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- Unreported Judgment
DISTRICT COURT OF QUEENSLAND
Keekenzie Pty Ltd atf MCG Trust t/as MCG Legal v Ocvirk  QDC 214
KEEKENZIE PTY LTD (ACN 120 557 075) as Trustee for the MCG TRUST Trading as MCG LEGAL
Magistrates Court, Southport
7 November 2019
11 October 2019
Kent QC DCJ
PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES – SOLICITOR AND CLIENT – RETAINER – GENERALLY – Where the court appointed a costs assessor to assess the fees charged by the appellant to the respondent – where the respondent initially denied receiving a costs agreement – where the costs assessor referred the factual issue of the existence of a costs agreement to the court – where the respondent then admitted he received the costs agreement – where the respondent accepted the costs agreement by conduct – where the Magistrate determined the costs agreement breached statutory disclosure requirements – where the Magistrate ordered the costs assessment be assessed “on the scale” following the terms of the referral – whether the Magistrate had jurisdiction to determine the costs agreement breached statutory requirements – whether the Magistrate had jurisdiction to set aside the costs agreement and order costs to be assessed on the scale.
Legal Profession Act 2007 (Qld) s 308, s 315, s 316(4), s 322(3), s 328
Uniform Civil Procedure Rules 1999 (Qld) r 717
Setschnjak v Derek Geddes Pty Ltd  QCAT 009, considered.
SK HARTWELL for the appellant.
The respondent was self-represented.
MCG Legal for the appellant.
The respondent was self-represented.
- This appeal arises from a claim in the Magistrates Court at Southport to recover legal costs and consequent orders for an assessment of the relevant costs. The appellant appeals against the decision of the Magistrates Court of 18 April 2019 where it was ordered/decided (after a referral by the assessor to the Court) that:
“… pursuant to rule 717(3)(a) the court determines that the costs be assessed on the scale because the costs agreement has failed to comply with rules 308 and 315 of the Legal Profession Act and it is appropriate that it be assessed on that basis as – under section 316(4).”
- The appeal is brought pursuant to the Magistrates Court Act 1921, s 45(1)A. On such an appeal, this court has the same powers as the Court of Appeal has to hear an appeal (District Court of Queensland Act 1967, s 113).
- The issues are:
- Did the costs assessor refer to the learned Magistrate for determination pursuant to r 717(2) the question of whether the appellant’s disclosure complied with s 308 and s 315 (Ground 1).
- If the answer to question 1 is no, then did the learned Magistrate nevertheless have power to determine the issue pursuant to r 717(3)(a) and/or s 316(4) of the Legal Profession Act 2007 (“the Act”)? (This refers to Grounds 2 and 4).
- Had the appellants in any event failed to comply with s 308 and/or s 315 of the Act (Ground 3).
- Were the reasons of the learned Magistrate inadequate? (Ground 5).
- The appellant is a law practice as defined in the Act. The respondent is a former client of the appellant. Between 29 March 2017 and 6 February 2018 the appellant rendered tax invoices to the respondent totalling $87,538.39 in respect of family law property proceedings.
- Proceedings were commenced by the appellant to recover the debt, in the Magistrates Court at Southport, on 21 September 2018. The proceedings were defended by the self represented respondent, inter alia, on the basis that the costs had not been properly assessed. Subsequently, the respondent sought the appointment of a costs assessor pursuant to s 335(1) of the Act and r 743A, Uniform Civil Procedure Rules 1999 (“UCPR”). The costs assessor was duly appointed by an order of the court.
- Thereafter the costs assessor referred to the court, pursuant to r 717(2) UCPR the issue as to whether or not there was a costs agreement between the appellant and the respondent, in circumstances where the respondent apparently denied this.
- As to the first ground, it is submitted that the costs assessor did not refer the stated question for determination. This has the result that no relevant jurisdiction was engaged to empower the Magistrate to make a finding concerning s 308 and s 315 of the Legal Profession Act. The appellant sets out the letter of the costs assessor containing the issue for determination:
“Pursuant to s 322(3) of the Legal Profession Act 2007 (the Act) a costs agreement may be accepted in writing or other conduct. As the defendant purportedly forwarded this costs agreement and the defendant denies ever receiving this costs agreement the court may be required to make directions as to whether the assessment is to be undertaken pursuant to this costs agreement or under the scale pursuant to s 328(5)(a) of the Act.
Please refer this matter for directions or advise as to the appropriate way forward considering this question of law.”
- Rule 717 UCPR provides:
“717 Issue or question arising
- (1)A costs assessor appointed to carry out a costs assessment may decline to decide any issue or question arising in relation to the assessment that the costs assessor considers should not be decided by the costs assessor.
- (2)The costs assessor may refer to the court any issue or question arising in relation to the assessment the costs assessor considers should be decided by the court.
- (3)The court may do either or both of the following—
- decide the issue or question referred under subrule (2);
- refer the issue or question to the costs assessor with or without directions.”
- The appellant submits that the costs assessor’s letter makes no reference to the appellant’s compliance with the disclosure obligations imposed by s 308 and s 315. It is submitted that it is clear the costs assessor sought a determination as to whether there was a costs agreement accepted by conduct as contemplated by s 322. Accordingly the appellant submits the Magistrate was in error in acting under r 717(3)(a) to determine that the appellant has failed to comply with disclosure obligations, because no such referral was ever made.
- The appellant argues that the Magistrate had no jurisdiction to determine that the costs agreement failed to comply with sections 308 and 315 of the Legal Profession Act. A court may make directions relating to an application for costs assessment but has no powers in relation to the actual assessment unless referred under r 717 as costs assessments are administrative processes. As outlined in Ground 1, the appellant submits the costs assessor did not confer the relevant jurisdiction to the Magistrate.
- The costs assessor must assess disputed costs by reference to the costs agreement unless satisfied the agreement does not comply in a material respect with any disclosure requirements of division 3. It is for the assessor to determine whether disclosure requirements were complied with unless they refer that power to the court pursuant to r 717. Further, the power to set aside a costs agreement (once it is determined that such an agreement is on foot, which was the situation before the Magistrate), whether for inadequate disclosure by practitioners or otherwise, is vested only in the Supreme Court of Queensland and QCAT. Accordingly, the appellant submits the Magistrate erred by determining that the costs agreement failed to comply with sections 308 and 315 of the Legal Profession Act when there was no jurisdiction to do so.
- The appellant submits that, even without the alleged jurisdictional error, the Magistrate erred in finding the costs agreement failed to comply with sections 308(1)(c) and 315 of the Legal Profession Act.
- Section 308(1)(c) of the Legal Profession Act provides:
“308 Disclosure of costs to clients
- (1)A law practice must disclose to a client under this division—
- an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs;”
- Section 315 of the Legal Profession Act confirms this is an ongoing duty of disclosure, requiring legal practices to disclose in writing any substantial change to anything previously disclosed under this division as soon as reasonably practicable.
- The appellant disclosed a broad estimate of costs based on five possible stages of litigation to the respondent on 6 February 2017. The appellant contrasts their disclosure to that in Setschnjak v Derek Geddes Pty Ltd. In that matter, the costs disclosure breached s 308 by mistakenly including irrelevant stages of litigation and breached s 315 as the practitioners failed to disclose, in writing, substantial changes to their relevant estimates caused by difficulties receiving instructions. Here, the appellant submits there are no irrelevant matters in the costs agreement nor any other evidence suggesting the legal practitioner did not turn their mind to the estimated range provided. Further, the appellant argues there is no evidence of any issue arising which would trigger the obligation to provide further disclosure under s 315, nor did they exceed the initial estimates provided.
- The appellant submits their costs disclosure complied with sections 308(1)(c) and 315 of the Legal Profession Act but maintain that this issue is for the costs assessor to decide in the course of their assessment. Certainly, as outlined in  above, there was in any case no power vested in the Magistrate to set aside an agreement on this basis; s 328(1) of the Act reserves this for the Supreme Court or QCAT.
- The appellant submits that the Magistrate erred in law by ordering that the costs assessor assess the appellant’s costs payable by the respondent ‘on a scale’ pursuant to s 316(4). This section provides:
“316 Effect of failure to disclose
- (4)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.”
- The appellant submits this section empowers the costs assessor to consider whether to reduce the costs and, if so, by how much. As the appellant argued previously, this issue was not referred to the court so the Magistrate erred in law by purporting to exercise this power.
- The appellant further argues the Magistrate failed to provide adequate reasons for their decision as he did not clarify how the costs disclosure breached section 308(1)(c) and did not explain why the appellant billing over $10,000 was a ‘substantial change’ which triggered the obligation under s 315 when this was the minimum of the range initially disclosed by the solicitor.
- The respondent submits the Magistrate’s decision should be upheld as the appellant’s failure to provide any updated costs estimates after their initial disclosure amounts to a breach of section 315. The respondent’s outline thereby did not engage with many of the legal issues which are truly the subject of this appeal, such as the true nature of the referral; the determination of the issue referred after the concession; and the lack of jurisdiction to set aside an agreement once it was properly found to have been on foot, which was the effect of the Magistrate’s decision.
Nature of Referral
- A curious aspect of the case is the exact nature of the referral by the costs assessor. The letter in its terms does not mention r 717. The referral was pursuant to r 743A, according to the appellant/plaintiff’s submissions (the order is silent on the point). The two provisions are in different parts of the UCPR, dealing with different situations. Rule 717 is in Chapter 17A Costs, Part 3, Assessment of Costs other than under the Legal Profession Act 2007. Conversely r 743A is in Part 4, Assessment of Costs under the Act (emphasis added). The difference is that Part 3 is for inter parties disputes, whereas Part 4 is for disputes between lawyer and client (i.e. Part 4 applies for the present situation).
- The two regimes are quite separate. It may thus be questioned as to whether a referral under r 743A, which this correctly seems to have been, has recourse to r 717, in a separate Part, as a dispute resolution procedure, particularly where Part 4 has its own separate mechanism in r 743G. This is even more so when there was, according to the file, a directions hearing on 15 February 2019, possibly pursuant to r 743G, but in its terms referring to r 717.
- However the feature which does seem to resolve the above complexities is r 743I, which applies inter alia r 717 to costs assessed under the Act. Thus in my conclusion the matter referred by the assessor was capable of consideration under r 717.
Consideration of question referred
- The respondent originally denied receiving the initial costs disclosure. On this basis, the costs assessor sought directions from the court as to ‘whether the Assessment is to be undertaken pursuant to the costs agreement or under the scale pursuant to s 328(5)(a) of the act.’ During the hearing, the respondent conceded he received the costs agreement and, although he did not read it, continued to provide instructions. Pursuant to the Legal Profession Act s 322(3) and clause 2.1(b) of the costs agreement itself, such conduct by the respondent can constitute acceptance. As the Magistrate stated in relation to the existence of the costs agreement, by the time of his decision there was ‘no substantial factual basis or contest between the parties.’ Accordingly the factual basis of the costs assessor’s referral was no longer contentious and the matter could have been returned to the assessor for the assessment to continue. The question which, in truth, was referred by the letter from the costs assessor was whether there was a costs agreement properly on foot between the parties; and the concession by the respondent put this to rest.
- Despite this, the Magistrate proceeded to consider whether the costs agreement fulfilled disclosure requirements, a matter which was never referred to him, and ultimately determined the assessment should be conducted on the basis of a scale. The basis for doing so is not clear – there is reference to s 316(4) of the Act, however a reduction on that basis would be for the assessor, not the Magistrate (see - above).
- The costs assessor’s letter did raise the issue of whether costs should be determined pursuant to a scale, referring to s 328(5) of the Act. Further, the Magistrate seems to have interpreted the referral to include this power. However, although the costs assessor may refer ‘any issue or question arising in relation to the assessment’ to the court, this cannot subvert the clear statutory provision which only empowers the ‘Supreme Court’ or ‘tribunal’ to set aside costs agreements and determine that costs assessment occur on the basis of a scale. The reference in the letter to s 328(5)(a) seems, with respect, to have been an error which may have misled the Magistrate; the subsection is confined in its terms to the jurisdiction conferred on the Supreme Court or QCAT. Section 328 is an express jurisdiction to set aside otherwise enforceable costs agreements which in various ways may be “not fair or reasonable”. Section 328(4) contemplates costs payable under an agreement which is otherwise set aside, and s 328(5) follows thereon. The Magistrates Court is simply not given any such jurisdiction. An application under that section would need to be separately instituted in the appropriate jurisdiction, which has not been done.
- His Honour seems, with respect, to have been distracted by applying Setschnjak v Derek Geddes Pty Ltd to the present situation. That case was a properly instituted argument under s 328 in QCAT, the correct jurisdiction. If there are to be similar arguments about failure of ongoing disclosure obligations in this case, they are for another day in a different forum. Even if the costs disclosures were inadequate, which was not a question for the Magistrate and cannot be considered by this court, only the costs assessor would be empowered to reduce the costs payable by whatever amount they considered appropriate.
- The Magistrate had no power to set aside the agreement on the basis of lack of disclosure, and his order to that effect was in error. Thus the appeal is allowed and the Magistrate’s order is set aside. It is determined that there is a costs agreement between the parties to which the Act applies and the determination of the costs payable under that agreement is remitted to the assessor to continue the costs assessment.
 Transcript of decision, p 2, ll 11-13.
 Ibid p 3, ll 27-30.
 Decision transcript, p 2, ll 1-5, p 3, ll 27-30.
 Uniform Civil Procedure Rules 1999 r 743G(1)
 Of course, after the filing of the costs assessors certificate the court may exercise all powers of the costs assessor pursuant to r 742(6)(a) and may make directions or judgement under r 743H .
 Allen v Ruddy Tomlins & Baxter  QCA 103, particularly Philippides JA at .
 Legal Profession Act 2007 (Qld) s 340(1)(c)
 Legal Profession Act 2007 (Qld) s 328(1).
 Affidavit of Matthew Gill sworn 15 March 2019, Exh MCG7, ‘Disclosure Notice’, clause 3.
  QCAT 009
 Ibid per Thomas J at -.
 Ibid at -.
 Appellant’s Outline paragraph 25.3.
 Appellant’s Outline paragraph 25.4 and 25.5.
 See footnote 1 above
 Affidavit of Matthew Gill sworn 13 May 2019, Ex 1 ‘Letter from Costs Assessor to Southport Magistrates Court’.
 Decision transcript, p 2, ll 10-14.
 Decision transcript, p 2, l 13.
 Decision transcript, p 4, ll 26-31.
 Proceedings transcript, p 1-5, ll 43-45.
 Uniform Civil Procedure Rules 1999 r 717.
 Legal Profession Act 2007 (Qld) s 328(1).
Legal Profession Act 2007 (Qld) s 316(4).
- Published Case Name:
Keekenzie Pty Ltd atf MCG Trust t/as MCG Legal v Ocvirk
- Shortened Case Name:
Keekenzie Pty Ltd v Ocvirk
 QDC 214
Kent QC DCJ
07 Nov 2019