High-profile Sydney solicitor Leigh Johnson has been rebuked by the state’s highest court and blocked from recovering more than $2 million in legal fees from two elderly clients, with the court saying the bill appeared “out of all proportion” with the amount of work done.
In a scathing judgment delivered on Friday, the Court of Appeal said Ms Johnson “represented that she would not seek to recover any additional legal costs” from her clients before a bill was sent in March last year, some six years after she acted for them successfully in a court case.
The court noted the bill included “numerous items …totalling over 24 hours on the same day” and “there is nothing to suggest any other lawyer than Ms Johnson” was working on the case at the time.
The decision marks the latest chapter in a bitter and protracted legal battle between the Woollahra-based solicitor and the founders of the Australian Institute of Music (AIM), the nation’s largest private music school.
Ms Johnson agreed in 2007 to represent AIM founders Peter Calvo, who has since died, and his wife Athalie in a court case to claw back shares in the company from their accountant.
In documents tendered in court Ms Johnson said she received only $55,000 for “three years of working solidly on their ‘unwinnable’ case” and Mrs Calvo had “cried and begged me to act for them for no money up front because she said they had none”.
The couple’s eldest son and the former managing director of AIM, Daniel Paul Calvo, is wholly supportive of Ms Johnson and has previously told Fairfax Media she devoted considerable time and energy to the case.
His parents signed agreements in May 2007 allowing Ms Johnson to charge $500 an hour for her work, or $300 for work done by others.
But Dr and Mrs Calvo, who were in financial strife, signed a separate deed a fortnight later which allowed Ms Johnson to seize 32.5 per cent of the shares in AIM if she won the case. This was almost all of the shares in dispute.
In December 2009, months after the Calvos won the case, Ms Johnson arrived at St Vincent’s Hospital, where Dr Calvo was recovering from his second stroke, seeking signatures to transfer the shares to her.
In a stinging judgment in August last year, Justice Patricia Bergin said the “unfairness of the situation is of breathtaking proportion”. She struck down the transfer of shares but said the earlier fee agreements were still in force.
The Court of Appeal – Justices Julie Ward, Fabian Gleeson and Mark Leeming – ruled on Friday Ms Johnson could not recover fees beyond the $55,000 already paid. Ms Johnson had sent a bill for between $2.3 million and $2.5 million to the Calvos in March last year.
Justice Ward said the costs itemised in the “very belated” bill were “remarkable, both in terms of the amount and in terms of the hours of work there recorded”.
Justice Leeming, with whom Justices Ward and Gleeson agreed, said there was much in the bill “which is of concern”, including that the bulk of the work had been done six years earlier.
“The amounts appear to be out of all proportion with amounts that could properly be charged,” Justice Leeming said.
“It is difficult to conceive how Ms Johnson could ever have properly charged anything close to those amounts.”