Will clients be entitled to seek itemised bills within 7 days under the Australian Consumer Law, 2010?

Patrick Oliver, the head honcho at a cool little Melbourne-based consultancy to incorporated legal practices called Lexcel, has drawn my attention to s. 101 of the Consumer Law, 2010.  It provides for ‘consumers’ to request itemised bills from service providers, and requires that they be provided within 7 days, in default of which a pecuniary penalty may be levied.  Sub-section (5) says ‘The supplier must ensure that the itemised bill is transparent.’

There is no carve-out for lawyers. I would not be surprised if the double-regulation is fixed by legislative amendment.  Meanwhile, however, the full text of s. 101, which commences on 1 January 2011, is as follows: Continue reading “Will clients be entitled to seek itemised bills within 7 days under the Australian Consumer Law, 2010?”

Can you piggy-back the taxation of an old interim bill onto a taxation of a fresh final bill?

Update, 22 February 2012: Another judge of the Queensland District Court has preferred the NSW position over the Victorian position: Golder Associates P/L v Challen [2012] QDC 11 (Samios DCJ).

Update, 14 August 2011: The decision is at odds with decisions of judges of NSW’s and Queensland’s District Courts: Retemu Pty Ltd v Ryan (NSW District Court, Coorey DCJ, 4300/08 and 4301/08, 16/4/10, unreported), which Costs Judge Wood did not follow in the decision which is the subject of the post below (Dromana Estate), and Turner v Mitchells Solicitors [2011] QDC 61 (McGill DCJ), which prefers the reasoning in Retemu to that in Dromana Estate.

Original post: Under the Legal Profession Act, 2004, clients have a year to apply for taxation of their solicitor’s bill.  Before, it was 60 days, but it was easy to get an extension: s. 3.4.38(5).  Now, it’s longer, but it’s harder to get an extension: you have to make an application to a judge in the Practice Court, and the test is stricter.  Section 3.4.37, though, says:

‘(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.

The Costs Court

I have been remiss in not bringing to your attention the creation of the Costs Court, which came into operation at the beginning of this year.  It is in fact not really a new Court, in the sense that it is just a revamped division of the Supreme Court.  But the development means that the number of dedicated costs decision makers in the Supreme Court has increased from one to three. It heralds a new era in the hitherto fragmented, inconsistent and arcane world of legal costs.  The air of change is enhanced by the relatively recent change of guard at the top from long-time and generally well-loved incumbent, Master Tom Bruce as Taxing Master to Associate Justice Jamie Wood as Costs Judge.

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.

Continue reading “The Costs Court”

What are ‘legal proceedings to recover legal costs’?

A barrister rang me the other day in relation to what he probably thought was a simple question: if a lawyer settles a dispute about legal costs and then sues for specific performance, is it a ‘proceeding to recover legal costs’?  No, I said, but I could not find, on my blog, or anywhere else where I store things for later use, authority for the proposition.  Now I have come across the authority I had in the back of my mind and have forgotten who asked the question.  So here it is, for the whole world to enjoy: Koutsourais & v Metledge & Associates [2004] NSWCA 313.  In fact, it is not authority for the proposition I had in my mind, since one judge held in favour of the proposition, one against, and one abstained from deciding the case on that issue.  Its investigation of previous cases is nonetheless useful, and it and those cases provide a useful jumping off point for anyone who needs to research the issue.  It has been considered subsequently, in cases published on Austlii, in these cases.  The ones I have looked at suggest that the proposition is a good one, at least where the character of the settlement agreement is sufficiently removed conceptually from the original indebtedness, but don’t quote me on that tentative conclusion.  Anyone know of any Victorian authority on the question? Continue reading “What are ‘legal proceedings to recover legal costs’?”

What is a ‘lump sum bill’?

In the law of legal costs, there has long been a distinction between a lump sum bill, of the kind generally given in the first instance by solicitors to clients with whom they have an ongoing working relationship, and an itemized bill which is usually given if a client wants a bit more detail in relation to how the hell legal costs could possibly have blown out to the amount stated in the lump sum bill.  Where the solicitor-client relationship is under a fair bit of strain, or has broken down, itemized bills are sometimes given in the first instance.  They were, and sometimes still are, known also as bills of costs in taxable form.  There is quite a bit of law on what is necessary for a bill to qualify as an itemized bill, but not all that much about what is necessary to qualify as a lump sum bill.  The difficulty is exacerbated by the lack of definition of ‘lump sum bill’ in s. 61 of the Supreme Court Act, 1986 or its successors the Legal Practice Act, 1996 or the Legal Profession Act, 2004.

My friend Richard Antill gave me an old decision of the Supreme Court of Victoria on the question, Stevens v Keogh, unreported, 3 December 1996, Justice McDonald.  Contact me if you would like a copy. A solicitor sued his client for fees. The client defended, called no evidence at trial, and successfully contended that the solicitor’s evidence disclosed no case to answer.  The letter under cover of which the controversial bills was given said:

‘I confirm that at our first meeting I stated that my charge would be at the rate of $150 per hour or pro rata per part.  Accordingly my account simply lists the times spent on the work for you’.

The bill itself said:

Continue reading “What is a ‘lump sum bill’?”

From when can solicitors claim interest on an unpaid bill?

Under s. 95 the Legal Practice Act, 1996, interest was chargeable on bills of costs from the period from 30 days after payment is demanded until the bill is paid.  But what does it mean?  Does interest start to run 3o days after (i) the date of the bill, (ii) the day it was posted, (iii) the day it was received, (iv) the day at the end of the period which the costs agreement says payment is to be made within, or (v) the due date for payment stated on the bill?  In this post, I hazard an answer, and note the different provision now to be found in the Legal Profession Act, 2004, following its amendment which I posted about here. Continue reading “From when can solicitors claim interest on an unpaid bill?”

Termination of a no-win no-fee retainer

Mr Burmingham is the subject of three posts already.  They dealt with three discrete aspects of his case, Maurice B Pty Ltd v Burmingham [2009] VSC 20: a titillating detail, advocates’ immunity, and the nature of the suit for fees.  But his case was really mostly about what happens when a no-win no-fee costs agreement is terminated before the end of the case.  Of course, it all depends on what the costs agreement says, and this costs agreement was presumably the result of many years’ honing by one of Australia’s foremost plaintiff firms.  Justice Byrne was not complimentary of the draftsmen (nor of the court book’s reverse chronological order, a bugbear of my own).  But in the end, the lawyers got their fees even though they did not obtain a successful result for Mr Burmingham. Continue reading “Termination of a no-win no-fee retainer”

Lawyers and the criminal law

Reproduced below is a blog post about ‘bill padding’ from the US site, Legal Blog Watch. That is where lawyers say work took them longer than it really did, and so charge commensurately more, or even make up the fact that they did work, and charge for it. Sometimes I read articles like this and wonder whether lawyers don’t think they live in a different world where, if they commit crimes, what will happen to them is that they will be dealt with by professional discipline. They think that, or course, because it’s more or less true, unless you get caught stealing from your trust account.  But the criminality of time sheet crime should not be allowed to be buried under anodyne euphemisms. ‘Bill padding’ sounds kind of cute, a necessary evil. It is a kind of newspeak. Time to do away with it. Let’s call it ‘rapacity fraud’.  It is tolerated by the profession in this sense.  There are generalised allegations of widespread bill padding.  Talk privately to costs consultants and they will tell you all about it.   But I have never heard of a firm which has even basic anti-fraud procedures to detect the practice.

My point kind of makes itself when the author says ‘allegations of bill padding … drew … strong criticism about the practice from legal ethics experts’.  Experts say fraud is bad?  Well shit Sherlock!  The 9th commandment does kind of feature relatively prominently in most systems of law.  We’re going to have the case one day when someone actually subpoenas a firm’s electronic billing system and its metadata, and diaries, analyses when the billing entries were made, and cross-examines lawyers on how they could have billed 180 units in a day and still made it to the client function at 6 p.m., or why, having billed relatively consistently every day, they would suddenly remember on the 30th of the month some comparatively vaguely described units they had forgotten to record mid-month, or why given that they had used a precedent for similar documents three times previously in the same month, they decided to draft the document from scratch, only to end up with — you guessed it — the same document as the precedent.  Now, that article: Continue reading “Lawyers and the criminal law”

Is interest a form of relief VCAT can grant?

In a long-wnded way, I tentatively suggest that, so long as the applicant has the sense to invoke s. 108 of the Fair Trading Act, 1999, then penalty interest is available under the Supreme Court Act, 1986, just like in the Supreme Court, so long as the dispute is a consumer-trader dispute. That is, a dispute between a purchaser or potential purchaser and a supplier or potential supplier of goods and services, broadly defined. There are some causes of action which come with specific interest provisions too, like the one attached to costs disputes under the Legal Profession Act, 2004.

Continue reading “Is interest a form of relief VCAT can grant?”

VCAT rewrites unrepresented man’s misconceived application

Slobodan Catovic did not want to pay his solicitor’s bill. He misconceivedly invoked the Legal Profession Act, 2004 provision which allows clients to apply to set aside costs agreements, but that is not what he wanted to do. Senior Member Howell satisfied himself that Mr Catovic had intended to bring an application under the Fair Trading Act, 1999, and ordered that the application be treated as a small claim under that Act. He even told the Registrar to refund Mr Catovic the difference between the fee on an application to set aside a costs agreement and the paltry fee payable on the institution of a small claim under the Fair Trading Act, 1999. See Catovic v H Solicitors [2008] VCAT 840. On the propriety of the cross-fertilisation of VCAT’s jurisdictions, see also this post.

Chakera v Kuzamanovic [2003] VSC 92

Chakera v Kuzamanovic [2003] VSC 92 is a decision of the Supreme Court of Victoria’s Justice Nettle in relation to the effect of a default under the costs disclosure regime under the Legal Practice Act, 1996. It stands for the proposition that in the case of complete non-compliance with the costs disclosure regime, the solicitor is still entitled to recover legal costs, albeit possibly on a reduced basis. The consequences of non-disclosure were spelt out in s. 91 of the Act. That section made it clear that costs were recoverable on a quantum meruit basis even where there was no valid costs agreement. All sounds pretty obvious now, but a Magistrate, tactfully unnamed, was adamant that non-compliance with s. 86 of the Legal Practice Act, 1996 meant that no fees for work done in a retainer could be recovered. ‘Nonsense!’, Justice Nettle said.

Today, the correlate of s. 86 of the old Act is s. 3.4.9,and the correlate of s. 91 is the rather more complicated s. 3.4.17.

VCAT runs out of patience with serial adjourner

I was drinking beer at The Peacock the other afternoon, and a VCAT member was muttering about the Supreme Court overturning VCAT decisions on the basis that applications for adjournment were not granted when they could have been cured by an order for costs. The suggestion was that the Court may have overlooked the fact that no costs are awardable in certain classes of cases. The other point was that in many lists, like the civil list, members are expected to churn through a case an hour, without the assistance of counsel on which decision makers generally rely on so heavily.

My conversation came back to me while reading HL v Fahey [2007] VCAT 2400, a case about Ms Fahey’s dissatisfaction with a bill for $1,199. Ms Fahey successfully sought 2 adjournments. The first time, she had to go to Norway for a qualifying competition for the Olympics. Her game is dressage. The second time, she simply wrote in sick. The third time, she attached a sick note from a doctor. VCAT told her that administrative adjournments were over and told her to come to the hearing and make her application there, and to be ready to proceed if she failed. She did not turn up, and so an order was made against her. She sought a review, akin to an application to set aside a default judgment. She sent a fax to VCAT at 9.36 a.m. before the 10 a.m. hearing in which she said she was ‘unable to attend today’s review hearing due to extreme illness’, and concluded ‘I will contact you again in the future to arrange a new review date.’ That attempt to direct the Tribunal to adjourn failed, and Senior Member Howell heard the case in her absence, saying: Continue reading “VCAT runs out of patience with serial adjourner”

VCAT cancels bill and leaves solicitor wholly unremunerated for sloppy work

Praag v W & T Lawyers [2008] VCAT 307 was a rare thing: a case in VCAT’s Legal Practice List actually prosecuted pursuant to the Legal Profession Act, 2004. Mr Praag was his late mother’s executor. Before her death, she lived in Canberra. Her assets were a house in Canberra and $50,000 cash. Mr Praag went to the respondent solicitors who said they would get probate of the will for $2,800. The scale cost for doing so was $499. They did not otherwise comply with the costs disclosure regime in the Legal Profession Act, 2004. In fact it was unnecessary to get probate in Victoria, and it would have been better to have got it in the ACT. Though Mr Praag was able to withdraw the cash from the Bank with the Victorian parchment, he was unable to deal with the house unless he resealed the probate in ACT, which cost a bit extra on top of the cost of getting probate. Member Butcher mentioned several ‘concerns’ he had before concluding: Continue reading “VCAT cancels bill and leaves solicitor wholly unremunerated for sloppy work”

Once the time for taxation runs out, the solicitor can sue on the bill as a simple debt

I have never been quite clear about what you have to prove in a suit for fees. I was attracted to the proposition that if a client wants to go through a bill item by item, the place to do that is in a taxation, and if they do not go down that path, or they can’t because they’re out of time, then no challenge of the kind typical of a taxation ought to be allowed in the suit for fees, that is, that the bill may be sued on as a debt due and owing. But I was never entirely confident about it.

The Full Legal Profession Tribunal’s 16 June 2000 decision in B v Home Wilkinson Lowry [1999] VLPT 1 is authority for many things (principally that state tribunals like VCAT have no jurisdiction over the costs of Family Court proceedings), and seems to be authority too for the proposition which attracted me. Continue reading “Once the time for taxation runs out, the solicitor can sue on the bill as a simple debt”

WARNING: costs agreements and bills require amendment

Since 6 December 2007, the maximum interest chargeable on bills has dropped from 12% (the penalty interest rate) to the Reserve Bank Target Rate +2% (at the time of writing 8.75%), and the period of non-payment after which you can begin charging has changed too. You need to amend your bills because if you don’t put the right statement on them, you won’t be able to recover interest unless you dream up some sophisticated arguments. In the case of ongoing retainers, you probably need to send the first new bill of the new regime under cover of a letter advising a change in the rate applicable to unpaid bills. Otherwise, you might fall foul of the ongoing obligation to disclose any substantial changes to anything previously disclosed.

You do not have to express the interest chargeable as a percentage rate per annum. In my experience, the only time anyone ever charges interest is when suing for fees, after the relationship has broken down, or demanding payment of fees as a condition of staying on the record or giving up a file subject to a lien. Perhaps that was because the rate was so punitively high, and perhaps because too few people knew about the penalty interest rate calculator on the internet. Why not set a lower rate which is dead easy to calculate and actually make a habit of collecting interest? So long as the rate you are effectively charging works out lower than what you would charge if you charged the maximum annual percentage rate over the same period, you’ll be sweet. Read on to find out the answer to the questions someone in your firm is sure to ponder at some stage in the future: does it apply to bills given before 8 November 2007? Does it apply in retainers in which instructions were first taken before that date?

Continue reading “WARNING: costs agreements and bills require amendment”

How to calculate interest on post-5 December 2007 bills in Legal Profession Act, 2004 (Vic.) matters

What follows assumes that you have not made any special agreement in a costs agreement, and so the default position applies. It is truly an idiot’s guide because (i) I have great sympathy for people who have difficulties with numbers, and (ii) I well remember how grateful I was when a partner of Middletons, Mark Howard, showed me as an articled clerk how to calculate penalty interest. Continue reading “How to calculate interest on post-5 December 2007 bills in Legal Profession Act, 2004 (Vic.) matters”

Ways for lawyers to cope with costs disclosure defaults

Under Victoria’s Legal Profession Act, 2004 the most apparently draconian consequences follow for the slightest non-compliance with any of the elaborate pre-retainer disclosures required to be made by solicitors. Under s. 3.4.17, if the lawyer has not disclosed something required by the relevant bit of the Act to be disclosed:

  • the client ‘need not pay the legal costs until they have’ been taxed as between solicitor-client in the Supreme Court, generally at the solicitor’s expense;
  • the solicitor ‘may not maintain proceedings … for the recovery of legal costs’ until the end of such a taxation; and
  • the client ‘may apply … to set the costs agreement aside’.

In Dennis v Cameron [2007] NSWCA 228, the New South Wales District Court and its Court of Appeal unanimously decided a case about failures to disclose various things in a bill of costs (and by operation of NSW legislation, the result was that no suit could be brought on it for recovery of fees claimed in it). If the case is followed in Victoria and extended to pre-retainer costs disclosure defaults, some balance might be introduced into the unprecedentedly strict regime introduced on 12 December 2005, which I reckon the profession is just beginning to feel the bite of. I was in VCAT’s Legal Practice List today battling over my solicitor client’s bill of costs, and she was certainly complaining. The decision suggests that:

  • the defects may be waived by the client, after which he or she will be estopped from relying on them (at [39] having cited In re Gedye (1851) S.C. 20 L.J. Ch. 410);
  • little compromises in relation to outstanding fees may amount to fresh contracts which may be sued on even if the original bills could not, so that the subsequent suit is not ‘to recover legal costs’ but is for breach of the compromise, and so is not barred by the prohibition on maintaining such suits before completion of a taxation (trial judge’s judgment, see Court of Appeal’s judgment at [22], citing Koutsourais v Metledge & Associates [2004] NSWSC 313; and
  • it is unnecessary to disclose to a client that which he already knows (at [46], citing Hogarth v Gye [2002] NSWSC 32 at [25].)

The decision is a wake up call to the profession which tends to be unable to focus on anything other than the legislation. But the legislation is not a code. A costs agreement remains a contract, and all the law that flows around contracts — including equity — can be brought to bear, to the extent not inconsistent with the legislation. There is a lot of law about retainers and costs agreements, and it can be worth looking up (undoubtedly the best place to start is Dal Pont’s Law of Costs in Australia). There is also much room for original thought by those who have a good grip on the law of obligations. Continue reading “Ways for lawyers to cope with costs disclosure defaults”

Bills of costs must be signed by principals or employees: what does that mean?

Update: 6 January 2008: Pinna v Kuek [1999] VSC 204 is a decision about the correlative section under s. 107, Legal Practice Act, 1996, which said (2) A bill of costs – (a) must be signed by – (i) the legal practitioner…’. O’Bryan J held that a letter signed by the legal practitioner enclosing a 10 page unsigned itemised bill of costs satisfied the requirements of the provision. Now that is made clear by the Legal Profession Act, 2004, since amendments which came into operation in 2007. The provision is s. 3.4.34(2A). Furthermore, it is no longer necessary for a partner of a firm to sign a bill. Any lawyer, including employees of the law practice rendering the bill may do so: s. 3.4.34(2).

Dennis v Cameron [2007] NSWCA 228 is a very interesting case about bills.

Original post: The law on what constitutes a signature is:

‘the fact an actual signature is not the result of the act of signing is not critical to the validity of the document. Even a form with a signature impressed upon it by a printing machine[6] or where the person signing places upon the document an engraved representation of that person’s signature by means of a rubber stamp[7] have been held to satisfy the statutory requirement of a signature. A telex signature has also been held to be sufficient to constitute a proper signature.8] The critical element appears to be that the signature must also contain the additional characteristic that the person making the mark approves of the contents of the document.’*

Hoeben J said much the same thing at [42] in Dennis v Cameron [2007] NSWCA 228 in the context of a NSW statutory provision which says that a bill of costs must be signed by a partner of a firm, or by a barrister, or an employee of either. That case is also the subject of the next post. Continue reading “Bills of costs must be signed by principals or employees: what does that mean?”

Unrepresented barristers’ entitlement to costs in cases involving them personally

In Winn v GHB [2007] VSC 360, a barrister was personally a party in some litigation. She was admitted in Victoria but at the relevant time was practising in Brisbane under a Queensland practising certificate. She taxed her solicitors’ fees, and acted for herself. She appealed successfully from the order of the Taxing Master. She successfully sought an order for costs, but the only costs she was entitled to were costs of travelling to and from Victoria from Queensland for the hearings because the exception to the rule that unrepresented litigants are not entitled to costs except for out of pocket expenses applies only to solicitors and does not extend to barristers. Continue reading “Unrepresented barristers’ entitlement to costs in cases involving them personally”