I have posted before about what needs to be pleaded in a modern suit for fees: see this post and the posts linked to within it. Today I have come across a decision in which the failure to plead that which many people think need not be pleaded resulted in a semi-successful application to set aside a default judgment entered by a solicitor against a former client: Wiley v Ross Lawyers (14 February 2012) [2012] QCATA 22, a decision of Queensland’s equivalent of VCAT. The lawyers had not pleaded a valid costs agreement or other basis for charging fees on the basis they were in fact charged, that there had been good service of a valid bill, or that there had been good service of a notice of rights. Apart from these defects in the pleading, the evidence in support of the application to set aside the default judgment was not compelling.
The tribunal ordered that the application to set aside the default judgment was to succeed or fail depending on whether the lawyers filed an affidavit verifying compliance with chapter 3 of Part 3.4 of the Legal Profession Act 2007 (Qld), the part which deals with costs disclosure defaults. I can only imagine that there are very many clients against whom lawyers have entered default judgments who are likely to be able to have them set aside as irregular, even years after the event, though the Queensland tribunal cases might be distinguished on the basis of the need to establish for jurisdictional reasons that what was being sued for was a debt or liquidated demand. The member relied on a previous decision of the same tribunal (Morales v Murray Lyons Solicitors (a firm) [2010] QCATA 87) where the Deputy President, Judge Kingham agreed with the reasons of Member Mandikos, who said:
‘[30] The only other basis upon which Mr Morales might argue that there was an irregularity in the entry of the default decision – such that it should now be set aside – relates to QCAT’s jurisdiction. In City Pacific Limited (in liq) & Anor v Ballandean Investments P/L [2010] QCA 113 at [27] “City Pacific”, her Honour Justice Holmes, citing earlier authority, restated the principle that:
“A judgment entered in favour of a party who has no entitlement to it is irregular.”
[31] Thus, if QCAT did not have jurisdiction to hear this dispute relating to payment of legal fees in the first instance, that would be an irregularity, sufficient to justify setting aside the default.
[32] As this is a matter involving the payment of legal fees, regard must be had to the Legal Profession Act 2007 (Qld) (“LP Act”), in particular Chapter 3, Part 3.4 “Costs disclosure and assessment”. Section 319(1)(a) provides that legal costs are recoverable under a compliant costs agreement. In this matter, there is a written client agreement, drafted pursuant to s48 of the Queensland Law Society Act 1952 (as it applied at the time).[12]
[33] There are further provisions contained within the LP Act, relating to the recovery of legal costs, which must be complied with before a law practice commences proceedings to recover legal costs. Section 329 of the LP Act provides that:
Legal costs can not be recovered unless bill has been served
(1) A law practice must not start legal proceedings to recover legal costs from a person until at least 30 days after the law practice has given a bill to the person under sections 330 and 331 or under provisions of a corresponding law that correspond to sections 330 and 331.
(2) A court of competent jurisdiction may make an order authorising a law practice to start legal proceedings against a person sooner if satisfied the person is about to leave this jurisdiction.
(3) A court of competent jurisdiction before which any proceedings are brought in contravention of subsection (1) must stay those proceedings on the application of a party or on its own initiative.
(4) This section applies whether or not the legal costs are the subject of a costs agreement.
[34] It is my view that, if a firm does not properly serve a bill to the client in accordance with s329 of the LP Act, in the form required by Chapter 3, Part 3.4 of the LP Act, that the firm does not have an entitlement to commence proceedings to recover legal costs as a debt or liquidated demand in QCAT. Any orders made in proceedings that had been commenced without having complied with the LP Act would be irregular, and set aside in accordance with the reasons espoused in City Pacific.
[35] Minimally, a Minor Civil Dispute Application filed by a law firm in QCAT, seeking to recover legal fees as a debt or liquidated demand, will need to annex the following material:
A solicitor’s affidavit annexing:
- Any applicable costs agreement, or the relevant scale of costs, or the basis for calculation of fair and reasonable costs (s319 LP Act);
- Evidence indicating that a legal costs bill has been served, and that at least 30 days have passed (s329 LP Act);
- A copy of the legal costs bill, which complies with s330 of the LP Act; and
- Evidence indicating that a “Notification of client’s rights” has been served (s331 LP Act).
…
[37] On the evidence before QCAT, it is unclear whether ML Solicitors have complied with the provisions of the LP Act before commencing the application that led to the default decision. It may be that these matters have inadvertently been omitted from ML Solicitors’ material, as the nexus between recovery of legal fees in QCAT and the LP Act has not yet been traversed in a QCAT decision.’
The Tribunal in Morales gave the lawyers an opportunity to hang onto their default judgment by filing an affidavit attesting to compliance with chapter 3 of Part 3.4
