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.ACAT applied Refshauge J’s judgment in Francis Pires v Dibbs Barker Canberra Pty Ltd [2014] ACTSC 283 at [83] to [87] which was to similar effect.  His Honour’s analysis proceded purely on the basis of statutory construction, and did not consider any authorities.  Elsewhere in in Refshauge J’s reasons, his Honour noted:

‘A client may defend a claim for costs on the basis that the lawyer was negligent. See Cachia v Isaacs (1985) 3 NSWLR 366 at 371. Other defences might include that the contract was an entire contract which was terminated without just cause: Smits v Roach (2004) 60 NSWLR 711 at 749-52; [78]-[85]. Other contractual defences may apply.’

Where the dividing line is between work which was unreasonable because a competent solicitor would have taken less time to do it, and work which is wasted by negligence, might well be a very nice point.

It must be said that the authorities on this question are not very well organised, and diverge in ways which does not seem explicable by different statutory regimes.  For what might amount to a different approach (stricter against clients), for example, see this blog post.  For what might amount to an approach stricter against solicitors, see this blog post, about an implied contractual term of efficiency in solicitors’ costs agreements found by ACAT’s cousin VCAT.  And for an example of a Supreme Court judge willing apparently to conduct a taxation within a suit for fees, see this blog post.

Dal Pont treats ‘Useless unnecessary or excessive costs disallowed’ at [5.24] in The Law of Costs (2013), but does so in the chapter on ‘Assessment of Lawyer and Own Client Bills’.  My lovely and great friends and colleagues Roger Quick and Liz Harris treat similar questions in the encyclopaedic Quick on Costs at [5.35] – [5.39] and [7.500] – [7.530].  Roger’s friend and colleague in England, Mark Friston, deals with this issue in Civil Costs Law and Practice (2012; 3rd edition to be published in August) at [27.26] and [27.27].  In fact, Friston explains how this area of costs law works as a matter of contract law very usefully:

‘a legal representative cannot recover his costs from his client where deficient professional performance has negated the benefit of that work; this is an example of the doctrine of abatement.  The right of abatement will arise where a trader claims fees, but the customer has an unliquidated counterclaim against him arising out of a breach of the contract for the supply of those services; where those are the circumstances, the customer may be entitled to deduct his counterclaim.  It is a right which is a true defence at common law, and is distinct from set-off.  (That said, there would be no reason why set-off could not be pleaded in the alternative.)  Where a client wishes to rely on a right of abatement, he must show that the breach of contract directly reduced the value of the services rendered; therefore, not all counterclaims arising out of a solicitor-client relationship would suffice, but a counterclaim for shoddy work would ordinarily be capable of passing that test.’

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