A former client who escalated a claim worth almost $1.5 million against a Perth law firm has been knocked back by the High Court.
Five of the seven High Court of Australia justices, including Chief Justice Stephen Gageler AC, have dismissed Dr Bruce Gray’s appeal of a decision of the Supreme Court of Western Australia and ordered that he pay costs to independent, full-service law firm, Lavan.
Gray retained Bennett & Co in 2005 and followed the principals and its employees to Lavan sometime after mid-2006 for assistance in Federal Court and Supreme Court of Western Australia matters.
Disputes eventually arose over the payment of Lavan’s invoices and the taxation of the firm’s fees and disbursements.
In 2018, Gray and Lavan reached a settlement that required Lavan to repay $900,000, being the “amount that would have been ordered to be refunded” had they received a certificate from a taxation officer.
At that time, the parties agreed to leave open the option of litigating the question of whether Gray had a claim for interest.
Within six months, proceedings were filed in the Supreme Court, with Gray pleading – and Lavan accepting – that the effect of the entry into the 2018 settlement deed was that the parties agreed to proceed as if there had been a taxation of the bills and a taxing officer certified Gray overpaid the taxation settlement sum.
Gray claimed compound interest, or simple interest on the alternative, on the $900,000 over the period from 30 June 2008 – the date he paid fees to Lavan – and 13 January 2019, being the date of payment of the final tranche of the $900,000.
At trial, Gray was limited to a claim that the settlement deed removed the “legal justification of Lavan to charge and retain” the invoiced sum and the paid amounts. Lavan was also said to have been unjustly enriched when the settlement was agreed to.
The Supreme Court found there was no failure by Lavan and the entry into the deed did not involve any unjust enrichment.
In the Court of Appeal, Gray submitted the legal basis for his payment failed at the time of the “deemed taxation” in the deed, and claimed this meant Lavan was required to make restitution of both the principal sum of $900,000 as well as interest.
The Court of Appeal dismissed Gray’s claims.
In the High Court, Gray sought to have orders substituted to the effect of requiring Lavan to pay him $1,450,680, as “compound interest” on the sum of $900,000, for the period between 30 June 2008 and the “dates of repayment of that sum”.
Gray claimed the Court of Appeal erred in holding there had been no failure of the basis at common law leading to unjust enrichment by Lavan in its receipt of the $900,000.
He also alleged the Court of Appeal erred in holding that, if he had a common law right to restitution of the $900,000, then Lavan’s retention and use of the $900,000 did not give rise to an obligation at common law for it to pay interest.
In ruling against Gray, the High Court bench accepted there was a strong basis to conclude that, as a matter merely of the agreement of the parties, the retainer agreement included a condition subsequent to the effect that Lavan had no right to retain the amount of any payment to the extent it was more than authorised under taxation.
However, the provisions of the Legal Practice Act have formed a comprehensive basis for the recovery of the principal sum paid for legal costs and interests on that sum, “to the exclusion of any common law claim for restitution”.
“Those provisions did not provide for interest to be payable by a law firm on those excess amounts for the period prior to the grant of a certificate. And those provisions left no room for a common law restitutionary claim for principal or interest consequent upon such excess amounts,” the High Court bench said.
“The settlement deed aimed to replicate the effect of a taxation pursuant to those provisions and did not create any restitutionary claim.”
The case: Gray v Lavan (A Firm) [2025] HCA 42.
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
