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Supreme Court authority on setting aside costs agreements

Update, 21 April 2008: see the decision on appeal: McNamara Business and Property Law v Kasmeridis [2007] SASC 90.

Original post: Kesmeridis v McNamara Business and Property Law [2006] SASC 200 is a decision of a Master of the Supreme Court of South Australia. Decisions in such applications in Victoria are heard by the members of VCAT’s Legal Practice List. The decision, and several related decisions, (i) say that a costs agreement reduced in writing need not be signed by both parties to be a contract in writing as required by the relevant statute, (ii) say that whether a costs agreement is “fair and reasonable” is to be determined by reference to pre-contract conduct, (iii) say that a discretion to charge a premium over and above an hourly rate is easily severable from a costs agreement and does not require the whole agreement to be set aside, and (iv) demonstrate that the courts’ distrust of hourly rate costs agreements is not waning with time.

Though the clients had been defendants in 35 proceedings before the relevant retainer and so “were not as ignorant of the legal system as they might have claimed”, the costs agreement was set aside in part because the solicitors had not explained to their prospective clients that there were other solicitors in Adelaide who would have been willing to do the same work on scale. Continue reading “Supreme Court authority on setting aside costs agreements”

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Fiduciary duties and the sophisticated client

Gee do plaintiffs adore sprinkling a bit of fiduciary duty action into their pleadings against solicitors. Their counsel see it as moon dust. A sophisiticated plaintiff (who had been party to separate litigation which eventually culminated in a High Court case about contractual certainty) tried it on in a somewhat novel way in Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164 but bombed out before Justice Byrne. Continue reading “Fiduciary duties and the sophisticated client”

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VCAT has no jurisdiction over Family Court fee disputes

VCAT does not have jurisdiction over costs disputes in relation to Family Court cases or to state Magistrates’ Courts exercising the Family Court’s jurisdiction (except to the extent it is exercising jurisdiction under ss 35 or 35B of the Bankruptcy Act, 1966), but does have jurisdiction in relation to costs disputes in relation to Federal Magistrates’ Court proceedings under the Family Law Act, 1975. Continue reading “VCAT has no jurisdiction over Family Court fee disputes”

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Winner gets indemnity costs but recovers less when loser proves winner’s costs agreement with his solicitors void

Casey v Quabba [2006] QCA 187

As reported in Lawyers Weekly, the Queensland Court of Appeal said the trial judge should have allowed the unsuccessful party in litigation to call for and challenge the validity of the successful party’s costs agreement with his solicitor in a party-party taxation of costs on an indemnity basis. Further, the judges found the successful party’s costs agreement was void for failure to specify the minimum requirements fora costs agreement, and ordered the costs to be taxed on the basis that there was no valid costs agreement (presumably by reference to the court scale). Don’t get too excited though; the case turned in part on the facts that (i) the taxing officer was directed by the rules of court to have regard, in indemnity costs taxations, to the costs agreement of the successful party, and (ii) the purpose of the Queensland provision was not only to benefit the client party to the agreement, but also to protect third parties affected, such as those against whom costs orders are made.

But I do wonder whether any thought was given by the successful party and the solicitors hastily putting together a valid agreement with retrospective operation. I can see no reason why it should not work.

Continue reading “Winner gets indemnity costs but recovers less when loser proves winner’s costs agreement with his solicitors void”

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Trustee has standing to apply to set aside costs agreement between bankrupt and solicitor

McVeigh’s Case [2005] VCAT 2917

McVeigh was the trustee in bankruptcy of the solicitor’s former client. The solicitor said he had no standing because only a client, defined for the purposes of s. 103 to mean “a person who retains a legal practitioner or firm to provide legal services for fee or reward”, can bring an application to set aside a costs dispute. Continue reading “Trustee has standing to apply to set aside costs agreement between bankrupt and solicitor”