All taxations after 9 May 2007 are conducted under the amended Legal Profession Act, 2004

On 25 July 2008, the Supreme Court’s newish Taxing Master Wood decided a question about the transitional effect of amendments to the provisions about lawyer-client taxations (now called ‘reviews’) under the Legal Profession Act, 2004.  The decision is Law Institute of Victoria v RK.  In relation to such taxations of costs, the Act was amended in important ways on 9 May 2007.  In this particular case, the facts were that the costs agreement predated the amendments, as did the doing of the work, but the giving of the bill and the application for taxation post-dated them.  Master Wood decided that the amended Act would govern all lawyer-client taxations held after the amendments took effect, including this one.  He expressed his distaste for the Law Institute’s opportunistic attempt to wriggle out of a costs agreement it had negotiated with a lawyer, describing its behaviour as ‘unjust’.

The previous version of the Legal Profession Act, 2004 provided that in a lawyer-client taxation of costs under a costs agreement in a non-litigious matter, the costs must be taxed not against the costs agreement but against the Practitioner Remuneration Order: old s. 3.4.43(3).  The PRO as it is called (formerly ‘SRO’) is a bit like the court scales, except for non-litigious work like advice, conveyancing and contract drafting.  That was insane, and almost certainly a drafting error.  In other matters, the terms of the costs agreement negotiated and agreed between the lawyer and the client were just one of 11 factors which the Taxing Master had a discretion to consider as part of a broader mandatory enquiry into the fairness and reasonableness of the amount of the costs in relation to the work: old s. 3.4.44(1).  Essentially, the Taxing Master could say “Costs Agreement Shmosts Agreement” and go with Mabo, the Constitution, justice and the vibe, a prospect which I doubt the Taxing Master found very appealing in the first place.  It is an oversimplification to say that the amended Act directed the Taxing Master to tax bills given under costs agreements by reference to the terms of the costs agreement, but it will do for the purposes of this post.

There were no transitional provisions associated with the relevant amendments.  So the presumption was that the new Act applied from the date when it came into force.  The only reason why that would not be so would be if it could be said that the amendments removed some accrued right such that the parliament should be taken to have intended that the amended Act not have retrospective effect. The Law Institute, which was the client in the relevant lawyer-client relationship sought to take advantage of these anomalies to reduce the amount it was liable to pay the lawyer who had advised it. It negotiated a costs agreement and then after its lawyer had done all the work and the time came to pay up, it said

‘Costs agreement shmosts agreement: we’ll pay you what you’re entitled to under the Practitioner Remuneration Order.  What? Unfair? But it’s the law. Silly you. You’re a lawyer aren’t you?’

Master Wood was unimpressed, and said that the Law Institute, represented by the Law Institute Costing Service, was acting ‘unjustly’.  He said:

‘if the [Law Institute’s] submission were to be accepted, the result would be that a sophisticated peak body representing solicitors would be entitled, having entered into a costs agreement on an hourly rate with [the lawyer] would be able to take advantage of an anomaly in the Act and achieve a review on an entirely different basis [namely the Practitioner Remuneration Order] to the one in the bargain.’

Master Wood declared that all lawyer-client taxations of bills regulated by the Legal Profession Act, 2004 which take place after the 9 May 2007 amendments came into operation are to be decided pursuant to the amended Act.  Lady Justice should be happy about that because this way, the drafting anomalies in the pre-amendment version are given the shortest possible life, and can now be forgotten about, the bizarro heterodoxy of the errors replaced with beautiful orthodoxy, the world of costs returned to the way its characters like it.

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