An application to tax costs out of time

Ciaglia v Beilby Poulden Costello Pty Ltd [2010] NSWSC 748 is a decision of Justice McCallum. A client sacked his lawyers.  They sent a bill for about $30,000.  Through his new lawyers he did a deal with the old lawyers: in exchange for the delivery to his new lawyers of the old lawyers’ file, he would pay the disbursements component of the bill (about $5,000) and give the new lawyers an irrevocable authority to pay the outstanding $25,000 or so from the proceeds of the proceedings in which the old lawyers had acted.  He had amended the authority proposed by the old lawyers so as to substitute for the irrevocable authority in relation to the proceeds of any proceedings against the person he was suing an irrevocable authority only in relation to the proceeds of the particular proceeding against that person in which he was then engaged.  In dicta, her Honour suggested that at this point, the client had probably ‘waived’ his right to a taxation.  But that was to change.

The solicitors delivered up the file.  Then the client discontinued the proceedings in which he was engaged and started a new one against the same person.  Cheeky!  It turned out the old solicitors had omitted to hand over one folder.  When the client asked for it, the old solicitors, noting the discontinuance trick, demanded a fresh irrevocable authority in respect of the new proceeding. It was not forthcoming, so they sued. Both the demand for a fresh authority and the suit showed that the old solicitors did not regard the original deal as on foot, according to her Honour.

The bill in question was dated 24 September 2007, and the application for review out of time has just been heard.  The client’s explanation for the delay in seeking taxation was that he was busy with complex litigation and had the full-time care of his elderly mother.  He was not cross-examined in relation to the explanation.  The solicitors said that the file handler was no longer with their firm and the passage of time created difficulties.  Her Honour retorted that ‘legal practitioners are well versed in the need to keep written records of legal services provided.  Costs are generally assessed on the strength of those records rather than on people’s recollections.’  Justice McCallum allowed the application, reasoning:

’28 The critical consideration in the present case, in my view, is the fact that [the client] undertook to pay the whole of the amount claimed by the [old lawyers] on the strength of an understanding that they, in turn, would not exercise their lien. He needed the file in order to instruct his new solicitors. If that had remained the common understanding of the parties, it may have been more difficult for [the client] to succeed on the present application.

29 However, the [old lawyers] abandoned the benefit of that agreement when they [sued for fees]. … Their conduct from that point, including exercising a lien over the blue folder, was inconsistent with the agreement earlier reached. In my view, [the client] was entitled in those circumstances to consider himself no longer bound by his previous commitment to pay the whole sum invoiced to him.

30 By the time the amended statement of claim was filed in the Local Court, however, the time for an application [for the NSW equivalent of taxation] had expired. Until that point, there was no occasion for an assessment because both parties were proceeding on an agreed basis. As I have indicated, I accept [the client’s] explanation for the delay after that time. In my view, those reasons warrant some relaxation of the time limitation in the statute.’

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