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  4. Simons v Dowd Lawyers Pty Ltd (No 4) - [2021] QCAT 134

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Simons v Dowd Lawyers Pty Ltd (No 4)[2021] QCAT 134

Simons v Dowd Lawyers Pty Ltd (No 4)[2021] QCAT 134

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

CITATION:

Simons & Ors v Dowd Lawyers Pty Ltd (No 4) [2021] QCAT 134

PARTIES:

ADAM Mark Simons

(first applicant)

FIX CONSULTANTS Pty Ltd

(second applicant)

Spiel Group Pty Ltd

(third applicant)

v

Dowd Lawyers Pty Ltd

(respondent)

APPLICATION NO/S:

OCL047-19

MATTER TYPE:

Other civil dispute matters

DELIVERED ON:

21 May 2021

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Hon Peter Lyons QC, Judicial Member

ORDERS:

  1. The application of the applicants to have the costs agreement dated 28 September 2017 set aside is dismissed.
  2. The respondent is to file submissions and any other material on which it relies in support of its counter-application and serve them on the first and second applicants by 4:00pm on 4 June 2021.
  3. The first and second applicants are to file submissions and any other material on which they rely in relation to the counter-application and serve them on the respondent by 4:00pm on 18 June 2021.
  4. The respondent is to file any submissions and other material in reply and serve them on the first and second applicants by 4:00pm on 25 June 2021.
  5. The submissions are also to deal with the question whether the counter-application is to be determined entirely on the basis of documents under s 32 of the QCAT Act.
  6. Parties serving submissions and material under these directions are at the same time to serve a copy on the liquidator of Spiel Group Pty Ltd.
  7. The respondent is to serve a copy of these reasons on the liquidator of Spiel Group Pty Ltd when it serves its first set of submissions.
  8. Parties serving submissions and material under these directions may do so by email to the last known email address of another party or entity.
  9. The hearing of the counter-application is adjourned to a date to be fixed.
  10. There is liberty to apply.

CATCHWORDS:

PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS AGREEMENTS – REASONABLENESS – where respondent provided legal services to applicants – where fees exceeded initial costs estimate provided to applicants – where applicants claim respondent failed to disclose substantial change in amount of fees charged – where applicants applied under s 328 of the Legal Profession Act 2007 (Qld) (“LP Act”) to set aside three costs agreements with the respondent – where it was declared only one agreement recorded costs agreement – whether costs agreement should be set aside – whether costs agreement fair or reasonable – whether respondent complied with disclosure obligations under s 315 of the LP Act – whether failure to make further estimate of costs meant agreement was not fair or reasonable – whether provision of range of hourly rates meant agreement not fair or reasonable – whether time-based charging system not fair or reasonable – whether Tribunal should make orders for costs and assessment of costs

Legal Practitioners Act 1981 (SA), s 42

Legal Profession Act 2007 (Qld), s 308, s 315, s 328

Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 28, s 32, s 60

Brown & Ors v Talbot & Oliver (1993) 9 WAR 70

Donald Edward Barclay and Ors v McMahon Clarke (A Firm) [2014] QSC 20

Jovetic v Stoddart & Co (1992) 7 WAR 208

Kasmeridis & Anor v McNamara Business & Property Law [2006] SASC 200

Legal Profession Complaints Committee v O'Halloran [2011] WASAT 95

Lewis Blyth & Hooper (A Firm) v Smith [2015] WASCA 47

McLaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305

McNamara Business & Property Law v Kasmeridis & Anor (2007) 97 SASR 129

Re Stuart; Ex parte Cathcart [1893] 2 QB 201

Simons & Ors v Dowd Lawyers Pty Ltd [2020] QCAT 348

Simons & Ors v Dowd Lawyers Pty Ltd (No 2) [2021] QCAT 1

Smith v Lewis Blyth & Hooper [2013] WASC 408

Winn v Boss Lawyers Pty Ltd [2018] QCAT 233

REPRESENTATION:

First and Second Applicants:

Mr Simons in person

Respondent:

H Clift, instructed by Dowd Lawyers Pty Ltd

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)

REASONS FOR DECISION

  1. [1]
    These proceedings were commenced by the application of the applicants to have three costs agreements set aside under the provisions of s 328 of the Legal Profession Act 2007 (Qld) (“LP Act”).  The first agreement is dated 28 September 2017, and the parties to it are Mr Simons and the respondent.  The second is described in the application as a costs agreement dated 5 February 2018, purportedly entered into between Mr Simons and Spiel Group Pty Ltd (“Spiel Group”) and the respondent.  The third is described in the application as a costs agreement dated 12 February 2018, purportedly entered into between Spiel Group and Fix Consultants Pty Ltd (“Fix Consultants”) and the respondent. A declaration was made under s 60 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (“QCAT Act”) that the second and third of these did not record any agreement.  The only agreement to be considered in these reasons is the agreement dated 28 September 2017.
  2. [2]
    The third applicant, Spiel Group, has been in liquidation since March 2020 and has not participated in these proceedings.[1]
  3. [3]
    On 19 March 2021, an order was made that the applicants’ application be determined entirely on the basis of documents, without the parties, their representatives, or witnesses appearing at a hearing, under s 32 of the QCAT Act. 

Background

  1. [4]
    In September 2017, Mr Simons was facing a claim made by the Australian Tax Office (“ATO”) in the District Court of New South Wales, for which he was hoping to negotiate a payment plan.  He discussed this with Mr Caine Barends, who was assisting him with business growth.  Mr Barends suggested that the ATO claim be reviewed by “a mate”.  Mr Barends was the Chief Financial Officer of the respondent.  He mentioned the matter to Mr Dowd, of the respondent, who then contacted Mr Simons.  There is some dispute about what then occurred.  However, on 28 September, Mr Simons received a copy of the costs agreement.  It is common ground that Mr Simons and the respondent entered into the agreement at about that time.  It is also common ground that the respondent provided a fee estimate as required by s 308 of the LP Act.  The estimate was in an amount of between $15,000 and $30,000 (excluding GST).  It was set out in a letter which formed part of the costs agreement.
  2. [5]
    The scope of the work was described in the costs agreement.  It included:
    1. (a)
      filing an appearance and defence in the District Court of New South Wales;
    2. (b)
      communicating with the ATO in relation to the claim, and participating in ADR procedures;
    3. (c)
      preparing submissions to the ATO in relation to a payment plan; and
    4. (d)
      advising generally in the matter.
  3. [6]
    The agreement made provision for charging for legal services on a time basis.  Different hourly rates were specified, depending on the position of the person who did the work.  It is unnecessary to refer to other provisions of the agreement, save to note that it made clear that the client might terminate it at any time.
  4. [7]
    In the latter part of 2017, services were provided pursuant to the agreement.  These included negotiations with the ATO about a payment plan and amending a defence.  Submissions were made to the ATO, and a psychologist was engaged to provide a supporting report.  Supplementary submissions were called for by the ATO.  A penalty notice issued in this period. 
  5. [8]
    An invoice issued on 20 November 2017 for these services.  The amount claimed was $37,952.42 (including disbursements of $60.42: amounts stated in these reasons are for professional fees, unless otherwise stated).  The invoice gave a brief description of the service provided, the date, and the amount charged for it.  In his affidavit, Mr Simons said that his first reaction on receipt of this invoice was “one of shock as a result of what Dowd had told me and what the (costs agreement) said about costs”.
  6. [9]
    A further invoice in similar form issued on 11 January 2018.  It claimed an amount of $8,370.
  7. [10]
    In his affidavit, Mr Dowd said that by late January or early February 2018 it had become apparent to him that the work was more extensive than he had originally considered.  He caused a further costs agreement to be prepared on about 5 February 2018.  Spiel Group was included as a party, because it too was being pursued by the ATO for unpaid taxes.  However, this document was not sent to either applicant, due to an administrative error.  Mr Dowd said that, until the present proceedings were commenced, he believed the documents had been sent to the clients.
  8. [11]
    On 9 February 2018, Mr Simons contacted Mr Dowd, to retain the respondent to provide advice to Spiel Group and to Fix Consultants in relation to commercial ventures which they were conducting; and to review and draft commercial and employment agreements necessary for their operations.  For convenience, work pursuant to this retainer will be referred to as companies’ work.  Mr Dowd then caused a further costs agreement to be prepared on about 12 February 2018, which he said had not been sent due to administrative error, but which, until the commencement of these proceedings, he believed had been sent to the clients.
  9. [12]
    A third invoice issued on about 23 February 2018 for $1,463.  It was in similar form to the earlier invoices.  Mr Simons deposed that he was completely shocked by what the ATO matter was costing in legal fees, given what Mr Dowd had represented, and what appeared in the costs agreement.  He said that he contacted Mr Dowd and told him that he was absolutely shocked by the fees, and questioned the amount.
  10. [13]
    Shortly afterwards, Mr Simons spoke with Mr Barends, who recommended a third-party funder, referred to as QuickFee, to provide finance to pay the invoices.  It might be noted that each invoice was payable within fourteen days.  Mr Simons said that, under pressure from the respondent and Mr Barends, he entered into an agreement with QuickFee.
  11. [14]
    The respondent carried out companies’ work from about the time of the retainer.  It also continued to carry out work in relation to the ATO claim. The last date on which work is recorded in the respondent’s tax invoices is 17 May 2018.
  12. [15]
    An invoice was issued by the respondent on 26 April 2018 for work on the ATO matter.  The fees charged amounted to $19,463.  A further invoice for such work issued on 7 August 2018.  The fees were, in total, $11,617.
  13. [16]
    Invoices issued for companies’ work on 26 April 2018 for fees totalling $8,640; on 30 May 2018 for fees totalling $1,220; and on 5 August 2018 for fees totalling $10,313.
  14. [17]
    Each invoice charged for GST in addition to the amounts set out above.  The invoices were all in similar form; and each specified a date for payment fourteen days after the date of the invoice.
  15. [18]
    In his affidavit, Mr Simons said that he has made payments to the respondent, either directly or pursuant to the QuickFee Agreement, totalling $54,675.80.  There were a total of twelve payments, generally made monthly, and generally in amounts a little under $5,000.  The last payment was made on 8 March 2019.  It would appear that these payments, at least generally, have been applied to the fees charged in relation to the ATO claim.
  16. [19]
    The respondent issued a Statutory Demand in March 2019, which was subsequently withdrawn.  The respondent commenced proceedings in the Magistrates Court for the recovery of fees in about May 2019.  These proceedings have been stayed.

Contentions of parties

  1. [20]
    At this stage of the proceedings, Mr Simons represents himself and Fix Consultants, of which he is a director.  In a list provided by email of 26 March 2021, he indicated that he relied on the applicants’ application (filed on 12 June 2019), and his affidavit filed on 3 September 2019 (apparently a reference to his affidavit filed 6 September 2019).
  2. [21]
    The grounds upon which the applicants relied in the application, so far as they relate to the first costs agreement, are, in summary:
    1. (a)
      that the agreement was entered into;
    2. (b)
      that the respondent, pursuant to s 308 of the LP Act, disclosed a costs estimate of between $15,000 and $30,000 (exclusive of GST);
    3. (c)
      that no further costs agreements were provided to Mr Simons despite the requirements of s 315 of the LP Act; and
    4. (d)
      the total for fees and disbursements invoiced by the respondent to Mr Simons was $86,751.95.
  3. [22]
    In its list provided by email on 23 March 2021, the respondent indicated that it relied upon its response and counter-application filed 24 February 2020, an affidavit of David John Dowd sworn on 30 September 2019, an affidavit of Graham Allan Swan sworn on 9 June 2020, an outline of submissions dated 22 July 2020, and earlier decisions of this Tribunal in this matter.[2]
  4. [23]
    The respondent’s response and counter-application disputed the contention that it had failed to comply with its disclosure obligations under the LP Act as regards the costs agreement because:
    1. (a)
      the disclosure statement given with that agreement gave a fair understanding of its effect;
    2. (b)
      Mr Simons was not deprived of the opportunity to gain a fair understanding of its effect;
    3. (c)
      Mr Simons has not adduced evidence that any matter that was omitted was significant to him; and
    4. (d)
      Mr Simons has not adduced any evidence that the terms and effect of the costs agreement were unreasonable. 

It also contended that costs for the services which it provided to Mr Simons (and the other applicants) should be assessed.

  1. [24]
    In its written submission, the respondent contended that the fact that fees exceed the estimate in a costs agreement does not provide a sufficient basis to set aside the agreement.  By email of 10 September 2018, Mr Simons accepted that if work had been done, it should be paid for.  It does not follow from the respondent’s failure to make the additional disclosure required by s 315 of the LP Act that the costs agreement was not fair or reasonable. Further costs agreements had been prepared by the respondent, but were not sent to the applicants due to administrative error.  Mr Simons continued to engage the respondent to work on the taxation proceedings and on new matters, even after he says he was shocked by the invoices.  His evidence that he was shocked by the invoices is inconsistent with his continuing to provide instructions in respect of the taxation proceedings, and in respect of other matters.  Particular reliance was placed on the email of 10 September 2018.  It was submitted that in determining whether the costs agreement was not fair or reasonable, regard could be had to cases relating to costs agreements under the general law.  The question is to be determined by reference to the costs agreement as opposed to some other aspect of the relationship between the client and the solicitor, and at the time the costs agreement was struck.  The nature of the client is a relevant consideration.  The onus of proof falls on the applicants, and it has not been discharged.

Statutory provisions

  1. [25]
    The application is brought under s 328 of the LP Act, which includes the following:

Setting aside costs agreements

  1. (1)
    On application by a client, the Supreme Court or the tribunal may order that a costs agreement be set aside if satisfied the agreement is not fair or reasonable.

(1A)  An application under subsection (1) to the tribunal must be made as provided under the QCAT Act.

  1. (2)
    In deciding whether or not a costs agreement is fair or reasonable, and without limiting the matters to which the Supreme Court or tribunal can have regard, the Supreme Court or tribunal may have regard to any or all of the following matters—
  1. (a)
    whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice;
  1. (b)
    whether any Australian legal practitioner or Australian-registered foreign lawyer acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates;
  1. (c)
    whether the law practice failed to make any of the disclosures required under division 3;
  1. (d)
    the circumstances and conduct of the parties before and when the agreement was made;
  1. (e)
    the circumstances and the conduct of the parties in the matters after the agreement was made;
  1. (f)
    whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement;
  1. (g)
    whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement.
  1. [26]
    Also relevant are the provisions of s 315, as follows:

Ongoing obligation to disclose

A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.

Some authorities discussed

  1. [27]
    When dealing with an application made under s 328 of the LP Act, Martin J, in McLaren v Wiltshire Lawyers Pty Ltd (“McLaren”)[3], discussed the expression “fair or reasonable”, as used in that section.  His Honour referred to a number of authorities.  From his Honour’s discussion, and those authorities, I take the following propositions as established law on this question:
    1. (a)
      fairness of the agreement refers to the mode of obtaining the agreement, and whether the client fully understands and appreciates the agreement[4];
    2. (b)
      the terms of the agreement must be reasonable[5];
    3. (c)
      the factors to be taken into account when deciding whether an agreement is fair and reasonable will depend on the circumstances of the case, but may vary according to the scope of the retainer, the terms of the agreement, the kind of legal work undertaken, and the client’s knowledge and circumstances[6];
    4. (d)
      an agreement is unreasonable if it can be shown objectively that the agreement came into being in circumstances which were unreasonable to the client; or that its terms are unreasonable to the client; or that its effect on the client is unreasonable[7], though these tests are not exhaustive[8]; and
    5. (e)
      the broad position is that a lawyer is not, in his or her relations with the client, to make a gain at the expense of that client, beyond an amount that is just and fair for professional remuneration that the lawyer is entitled to receive for the work done.
  1. [28]
    It is also relevant to note that a failure to provide an estimate of fees as part of the disclosure required by statute, even before the parties enter into a costs agreement, does not necessarily mean that the agreement is not fair or reasonable.[9]  It is necessary to consider such a failure in the context of all relevant circumstances, including those specified in s 328(2).
  1. [29]
    The respondent’s submission that the question whether the costs agreement is fair and reasonable is to be determined at the time when the agreement was struck was based on a statement of Carmody J in Winn v Boss Lawyers Pty Ltd[10], which in turn relied on a statement of Judge Lunn, a Master of the Supreme Court of South Australia, in Kasmeridis & Anor v McNamara Business & Property Law.[11]  That case was brought under s 42(7) of the Legal Practitioners Act 1981 (SA).  Section 328 of the Queensland Act makes potentially relevant any misconduct of the legal practitioner in relation to the provision of services under the costs agreement, the circumstances and conduct of the parties after the agreement was made, and a failure to make post-agreement disclosure required by s 315.  There was no suggestion that the South Australian legislation contained similar provisions.  It seems to me that the view of Judge Lunn is not consistent with the provisions of the LP Act.  In my view, post-agreement circumstances are potentially relevant when deciding whether a costs agreement was not fair or reasonable.

Consideration of applicants’ case

  1. [30]
    The applicants have relied upon the respondent’s failure to disclose a substantial change to anything included in the initial costs disclosure, as required by s 315 of the LP Act.  The only matter identified to show a requirement to disclose a change is the amount of fees charged, substantially in excess of the estimate provided in the initial disclosure.  Once the fees exceeded the estimate, it must have been apparent to the respondent that the estimate was no longer correct; and that a current estimate must be of a greater amount.  There is no suggestion, and no evidence to show, that the initial estimate was not a genuine estimate.  The only evidence provided to explain the change is that of Mr Dowd – that the work on the matter was in fact more extensive than he had originally considered.  That evidence is unchallenged, and there is no reason not to accept it.  The emerging extent of the work required on the matter, and its consequences for the costs estimate, triggered the requirement in s 315 to provide further disclosure.
  2. [31]
    This is not a case of a failure to make disclosure prior to the agreement.  It is a case where disclosure should have been made at some point after some work had been done under the agreement, and a point had been reached where those conducting the matter on behalf of the respondent must have realised that the original costs estimate no longer reflected the likely range of costs.  It is not possible to identify when that was, beyond saying that it was at some time prior to 20 November 2017.  The question which thus arises is whether the failure to provide a further estimate of costs had the consequence that the agreement was not fair and reasonable.  This may relate to the questions whether the terms of the agreement were consequently unreasonable to the client, or that the effect of the agreement on the client was consequently unreasonable.
  3. [32]
    In Donald Edward Barclay & Ors v McMahon Clarke (A Firm) [12], a case where there had been a failure to make the pre-agreement disclosures required by s 308 of the LP Act, Byrne SJA posed the following question:

Is the non-disclosure a basis for satisfaction that the costs agreement itself is ‘not fair…’?

  1. [33]
    It seems to me that, in principle, similarly formulated questions are appropriate when the allegation is that by reason of a failure to make a pre-agreement disclosure, the agreement is not reasonable; and in a case like the present one, when the allegation is that the law firm failed to make the further disclosure required by s 315 of the LP Act.
  2. [34]
    His Honour continued:

Section 328(1)(c) indicates that such non-disclosure might demonstrate that a costs agreement was not fair.[13]

  1. [35]
    His Honour was not prepared to go further.  He noted that s 328 requires other things to be taken into account.  In my view, his Honour’s approach provides guidance to the approach to be taken to the assessment of the applicants’ case.[14]
  2. [36]
    While s 328(1)(c) has the effect that a failure to make disclosure required by the LP Act might demonstrate that the agreement is not fair or reasonable, it does not necessarily lead to such a conclusion.  In the case relied on for the hearing, the applicants have made no attempt to demonstrate why, in the circumstances of the present case, the failure to make the disclosure required by s 315 had the consequence that the agreement was not fair or reasonable.  The matter is of some importance.  It is not obvious that a change in the anticipated extent of the work required, which becomes apparent as the law practice carries out the retainer, will of itself make the costs agreement unfair or unreasonable.  Unless an argument is articulated to show why the change had that effect, the respondent does not know what case it has to address.  The requirement found in s 28 of the QCAT Act that the Tribunal act fairly and according to the substantial merits of the case requires it to consider the position of both parties.
  3. [37]
    The applicants have had ample warning of the difficulty.  As has been noted in its response dealing with the breach of s 315, the respondent contended that Mr Simons was not deprived of the opportunity to gain a fair understanding of the agreement; and he had not adduced any evidence that a matter that was required to be disclosed, but was omitted, was significant to him.  More recently, in its submissions of 22 July 2020, the respondent contended that it did not follow from the failure to make disclosure required by s 315 of the LP Act that the costs agreement was not fair and reasonable.
  4. [38]
    It might be noted that the applicants have had extensive opportunity to advance a broader case on this question.  The matter was originally listed for final hearing on 3 March 2020.  One would expect that, before the matter was set down for that hearing, the applicants might have made such a case as they could to demonstrate that the failure to make disclosure required by s 315 had the consequence that the agreement was unreasonable.  They had, for a time prior to March 2020, been represented by lawyers.  Since March 2020, the applicants were, for a substantial period of time, again represented by lawyers, including Senior Counsel, but no further evidence on the question has been put forward; nor is there any satisfactory argument on the question in the material now relied on.  At the most recent directions hearing, a direction was made that the matter not be decided for a further two weeks.  That gave the applicants the opportunity to seek further legal advice about the presentation of their case, should they wish to do so.  There has been no suggestion that that opportunity has been taken up.
  5. [39]
    Beyond that, circumstances which will now be discussed do not suggest that the failure to make the disclosure required by s 315 had the consequence that the agreement was not fair or reasonable.
  6. [40]
    Mr Simons is an experienced businessman.  He has been in business for 36 years, though he claimed not to be a sophisticated businessman.  He gave evidence on 10 August 2020 that at times his businesses had employed more than 50 people.  This is broadly consistent with the information in the statutory report of the liquidator for Spiel Group, tendered at that hearing, that 103 former and current employees had outstanding claims for unpaid wages, superannuation and annual leave.  The ATO’s claim of $3,353,003.63 in respect of running balance account deficit debts and income tax, also suggests a business of some size. 
  7. [41]
    Mr Simons’ conduct subsequent to the agreement is made potentially relevant, by s 315(2)(e).  He received the first tax invoice on about 20 November 2017. It substantially exceeded the upper limit of the fees estimate, but he took no step at that point to terminate the retainer, or to limit his exposure to further costs, or indeed to seek an updated estimate.  In fact, it is apparent from the tax invoice of 11 January 2018, that he continued to interact with the lawyers from the respondent, who continued to carry out the retainer.  After receipt of the second tax invoice, he retained the respondent to do the companies’ work in early February 2018.  At this point the fees charged totalled $46,322.42.  Nevertheless, as is apparent from the tax invoices, he continued to retain the respondent, and have dealings with its representatives, on a relatively frequent basis over subsequent months.  The only contractual arrangement of which Mr Simons was aware was the costs agreement.  His conduct in this period does not suggest that the operation of the agreement had become unreasonable because the fees substantially exceeded the original estimate, and no revised estimate had been provided to him.  On the contrary, Mr Simons also made the payments referred to earlier, from April 2018 until March 2019.
  8. [42]
    It seems to me that another relevant feature of this history is that, when he retained the respondent for the companies’ work, he did not seek a costs disclosure, although he apparently was conscious that he had been given a costs disclosure with the costs agreement.  There was no obligation on him to request disclosure, but in the circumstances of this case, his failure to at least enquire about the likely extent of costs is not without significance.
  9. [43]
    The general impression is that, in truth, further disclosure of a costs estimate as required by s 315 was of no great significance to Mr Simons throughout the period when the respondent provided legal services to the applicants.  He was receiving invoices progressively, which indicated that many services were being provided, their nature, and the amount charged for each.  From the invoices, taken together, the total amount of fees charged could be determined.  That would appear to have been sufficient for him in this period.  Mr Simons has not suggested that, if he had received a revised estimate of costs, the matter would have proceeded differently.
  10. [44]
    The respondent has placed some reliance on an email from Mr Simons of 10 September 2018.  That resulted from the pursuit of payment for outstanding invoices for the ATO claim and the companies’ work.  Mr Simons had earlier entered into a QuickFee arrangement for other invoices.  In the 10 September email, Mr Simons expressed an intention to pay; but thought the invoices were being paid off, by reason of payments out of his account.  He also wanted to understand an unpaid invoice.  After referring to these matters, he wrote, “In my world if you did the work you get paid.  I’m not disputing it.”  I cannot detect in the email any concern about earlier inadequate disclosure of likely fees.  On the other hand, there is praise for “Jennie-lee”.  Ms Jennie-Lee Schloffer was identified in the costs agreement, and her name appears frequently in the tax invoices as a person performing work on the ATO claim.  The email is consistent with the view earlier expressed about Mr Simons’ attitude to the absence of disclosure after entering into the costs agreement.  It does not suggest that that absence of further disclosure had the consequence that the agreement became unfair or unreasonable.
  11. [45]
    The email was given some emphasis in Mr Dowd’s affidavit filed on 1 October 2019; and has been relied upon in the respondent’s response and counter-application filed on 24 February 2020, and the respondent’s subsequent submissions.  Mr Simons has not commented on the email.
  12. [46]
    No attempt has been made to show that the charging rates provided for in the agreement (with some possible exceptions, discussed later in these reasons) were not reasonable, or had become unreasonable at some point during the period over which the respondent provided legal services.
  13. [47]
    It is convenient at this point to consider evidence from Mr Simons about the circumstances in which he entered into the QuickFee arrangement. He stated that he felt pressure from the respondent and from Mr Barends to enter into this arrangement.  The only evidence of any conduct which might be said to amount to such pressure is Mr Simons’ statement that Mr Barends urged him to enter into the arrangement, and an email from Mr Barends of 23 March 2018.  Omitting formalities, the email was as follows:

I’ve been asked to send the attached Quickfee Application as discussed.

Can you review and advise.  Just for your info, This is causing a bit of a ripple here now because they are still working on the matter.  By all means give David or Jennie-lee a call if you’re not happy or want to discuss but please don’t leave it in Limbo.

  1. [48]
    In my view, the email does not indicate any inappropriate pressure was exerted on Mr Simons to enter into the QuickFee arrangement.  It may have indicated that the respondent was not prepared to continue to provide legal services without some assurance of payment of past invoices, but that would hardly have been surprising to Mr Simons, given his business experience; and it would be a natural corollary of what Mr Simons said in his email of 10 September 2018.  Moreover, clause 8 of the costs agreement gave the respondent the right to stop work if bills were not paid.  There is no other specific evidence of any other pressure in Mr Simons to enter into the arrangement.  Rather, the email invited Mr Simons to consider the QuickFee application; and to discuss it with Mr Dowd or Ms Schloffer if he was not happy with it, or wanted to discuss it.  What conduct occurred which Mr Simons described as urging him to enter into the QuickFee arrangement is not evident.  It may have merely amounted to a recommendation, or something more.  However, the email suggests that it is unlikely that Mr Barends did more than give appropriate advice.  There is nothing to suggest that entry into the QuickFee arrangement was in any relevant sense disadvantageous to the applicants.  I am not prepared to find that Mr Simons was subjected to any inappropriate pressure in relation to it.
  2. [49]
    I have previously referred to some statements in Mr Simons’ affidavit that he was shocked when he received the first tax invoice on about 20 November 2017, and again when he received the third tax invoice on about 23 February 2018.  He also stated that he was shocked by the amount of the fees, given what Mr Dowd had said to him about likely fees, and the disclosure in the costs agreement.  He also said that he spoke to Mr Dowd, saying that he was absolutely shocked by the fees, and questioning the amount.  In its submissions of 22 July 2020, the respondent submitted that there is no documentary evidence to support Mr Simons’ claim that he was shocked by the fees, and it is inconsistent with his continuing to provide instructions, both in relation to the ATO matter and the companies’ work.
  3. [50]
    It is not clear what significance the applicants seek to attribute to Mr Simons’ evidence that he was shocked on these occasions.  It is not referred to in the submissions for the applicants of 14 July 2020, discussed later in these reasons.  It would not be surprising, and I accept, that Mr Simons was shocked, in the sense that he was surprised and concerned that the fees were well above the estimate, at times when the work had not been concluded. That does not necessarily mean that the agreement was no longer fair or reasonable.  As I have indicated, no argument has been advanced to demonstrate why that would be so. The conduct of Mr Simons, both in relation to continuing to give instructions regarding the ATO matter, and in retaining the respondent for the companies’ work, as well as his expressed willingness to pay for services provided, indicate the contrary.

Other matters

  1. [51]
    The respondent relied for this hearing on its submissions of 22 July 2020.  These submissions included responses to submissions of 14 July 2020, then relied upon by the applicants (“applicants’ 2020 submissions”), but not relied upon for the present hearing.  Strictly speaking, it is not necessary to deal with submissions then made for the applicants.  Given that the applicants no longer have legal representation, and the matters are dealt with in the submissions relied upon by the respondent, it may be appropriate to consider them.
  2. [52]
    The matters then relied upon by the applicant included the failure to make post-agreement disclosure as required by s 315 of the LP Act.  The submissions acknowledged that such a failure would not inevitably lead to the costs agreement being set aside.  That failure has already been discussed.
  3. [53]
    The applicants’ 2020 submissions relied upon the fact that until 19 August 2019, the respondent relied upon the validity of variations of the costs agreement, when the agreement had plainly not been varied.  Mr Dowd has given unchallenged evidence that, until the commencement of the present proceedings, he was unaware that the varied agreement had not been sent to the applicants.  That would seem to provide a reasonable explanation for the reliance.  In any event, it is difficult to understand how misplaced reliance on variations to an agreement could have the effect that the original agreement was not fair or reasonable.
  4. [54]
    The applicants’ 2020 submissions relied upon an assertion that the costs agreement failed to make clear what hourly rates would be charged, by providing for a range of hourly rates.  For five of the legal positions identified, a range of rates was specified.  The range was not extensive.  However, no argument was advanced by reference to this matter.  The agreement had the consequence that an upper limit for these rates was specified.  Unless it were established that this limit was unreasonable, it is difficult to see why the identification of a range of rates is unreasonable.  In any event, there is no evidence that the respondent charged at more than the minimum rates identified in the costs agreement.  There is no support in the present case for a conclusion that the provision of a range of rates had the effect that the agreement was not fair or reasonable.
  5. [55]
    Another matter relied upon in those submissions was the failure to honour Mr Dowd’s “clear, unambiguous oral representation to Mr Simons that the total costs in the matter would not exceed $30,000 plus GST”.  The basis for that submission was a statement in the affidavit of Mr Simons that Mr Dowd had said to him with respect to the work for the ATO claim, “It should cost about $15,000, but it could go as high as $30,000, but I can’t see that happening.”  In his affidavit, Mr Dowd stated that he gave Mr Simons a verbal estimate of $15,000 to $30,000 but went no further.
  6. [56]
    This conversation occurred by telephone, on the first occasion when Mr Simons and Mr Dowd had any discussion about the matter.  Even on Mr Simons’ evidence it seems to me to amount to no more than an estimate of the likely range of fees.  It was in fact consistent with that set out in the costs agreement.  As the costs agreement pointed out, a number of factors can have a significant bearing on the overall costs of a matter, and they may result in a variation from any estimate given to a client.  The costs agreement emphasised that the estimate was not a quote nor a cap on what would be charged.  Mr Simons received that agreement at a very early stage, and shortly after the telephone conversation.  Given the subsequent warnings in the costs agreement, it is difficult to attribute any particular significance to Mr Dowd’s statement in the telephone conversation. I do not consider that the conversation provides a basis for finding that the agreement was not fair or reasonable.  That conclusion is reinforced by subsequent events, discussed earlier in these reasons.
  7. [57]
    Another matter relied upon was that the costs agreement provided for a time-based charging system which would allow the respondent to charge for more than the time actually spent on the matter. Subsequent submissions referred to the fact that charging would be based on units of six minutes, or a part of a unit.  That had the consequence that the client could be charged as if six minutes of work had been performed when only one or two minutes’ work was carried out.
  8. [58]
    In Legal Profession Complaints Committee v O'Halloran[15], a practitioner was charged with engaging in unprofessional conduct.  The allegations included an allegation that he had entered into an agreement for costs which permitted him to charge for services at a rate above a statutorily imposed upper limit, and pursuant to terms of the agreement which were not reasonable.  It was alleged that terms of the agreement permitted the practitioner to charge unreasonable minimum charges for certain tasks, irrespective of the time taken to perform the task.  The agreement permitted the practitioner to charge for time in six-minute units.  One term (clause (b)) had the effect of permitting a minimum charge for one unit of time for any time spent on the matter; and another (clause (c)) permitted a minimum charge of two units per page for outgoing correspondence.  It was a regular practice to impose charges under these clauses, regardless of the time taken to perform the relevant task.  It was acknowledged that there was a standard practice within the legal profession of charging by reference to six-minute units.  The Tribunal found that the minimum charges provided for in clause (c) permitted unreasonable charges to be made[16]; but did not make that finding in respect of clause (b).  
  9. [59]
    The application which was the subject of Smith v Lewis Blyth & Hooper[17] sought orders which included an order for the cancellation of costs agreements on the ground that they were unreasonable, under legislation generally similar to s 328 of the LP Act.  Each of the agreements permitted charging a minimum unit of six minutes for a task, regardless of the time actually spent on it.  Jenkins J held that this provision was not unreasonable.[18]  The focus of the argument appears to have been on the question whether charging for time did not take into account the kind of work being done.  Later, her Honour observed that, “appropriately”, the disclosure statements said that the practice charged a minimum unit of six minutes, irrespective of the actual time spent on the task.[19]
  10. [60]
    Such authority as I have been able to find does not support the view that an agreement which permits time to be charged for in minimum units of six units is, for that reason, unreasonable.  If anything, it suggests the contrary. 
  11. [61]
    Moreover, the submission does not fully reflect the costs agreement.  Clause 2 specifies hourly rates.  Clause 21 states that, where work is charged for on a time basis, everyone who carries out work on the matter will record the time taken for the work carried out.  Charges would be in units of six minutes.  Each unit or part thereof would be charged at one-tenth of the appropriate hourly rate.  However, the clause also provided, “…we will not charge you for every single piece of work we perform such as brief telephone calls or short emails”.  It seems to me that this qualification makes it difficult to find the agreement was unreasonable because it permitted charging for six minute units.
  12. [62]
    Another matter relied upon was the fact that the invoice of 20 November 2017 did not include all of the work carried out by that date, which was charged for in a later invoice.  It was said that Mr Simons was misled about the legal costs incurred up to 10 November 2017.  No submission was made to explain why this had the consequence that the agreement was not fair or reasonable.  There is no evidence from Mr Simons that he was in fact misled.  If he was, it was only for a relatively short period.  The invoice of 11 January 2018 included work done between September and 10 November 2017.  There is no substance in this matter.
  13. [63]
    Another complaint made in the applicants’ 2020 submissions is that where more than one person within a law firm works on a matter there may be an element of double charging and over-servicing.  There has been no attempt to demonstrate either proposition in the present case.  It is common to have more than one person in a law firm work on a matter.  If not, all of the work would have to be done by the person best qualified to perform it; most likely at a higher rate than that applicable for others at the firm who might otherwise do some of the work.  There is nothing to indicate that it was unreasonable in the present case for more than one person to work on the matter.  Moreover, the costs agreement made clear that more than one person would work on the matter, and Mr Simons accepted it.
  14. [64]
    The matters raised in the applicants’ 2020 submission do not gain any strength when considered together, including the failure to comply with s 315 of the LP Act.  They do not show that the agreement was not fair or reasonable.

The counter-application

  1. [65]
    The respondent seeks orders that the costs in respect of the services provided by it to Mr Simons be assessed.  It also seeks a similar order in respect of the services provided by it to Spiel Group and Fix Consultants.  It also seeks an order that the applicants pay its costs of the applicants’ application.
  2. [66]
    No party has provided submissions dealing with the statutory provisions relevant to the orders sought by the respondent, in light of the determinations which have been made and whether the Tribunal should make the orders for assessment of costs and the costs order sought by the respondent.  It is not appropriate to deal with these matters without such submissions.  Accordingly, I propose to make directions about them.

Conclusion

  1. [67]
    The Tribunal makes the following orders:
  1. The application of the applicants to have the costs agreement dated 28 September 2017 set aside is dismissed.
  2. The respondent is to file submissions and any other material on which it relies in support of its counter-application and serve them on the first and second applicants by 4:00pm on 4 June 2021.
  3. The first and second applicants are to file submissions and any other material on which they rely in relation to the counter-application and serve them on the respondent by 4:00pm on 18 June 2021.
  4. The respondent is to file any submissions and other material in reply and serve them on the first and second applicants by 4:00pm on 25 June 2021.
  5. The submissions are also to deal with the question whether the counter-application is to be determined entirely on the basis of documents under s 32 of the QCAT Act.
  6. Parties serving submissions and material under these directions are at the same time to serve a copy on the liquidator of Spiel Group Pty Ltd.
  7. The respondent is to serve a copy of these reasons on the liquidator of Spiel Group Pty Ltd when it serves its first set of submissions.
  8. Parties serving submissions and material under these directions may do so by email to the last known email address of another party or entity.
  9. The hearing of the counter-application is adjourned to a date to be fixed.
  10. There is liberty to apply.

Footnotes

[1]See the affidavit of Graham Allan Swan sworn 9 June 2020, and in particular the email chain at Exhibit GAS 7.

[2]See Simons & Ors v Dowd Lawyers Pty Ltd [2020] QCAT 348; Simons & Ors v Dowd Lawyers Pty Ltd (No 2) [2021] QCAT 1.

[3][2019] QSC 305, [18]-[25].

[4]See Re Stuart; Ex parte Cathcart [1893] 2 QB 201, 204-205, cited by Martin J in McLaren at [18].

[5]Ibid.

[6]See McNamara Business & Property Law v Kasmeridis & Anor (2007) 97 SASR 129, 138 (Doyle CJ, Gray and David JJ agreeing), cited by Martin J in McLaren at [19].

[7]See Jovetic v Stoddart & Co (1992) 7 WAR 208 (Seaman J), cited by Martin J in McLaren at [20].

[8]See the discussion of Seaman J’s statement by Ipp J in Brown & Ors v Talbot & Oliver (1993) 9 WAR 70, 75; cited by Martin J in McLaren at [20].

[9]See Donald Edward Barclay and Ors v McMahon Clarke (A Firm) [2014] QSC 20; Lewis Blyth & Hooper (A Firm) v Smith [2015] WASCA 47, [97], [111], [115]-[118].

[10][2018] QCAT 233, [24].

[11][2006] SASC 200, [4].

[12][2014] QSC 20, [23].

[13]Ibid, [24].

[14]See also Lewis Blyth & Hooper (A Firm) v Smith [2015] WASCA 47, [97], [111], [115]-[118].

[15] [2011] WASAT 95.

[16] Ibid, [102].

[17] [2013] WASC 408; in part overturned in Lewis Blyth & Hooper v Smith, on questions not related to charging on a time cost basis.

[18] Ibid, [169].

[19] Ibid, [175].

Close

Editorial Notes

  • Published Case Name:

    Simons & Ors v Dowd Lawyers Pty Ltd (No 4)

  • Shortened Case Name:

    Simons v Dowd Lawyers Pty Ltd (No 4)

  • MNC:

    [2021] QCAT 134

  • Court:

    QCAT

  • Judge(s):

    Hon Peter Lyons QC

  • Date:

    21 May 2021

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Barclay v McMahon Clarke (A Firm) [2014] QSC 20
4 citations
Jump To
Cite 1 - [2014] QSC 20
Cite 2 - [2014] QSC 20
Cite 3 - [2014] QSC 20
Cite 4 - [2014] QSC 20
Brown v Talbot & Olivier (1993) 9 WAR 70
2 citations
Jump To
Cite 1 - (1993) 9 WAR 70
Cite 2 - (1993) 9 WAR 70
Jovetic v Stoddart & Co (1992) 7 WAR 208
2 citations
Jump To
Cite 1 - (1992) 7 WAR 208
Cite 2 - (1992) 7 WAR 208
Kasmeridis v McNamara Business & Property Law [2006] SASC 200
2 citations
Jump To
Cite 1 - [2006] SASC 200
Cite 2 - [2006] SASC 200
Lewis Blyth & Hooper (A Firm) v Smith [2015] WASCA 47
3 citations
Jump To
Cite 1 - [2015] WASCA 47
Cite 2 - [2015] WASCA 47
Cite 3 - [2015] WASCA 47
McLaren v Wiltshire Lawyers Pty Ltd(2019) 3 QR 158; [2019] QSC 305
6 citations
Jump To
Cite 1 - [2019] QSC 305
Cite 2 - [2019] QSC 305
Cite 3 - [2019] QSC 305
Cite 4 - [2019] QSC 305
Cite 5 - [2019] QSC 305
Cite 6 - [2019] QSC 305
McNamara Business & Property Law v Kasmeridis (2007) 97 SASR 129
2 citations
Jump To
Cite 1 - (2007) 97 SASR 129
Cite 2 - (2007) 97 SASR 129
Profession Complaints Committee v O'Halloran [2011] WASAT 95
5 citations
Jump To
Cite 1 - [2011] WASAT 95
Cite 2 - [2011] WASAT 95
Cite 3 - [2011] WASAT 95
Cite 4 - [2011] WASAT 95
Cite 5 - [2011] WASAT 95
Re Stuart; Ex parte Cathcart [1893] 2 QB 201
2 citations
Jump To
Cite 1 - [1893] 2 QB 201
Cite 2 - [1893] 2 QB 201
Simons & Ors v Dowd Lawyers Pty Ltd [2020] QCAT 348
2 citations
Jump To
Cite 1 - [2020] QCAT 348
Cite 2 - [2020] QCAT 348
Simons & Ors v Dowd Lawyers Pty Ltd (No 2) [2021] QCAT 1
2 citations
Jump To
Cite 1 - [2021] QCAT 1
Cite 2 - [2021] QCAT 1
Smith v Lewis Blyth & Hooper [2013] WASC 408
2 citations
Jump To
Cite 1 - [2013] WASC 408
Cite 2 - [2013] WASC 408
Winn v Boss Lawyers Pty Ltd [2018] QCAT 233
2 citations
Jump To
Cite 1 - [2018] QCAT 233
Cite 2 - [2018] QCAT 233

Cases Citing

Case NameFull CitationFrequency
Ashney v Pippa Colman & Associates Law Practice Pty Ltd [2022] QCAT 2812 citations
1

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