NSW solicitor who didn’t pay counsel’s fees struck back on

Salvatore Russo, a solicitor of 29 years’ standing, was struck off NSW’s roll of solicitors on 16 April 2016 by NCAT.  He had received payment from his client for counsel’s fees but not paid counsel for years. Then he was high-handed in response to the client’s entreaties when counsel sued the client directly.  The Court of Appeal found a denial of procedural fairness by NCAT.  The Tribunal had telescoped the questions of liability and penalty into one hearing.  It had failed to give Mr Russo sufficient notice of the fact it was considering striking him off despite the fact by the end of the trial, the Commissioner was not seeking such an outcome any more. Now he’s been struck back on by the NSW Court of Appeal, a fine of $20,000 substituted for his misconduct: Russo v Legal Services Commissioner [2016] NSWCA 306.  (In fact, the striking off never came into operation, because he got a stay along the way.) Continue reading “NSW solicitor who didn’t pay counsel’s fees struck back on”

Legal Services Commissioner’s new decision making powers

The Victorian Legal Services Commissioner has published a report on his new proactive regulation of the profession.  It tells how risk profiles of practices are being constructed with the assistance of academics to target trust audits and audits of firms more generally (a new thing for law practices which are not ILPs).  It also tells about the exercise of the power to make binding decisions, and alerted me to the fact that the Commissioner now publishes redacted versions of costs determinations at this page. The report says: Continue reading “Legal Services Commissioner’s new decision making powers”

Third party payer taxations where client bankrupt: WASCA

In Iron Mountain Mining Ltd v K & L Gates [2016] WASCA 166, the appellant, a listed company, had indemnified one of its directors against the legal costs of lawyers defending the director in criminal charges.  Companies can do this on the basis that the director must repay the costs if he pleads or is found guilty, since it is illegal to indemnify a costs liability incurred as an officer of the company if the costs are incurred in defending or resisting criminal proceedings in which the person is found guilty: ss. 199A-C Corporations Act 2001Note Printing Australia Ltd v Leckenby [2015] VSCA 105; (2015) 106 ACSR 147 [65]. The company paid more than $500,000 in respect of the fees prior to the guilty plea.

The director went bankrupt.  The company applied for taxation of the director’s solicitors’ fees.  By that time, the director had pleaded guilty to some of the charges.  The company was a non-associated third party payer; it promised to pay the lawyers’ fees, but its promise was made to the director and not to the lawyers. The Court found that the right given to third party payers to seek taxation did not adjust the interests of the client and the lawyers; it only adjusted the interests between the third party payer and the client: Continue reading “Third party payer taxations where client bankrupt: WASCA”

Yet more on the obligation on Legal Services Commissioners to plead their case properly and stick to it

Legal Services Commissioner v AL [2016] QCAT 237 is a decision of a disciplinary tribunal presided over by Justice David Thomas, President of QCAT and a Supreme Court judge. It is therefore of high persuasive value, and treats Queensland provisions which are the same as the equivalent Victorian provisions. And it provides what I suggest with respect are the correct answers to the following questions:

  • How negligent do you have to be before you can be found guilty of unsatisfactory professional conduct as defined in provisions which say that the concept includes ‘conduct that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent’ lawyer holding a practising certificate? (Answer at [44] and [27]: substantial and very obvious fallings short of the standard, established by direct inferences from exact proofs.)
  • What must be pleaded specifically in a disciplinary charge? (Answer at [82] – [92]: all states of mind, not only dishonest intents, and all facts to be relied on (‘the charges to be levelled must be fully and adequately set out in the Discipline Application. As a matter of procedural fairness, the Practitioner should not be left in any doubt as to the extent of the allegations that is to be met.’)
  • To what extent is a disciplinary tribunal constrained in its decision making by the allegations specifically made in the charge? (Answer at [96] – [108]: absolutely: if no state of mind is alleged, the prosecution should not be allowed to call evidence as to state of mind; ‘it would be wrong to admit evidence the principal purpose of which is to establish conduct that lies beyond the ambit of the charge’.)
  • Does the mere fact that charges are not allowed on taxation mean that there has been overcharging such as to warrant discipline? (Answer at [76] – [77]: no)

The Tribunal dismissed charges against a solicitor who lodged a caveat pursuant to an equitable mortgage without checking that it satisfied the Statute of Frauds’ writing requirements and against a partner of her firm who took over her files when she was on holidays and billed the client for the work in attempting unsuccessfully to register the caveat.

I move from the specific facts of this QCAT case to general comment (what follows is certainly not veiled reference to the conduct of the Commissioner’s counsel in QCAT). There is a very real reason to insist on the particularization of states of mind in disciplinary tribunals, including particulars of actual and constructive knowledge. These details do not always get left out just because it is thought that disciplinary tribunals are not courts of pleading and such minutiae is not appropriate. Nor do they just get left out because they are thought to be inherent in the allegation, or because of incompetence, or mere mistake. Rather, they get left out because bureaucrats have investigated incompetently and when competent counsel come to plead disciplinary applications based on the investigation, they do not have a sufficient factual foundation to make these allegations, or perhaps are simply too timid.

But sometimes counsel with civil practices, untutored in the art of prosecutorial restraint, and safe in their private belief that the practitioner is in fact much more evil than incompetent investigation established, might fall prey to temptation. Mealy-mouthed, ambiguous allegations might be made which require the practitioner to get into the witness box. Then, all manner of unpleaded allegations as to states of mind and as to completely un-pleaded conduct, justified in relevance as tendency evidence or circumstantial evidence of the pleaded facts, might be cross-examined out of the practitioner and an unpleaded case presented to the disciplinary tribunal in closing. In a tribunal not bound by the rules of evidence, such questioning may be waved through with lip service to the proposition that objections will be dealt with by according appropriate weight to the evidence in the final analysis. Queensland leads the charge against such conduct, and I can’t help thinking it’s because Supreme Court judges seem to get involved in disciplinary decisions more often up there. All power to them. So impressed am I with this latest judgment, I have decided to go on a study tour of the Sunshine Coast in the September school holidays.

Continue reading “Yet more on the obligation on Legal Services Commissioners to plead their case properly and stick to it”

A little case about a barrister suing a solicitor for fees

Barnet Jade has given us an admirably constructed decision of Assessor Olischlager, a no-doubt busy decision maker in the Small Claims Division of the Local Court in NSW.  Dupree v Russo [2016] NSWLC 8 was a barrister’s suit for fees against a solicitor.  Call me a dag, but it is always a pleasure to find diligent, elegant decisions carefully considering bang-on authority from the busiest decision makers who generally receive little assistance in the researching and writing of decisions. The decision considers whether costs agreements came into existence by the continued giving of instructions, and between whom, what disclosure obligations the barrister had, and whether the limitation period for suing for the fees was re-set by an acknowledgement of debt by the solicitor.

The barrister offered to enter into a costs agreement jointly and severally with his instructing solicitor and their client.  The offer said that the continuing provision of instructions would be taken as acceptance.  The solicitor continued to give instructions on behalf of the client.  The Court found that a costs agreement arose: the instructions were given by the solicitor personally and as agent for his client, as an act of acceptance on both their parts.  As the Assessor said: Continue reading “A little case about a barrister suing a solicitor for fees”

Advocates’ immunity: at once more powerful and narrower than most yet understand

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,[1] 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.[2] Continue reading “Advocates’ immunity: at once more powerful and narrower than most yet understand”

Applications to extend time to tax lawyers’ bills: keep ’em tight

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 [2012] 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 [2015] 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”

What quality of work defences are available in a suit for fees where client did not seek taxation?

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 [2016] 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?”

Man fails to set aside compromise of taxation of costs despite drunkenness from allergy tablets

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: [2015] 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 [2012] 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 [2016] VSC 91.

When can lawyers contract out of taxation (part 3)

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 [2015] 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)”

When can lawyers contract out of taxation? (part 2)

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 [2013] 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)”

When can lawyers contract out of taxation? (part 1)

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)”

All-new High Court to hear advocates’ immunity appeal

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 [2005] 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 [2014] 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 [2015] HCASL 73 (6 May 2015, Bell and Gageler JJ) and Nikolidis v Satouris [2015] 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”

Unqualified costs consultants

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 [2014] 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 [2014] VSC 205 at [85] and Santamaria JA (with whom Neave JA agreed) did so at [2014] VSCA 154 at [21]);

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”

Client obtains Anton Piller order over solicitor’s hard disk in fees dispute

Ho v Fordyce [2014] 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.’

What does an indemnity costs order actually get you?

On 3 October 2014, Besanko J decided in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] 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 [2013] 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) [2012] 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.

What orders ought follow the setting aside of a costs agreement?

BGM v Australian Lawyers Group Pty Ltd [2014] 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.

Solicitor’s creditors statutory demand set aside because of alleged non-compliance with costs disclosure obligations prior to settlement of client’s case

In IMO Speedy Loans Pty Ltd [2014] 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).

Is solicitor-director of ILP which acted for him to be treated as self-represented?

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) [2014] NSWSC 673 is:

Continue reading “Is solicitor-director of ILP which acted for him to be treated as self-represented?”

Self-represented solicitor guilty of misconduct for breaching a rule expressed to regulate conduct when acting for a client

A Western Australian disciplinary case, Legal Profession Complaints Committee v CSA [2014] 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”