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Federal Court says Jarndyce v Jarndyce is to be kept front of mind by Costs Courts

For some reason I have agreed to give a seminar on the ethics of billing by the hour, one of those topics so big that I have until now avoided tinkering around the edges of it.  My distinguished collaborators, who will give separate papers at the 7 September 2011 seminar in Melbourne, will be Costs Judge Jamie Wood and Liz Harris, head honcho at Harris Costs Lawyers.  My researches begin here, today, with a look at a recent decision of Justice John Logan of the Federal Court in Queensland who has a few days ago delivered a leviathan costs judgment (Wide Bay Conservation Council Inc v Burnett Water Pty Ltd (No 9) [2011] FCA 661) in which he awarded solicitor-client costs against the applicant in respect of failed allegations of misconduct and said:

‘Some of the language employed in [the scale] in respect of particular items is indeed redolent of a 19th century legal office – “engross” and “folio”, for example. This acknowledged, to approach the subject of how much reasonably to allow in respect of legal costs by recalling the works of Charles Dickens may not, with respect, necessarily be a bad thing.’

His Honour then went on to catalogue judicial diatribes against the billable hour, via a reference to Bleak House: Continue reading “Federal Court says Jarndyce v Jarndyce is to be kept front of mind by Costs Courts”

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Problems abound when one spouse’s solicitor conveys matrimonial property by order of the Court

Update, 6 June 2011: A reader has helpfully pointed out that the decision digested below has been overturned by a unanimous Court of Appeal, the principal judgment having been given by Justice McMurdo.  See Legal Services Commissioner v Wright [2010] QCA 321.

Original post: The Family Court likes to order that one spouse’s solicitor act for both spouses in the conveyance of matrimonial property which it orders be sold.  That this may occur exemplifies the principle that it is not enough that clients’ interests conflict for a conflict of duties to proscribe a multiple client retainer; what is necessary is that they conflict materially in relation to the matter which is the subject of the retainer.  But I have acted in three matters where such an order has resulted in problems, and that suggests to me that there are many more such matters which have run into problems.  Generally, the problems arise from the solicitor ignoring in some way the interests of the spouse for whom he or she had previously been acting exclusively, or at least the perception that that is so.

Legal Services Commissioner v Wright [2010] QSC 168 is a variation on the theme.  It arose out of a de facto property adjustment case in Queensland’s District Court.  The Court ordered that the de facto husband’s solicitor ‘will act on [his] behalf in the conveyance of the sale of the property’, which was in the de facto husband’s name.  The de facto husband and wife were then ordered to cooperate in paying out costs of the sale (including the legal fees) and creditors before the balance was to be divided 75% to the de facto wife and 25% to the de facto husband.  The Chief Justice of Queensland wasted little ink in concluding that the wife was neither the solicitor’s client nor a third party payer, and so was not even entitled to an itemised bill when the husband’s solicitor charged over $7,000 for the conveyance, directly diminishing the amount reaching her pocket by three-quarters of $7,000.

Where one spouse agrees on the other spouse’s solicitor conducting a conveyance otherwise than expressly for both of them, this case suggests that they would be well advised either to provide for an obligation to pay the solicitor’s fees of a kind which brings them within the definition of ‘third party payer’, or fix the fee payable for the conveyance, or contract for an entitlement to an itemised bill, and thereafter to be deemed by agreement to be a third party payer. Continue reading “Problems abound when one spouse’s solicitor conveys matrimonial property by order of the Court”

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The limits on Kuek v Devflan articulated

The Court of Appeal has had the opportunity promptly to provide a decision illustrating the limits of its previous decision in Kuek v Devflan Pty Ltd [2011] VSCA 25, which I posted about here.  The opportunity arose in Shaw v Yarranova Pty Ltd [2011] VSCA 55, a unanimous decision of Justices of Appeal Redlich and Mandie.  A third party payer was principally responsible for the fees of the victorious litigant.  The vanquished litigant sought to avoid the adverse costs order by invoking the indemnity principle of legal costing by establishing that the victorious litigant had no obligation to pay its lawyers.  The Court of Appeal said that the law presumes that there is an obligation on the client to pay its lawyers even if there is evidence of an obligation on a third party to pay the lawyers as well.  It made clear that it would not sanction fishing expeditions to displace the presumption.  Here, the litigant’s parent company, which was the third party payer, did not have a costs agreement with the lawyers and neither did the litigant.  But unless lawyers agree to do work for a client for free, they are entitled to payment on scale even in the absence of a costs agreement. Continue reading “The limits on Kuek v Devflan articulated”

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Applicants for taxation can call for other side’s costs agreement and bills

Update: for the incredible backstory to this latest piece in the litigation over $705 in repairs to Mr Kuek’s Toyota Camry, see this story at Justinian.  You will have to subscribe for $22.

The indemnity principle in costs law says that an award of party party costs must never exceed the beneficiary’s liability to his or her own lawyers.  That is, party party costs must not exceed solicitor-client costs.  Traditionally, however, those ordered to pay costs by a court have not been allowed to look at the costs agreement or bills between the party whose costs they have been ordered to pay.  Kuek v Devflan Pty Ltd [2011] VSCA 25 says that at least where there is some reason to believe that the indemnity principle might be infringed, the costs disclosure letters, costs agreement, and, probably, solicitor client bills may be inspected by the party ordered to pay the costs, and used to argue the application of the indemnity principle.

Justice of Appeal Hansen, with whom Justices of Appeal Neave and Harper agreed, said that the Taxing Master’s view that ‘the course proposed [requiring production of the costs agreement and costs disclosures, and having regard to them in the taxation] will lead to the taxation of two different bills with additional delay, expense and inconvenience … is a floodgates type argument which is no answer to a taxing officer’s fundamental duty to conduct each taxation on its own merits in accordance with law.’  His Honour continued:

‘This type of issue will not often arise because, in the ordinary case, party / party costs fall well short of the receiving party’s actual liability to its lawyers.  But, as I have noted, here the material is sufficient to suggest that the position may be otherwise.  It follows that the taxing officer must be satisfied that, as a question of fact, the party / party costs do not exceed the respondents’ liability to their lawyers.  Both the Taxing Master and the judge seemed to assume that the consequence of such a factual exercise would be the (inconvenient) step of requiring the respondents to produce a solicitor / client bill, and that there was nothing in the authorities to require a solicitor / client bill.  However it does not follow that the factual question posed can only be determined by reference to a solicitor / client bill.  It may be readily apparent on the face of the lawyers’ accounts that the receiving party has actually paid its lawyers more than the amount of the party / party bill.’

Many lawyers do not enter into proper costs agreements with their clients, because they trust them to pay the bills.  Most lawyers, for a variety of reasons, do not comply perfectly with the costs disclosure regime, but get away with it because their clients are happy with their services and charges, or are ignorant of the consequences of costs disclosure defaults.  This decision constitutes a reason why it is important to have a valid costs agreement and to comply with the costs disclosure obligations: otherwise the party may recover less on a party party costs award than he or she otherwise would.  The decision whether to do things properly is no longer just a decision about whether to take the risk that the client will unexpectedly take advantage of the law, but must be taken in the context of the lawyer’s duty of care to avoid foreseeable economic loss to the client.

Continue reading “Applicants for taxation can call for other side’s costs agreement and bills”

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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?”

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New cases

Legal Services Commissioner v Dempsey [2010] QCA 197 is an unsuccessful appeal from a disciplinary prosecution in which findings of dishonesty were made.

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

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

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


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Solicitors’ retainers have implied term of efficiency

In Michaels v Daley [2010] VCAT 1205, Senior Member Howell advised that:

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

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

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An application to tax costs out of time

Ciaglia v Beilby Poulden Costello Pty Ltd [2010] NSWSC 748 is a decision of Justice McCallum. A client sacked his lawyers.  They sent a bill for about $30,000.  Through his new lawyers he did a deal with the old lawyers: in exchange for the delivery to his new lawyers of the old lawyers’ file, he would pay the disbursements component of the bill (about $5,000) and give the new lawyers an irrevocable authority to pay the outstanding $25,000 or so from the proceeds of the proceedings in which the old lawyers had acted.  He had amended the authority proposed by the old lawyers so as to substitute for the irrevocable authority in relation to the proceeds of any proceedings against the person he was suing an irrevocable authority only in relation to the proceeds of the particular proceeding against that person in which he was then engaged.  In dicta, her Honour suggested that at this point, the client had probably ‘waived’ his right to a taxation.  But that was to change. Continue reading “An application to tax costs out of time”

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The 20% reduction in Worksafe case costs: what does it mean?

Section 134AB(29) of the Accident Compensation Act, 1985 means if injured workers win in proceedings under that Act, they get 20% less from the losing party towards the amount they have actually been charged by their lawyers than all other litigants. In Joaquim v FPI Vinyl Compounds Pty Ltd, Supreme Court of Victoria, unreported, 9 July 2010, Costs Judge Wood held that the provision means that whatever the taxed costs are, 20% is deducted.  It was argued by the losing party that the 20% deduction should apply only to scale items allowed as per the scale allowance, and not to items which were already allowed in the discretion granted by the preamble to the County Court scale in an amount less than provided for by the scale.  The provision says:

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

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

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Applications to waive fees are not party party costs

In Joaquim v FPI Vinyl Compounds Pty Ltd, unreported, Supreme Court of Victoria, 9 July 2010, Costs Judge Wood held that solicitors’ assistance to poor clients in applying for waivers of court fees (filing fees, setting down fees and hearing fees in this case) are not fees which are properly claimed in a party-party bill of costs.  Clients are perfectly capable of filling them in themselves, his Honour held, and if the solicitor does it for them, it’s not something the other side should have to pay for if they lose.  This is an example of work done and billed for by the solicitor which may be allowed on a solicitor-client taxation, but not on a party party taxation.  That is, it is an illustration of the difference between solicitor-client and party-party costs.

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

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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.

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Orders for discovery in SA taxations

Here is a new decision from South Australia about the availability of discovery in a taxation of costs: Steicke v Donaldson Walsh Lawyers [2010] SASC 188.  Apparently, there is a big divorce case going on in which the wife has paid over $10 million in legal fees and the husband over $20 million.

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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”

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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’?”

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No taxations of old-Act hourly rates costs agreements

The Legal Practice Act, 1996 still governs costs agreements in matters where instructions were first given prior to 12 December 2005 and bills rendered pursuant to them, even after that date, which was the commencement date for the Legal Profession Act, 2004: see cl.  3.1(1) of the second schedule to the Legal Profession Act, 2004.  A curiosity of the old Act is that bills rendered pursuant to costs agreements which provided for fees to be charged at hourly rates were not amenable to solicitor-client taxations by the Taxing Master.  Disputes in relation to fees where the total fees (rather than the disputed fees) did not exceed $15,000 could be dealt with by VCAT, but otherwise, clients were left to dispute the bills in a suit for fees.  Though all competent costs lawyers are aware of this proposition, authority published online for it is surprisingly scant.  Only last year did VCAT’s Legal Practice List say squarely (but in respect of the old Act):

‘the Taxing Master cannot assess costs that have been charged pursuant to a costs agreement with time-based charges.’

It was Senior Member Vassie who said so in Leong v Sesto [2009] VCAT 99 in that part of his decision headed ‘The Law: What Costs Agreements are Subject to Assessment’ at [105]ff, drawing support from Justice Beach’s decision in Gaweda v Shaw [1999] VSC 474.

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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”

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The suit for fees

One might imagine the suit for fees to be the simplest legal claim there is.  But there seems to be great confusion about what the elements of the claim are,  what defences are available, and the relationship of the suit with a taxation, or the failure to exercise a right of taxation. If anyone has any contributions to the mysteries referred to below, I would be happy to hear them. Continue reading “The suit for fees”

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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”

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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”

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Solicitor gets away with fees of $83,000 after estimating at $2,500 and never updating

Ok, ok, that’s a bit of an exaggeration, but the solicitor did put out a costs agreement and fee disclosure document which contained no estimate other than $2,500, and did charge $111,000, which was reduced on an assessment — a NSW privatised version of taxation — and did not provide any re-estimates before putting out the first bill for $88,000. Savings Factory Pty Ltd v Daniel [2007] NSWSC 1343 is a useful case to illustrate that failure to comply with costs disclosure regimes is not the end of the world for lawyers. You just have to get the costs taxed at your expense.  Justice Palmer held that the estimate was just an estimate, and was confined to one part of the work which was to be the subject of the retainer (no estimates were provided in respect of the other work).  Here, the client maintained the solicitor’s retainer long after receiving the initial bill.

The case also illustrates another principle which you would think lawyers would get fairly readily, but which, sadly, we don’t.  It is that you can’t just put your rates up whenever you feel like it.  One reason why about 20% was taxed off the bills was that the lawyer’s rates were allowed only at the rate originally provided for under the costs agreement.