Overview of Bell and Pentelow

Flash forward to 2019 and Ms Pentelow, the respondent in the seminal High Court proceeding which has now revoked the Chorley exception, a barrister in her own right, had been briefed and retained to appear in a matter before the Supreme Court of New South Wales by Bell Lawyers. At the conclusion of this matter, Ms Pentelow’s fees were only partly paid and a dispute ensured between Ms Pentelow and Bell Lawyers as to Ms Pentelow’s outstanding fees.

Ms Pentelow engaged a solicitor and filed her claim seeking to recover her unpaid fees in the Local Court of New South Wales. The Local Court found in favour of Bell Lawyers. Aggrieved by the ruling, Ms Pentelow appealed to the Supreme Court, whilst engaging the services of Senior Counsel to assist.

As one might expect, Ms Pentelow utilised her legal prowess and skills throughout the two proceedings, undertaking various tasks, including, but not limited to, preparing draft documents and affidavit material, engrossing submissions and other general work. Ms Pentelow was successful in the appeal, obtaining a favourable costs order, with costs to be paid by Bell Lawyers.

When preparing her claim for costs, in addition to the fees of her solicitor and Senior Counsel, Ms Pentelow sought the recovery of her own fees for the work she conducted throughout the proceeding. Her fees were claimed in the vicinity of $44,000. The Court appointed costs assessor, and a subsequent review panel, rejected the claim for Ms Pentelow’s fees. Underpinning the determination, was the understanding that the Chorley exception did not extend and apply to barristers.

Ms Pentelow, determined to review the panel’s decision, was unsuccessful in an appeal from the Review Panel to the District Court[2]. However, she then succeeded on Appeal[3], with the New South Wales Court of Appeal finding in her favour with a 2:1 majority, extending the Chorley exception to work carried out by a barrister.

In December 2018, Bell Lawyers were granted special leave to appeal the decision to the High Court of Australia. The High Court was requested to consider whether the Chorley exception extends to Barristers and, fundamentally, whether the exception should be recognised as a part of Australian common law at all.[4]

High Court Decision

On 4 September 2019 the High Court found in favour of Bell Lawyers, allowing the appeal with a 6:1 majority.

Kiefel CJ, Bell Keane and Gordon JJ

The lead judgment was critical of the Chorley exception and the ramifications it could have in practice. In its application, it was held, this common law exception created a right retained only by solicitors. In other words, creating privilege and inequality before the law.[5]

Their Honours provided:

(T)he Chorley exception is not only anomalous, it is an affront to the fundamental value of equality of all persons before the law. It cannot be justified by the considerations of policy said to support it.[6]

Further, their Honours highlighted the undesirable situation in which a solicitor would act for themselves. Underlining this concern is the maintenance of objectivity as a result of self-interest. The lack of an impartial mind may inadvertently increase legal costs.[7]

When considering an award for costs to be a partial indemnity for professional costs incurred during litigation. Their Honours questioned whether an award of costs to a self-represented practitioner could be considered more akin to compensation for a loss of earnings or as a reward for success, rather than partially indemnifying the successful party for monies outlaid during the litigation.

Gageler J

His Honour considered the history of the common law and the application of the exception in Australia.

Resonating comments made in Cachia v Hanes[8], where the exception was acknowledged as “somewhat anomalous”, with “unconvincing” support to vary from the general principle. His Honour queried whether “the logical answer may be to abandon the exception in favour of the general principle”.

Gageler J further considered the application of the exception as being inconsistent with the Civil Procedure Act 2005 (NSW). Section 3 (1) of the Act defines costs in relation to proceedings to mean “costs payable in or in relation to the proceedings and includes fees, disbursements, expenses and remuneration.” His Honour considered this definition to reflect the general principle in a manner which leaves no room for an exception.[9]

His Honour nicely summarised his position at [63] where he said:

This Court in its capacity as ultimate custodian of the contemporary common law of Australia is now to take the step foreshadowed in Cachia of determining that the exception to the general principle should be abandoned. For the reasons given by Kiefel CJ, Bell, Keane and Gordon JJ, that is the step which should now be taken.

Edelman J

His Honour Justice Edelman considered and took issue with the distinction arising from the exception. Aligning with the lead judgment, his Honour held, at [91]:

If a distinction were said to lie in the skill often possessed by unrepresented solicitors but not by other unrepresented litigants then costs should be permitted for the time of an unrepresented builder, plumber, engineer, architect, or accountant who relies on their expertise to perform work on their own case including preparing submissions on matters within their expertise.

In summary, Edelman J underpinned the position when considering the common law rule, which has yet to be applied with any statutory enactment. When considering the exception is inconsistent with the underlaying principle upon which costs rules have developed, it is perhaps inevitable the adopted Chorley exception has finally been overruled in Australia.[10]

Nettle J – Dissent

His Honour Justice Nettle agreed with the ultimate result. However, his Honour did not favour the terms relied upon by the majority. Nettle J supposed that the Chorley exception did not extend to barristers and ought not be applied in this particular case. However, his Honour was not in agreement with the abolition of the exception from Australian common law. Generally concerned with wider ramifications which may arise from abrogating the exception.[11], his Honour said that the abrogation of the exception could have been considered by Parliament where the nature and the extent of the potential regulatory and fiscal consequences could be measured and balanced.[12]

The Effect

The High Court, although considering the point (at [51]), is yet to conclude the position of a solicitor employed by an incorporated legal practice for which they are the sole director and shareholder and who is a party to a proceeding. This question considers the extent of detachment a law firm could provide a self-represented litigant from the proceeding generally, requires consideration of the award of costs as a partial indemnity.

Regardless of this, the Chorley exception is no longer recognised as a part of the common law of Australia. Hence, a self-represented solicitor or barrister is no longer be able to recover his or her own professional costs incurred for acting on his or her own behalf in any litigation.

The High Court has clearly stated that the time and effort expended by all self-represented litigants is to be treated equally. A solicitor or barrister seeking to work on their own case in order to save costs is no longer a sensible option when costs considerations are paramount. The Court has reiterated concerns with respect to self-represented litigants generally, who may lack impartial decision making and independent advice, complicated by self-interest and investment.

[1] (1884) 13 QBD 872 at 876, 977, 878.
[2] Pentelow v Bell Lawyers [2016] NSWDC 186.
[3] Pentelow v Bell Lawyers [2018] NSWCA 150.
[4] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, 2.
[5] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, 38.
[6] Ibid 3.
[7] Ibid 18.
[8] (1994) 179 CLR 403, 411 – 412.
[9] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, 68.
[10] Ibid 93.
[11] Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29, 72.

[12] Ibid 73.