Dye v Fisher Cartwright Berriman Pty Ltd [2010] NSWSC 895 is a case in which an application for a costs assessment (NSW version of taxation) outside the allotted 12 month period succeeded.

Young v Masselos & Co [2010] NSWDC 169 is one of those cases where a solicitor negligently let a limitation period go by and damages had to be assessed based on the plaintiff’s prospects of winning the case foregone.

Council of the Law Society of New South Wales v Harrison [2010] NSWADT 201 is a decision about the Law Society’s successful application to amend a charge against the respondent solicitor.  It reviews a lot of NSW law about the requirements for pleading disciplinary charges, and considers the application of Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 to disciplinary hearings.

’12    It usually is an implied term of the engagement of a legal practitioner, at hourly rates, that the work will be performed efficiently. It is an implied term of the kind that “goes without saying”, to adopt the phrase used by the Privy Council in B.P. Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 ALJR 20 @ 26. It goes without saying that a client does not agree to a practitioner acting inefficiently, by spending an excessive amount of time performing legal work, only to be rewarded for every hour of inefficiency.’

Who knew?  Breach of the implied duty no doubt carries an entitlement to damages, and every suit for fees can be turned into a taxation, so long as ‘efficiently’ means the same as the concept of ‘necessary or proper’ in the law of taxation.

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.’

‘For the purposes of the taxing of costs in proceedings to which this section applies, any applicable scale of costs has effect as if amounts in the scale were reduced by 20%.’

Let me know if you would like a copy of the decision.

Let me know if you would like a copy of the decision.

‘(1) A law practice may give a person an interim bill covering part only of the legal services the law practice was retained to provide.

(2) Legal costs that are the subject of an interim bill may be reviewed under Division 7, either at the time of the interim bill or at the time of the final bill, whether or not the interim bill has previously been reviewed or paid.’

In Dromana Estate v Wilmoth Field & Warne [2010] VSC 308, the artist formerly known as the Taxing Master, the Supreme Court’s Costs Court’s Costs Judge Wood, ruled in favour of submissions made by Daryl Williams and supported by Richard Antill of counsel.  They submitted that a client may never, without special permission, have a taxation of a bill more than a year old, even an interim bill sought to be taxed at the same time as a final bill younger than a year.  So there you go: once a year has gone by after the rendering of an interim bill, the solicitor only has to fear an application for leave to tax bills out of time.  Unless of course he or she has failed to comply with any aspect of the disclosure requirements (such as the obligation to give disclosures before or as soon as practicable after retainer, the obligation to update disclosures already given if circumstances change, and the obligation to give pre-settlement disclosure of what the client will get in his or her pocket after costs), in which case the solicitor is not entitled to recover fees, and the client need not pay fees, until the bills have been taxed, presumptively at the solicitor’s costs: s. 3.4.17.  The sombre solution for the solicitor, in that case, is to apply for taxation of his or her own costs under s. 3.4.40.  There is no time limit under the Legal Profession Act, 2004 for doing so.

Greater consistency between decisions in relation to costs in the different state courts and VCAT will be promoted by all their taxations being conducted by the one new institution, in the same place, under the ultimate control of the Costs Judge.  The County Court’s former taxing officers have become Registrars.  They used to do taxations of Magistrates’ Court cost orders as well, and the new reality is that no more taxations will be conducted by officers of VCAT, the Magistrates’ Court, or the County Court.  That is not to say, of course, that VCAT members, Magistrates and County Court judges, will not fix costs summarily by reference to the appropriate scale at the end of a case though. But I can’t think of a decision maker who relishes fixing costs, and the temptation to leave it to the Costs Court may mean judges and Magistrates fix costs less.

There is an anomaly which should be cured. VCAT will continue to hear applications to set aside costs agreements, and ‘costs disputes’ under the Legal Profession Act, 2004, in relation to disputes over fees in matters where the total costs are not more than $25,000, whereas solicitor-client taxations (which are often stayed pending, for example, the result of applications to set aside costs agreements) are carried out by the Costs Court.  It would seem appropriate to me for those jurisdictions to be brought into the Costs Court, and re-built into one stand-alone system for the resolution of solicitor-client disputes over fees, to operate under one statute (e.g. the Legal Profession Act, 2004) rather than the present jumble of that Act, the Supreme Court Rules, 2005 the Supreme Court Act, 1986, the VCAT Act, 1998 and the Fair Trading Act, 1999.  The wealth of experience of the members of the old Legal Profession Tribunal, now VCAT’s Legal Practice List, could and should be brought into the Costs Court.

Here is Practice Note no. 7 of 2010, about the Costs Court.  The Costs Judge’s associate is Sean Linehan whose numbers are 9603 9324 and 9603 9320.

Section 17D(3) of the Supreme Court Act, 1986 now provides that the Costs Court ‘must exercise its jurisdiction with as little formality and technicality, and with as much expedition, as the requirements of this Act, the Rules and the proper consideration of the matters before the Court permit’.  Another innovation is that the Costs Court is newly empowered to give on the papers estimates of the amount a bill is likely to tax at, which may be made into an order if no objection is raised by either party within 21 days: see Part 8 of Order 63: new rules 63.86 – 63.89.  The Federal Court has been doing so for years, a service much appreciated by practitioners.

Establishment of Costs Court

The Costs Court is created by the Courts Legislation (Costs Court and Other Matters) Act, 2008 (no. 78), which inserted a new Division 2B (‘Costs Court’) into the Supreme Court Act, 1986. Transitional matters are to be found in ss. 145-148 of the Supreme Court Act, 1986 (see s. 9 of the amending Act). Section 17C sets up the Court. It is comprised of an Associate Justice (formerly ‘Master’) allocated as the Costs Judge, who has some supervisory power to direct Costs Registrars.

The Costs Court may refer to a Supreme Court judge ‘for directions any question arising on a taxation’: r. 63.51.

Applications for Taxation

Applications for taxation are to be made by summons, not by writ or originating motion, even in respect of costs orders made in another court (weird!).  There is a special form:  no. 63A.  See new r. 63.38, and new County Court Rule 46.04(2)(c). Such summons is to be filed with the Prothonotary, not the Costs Judge’s Associate.  The costs order is to be attached.  Service is to occur at least 14 days before the ‘day for hearing named in the summons’.

The heading should read:

IN THE SUPREME COURT OF VICTORIA
AT MELBOURNE
COSTS COURT

The parties are to be described as ‘Applicant’ and ‘Respondent’, and the court heading is to bear the court reference of the matter in another court if the costs to be taxed do not relate to a Supreme Court matter.

The fees for filing a summons for taxation depend on which Court dealt with the matter to which the costs relate: Supreme: $319.10; Magistrates’ and County: $233.80; VCAT: $150.80.  There is no fee for filing an application for a solicitor-client taxation.

‘Appeals’

The Costs Judge may review decisions of Registrars either of his own motion (weird!) or on the application of a party: s. 17H (and see new r. 63.56.1(2)).  And the Costs Judge may review his own decision: r. 63.56.1, though the Taxing Master had that unusual (possibly unique) power years ago.  The requirements of the application for review of either kind are specified in new r. 63.56.1(4).  There is a 14 day time limit.  On a review, the Costs Judge:

‘(a)  shall reconsider and review the taxation upon the objections stated in the notice;

(b) shall make an order confirming, setting aside or varying the taxation or make such further or other order as may be necessary; and

(c) may make any other order the case requires.’ See r. 63.56.1(6).

New evidence may be admitted in respect of any objection which is the subject of the review by the Costs Judge: r. 63.56.1(7), so it is more like a hearing de novo than an appeal, consistently with its description as a ‘review’.

In addition, decisions of the Costs Judge may be reviewed by a single judge of the trial division, just like in the old days: s. 17I, and r. 63.57, which governs the procedure and says that:

‘(6)  On the review, unless the Judge of the Court otherwise orders–

(a)  further evidence shall not be received;

(b) the party giving notice shall not raise any ground of objection not stated in the notice.’

A Supreme Court judge has the same powers on review as does the Costs Judge under r. 63.56.1(6), above, except that he or she has an additional power to remit any item in the bill to the Costs Court.

Taxations of costs under other courts’ and VCAT’s orders

The Supreme Court Rules have been amended by the Supreme Court (Costs Court Amendments) Rules 2009 and the County Court’s by the County Court (Costs Court Amendments) Rules 2009.  Bear in mind in what follows that the Supreme Court order dealing with costs is Order 63, while the County Court counterpart is Order 63A.  In drafting this post, I have concentrated on the interrelationship of the County and Supreme Court’s rules.  The Magistrates’ Court’s and VCAT’s I am yet to unravel.

Many provisions dealing with taxations by the County Court have been repealed, e.g. Order 63A, Part 4 (‘Costs of Taxation’), formerly comprised of r. 63A.36.  So too most of Part 5 (‘Procedure on Party and Party Taxation’), including former rules 63A.39 – 63A.50 (except sub-rule 48) and 63A.55 – 63A.57, which dealt with reviews of decisions in taxations.  So too bits of Part 6 (‘Costs of a Solicitor’) and Part 7 (‘Allowances on Taxation Generally’), including former rules 63A.66 – 63A.67, and former rules 63A.66 – 85 (except sub-rules 72 and 82).

Taxations of party-party costs orders in the County Court, Magistrates’ Court and VCAT may be carried on in the Costs Court, whereas previously they would be carried on by the taxing officers of VCAT or the County Courts, if not fixed by the judge or Magistrate summarily at the end of the hearing.  In the cases of these courts and VCAT, it may do so if their Rules so provide or the Court or VCAT orders that the Costs Court tax the costs: s. 17D, Supreme Court Act, 1986.  (The County Court’s power to so order is found in new s. 78A(2) of the County Court Act, 1958; the Magistrates’ Court’s is in new s. 131A of the Magistrates’ Court Act, 1989, and VCAT’s in new s. 111 of the VCAT Act, 1998.)  County Court Rules, new r. 63A.05 directs that unless the County Court otherwise orders, costs taxed in accordance with Order 63A (the County Court’s order about taxations) shall be taxed by the Costs Court, and see also amended r. 63A.10, which provides for taxation as of right in the Costs Court wherever the Court makes an order for costs, or an application is dismissed with costs, or the rules provide an entitlement to costs (as on an amendment), amongst other situations.

When an order is made by the Costs Court in such a case, the order is taken to be an order of the other Court, and the procedure is regulated by the Supreme Court Rules or ‘the Rules, including any scales of costs, of the court in which the proceeding to which the costs relate originated or of VCAT, as the case requires’: s. 17J(2).  But even if the Supreme Court were to choose to apply the County Court Rules in a taxation of costs in a County Court proceeding, r. 63A.38 of the County Court Rules now says that ‘An application to the Costs Court for costs to be taxed shall be made in accordance with the Supreme Court Rules,’ and r. 63A.63 says ‘Subject to these Rules and to any Act or order of the Court, costs under this Part shall be taxed as provided by the Supreme Court Rules’.

‘(1) A law practice must not commence legal proceedings to recover legal costs from a person until at least 65 days after the law practice has given a bill to the person in accordance with sections 3.4.34 and 3.4.35.’