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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 6

6. Illustrations in the Costs Space

In this section of the paper, some recent cases in which the inherent or analogous implied jurisdiction has been resorted to are considered in detail.

Re Jabe (2021)

Re Jabe; Kennedy v Schwarcz [2021] VSC 106 is a decision of Justice McMillan in the course of considering whether to approve the settlement of a testators family maintenance claim.[1] It was cited with approval in Hartnett v Bell [2023] NSWCA 244 at [123]. Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 6”

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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 5

5. The Costs Court is given certain powers of the Supreme Court

Section 17D(1)(h) gives the Costs Court any jurisdiction given to it under any Act (including the Supreme Court Act) or by the Supreme Court’s rules, a provision which might seem at first glance to be redundant, but which might be intended to avoid arguments that procedural rules are inapt to be read as granting jurisdiction.[1]

A. Section 17D(2) (ancillary powers)

As Bell J observed in Owerhall v Bolton & Swan Pty Ltd, s. 17D(2) of the Supreme Court Act 1986 gives the Costs Court such powers of the Court (defined to mean the Supreme Court) as are necessary to enable it to exercise its jurisdiction. This can be described as providing the Court’s ‘ancillary powers’. Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 5”

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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 4

4.  The Supreme Court and the Costs Court are different

The Taxing Master was an officer of the Supreme Court.  But the Costs Court is something different from the Supreme Court, even though it is said by the amendments to the Supreme Court Act 1986 by which it came into existence to be created within the Trial Division of the Supreme Court.[1]

Its powers are spelt out in s. 17D(1): Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 4”

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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 3

3. Other courts

The supervisory jurisdiction is often spoken of as an inherent jurisdiction of superior courts of record.  So other states’ and territories’ Supreme Courts would have the same jurisdiction, albeit more amenable to statutory modification / influence than the Victorian Court’s jurisdiction.  Those other courts still jealously guard their jurisdictions against statutory incursion, though, holding that only statutes which prohibit a particular course will affect the inherent jurisdiction.[1]

Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 3”

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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 2

2. The inherent supervisory jurisdiction of the Supreme Court

Woolf v Snipe (1933) 48 CLR 677 is a decision of the High Court in its original jurisdiction, constituted by Sir Owen Dixon who observed at 678-679 that ‘The superior Courts of law and equity possess a jurisdiction to ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client,’ and that there were three sources of that jurisdiction:

    • That ‘founded upon the relation to the Court of attorneys and solicitors considered as its officers.[1] This jurisdiction … enables it to regulate the charges made for work done by attorneys and solicitors of the Court in that capacity, and to prevent exorbitant demands.’
    • That to determine by taxation or analogous proceeding the amount of costs whenever a contested claim for costs comes before the Court which it has jurisdiction to determine.[2]
    • The statutory jurisdiction (now found in the Legal Profession Uniform Law).

Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 2”

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The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 1

I gave a talk to the National Costs Law Conference put on by the Law Institute of Victoria the other day.  This is part 1 of the paper which accompanied it. The balance will follow.

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The unlimited jurisdiction of the Supreme Court

The Supreme Court of Victoria has a constitutionally entrenched unlimited[1] subject matter jurisdiction. Section 85(1) of the Constitution Act 1975 (Vic) says Continue reading “The Supreme Courts’ inherent supervisory jurisdiction (lawyers’ fees) Part 1”

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Dal Pont’s Law of Costs (5th ed, 2021), a review

Here is my review of the latest edition of Professor Dal Pont‘s Law of Costs, published in the latest (December) edition of the Law Institute Journal:

‘Law of Costs 

Professor Gino Dal Pont, (5th edn), 2021, LexisNexis, pb $460

Everyone thinks they know the law of costs and we look it up too infrequently, but costs lawyers spend their lives mopping up after errors made by litigators, KCs and judges included. Sometimes, a mop up is not possible, and in the realm of solicitor-client costs, lawyers are forced into quiet but devastating settlements by which they give up and disgorge costs to the tune of many hundreds of thousands of dollars at a time, more often than might be imagined.

Continue reading “Dal Pont’s Law of Costs (5th ed, 2021), a review”

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Who can hear an application to extend time for taxation?

People out of time to seek taxation in Victoria customarily file and serve a summons for taxation in the Costs Court, within the Trial Division of the Supreme Court of Victoria.  A Judicial Registrar of that Court then refers the exension of time question  to the Practice Court, again within the Trial Division, where it is heard by a Judge of the Court (as opposed to an Associate Judge or some other decision maker within the Court).

In my experience, such applications are not necessarily able to be accommodated in the business of the Practice Court, and more difficult ones end up being listed for trial as a cause, months away.  Also in my experience, Judges of the Court are unimpressed to be bothered with such a trivial application.  If there were a way for such applications to be listed before Associate Justices (especially an Associate Justice who is a Costs Judge) that would be good because (a) the time of Judges of the Court would not be taken up by these applications; (b) the applications would get heard much more quickly and (c) Costs Judges may be expected to be appropriate people to adjudicate these kinds of applications efficiently, consistently and therefore predictably.

One Supreme Court judge has already suggested that Associate Judges could hear these applications, but I am not aware of any such application having been determined by an Associate Judge.  In this post I explore the none too simple statutory provisions which are germane to the question.  It seems to me that there would have to be a referral to an Associate Judge by a Judge of the Court under r. 77.05 in order for an Associate Judge to be able to hear a s. 198(4) application.

But it also seems to me that the Court could arrive at a standard procedure for these kinds of applications which could be specified in the Practice Note for the Costs Court.  Then r. 77.05 referrals could be made without a hearing on the papers as a matter of course.  Better still, the judges of the Court could add s. 198(4) applications to the list in r. 77.01 of matters ordinarily to be heard by Associate Judges. Even better would be for the Legal Profession Uniform Law Application Act 2015 to be amended so as to nominate the Costs Court as the designated tribunal for applications to extend time. Continue reading “Who can hear an application to extend time for taxation?”

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How taxation is obtained out of time under the LPUL in NSW

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 [2021] 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”

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Supreme Court sets aside default judgment in Magistrates’ Court and refers the fees to taxation instead of remitting suit for fees

Davey v Costanzo Lawyers Ltd [2021] 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 [16]. 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”

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Taxation of costs of litigious matters where there is no valid costs agreement at all or where the costs agreement is void

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”

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Supreme Court flexes inherent jurisdiction of its own motion to require both parties’ lawyers’ costs to be taxed by the Costs Court on Scale

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 [2021] 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”

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Costs Disclosure Obligations Under the Legal Profession Act 2004 (Vic)

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.

1. Summary

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)”

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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 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

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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”

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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 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.

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Case law

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”

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Holy moly! VCAT finds costs agreement void for ambiguous disclosure then orders solicitors to content themselves with original estimate

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 [2017] 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”

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Suit for fees goes badly wrong but could have gone much worse

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 [2017] 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”

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Judges’ referrals to the ATO, police, Legal Services Commissioners

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) [2016] 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) [2017] NSWDC 127: Continue reading “Judges’ referrals to the ATO, police, Legal Services Commissioners”

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Applicant brings case beyond jurisdiction; respondent doesn’t take the point until the last minute; no one gets costs

Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd [2017] 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.

Continue reading “Applicant brings case beyond jurisdiction; respondent doesn’t take the point until the last minute; no one gets costs”

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Legal Services Commissioner’s new decision making powers

The Victorian Legal Services Commissioner has published a report on his new proactive regulation of the profession.  It tells how risk profiles of practices are being constructed with the assistance of academics to target trust audits and audits of firms more generally (a new thing for law practices which are not ILPs).  It also tells about the exercise of the power to make binding decisions, and alerted me to the fact that the Commissioner now publishes redacted versions of costs determinations at this page. The report says: Continue reading “Legal Services Commissioner’s new decision making powers”