Virgtel Ltd v Gadens Lawyers [2010] VCAT 1584 might be VCAT’s Legal Practice List’s highest value case. Not all that long ago in the scheme of things, I remember learning that VCAT had certain jurisdictions which were unlimited, and realising that — shock! — it might hear cases which the Magistrates’ Court could not hear. Well, this case is an application pursuant to s. 103 of the Legal Practice Act, 1996 to set aside a costs agreement pursuant to which bills totalling $2.3 million were charged. That explains why two QCs faced off on a pre-trial application.
The respondents applied for summary dismissal under s. 75 of the VCAT Act, but advised the day before the hearing that they would withdraw it. The applicants sought costs of the application. Senior Member Howell granted that application, on a solicitor-client basis. That was because the application was misconceived. Its thesis was that there was no point making an order setting aside the costs agreement because all but one of the bills was out of time for taxation anyway. But it did not follow from the unavailability of taxation that the fees billed by the respondents could not be adjusted. As Senior Member Howell said:
‘pursuant to s. 103 … if a costs agreement is cancelled pursuant to s.103 of the Legal Practice Act, the Tribunal “may make such order as it thinks fit in relation to the payment of legal costs the subject of the cancelled agreement, taking into account the seriousness of the conduct of the legal practitioner or firm”. This gives considerable scope for the making of an order. It is significant that the section does not say, as seems to have been assumed by Gadens Lawyers, that costs are to be assessed by the Costs Court if the parties do not agree as to the costs to be paid.’
Indeed, what happened in Leong v J.P. Sesto & Co [2010] VCA T 367 was that Senior Member Vassie appointed a special referee pursuant to s. 95 of the VCAT Act, 1998 to give an opinion in relation to what the scale costs were, adopted that opinion and made final orders that the client pay that sum.
In making the costs order, Senior Member Howell relied on the costs power in the Legal Practice Act, 1996 associated with applications to set aside costs agreements on the basis that it was inconsistent with the general provision in relation to costs of VCAT proceedings, s. 109 of the VCAT Act, 1999. Pursuant to s. 159 of the VCAT Act, the Legal Practice Act, 1996 (and the Legal Profession Act, 2004) prevail over the VCAT Act, 1999 in the case of inconsistency. And inconsistency there was, Senior Member Howell found, in that s. 109 stipulates a presumption against costs in the ordinary case, whereas s. 103’s costs provision does not.
