Advocates’ immunity was, until recently, more powerful than many lawyers were aware. Since the 1 July 2015 introduction of the Legal Profession Uniform Law and the High Court’s May 2016 decision in Attwells v Jackson Lallic Lawyers Pty Limited, however, it may be narrower than many realise. And perhaps not everyone is aware that the immunity these days is very likely peculiar to Australia; it is certainly not a feature of English, American, Canadian, Continental, Indian, South African or New Zealand law. Continue reading “Advocates’ immunity: at once more powerful and narrower than most yet understand”
Many disputes about costs are still governed by the Legal Profession Act 2004. It specified as the time in which to seek taxation a period of 12 months. Where a bill is given, the 12 month period starts from the date of service of the bill. But since Collection Point Pty Ltd v Cornwalls Lawyers Pty Ltd  VSC 492, it is clear that clients have until 12 months after the service of the final bill in any particular matter to seek taxation of any previous bill. Of course what is the final bill in the same matter is a difficult question. What is clear is that one costs agreement may govern several matters.
Applications to extend time must be made to a Justice of the Supreme Court (as opposed to any decision maker in the Costs Court or any Associate Justice) under s. 3.4.38(6). The law is well-summarised by John Dixon J in Rohowskyj v S Tomyn & Co  VSC 511, and his Honour’s guidance about the nature of an extension of time application is useful and prone to be overlooked: Continue reading “Applications to extend time to tax lawyers’ bills: keep ’em tight”
An Appeal Tribunal within the ACT Administrative Tribunal has put out a neat little decision which makes clear that where solicitors do work and bill it, where the client does not seek taxation within the time for doing so, and the solicitors sue for fees, the tribunal hearing the suit for fees still has, in the ACT at least, jurisdiction to consider defences based on the quality of the work. In particular, work which may be said to have been wasted by virtue of negligence on the part of the solicitor will not be allowed by the Court. The lawyers in Williams Love & Nicol Lawyers Pty Ltd v Wearne  ACAT 18 essentially argued that they were entitled to sue on their bills as a debt once the time for taxation had passed.
In this case, the lawyers had negligently drawn a response to allegations of misconduct by an employee without obtaining the foundational document in which the allegations were actually made. When they belatedly obtained that document, the response had to be re-drawn. The Tribunal drew a distinction between a defence of waste as a result of incompetence and an argument that the fees were not ‘fair and reasonable’ in a more general sense, and confirmed essentially that the client had foregone the opportunity to mount ‘fair and reasonable’ arguments by not seeking taxation of the solicitors’ fees. Nevertheless, the Tribunal disallowed the suit for fees to the extent of the fees associated with the original drawing of the response. Continue reading “What quality of work defences are available in a suit for fees where client did not seek taxation?”
A man took 5 times his usual dose of phenergan before a mediation in a Costs Court matter in which he sought to tax his former solicitor’s fees. Represented by a solicitor, he settled the taxation. It is an interesting footnote that the man’s solicitor was from the rather wonderfully named Coolabah Law Chambers, and is described on the firm’s website as follows:
‘Although Jeff has sincere respect for the Bench, he is not afraid to argue and fight for his clients. Jeff believes that each of his clients must be properly represented and must receive a ‘fair go’. To appreciate Jeff’s keenness one has only to learn of one occasion when, during his closing address to the jury, Jeff performed an impersonation of Austin Powers in “The Spy Who Shagged Me”. Jeff’s client was successful in that case!’
The man applied, unrepresented, to the Costs Court to have it set aside on the basis of the solicitor respondent to the taxation had taken unconscientious advantage of his phenergan intoxication in procuring the settlement. The Costs Court referred the question to the Practice Court.
The Practice Court considered whether the determination of a mixed question of fact and law was one which could be the subject of a referral by the Costs Judge for ‘directions’ to a judge of the trial division under r. 63.51. Bell J said it could.
But his Honour ruled that the Costs Court did not have jurisdiction to hear that question and so made the man commence a fresh Supreme Court proceeding for a declaration:  VSC 417. Bell J found that the Costs Court is a ‘statutory court of limited jurisdiction’. That is interesting because presumably when the same work was done by the Taxing Master, the Supreme Court itself would have been exercising its unlimited jurisdiction so the creation of this Costs Court has complicated things.
Bell J found that the Costs Court did not have jurisdiction and so could not refer the proceeding to the Practice Court. The question which, on one characterisation, was whether the Costs Court should enforce a settlement of a Costs Court proceeding at a mediation ordered by the Costs Court was not one arising in the course of ‘assessment, settling, taxation or review of costs’ and so not within the Costs Court’s jurisdiction as described in s. 17D of the Supreme Court Act 1986. Not even within the grant of such additional power to the Costs Court as is necessary to do its job in sub-s. (2). Emerton J’s decision in Gadens Lawyers v Beba Enterprises  VSC 519 about the Costs Court’s jurisdiction was not cited to Bell J, who reasoned:
‘It is true that, in the circumstances of the present case, the issues raised by the application to set aside the agreement are connected with the ‘assessment, settling, taxation or review of costs’ because, in great part, the agreement settled the issues relating to those matters in the Costs Court. But a connection with those matters is not enough. The issues must actually relate to those matters. The issue is not that the set-aside application raises substantive issues of mixed fact and law, which it does, but that those issues do not relate to the ‘assessment, settling, taxation or review of costs’.’
So the man duly commenced a new proceeding which a judge of the Court referred back, perhaps a little paradoxically, to an Associate Justice who was not the Costs Judge for determination. If you’re expecting a happy ending for the doughty self-represented client-plaintiff after this procedural buffeting, I can’t help you. Derham AsJ found that the solicitors had been ignorant of any excema-related intoxication under which the plaintiff laboured and dismissed his application to set aside the settlement: EO v Bolton & Swan Pty Ltd  VSC 91.
This is part 3 of a post about the circumstances in which lawyers can avoid having their fees taxed. Parts 1 and 2 are here and here. In GLS v Goodman Group Pty Ltd  VSC 627, Macaulay J held that an accord and satisfaction which was found to have been made in relation to fees previously rendered for work already done was not a ‘costs agreement’ in the sense of that expression in the now-repealed but still operative Legal Profession Act 2004, so that the prohibitions on contracting out of taxation in costs agreements, and the writing requirements for costs agreements were not applicable. His Honour distinguished Amirbeaggi and Jaha, discussed in the two previous posts, explaining that he was following Beba.
Justice Macaulay ruled: Continue reading “When can lawyers contract out of taxation (part 3)”
This is part 2 of a post about in what circumstances lawyers can avoid having their fees scrutinised by the Supreme Court by the process traditionally known as ‘taxation’, but more recently also described in statutes as ‘costs review’ and ‘costs assessment’. Part 1 is here. First, a disclosure: I argued Beba at first instance, for the lawyers, and advised in the appeals.
In Beba Enterprises Limited v Gadens Lawyers  VSCA 136, a borrower promised the lender to pay the lender’s legal costs if they defaulted. Of course, they did default, and the lender demanded a sum which included an allowance for the lender’s legal fees occasioned by the default. The borrower and lender compromised their dispute, including in relation to the legal fees payable. Nevertheless, the borrower sought taxation of the lender’s legal fees by issuing a summons for taxation addressed to Gadens Lawyers, the lender’s solicitors. Continue reading “When can lawyers contract out of taxation? (part 2)”
Often enough, lawyers would love to avoid having their costs taxed. Under the repealed but still operative Legal Profession Act 2004, lawyers could contract out in advance of the obligation to have their fees reviewed by taxation with ‘sophisticated clients’, but I do not recall ever having seen anyone attempt to do so.
When lawyers have not complied perfectly, vis-a-vis unsophisticated clients, with the costs disclosure regime under the repealed but still relevant Legal Profession Act 2004, they could not recover their fees unless there had been a taxation: s. 3.4.17.
It was clear that unsophisticated clients could not validly agree to waive in advance of the fees being incurred their right to tax their lawyers’ charges. But what about if the solicitors entered into a compromise of a dispute about their already rendered fees with their client?
How did the law of accord and satisfaction apply? (Accord and satisfaction is the litigation estoppel equivalent to res judicata when a dispute is compromised or ‘settled’ rather than adjudicated upon.)
Can lawyers get certainty and avoid further disputation (including taxation) in return for a discount on their fees? Can they get around the s. 3.4.17 prohibition on recovering fees in cases of disclosure defaults unless they have been taxed? If a taxation is commenced and then compromised, I would think there was no doubt that the fees have been ‘taxed’ for the purposes of this rule, especially if the compromise were embodied in orders finalising the taxation. But what if the compromise occurs without any summons for taxation having been issued? Need the compromise comply with the formal requirements for costs agreements on the basis that they are agreements about the payment of legal costs which have been which have been charged for the provision of legal services? Does the accord have to state expressly that the client waives the right to taxation?
It seemed until recently, that lawyers could not preclude taxation by compromising a dispute with a client or associated third party payer about fees, because such agreements would amount to a ‘costs agreement’ under the Legal Profession Act 2004. Costs agreements were defined, after all, to mean ‘an agreement about the payment of legal costs’: s. 3.4.2, where ‘legal costs’ were defined by s. 1.2.1 to mean, amongst other things, ‘amounts that a person has been … charged by … a law practice for the provision of legal services…’). And the Act prohibited unsophisticated clients from contracting out of their right to taxation. Attempts to do so were void: ss. 3.4.26(5), 3.4.31.
The cases in this blog post (Amirbeaggi (NSWSC, 2008) and Jaha (SCV, 2012) explain why unsophisticated clients were apparently equally unable validly to waive their right to taxation after the fees had been incurred as they were unable to do so in advance, by virtue of the breadth of the definition of ‘costs agreement’.
Subsequent blog posts will consider what the Court of Appeal has had to say in a case indirectly on point, and explain the true state of the law in Victoria, as declared by the Supreme Court. It seems now that Victorian lawyers in dispute with their clients can buy their way out of taxation by giving clients a bit of a discount, and that this can occur without any writing or other formalities associated with ‘costs agreements’, and without any express reference to the future unavailability of taxation. The client need not even be aware that they are giving up their right to taxation. And that is so because agreements about how much a lawyer will accept in full and final satisfaction of their claim for fees already rendered for work already done are not ‘costs agreements’ governed by the Act after all. Continue reading “When can lawyers contract out of taxation? (part 1)”
The plurality judgment in the last decision of the High Court squarely about the advocates’ immunity was written by Chief Justice Gleeson and Justices Gummow, Hayne and Heydon JJ. They have now retired from the Court. As have the other judges who constituted the Court in D’Orta-Ekenaike v Victoria Legal Aid  HCA 12; 223 CLR 1, Justices McHugh, Kirby and Callinan. Now, a Court constituted by a selection of the current justices (Chief Justice French and Justices Kiefel, Bell, Gageler, Keane, Nettle and Gordon) will hear an appeal from the New South Wales Court of Appeal’s decision in Jackson Lalic Lawyers Pty Ltd v Attwells  NSWCA 335 (trial judge’s decision here, and special leave application transcript here: the application was heard by Justices Bell, Gageler and Gordon, and the appellant’s counsel was R. D. Newell), and the appeal seems set to be heard in November. Lawyers allegedly negligently settled litigation, were sued for damages, and successfully invoked advocates’ immunity.
I have been thinking about these questions for a long time and many times as a lawyer representing solicitors and barristers, called on the immunity successfully. I published the concisely titled ‘Compromise of litigation and lawyers’ liability: Forensic immunity, litigation estoppels, the rule against collateral attack, confidentiality and the modified duty of care’ in 2002 at 10 Torts Law Journal 167 and would be happy to provide a copy upon request. I was also in the High Court for argument of D’Orta-Ekenaike’s Case as one of the barrister respondent’s instructing solicitors. I might even pop up to Canberra to watch the argument in this latest case.
It was third time lucky for a leave application in this kind of case, after the Court declined special leave in Young v Hones  HCASL 73 (6 May 2015, Bell and Gageler JJ) and Nikolidis v Satouris  HCASL 117 (4 August 2015, Nettle and Gordon JJ (‘Given the procedural history of those initial proceedings, including that the applicants agreed to settle those proceedings, the present case does not provide an appropriate vehicle for reconsidering [the immunity]’).
In the Court of Appeal, Chief Justice Bathurst, with whom Justices of Appeal Meagher and Ward agreed, reversed the decision of Harrison J. The trial judge was quite frank: he said in a cri de cœur which met with little sympathy on appeal:
‘Notwithstanding all of the above, there remain at least two related matters that in my opinion are particularly troubling in this case, and which directly intersect with the way in which I am able to dispose of this application. The first matter is the apparent or potential strength of the plaintiffs’ allegations that the defendants have been negligent. As I have already commented, the plaintiffs would have been substantially better off if they had simply not defended the proceedings. The predicament that the judgment created for them is difficult to explain but even more difficult to understand. It is also difficult not to have a sense of unease about the possibility that an egregious error may go without the prospect of a remedy.’
Even if the immunity is not abolished, the decision has the potential to radically re-write the immunity landscape. The other thing it will do is promote discussion of the immunity, see good people marshalling the increasingly excellent arguments in favour of its abolition, and provide the possibility (again) for legislative amendment or abolition.
What has happened since D’Orta-Ekenaike’s Case? My (admittedly somewhat) Victorian-centric thinking suggests the following: Continue reading “All-new High Court to hear advocates’ immunity appeal”
Further update, 15 February 2017: The Victorian Legal Services Commissioner has formally advised me, and authorised me to tell you, that he will treat the transitional provisions as meaning that where the solicitor’s retainer is governed by the 2004 Act, so too will barristers’ retainers by the solicitor be governed by that Act, even if the brief post-dates the 1 July 2015 commencement of the LPUL.
Update: The position of the post-1 July 2015 briefed barrister briefed by a solicitor retained pre-1 July 2015 is not as clear as I suggested below. So now it’s me who’s arguably been disseminating misinformation: my apologies. But it seems to me that there has plainly been a drafting error. Certain that I knew what the intention of the transitional provision was, I overlooked what the actual words of cl. 18(2) say:
‘If a law practice [read ‘barrister’] is retained by another law practice [read ‘solicitor’] on behalf of another client [read, I would suggest, ‘a client’] on or after [1 July 2015] in relation to a matter in which the other law practice [read ‘solicitor’] was retained by the client before [1 July 2015]—
(a) Part 4.3 of this Law does not apply in respect of the other law practice [as drafted, this must be a reference to the solicitor, and this is the error] in relation to that matter; and
(b) in that case the provisions of the old legislation relating to legal costs … continue to apply.’
As drafted, there is no point to the provision. It is otiose in the context of cl. 18(1), which is said to be subject to sub-clause (2). It is beyond doubt in my mind that what was intended was a provision cognate with the similar provision in the Legal Profession Act 2004, which is as follows:
‘(2) Part 3.4 of this Act does not apply in respect of a law practice that is retained by another law practice on behalf of a client on or after the commencement day in relation to a matter in which the other law practice was retained by the client before the commencement day and in that case Part 4 of the old Act continues to apply.’
If the transitional provision as enacted is given its literal meaning, which given the apparent absence of ambiguity might require sophisticated argument to avoid, then the absurd situation will arise where one part of the legal team is regulated by one Act and the other by another. This may well be a situation where the provision is read to mean something other than what it plainly seems to say in order to avoid an absurd result which parliament could not be taken to have intended. Nevertheless, the answer should lie in retrospective amendment, and I believe that this problem will now be raised urgently at the highest levels, so I will keep you posted.
Original post: Misinformation about the transitional provisions for the new law regulating legal practice set to commence on 1 July 2015 is circulating around the Bar. Most people seem to understand that the question of whether the Legal Profession Act 2004 continues to have operation to a solicitor’s retainer after its repeal or whether the Legal Profession Uniform Law applies is answered by working out when instructions were first taken in ‘the matter’. (Let me digress for a moment. What a ‘matter’ is is not defined in the new Law (or the old Act), and remains a mystery to the world of costs law, although some guidance may be found in Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd  NSWSC 132. It is not clear that ‘matter’ and ‘retainer’ are co-extensive, and nor is it clear that a ‘matter’ is equivalent in scope to the scope of a ‘costs agreement’ which is applicable: that, I think we can say with some confidence. Generally, parties may agree as between themselves on what a statute is to be taken to mean. Those who take a sophisticated approach to handling costs disclosures under the new Law are likely to reduce the scope of their risk by carefully defining what a ‘matter’ is. More about that anon, perhaps, but the broader the retainer the more difficult the task of estimating total legal fees, and if the ‘matter’ in respect of which disclosure must be given may be attenuated by agreement, that would seem sensible from the lawyer’s point of view. Clients ought resist such an approach and actually ask what they want to know (e.g. how much might this litigation you’re proposing for me cost if the other side appeals all the way to the High Court and things go as pear shaped as can be imagined, and what are my chances of getting out of it without having to pay the other side’s costs at different points along the way?).)
What seems not to be appreciated is that which law applies to a barrister’s brief by a solicitor (as opposed to a direct access brief) depends on which law applies to the solicitor’s retainer. So a solicitor first instructed in relation to a matter prior to 1 July 2015 will continue to be governed by the old Act, and a barrister first briefed by that solicitor in that matter (or re-briefed in it for that matter) after 1 July 2015 will continue to be bound by the old Act too. The transitional provision is cl. 18 of Schedule 4 to the Legal Profession Uniform Law Application Act 2014 and sub-clause (2), apposite to barristers, is set out at the end of the post. Continue reading “Transitional arrangements for costs provisions of Legal Profession Uniform Law”
There has been another challenge to the legality of the work done by non-lawyer costs consultants. It did not go anywhere because of deficiencies in the way the client (himself a lawyer) went about trying to prove in the Magistrates’ Court that the costs consultant in question (a struck off lawyer) had engaged in unqualified practice, and because of the limited nature of an appeal from a Magistrate. The Supreme Court’s judges also emphasised the exactness of proof necessary to establish a breach of s. 2.2.2 Legal Profession Act 2004‘s prohibition on unqualified practice, given that it sets up an indictable criminal offence punishable by up to 2 years’ jail. Such exactness is needed even in civil proceedings which obviously do not carry criminal consequences.
But as three judges of the Supreme Court made clear, all this means is that this was not the vehicle to decide just how much non-lawyers are permitted to do in the realm of costs law, and subject to what level of supervision by a lawyer, and there is little solace for unqualified costs consultants in the judgments.
The reasons of the Court of Appeal for not granting leave to appeal the Supreme Court’s dismissal of an appeal from a Magistrate are: Defteros v JS  VSCA 154. They are interesting for three reasons:
1. They endorse comments made by the Costs Judge in a June 2010 decision as to the need for consideration of reform of the ‘mini-industry’ of costs consultants (Kaye J did so at  VSC 205 at  and Santamaria JA (with whom Neave JA agreed) did so at  VSCA 154 at );
2. They record an interesting submission of counsel, namely that the solicitor client was relying on his own contempt of the Supreme Court by asserting as a defence to a suit for fees a statutory prohibition on the recovery of money charged for the provision of legal services in contravention of the prohibition on unqualified practice — the contempt arose, so the argument ran, because the solicitor well knew at all relevant times that the costs consultant was not a practising certificate holder, and so had permitted the costs consultant to engage in unqualified practice if it had occurred, contrary to s. 2.2.10 of the Legal Profession Act 2004; and
3. They emphasise the modern trend of leaving to the Costs Court questions which have traditionally been dealt with by certificates of the trial judge (e.g. certification for two counsel).
It will not be too long before someone takes a grip of this issue and runs a test case carefully. An alternative battle ground might be found if the unqualified costs lawyers seek to influence the makers of the forthcoming Uniform Rules of professional conduct so as to provide an exemption for unqualified costs lawyers from the prohibition on unqualified practice: see s. 10(3), Legal Profession Uniform Law (Vic). That seems to me to be the most efficient means of resolving the question. In my books, if there is to be a place for the continued operation of unqualified practitioners there may be a case for restricting the exemption from unqualified practice to existing practitioners and closely defining the permissible ambit of their activities, perhaps to party-party disputes. Continue reading “Unqualified costs consultants”
Ho v Fordyce  NSWSC 1404 is a decision in an ex parte application of which the solicitor had no notice and did not participate. There is a dispute between solicitor and client in relation to fees. The client contended that costs agreements relied on by the solicitor were ‘a recent invention’. Given that the client asserts that there was no costs agreement, presumably the implication is that someone forged the documents relied on by the solicitor. The client applied for an Anton Piller-like order allowing IT people to march into the solicitor’s office and copy certain contents of the solicitor’s hard disk in order to preserve evidence which may assist in proving the implied fraud.
In a brief judgment given ex tempore, Rein J granted the application, relying on a decision of the Victorian Supreme Court’s Justice McMillan. The question of the likelihood of privileged material being present on the firm’s computers is not something discussed in the reasons. It may well be dealt with in the order, which is not reproduced in the reasons. I have never heard of any such application having been made by a client or granted against a solicitor in such circumstances before.
What his Honour said was:
’10 I do not wish to suggest that I am satisfied at this stage that there has been any false creation of documents. Rather there is a contention that it has occurred, and there is some support for that possibility in the evidence which has been presented. If it has occurred it will be difficult to prove and, if the secrecy of this application were not preserved until the point at which someone independent is at the office to obtain copies, the opportunity to establish that there has been recent creation (if that be the fact) will be lost.
11 In other words, for the plaintiff to have to present a normal application for discovery may act to the disadvantage of the plaintiff forensically and, accordingly, in circumstances where (a) the ambit of information which is sought is very narrow and (b) the consequences of the making of these orders will be of very limited effect, if it turns out that there has been no recent creation, weighs in favour of the making of the order.’
On 3 October 2014, Besanko J decided in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd  FCA 1066 that an order of a fellow judge that one party pay the other’s costs on an indemnity basis, which did not specify that the costs were to be assessed by reference to the successful party’s costs agreement with its solicitors, entitled it to costs assessed on that basis.
The Federal Court is therefore a better place to get an indemnity costs order than the Supreme Court because the law in the Supreme Court, as determined by the Costs Judge, is that the beneficiary of an indemnity costs order gets costs assessed according to the same scale as ordinary costs are assessed by reference to, but with an easier road to showing that the costs incurred ought to be paid by the other party at all: ACN 074 971 109 as trustee for the Argo Unit Trust v National Mutual Life Association of Australia Limited  VSC 137.
In the Supreme Court, of course, a special costs order allowing costs to be taxed by reference to the costs agreement may still be sought, and obtained, e.g. Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3)  VSC 399. But that is the exception rather than the default, and one which many trial counsel may not be aware of.
So badly do many trial counsel deal with the question of costs that it really would not be a bad idea if litigants got advice more often than they do from costs lawyers before costs fell to be argued in any case in which there are substantial costs and fault in the costs sense on both sides, or a number of interlocutory costs issues remaining for determination.
Mind you, according to Besanko J, it has long been thus. His Honour pointed to Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 121 (per Von Doussa J) and older cases from other jurisdictions.
This case demonstrates that ultimately what determines questions of costs is always the statutory instrument which provides for them. Increasingly, one jurisdiction’s jurisprudence will not prove persuasive in relation to different statutory regimes.
BGM v Australian Lawyers Group Pty Ltd  WASC 290 (S) is a decision confined to questions about what ought to follow from a Court coming to a view that a costs agreement ought to be set aside. Three matters are of interest:
1. The Court took the view that it followed as a matter of statutory construction that upon a costs agreement being set aside, bills rendered pursuant to it were of no force and effect, and declined to make a declaration to that effect because it was unnecessary.
2. Though the Court assumed that some form of restitutionary relief would entitle the applicant to repayment of monies paid under such bills, the Court declined to make any such order because no such relief had been pleaded in the originating process.
3. The Court declined an application for costs by the successful applicant for the setting aside of the costs agreement. It did so on the basis that there was a Calderbank offer to accept a sum of money in satisfaction of the lawyers’ claim to fees. The applicant argued that it had succeeded in the application to set aside the costs agreement and that the Calderbank offer should be brought to bear in the subsequent phase of ascertaining the fees against a scale which applied in default of the costs agreement having application. But the Court reserved the question of the costs of the application to set aside the costs agreement pending the finalisation of that second phase.
In IMO Speedy Loans Pty Ltd  VSC 273, a Victorian law firm delivered a creditors statutory demand to a company which was its former client. The client convinced Gardiner AsJ to set it aside exclusively by reference to an argument that by virtue of s. 3.4.17(1) of the Legal Profession Act 2004, the client was not yet obliged to pay the fees, no taxation (‘costs review’) having yet occurred. That was because there was an alleged failure to comply with the s. 3.4.16 requirement to provide costs estimates prior to the negotiation of the compromise of a litigious proceeding.
The lawyer involved swore that he had done so orally and the client swore that the lawyer had not. There was, accordingly, a genuine dispute as to the indebtedness of the company and the statutory demand had to be set aside. Lesson: give written disclosures even when writing is not specifically required. And be very sure of perfect compliance before suing for fees or issuing a creditors’ statutory demand. Otherwise, seek taxation of your own costs, following which the Costs Court will ordinarily make an order for payment of the taxed sum (or simply write off the fees as uncommercial to recover).
A NSW solicitor was partially successful in a defamation suit. But for the circumstance that he had retained an incorporated legal practice with which he was associated and for part of the time the director and the file handler, the Court was willing to order the defendant to pay his costs on an indemnity basis. In respect of the period in which the solicitor was — the fictions of corporations law aside — substantially self-represented, his costs were ordered to be assessed on the ordinary basis. What McCallum J said in McMahon v John Fairfax Publications Pty Ltd (No 8)  NSWSC 673 is:
A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA  WASAT 57 is interesting in a number of ways. A criminal lawyer was the manager of a strata corporation. She owned two units and the complainant the third. The complainant affixed an airconditioner to a wall which impeded on a common area. She sought legal advice. Her lawyers wrote a letter of demand to the complainant and charged a few thousand dollars. The complainant did not fix the problem within the 14 days demanded, so the lawyer sued in the Magistrates’ Court. The case was settled on the basis that the airconditioner would be relocated and the lawyer withdrew the proceeding without seeking costs. When the complainant sold the third unit, the lawyer demanded that the complainant pay her the few thousand dollars her lawyers had charged her for the advice and the letter of demand. She did so by a letter of demand drafted for her by another lawyer, though the involvement of this second lawyer only emerged at the disciplinary hearing. When the complainant did not pay up, she sued for them in her personal capacity. The suit was found to have no legal foundation, but the lawyer said that she mistakenly thought that it did have a legal foundation, and that civil proceedings were not her thing. The case says:
1. The suit was an abuse of process because there was no legal foundation for suing for the recovery of ‘pre-litigation’ legal costs.
2. The lawyer’s conduct in threatening to bring and then bringing a suit which was an abuse of process was common law misconduct but was also a breach of a rule which prohibited lawyers from claiming on behalf of a client costs in a letter of demand for recovery of a debt because she was acting for herself in writing the letter (even though no legal letterhead or reference to her status as a lawyer was involved).
3. There is no defence of honest and reasonable mistake in professional discipline.
4. It is inappropriate for a disciplinary tribunal to make what the prosecutors described as ‘an incidental finding of dishonesty’ in relation to statements made during the investigation in respect of which no charge had been laid in the disciplinary proceeding. Any such allegation ought to be the subject of a separate process (though the Tribunal then went ahead and found that the allegation was not made out on the Briginshaw standard anyway). Continue reading “Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client”
Updated post (25 July 2014): The answer to the question posed by the original post is: yes, he will be struck off. Here are the reasons: Council of the Law Society of NSW V Andreone (No2)  NSWCATOD 81. His failure to make submissions on the question would not have assisted. On the question of whether monies received by solicitors from clients for payment of counsel’s fees are trust monies, and on whose behalf they are held, see Legal Services Board v Gillespie-Jones  HCA 35 about which Melbourne University’s Associate Professor Bant’s learned commentary may be found here.
Original post (published as ‘Will Solicitor Who Failed to Pay Counsel’s Fees be Struck Off?’): The Law Society of NSW wants a solicitor who persistently delayed in paying counsel struck off. The NSW equivalent of VCAT has found the professional misconduct established: Council of the Law Society of NSW v Andreone (No. 1)  NSWCATOD 49, and a hearing on sentencing is pending. In this case, clients had paid bills which included claims by the solicitor for counsel’s fees by electronically depositing monies into the firm’s office account — probably at the firm’s direction, as the Tribunal found.
The Tribunal found without reference to authority that those payments were trust monies to the extent that they satisfied the claims by the solicitor for counsel’s fees, the solicitor not having paid the counsel at the time of their receipt. In other words, the solicitor held the monies on trust for the barristers. But it seems that the Tribunal considered the solicitor’s misappropriation of trust monies and the failure to pay the fees as separate instances of professional misconduct. In other words, the mere failure to pay the fees, given its intentionality and persistence, amounted to professional misconduct. This is what the Tribunal said: Continue reading “NSW solicitor who failed to pay counsel’s fees struck off”
Hidden away in Trkulja v Efron  VSCA 76, at footnote 49, is a little dictum of the Chief Justice and Justice of Appeal Santamaria which explains their Honours’ understanding of the term ‘pro bono’:
‘In current legal practice, the expression ‘pro bono basis’ is understood to refer to the basis where a practitioner offers his or her services on a voluntary basis without any entitlement to or expectation of remuneration.’
Practitioners should, it seems to me, think carefully before describing themselves as acting ‘pro bono’ when their retainers provide for them to be paid out of the proceeds of a costs order made in favour of their client in litigation to be paid by their client’s opponent in the litigation.
There has been uncertainty in relation to the efficacy of a retainer which says ‘I will charge you $300 per hour but will seek to recover it from you only if you obtain an order that the other party pay your costs, and then I will only seek to recover my fees to the extent of the other side’s liability under the costs order’ or any variation of that concept.
The issue was that the indemnity principle requires total party-party costs to be no more than the liability of the person seeking the costs order to their own lawyers for costs. If the liability depends on the making of a costs order, until the order is made, the liability is nil, so that the indemnity principle precludes the making of the order in the first place (so the argument goes). The latest important decision to endorse this reasoning, albeit in dicta, was King v King  QCA 81.
Now if there is a principle which is properly described as ‘flexible’, it is the indemnity principle in costs law and it is a matter of surprise to me that the uncertainty has persisted so long given the obvious desirability from the perspective of access to justice to sanctioning such arrangements.
Happily, the Supreme Court of Queensland recently gave a decision this year which decided as a matter of ratio that an otherwise orthodox hourly rates costs agreement which included the following special condition was efficacious and did not offend against the indemnity principle:
‘No fees will be payable by you unless an order is made by the Supreme Court of Queensland in your favour for the payment of costs and those costs are recovered by us from other parties and any fees charged shall be limited to the amount of costs so recovered.’ Continue reading “What does ‘pro bono’ mean? Are ‘semi-pro bono’ costs agreements legally efficacious?”
The Costs Judge recently clarified the procedure for seeking review of a decision of a Judicial Registrar on a preliminary point of law in a taxation of costs in the Costs Court. Essentially, his Honour said, the procedure in r. 63.56.2, mutatis mutandis, will generally be appropriate, including the 14 day time limit referred to in it. In relation to this kind of decision of a Judicial Registrar, the review goes straight to the Costs Judge, unlike in the case of rulings upon items in a bill of costs during the taxation proper, where there is a bizarre requirement for the Judicial Registrar to reconsider her own decision before it may be appealed to the Costs Judge. Continue reading “Reviews of decisions of the Costs Court’s Judicial Registrar”
A decision of the Supreme Court of Queensland has made clear what ought to be more obvious than it appears to be, namely that costs disclosure defaults will not result in the setting aside of a costs agreement in the absence of evidence that the non-disclosures had some effect on the client’s decision to enter into the costs agreement on the terms in fact adopted between the solicitor and client. Continue reading “Application to set aside costs agreements for disclosure defaults fails”