Lawyer claiming inexplicably high fees against other side restrained from acting

In the case of Brogue Tableau Pty Ltd v Tottle Partners [2006] WASC 273, Master Sanderson of the Supreme Court of Western Australia, exercised the Court’s inherent jurisdiction to restrain a firm from acting to protect the administration of justice. The fees they had charged their client, and which they were seeking against the other side on behalf of the client, seemed inexplicably high. The other side suggested they had overcharged, and the judge said the administration of justice could not tolerate them continuing to act in those circumstances.

The solicitors acted for a landowner. A company lodged a caveat against it improperly. Through the solicitors, the landowner applied succesfully to have the caveat set aside, and was awarded costs on a party party basis. It agreed the costs with the company at $17,000 and the costs were paid. Then, again through the solicitors, it commenced proceedings against the company for compensation under s. 140 of the Transfer of Land Act, 1983 (WA) for losses occasioned by the wrongful lodgement of the caveat. Those losses were the difference between the agreed party party costs and the solicitor client costs of the application to remove the caveat. The solicitor-client costs were about $52,000, three times the agreed party party costs. The Court said that “in charging [the landowner] as it has, the ethics of the [firm] is called into question” and that the administration of justice would not countenance it being in the position of having to defend itself against the ethical attack of the company and represent its client at the same time. It is a curious decision in the context that two other bases for the injunction were rejected: (i) that the firm’s members and employees would have to give evidence (the firm’s counsel said there was no intention to do so) and (ii) the firm had a direct personal interest in the outcome of the proceedings so as to give rise to a duty / interest conflict (it cannot be the case that such a conflict disentitles lawyer from acting, because it is inherent in every inter-partes costs dispute). What Sanderson M said:

“17 … The [company] says that to charge the extra $34,582.15 as it did there must have been a costs agreement. If there was not, then there would be a question as to the [firm’s] entitlement to have charged those fees. To date no costs agreement has been produced by [the landowner] in the compensation action so it is arguable that the [firm] has overcharged its client whether or not [the landowner] makes that complaint.

18 For the purposes of this action it can be assumed, without deciding, that it would be open for [the company] in the compensation action to argue that … the amount of costs claimed was unethical. Even if that argument was mounted and lost it must be open to the [company] to mount the argument. That being so, it does seem to me that the ethics of the defendant might be in issue giving it an interest in the proceedings different to its client. In my view, this argument of the [company] carries the day.

19 On that basis then I would be prepared to restrain the [firm] from continuing to act for [the landowner] in these proceedings.”

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