Too broad a range of estimates of total costs causes NSW solicitor great grief

Frontier Law Group Pty Ltd v Barkman [2016] NSWSC 1542 is an ex tempore decision of Justice Slattery in an urgent application to extend the operation of a caveat lodged by solicitors over their client’s property.  The application failed in part because the solicitors did not prove, even to the prima facie level required in such an application, that the money said to be owing and secured by the equitable charge which was the subject of the caveat was in respect of fees invoiced under the costs agreement referred to in the caveat.  That is not particularly interesting except as schadenfreude.

Two things are interesting though, given that the costs agreement was probably entered into in 2012 and so the Legal Profession Act 2004 (NSW) almost certainly applied (even though the Court looked also at the situation under the Legal Profession Uniform Law (NSW)):

  • First, the Court found that the range of estimates of total legal costs was so wide as not to comply with the relevant disclosure obligation.
  • Secondly, the Court appears to have treated the extension application as the commencement of proceedings for the recovery of legal costs, such that the statutory preconditions to such proceedings needed to be, but were not, proven to be satisfied by the lawyers.

I cannot think of another authority which states so plainly that some estimates are so imprecise as to render them non-compliant with the obligation to give a range of estimates of total legal costs.  But now we have it: a decision of the Supreme Court of NSW under a legislative scheme of which Victoria is also a part and which is likely to be followed as a matter of comity in Victoria.

What the Court said is:

’38. … even if one were to assume the costs agreement before the Court is the one that applies to the legal services for which the solicitor’s charges have been claimed, the disclosure contained in the costs agreement is, in my view, incomprehensible. The costs agreement takes the extraordinary step of providing a “total estimate of costs and disbursements” in a purported attempt to comply with s 174(1) [of the Legal Profession Uniform Law] (see Legal Profession Act, s 309(c)) by asserting that the total legal costs will be “between $2,200 – $55,000”. In other words, the upper limit of the amount claimed is more than twenty times the lower limit. In my view, that is on its face, so wide a range as to provide no guidance to any client and is not, on any rational basis to be described as an “estimate of the total legal costs” that complies with the legislation.

39. … the costs agreement in question does not appear to relate to the amount claimed in the caveat, given there are some twenty files for work done between this solicitor and this client. This is important because in order to sue upon this costs agreement, a law practice must be able to surmount the prohibition in Legal Profession Uniform Law194 (Legal Profession Act, 331) that it must not commence legal proceedings unless a bill has been given for legal costs and the bill complies with the requirements of “this Law and the Uniform Rules”. It seems impossible for the solicitor to be able to establish a right to commence these legal proceedings, unless a memorandum of costs is tendered, which, on its face, complies with the law and the Uniform Law. In this case that at least requires the bill to relate to the costs agreement for which disclosure has been given.’

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