Leong v J P Sesto & Co  VCAT 99 is the latest in the on-again off-again saga of whether solicitors engage in trade or commerce, and, whether, if not, it means that VCAT does not have jurisdiction over claims involving them, and if so, which claims. Senior Member Vassie considered the question in the context of an application to set aside a costs agreement. It was heard in October 2008 and decided on 30 January 2009. The NSW Court of Appeal’s decision in Kowalczuk v Accom Finance  NSWCA 343, decided on 10 December 2008 was not referred to (see Part II).
The application was made on the orthodox basis (under the predecessor of the Legal Profession Act, 2004) and supplemented by somewhat half-hearted arguments under the Fair Trading Act, 1999, the state equivalent of the Trade Practices Act, 1974. The law is quite clear that regardless of whether lawyers engaged in their core professional roles of representation and advising are engaged in in trade or commerce (the traditional view is that they are not), some aspects of their businesses are. What this decision says is that in negotiating fees, lawyers are engaging in trade or commerce, and so causes of action which seek relief in relation to costs agreements under the Fair Trading Act, 1999 and which are dependent on conduct in trade or commerce are available to clients. (It might be worth tucking away for future thought whether a lawyer who does not negotiate and seeks to recover fees only on scale or practitioners remuneration order, could be said to be engaging in trade or commerce, but it is unlikely such a costs agreement would be the subject of an application to set it aside.)
The decision also asserts that the Fair Trading Act, 1999‘s definition of ‘services’ requires that the services be in trade or commerce, contrary to an earlier considered decision of the Legal Practice List, which it seems may not have been cited to Senior Member Vassie. No argument on this point is recorded in the decision. Ironically, if this decision is followed, the result may be a narrowing of VCAT’s jurisdiction, because in those causes of action which do not specifically require conduct in trade or commerce, but require ‘services’, VCAT’s previous position was that the services did not have to be in trade or commerce to come within the definition, because though the words ‘trade or commerce’ appeared in the definition, the definition was inclusory, and only ‘included’ certain conduct in trade or commerce, rather than mandating ‘trade or commerce’ as an essential characteristic of activity falling within the meaning of ‘services’. An example of such a jurisdiction is the one to resolve ‘consumer-trader disputes’, a jurisdiction which essentially grants to VCAT common law jurisdiction enhanced by special legislative powers over all disputes arising directly out of the provision of services, regardless of their value. In those instances of lawyers’ conduct which are not engaged in in trade or commerce, Senior Member Vassie’s construction of the Act would deny VCAT jurisdiction where it would otherwise have had jurisdiction by virtue of the expansive construction of the definition of ‘services’. (Note that J P Sesto & Co v Jadewealth Pty Ltd  VCAT 80 is essentially the same judgment in the same case.)
What Senior Member Vassie said was: Continue reading “Latest on whether solicitors engage in trade or commerce: part I”