In the last post, Justice Quigley extended time in which to seek taxation under the Legal Profession Uniform Law (Vic) in unusual circumstances, by consent. Curiously, a funny little case from NSW provides an echo: Stoltz v Peter Skidmore of Phoenix Legal Consulting Pty Limited  NSWSC 1063 (funny choice of defendant, I must say, but Ms Stolz was unrepresented). Continue reading “How taxation is obtained out of time under the LPUL in NSW”
Davey v Costanzo Lawyers Ltd  VSC 449 is episode # c. 898 in my series about suits for fees, ‘Many a Slip Twixt Cup and Lip’.
A family law firm whose website modestly explains that they are the ‘best family lawyers’ sued its former client for professional costs and barristers’ fees for work done in 2018. They got default judgment for about $40,000 in June 2019, but they forgot to plead that they did the work set out in the bill, that being left to be inferred from the fact that they gave a bill.
In July 2019, a judicial registrar refused an application to set the default judgment aside. A Magistrate at Heidelberg, reviewing that decision, came to the same conclusion in August 2019. Then the plaintiff hired counsel and applied again to the same Magistrate to set aside the judgment, and she said no, again, in February 2020.
The lawyers had thrice claimed successfully that there was no merit at all in the client’s defence. But the client got a barrister, sought judicial review in the Supreme Court and jumped the arguable defence hurdle on the fourth attempt, clearing House v R in the same leap though it was strictly unnecessary to do so, and won on the basis that the complaint had been so badly pleaded that it did not make out a cause of action in debt, so that the default judgment was irregular and should have been set aside ex debito justitiae. Then she got costs.
The decision is also of interest in relation to the circumstances in which a second application to set aside a default judgment might succeed. Quigley J observed in dicta:
’36 The new or additional material argued before her Honour is set out above at . Her Honour was sceptical that the matters identified were new or different. However, insofar as it is necessary to make any observation in this regard, it is apparent that a more cogent formulation of the basis of the potential defence(s) [was] articulated in this second application before her Honour. In my view, this may be sufficient to provide a change in circumstances from the situation which pertained before the Court on the first occasion.’
In other words, if you’re represented competently the second time and you self-represented the first time, that might be enough. Continue reading “Supreme Court sets aside default judgment in Magistrates’ Court and refers the fees to taxation instead of remitting suit for fees”
In this post, I look at the law governing taxations of costs between lawyers and their clients, charged in litigation. It used to be that where the costs agreement was void, or it was disregarded for the purposes of the taxation because of material costs disclosure defaults, or there was no costs agreement which covered the relevant work, the taxation would proceed according to the relevant court scale.
In two cases (Shi and Re Jabe), the Court has found that scale is the appropriate basis for taxing costs in this situation. In others, where the Court considers that the client would not have done anything much differently had they obtained proper costs disclosure, and the costs charged were much the same as scale, or in accordance with what was being charged in a well-worked out market for a common kind of work, the Court has at an interlocutory stage told the lawyers that they can draw the bill of costs in taxable form by reference to the hourly rates in the void costs agreement, but that at the end of the day, the enquiry is what is fair and reasonable according to the criteria in s. 172 of the Legal Profession Uniform Law, noting also the considerations which may be taken into account in s. 200.
In other words, though the bill need not necessarily be drawn on scale anymore, nor is there the comfort that the lawyers will get at least scale. They might get significantly less than scale. Indeed, though I don’t know of it having been argued yet, they might get nothing, because, had the client been given proper disclosure they would never have embarked on the expensive exercise from which they gained no advantage.
Another thought: if the costs agreement is void, then though the hourly rate might still be able to be used for the purposes of the bill of costs in taxable form, the pernicious rounding up provisions in many costs agreements will be unavailable. A bill where many one, two or three minute attendances are charged at one ‘unit’ of 6 minutes or part thereof, would only be able to claim a fraction of the fees which were actually billed. Continue reading “Taxation of costs of litigious matters where there is no valid costs agreement at all or where the costs agreement is void”
Pity the dozy lawyer who wanders innocently into Justice Cate McMillan’s court, bringing attitudes from days of yore about fees charged out of a great big fund. Re Jabe; Kennedy v Schwarz  VSC 106 should in my opinion be reported in the Victorian Reports as indicative of the breadth of and resilience to statutory incursion of the Court’s inherent jurisdiction. The Court of its own motion sent both parties’ lawyers’ costs off to the Costs Court to be taxed on Scale, at the conclusion of a case, having found, on an inquiry initiated by Justice McMillan, disclosure defaults and void costs agreements governed by the Legal Profession Uniform Law, and legal costs that were not fair, reasonable and proportionate as required by that Law and the Civil Procedure Act 2010. Continue reading “Supreme Court flexes inherent jurisdiction of its own motion to require both parties’ lawyers’ costs to be taxed by the Costs Court on Scale”
The legendary foundation author of Quick on Costs, Roger Quick, has asked me to put this old workmanlike paper on my blog so that he can cite it and link to it in the second edition of that monumental text which he is kindly working on for all our benefits.
What follows does not deal with any developments in the law since 2010, or indeed anything I have learnt since 2010, when I delivered the paper, and so it is out of date, but it might still be of use in some jurisdictions which have not adopted the Legal Profession Uniform Law or by analogy in some cases which are governed by that law. Sorry about the formatting, which is the product of copying and pasting a Word document into WordPress.
This paper does not deal with contingent, or no-win no-fee retainers. In relation to all other matters, the take-home points are these: Continue reading “Costs Disclosure Obligations Under the Legal Profession Act 2004 (Vic)”
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by victorious litigants who engage their lawyers on the basis of a greater variety of pro bono arrangements. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the last few days, I published parts one and two of the paper I distributed. What follows is the third and final part, which considers different kinds of client-favourable costs agreements (some quite esoteric) and analyses their indemnity principle implications. It also provides some thoughts on how to draft costs agreements for work done otherwise than on a purely commercial basis, and how to ensure counsel get paid. Part one is here and part two here
Species of client-favourable costs agreements
Options available to lawyers who wish to do work at less than their usual rates for non-commercial reasons include:
(a) not making any arrangements as to fees at all;
(b) charging your usual rates and leaving it to your discretion whether you send out a bill, or whether you forgive some or all bills given in the event that certain outcomes obtain;promising to do the work for free;
(c) agreeing to do the work at a reduced rate;
(d) doing the work on a no win = reduced fee basis;
(e) doing the work no win = no fee;
(f) doing the work no costs order = no fee;
(g) doing the work on no actual recovery of costs / compensation / costs or compensation = no fee basis. Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 3”
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by victorious litigants who engage their lawyers in a greater variety of pro bono bases. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the next few days, I will publish, in digestible chunks, the paper I distributed. What follows is the second part. Part one of this article is here.
The Court of Appeal declared that the indemnity principle is not offended by a costs agreement which is conditional on the client obtaining a costs order in Mainieri v Cirillo (2014) 47 VR 127. In that case, the successful party’s solicitors’ costs agreement said: Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 2”
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by litigants who engage their lawyers in a greater variety of pro bono bases. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the next few days, I will publish, in digestible chunks, the paper I distributed. What follows is the first part.
The amendments to Order 63 of the Supreme Court’s rules and of Order 63A of the County Court’s rules are designed to overcome one aspect of the operation of the indemnity principle in costs law.
Simply put, costs are awarded as a partial indemnity to a successful party for that party’s liability to pay their own lawyers and witnesses and for such payments already made. The indemnity principle says that the amount allowed under a costs order may not exceed the total of those liabilities. Put most pithily, the loser’s costs liability cannot be greater than the winner’s fees and disbursements. Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 1”
VCAT has published reasons, the first I’ve come across, dealing with the allowance of costs under a costs agreement void for disclosure defaults: Sleath v RGL  VCAT 1998. Though they do not say so, it seems that the principal logic of the determination, under the same principles as the Costs Court is required to have regard to in taxations, was to keep the practitioners to their original written estimate notwithstanding subsequent oral updates. Scary stuff for lawyers if other decision makers reason similarly. Whether the Costs Court will reason similarly is an interesting question. It may be more likely that the Legal Services Commissioner will feel compelled to adopt similar reasoning in those costs disputes which it determines itself rather than referring off to VCAT. Good news for clients and third party payers if so. Continue reading “Holy moly! VCAT finds costs agreement void for ambiguous disclosure then orders solicitors to content themselves with original estimate”
An ACT practitioner seems to me to have been skilfully represented, escaping with findings of unsatisfactory professional conduct, a reprimand and a fine. The decision in Council of the Law Society of the ACT v LP  ACAT 74 just shows how far cooperation and a persuasive articulation of remorse and insight can go.
The practitioner illegally sued his former client for fees in circumstances where he knew that the very person who had instructed him, a director of the client who had given a director’s guarantee and so was a third party payer, had sought taxation. Generally speaking, solicitors cannot sue their clients for fees once the client has commenced taxation.
In support of applications for default judgment, and to wind up the corporate client, the practitioner represented to the court, including on oath, that there was no dispute about fees. Given that the director, a builder, was the alter ego of his building company client, the proposition that the company did not dispute the fees attracted a charge of professional misconduct by swearing a false affidavit, a thoroughly serious allegation. By a plea bargain, it was downgraded to a weird charge of unsatisfactory professional conduct (varied by me for readability):
The practitioner breached his general law ethical duty of professional conduct or the duty owed to the director of his former client pursuant to Rule 1.1 of the Legal Profession (Solicitors) Rules 2007 to continue to treat the former client fairly and in good faith, and not to treat it otherwise than in an honourable and reputable manner during the dispute over costs owed by the director or the former client.
Rule 1.1 was itself a weird old rule:
‘A practitioner should treat his or her client fairly and in good faith, giving due regard to the client’s position of dependence upon the practitioner, his or her special training and experience and the high degree of trust which a client is entitled to place in a practitioner.’
Perhaps the horribleness of the original false affidavit charge’s drafting contributed to the prosecution’s willingness in the end to back away from it and retreat into the weirdness set out above. The original charge (again, varied by me for readability) was: Continue reading “Suit for fees goes badly wrong but could have gone much worse”
Update, 7 November 2018: the pendulum is certainly swinging in favour of pro se barristers being entitled to scale costs if they win: Pentelow v Bell Lawyers Pty Ltd  NSWCA 150; Lake v Municipal Association of Victoria (No 2)  VSC 660.
Update, 30 November 2017: The Full Court of the Tasmanian Supreme Court has weighed in, deciding that a practitioner who was admitted but yet to apply for a practising certificate was not a person to whom the Chorley exception applied: QRS v Legal Profession Board of Tasmania  TASFC 13, and that the exception only favours lawyers who held a practising certificate at the time they did the work.
Update, 24 October 2017: Readers have brought my attention to a couple of developments in relation to the law about the costs awards available to various classes of litigants who represent themselves. First, in Joint Action Funding Limited v Eichelbaum  NZCA 249 (14 June 2017), the New Zealand Court of Appeal decided that the Chorley exception in favour of lawyers who represent themselves is not available to a barrister who acted for himself. But as Andrew Beck pointed out in ‘Who Gets Costs? The Plight of the Unrepresented’  NZLJ 281 (I have a copy if you want one), the Court’s reasoning may affect a broader class of unrepresented persons, and the decision may in time come to be seen as a substantial inroad into the Chorley exception. Though the New Zealand High Court considered the Australian authorities in some detail, between the NZ case being argued and judgment being delivered, the NSW Court of Appeal delivered what seems to me likely to be a decision on rather similar questions in Coshott [sic!] v Spencer  NSWCA 118 (31 May 2017). Continue reading “Costs of the lawyer litigant: judgments all over the place”
Often enough, judges refer the conduct of lawyers appearing before them (or disclosed by the case they are adjudicating) to the Legal Services Commissioner for investigation. A recent example is Re Manlio (no 2)  VSC 130. Judges also refer the conduct of non-lawyer parties to investigative agencies, e.g. where a tax fraud is suggested by evidence in the case.
Generally, this is not done pursuant to any statutory directive or authority. An exception is s. 202 of the Legal Profession Uniform Law which requires the Costs Court to refer a matter to the Legal Services Commissioner if it considers that the legal costs charged, or any other issue raised in the assessment, may amount to unsatisfactory professional conduct or professional misconduct. (Compare s. 3.4.46 of the Legal Profession Act 2004 which authorised rather than required the Taxing Master to make a referral.)
I have never been particularly clear about the nature of such a referral, or as to the procedures which ought to be followed. Gibson DCJ set out the principles recently, at least as they apply in NSW, in Mohareb v Palmer (No. 4)  NSWDC 127: Continue reading “Judges’ referrals to the ATO, police, Legal Services Commissioners”
Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd  VSC 220 is a little case, but it is instructive about a number of things: solicitor-client taxations can take an awfully long time; some businesses probably don’t understand that they are ‘commercial clients’ and so fail to negotiate rights in lieu of the rights to seek taxation which, under the LPUL they no longer have; some lawyers no doubt have standardised disclosures which advise their clients that they have rights which, if they are commercial clients, they do not have; the costs proportionality provisions extend to cases where costs have become disproportionate as a result of a simple oversight by one or other side’s lawyers.
I gave a presentation at the really well organised Junior Bar Conference this year. The Bar sought questions which the junior barristers who attended wanted answers to. One question, which I thought odd, but which I answered earnestly, was ‘What can a barrister charge for?’ This was my answer:
The starting position is freedom of contract, such that barristers can charge for whatever they can get someone to promise to pay. The costs provisions of the LPUL (the Legal Profession Uniform Law (Victoria)) mostly do not apply in favour of commercial or government clients and commercial and government third party payers. There is newly room, therefore, for much greater creativity in contracting with such clients. Note the application of some provisions about conditional costs agreements and contingency fees, however, even in relation to such clients and such third party payers: s. 170. Continue reading “What can barristers charge for?”
The Civil Procedure Act 2010 applies to proceedings in the Magistrates’ Court, County Court, and Supreme Court but not federal courts or VCAT. Its overarching purpose is to
‘facilitate the just, efficient, timely and costs effective resolution of the real issues in dispute’: s. 7. Continue reading “The Civil Procedure Act’s overarching obligation to keep costs proportionate”
For far too long, the law was unclear about whether costs agreements which said ‘We’ll only charge you if you win and only for work in respect of which we get a costs order’ actually worked. The problem was that losing parties invoked the indemnity principle in the law of costs, arguing that what was recoverable under a costs order was nil. The indemnity principle says that party-party costs awards are in no way punitive; they are wholly compensatory. Party-party costs orders are awarded as a partial indemnity to the winning party’s liability for their lawyers’ fees and other expenses of the litigation. If the winning party has no such liability at the time of the costs order, there is nothing for the losing party to be ordered partially to indemnify. Where the winner’s liability to pay their lawyer was conditional on a party-party costs order, there was, at the moment of making the costs order, nothing to indemnify. Wentworth v Rogers  NSWCA 145 was the leading case for many years. Justice Santow’s dictum was favourable to pro bono solicitors while Justice Basten’s was unfavourable. The third judge did not weigh in on this question.
What the judges in that case said, however, was obiter dicta. Now there is a unanimous decision of the Victorian Court of Appeal which actually decides that this kind of costs agreement works; the winning party may obtain from the losing party a party-party costs order by way of a partial indemnity against the liability to pay their lawyers. The case is Mainieri v Cirillo  VSCA 227 and Nettle, Hansen and Santamaria JJA expressly preferred Justice Santow’s reasoning in Wentworth. It may be expected that state courts, including Courts of Appeal, elsewhere in Australia will follow the Victorian Court’s decision: Farah Constructions Pty Ltd v Say-Dee Pty Ltd  HCA 22 at  and .
That is the good news though. The bad news is that an unfortunate level of confusion still prevails in relation to costs agreements which are even closer to pure pro bono in that they say ‘We won’t charge you anything unless you get a costs order, and then we will only charge you so much as you are actually able to recover from the person ordered to pay costs under the costs order’. A costs agreement which was, as a matter of substance, to that effect was found not to present a problem in LM Investment Management Limited v The Members of the LM Managed Performance Fund  QSC 54. Then in Mainieri, the Court of Appeal left open in obiter dicta the possibility that a costs agreement in which the winning party’s liability to pay their solicitors was conditional on recovery of costs from the losing party might not work. Subsequently, in Mourik v Von Marburg  VSC 601 the Costs Judge in Victoria decided that such an agreement in fact does not work, but the correctness of that decision has subsequently been doubted in dicta of a Victorian Federal Court judge sitting in Sydney. What a mess. But I am not convinced that the pro bono sector should give up on obtaining judicial recognition of a costs agreement which, as a matter of substance, predicates recovery of costs on the actual recovery of costs from the other side. Continue reading “The latest on pro bono costs agreements which preserve the possibility of a costs order against the other side”
As with most years, no doubt scores of Victorian lawyers forgot to renew their practising certificates last year. For months, in some cases, this situation was allowed by the regulators to persist without intervention. In Victorian Bar Inc v GSL  VCAT 435 the VCAT, constituted by Judge Bowman, Peter Jopling QC, and Ms F Harrison made clear that the disciplinary Tribunal expected regulators to be proactive to prevent practitioners inadvertently practising uncertificated. Eventually, at least in some cases, the regulators seem to have raised the issue with some practitioners whose sudden apparent cessation of practice at a young age seemed unlikely.
May I respectfully suggest that you go and check, now, whether you actually have a practising certificate for the current financial year.
The question now that the regulators have apparently complied imperfectly with VCAT’s guidance is what ought to happen? Should the practitioners who are close to blameless for practising without a certificate be given a new one with retrospective effect (some were told, for example, by their office manager that the applications had been lodged before the end of the year, and were entitled to assume that their existing practising certificate had ongoing operation pending the Board getting around to dealing with the application, by virtue of a legislative provision to that effect discussed below). Or should the full consequences of the law, including disciplinary investigation, and the refunding to clients of fees for work done while uncertificated (s. 10, LPUL), be brought to bear? The latter approach has the disadvantage of causing lawyers’ professional indemnity insurer to cancel cover during the period of non-certification and the Fidelity Fund may be unavailable to clients of the lawyers in question in relation to conduct engaged in while uncertificated.
What VCAT said was:
Original post: Say you’re a solicitor. You send a bill to your client noting your intention to pay it from monies in your trust account held for the client. Seven days go by and there is no objection to the transfer. Say at this point you have a perfectly good entitlement to appropriate your fees from trust. But you don’t get round to transferring the money on the 8th day. And then the client objects to the transfer, belatedly. Can the solicitor ignore the out of time objection and transfer the money? Continue reading “Transferring monies from trust to pay legal fees: can a client stymie an accrued right to appropriate fees by a late objection to the transfer?”
Frontier Law Group Pty Ltd v Barkman  NSWSC 1542 is an ex tempore decision of Justice Slattery in an urgent application to extend the operation of a caveat lodged by solicitors over their client’s property. The application failed in part because the solicitors did not prove, even to the prima facie level required in such an application, that the money said to be owing and secured by the equitable charge which was the subject of the caveat was in respect of fees invoiced under the costs agreement referred to in the caveat. That is not particularly interesting except as schadenfreude.
Two things are interesting though, given that the costs agreement was probably entered into in 2012 and so the Legal Profession Act 2004 (NSW) almost certainly applied (even though the Court looked also at the situation under the Legal Profession Uniform Law (NSW)):
- First, the Court found that the range of estimates of total legal costs was so wide as not to comply with the relevant disclosure obligation.
- Secondly, the Court appears to have treated the extension application as the commencement of proceedings for the recovery of legal costs, such that the statutory preconditions to such proceedings needed to be, but were not, proven to be satisfied by the lawyers.
I cannot think of another authority which states so plainly that some estimates are so imprecise as to render them non-compliant with the obligation to give a range of estimates of total legal costs. But now we have it: a decision of the Supreme Court of NSW under a legislative scheme of which Victoria is also a part and which is likely to be followed as a matter of comity in Victoria.
Russo v Legal Services Commissioner  NSWCA 306 was the subject of my previous post. The Court engaged in a comparatively sophisticated review of disciplinary outcomes in like cases. The purposes of this post is to reproduce that review and comment on the variables which ought to be taken into account in any proper survey of past outcomes.
To survey penalties in like cases has always been an important part of sentencing and should be an important part in imposing disciplinary sanctions. Barbaro (2014) 253 CLR 58;  HCA 2 and Cth v Director, Fair Work Building Industry Inspectorate  HCA 46; (2015) 326 ALR 476 do not suggest to the contrary. They say that the purpose of a survey of like sanctions is to promote consistency in penalties but not the establishment of a range of available sanctions deviation from which is appellable. Buchanan JA observed in R v Macneil-Brown  VSCA 190, (2008) 20 VR 677 at :
‘counsel can best assist a sentencing judge, not by advancing what they consider to be sentences at the lower or upper limits of a sound sentencing discretion, but by making submissions as to the existence and nature of aggravating and mitigating circumstances and providing some guide to the manner in which other judges have approached like cases by supplying sentencing statistics and citing passages from decided cases which bear upon aspects of the instant case.’
I would submit that any survey of fines as a disciplinary sanction must take into account, as an important aspect of the analysis, the financial situation of the person or persons liable to pay it. The specific deterrence of a fine will vary greatly from one practitioner to another. Practitioners who struggle, for personal reasons, are more likely to get themselves into trouble in the first place, and to exacerbate it by less than perfect intercourse with the Legal Services Commissioner. Their financial situations often deteriorate too. Specific deterrence may be achieved by imposition of a fine much smaller than would be imposed on a flourishing practitioner raking it in. General deterrence will also be achieved if the Tribunal is transparent in taking account of financial circumstance. In such a case, the Tribunal might indicate the kind of fine which might have been imposed had the practitioner enjoyed an average post-tax income.
Furthermore, the costs burden borne by the practitioner ought also to be taken into consideration. Costs and fine are inter-related in this way: Environment Protection Authority v Barnes  NSWCCA 246 at  (Kirby J speaking for the Court) applied by analogy in LSC v Bechara  NSWADT 313. The extraordinary costs practitioners are liable to in Victoria following disciplinary prosecutions would very often be more than adequate to achieve specific and general deterrence. If you are prosecuted and reprimanded, made the subject of an editorial on the front page of the Commissioner’s website, and have to cough up $40,000 in unrecoverable solicitor-client costs reasonably incurred and costs liability to the Legal Services Commissioner, that is going to make you think just as hard about doing it again as any comparatively trivial fine you might cop.
Finally, one must be astute to inflation. In my experience, people tend to exaggerate the effect of inflation when considering older fines. Here is a calculator which assists in measuring in today’s dollars a fine imposed some years ago.
For some reason, notwithstanding that NSW is now a part of the legal profession uniform law, the other participant in which is Victoria, no Victorian fines were part of the survey. That strikes me as unusual, since there is a whole statutory office the purpose of which is to promote interstate uniformity in the application of the Uniform Law: the Commissioner for Uniform Legal Services Regulation. Russo’s Case was decided under the old legislation which the LPUL replaced, and which legislation in fact governed the prosecution was one of the issues on appeal. Interestingly, apparently because it was thought that there were no relevant differences between the two regimes, that question was not decided.
This is what the NSWCA said about its survey of fines, and about the appropriate fine in this case: Continue reading “NSWCA surveys fines in NSW lawyers’ discipline decisions over a decade”