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- Waller Family Lawyers Pty Ltd v AB[2022] QCAT 362
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Waller Family Lawyers Pty Ltd v AB[2022] QCAT 362
Waller Family Lawyers Pty Ltd v AB[2022] QCAT 362
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Waller Family Lawyers Pty Ltd v AB [2022] QCAT 362 |
PARTIES: | WALLER FAMILY LAWYERS PTY LTD ABN 43605371284 (applicant) v AB (respondent) |
APPLICATION NO/S: | 50223/21 |
MATTER TYPE: | Other minor civil dispute matters |
DELIVERED ON: | 18 October 2022 |
HEARING DATE: | 15 November 2021, 6 June 2022 |
HEARD AT: | Brisbane |
DECISION OF: | Adjudicator Alan Walsh |
ORDERS: |
|
CATCHWORDS: | CIVIL LAW – CIVIL TRIBUNALS – QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL – MINOR CIVIL DISPUTE – MINOR DEBT DISPUTE – where family lawyers sued for unpaid professional costs – where liability disputed – where costs not assessed – whether solicitor waived unpaid professional costs or estopped from maintaining claim PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS DISCLOSURE – COSTS AGREEMENTS – where do and charge costs agreement – where scope of work included future work – where disclosure notice scope of work inconsistent with generality in costs agreement – whether scope of future work ascertained – whether disclosure notice incorporated in costs agreement – whether costs agreement certain in terms – whether costs agreement compliant with legislation – whether costs agreement void for uncertainty – whether costs agreement void for contravention of statute PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS DISCLOSURE – COSTS AGREEMENTS – OTHER MATTERS – where two costs disclosure notices given – where second notice for additional work and cost – whether second notice in substance a costs update – whether second costs agreement required – whether solicitor estopped from asserting otherwise – whether claim for costs following second costs disclosure notice are for minor debt or liquidated demand of money PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS DISCLOSURE – COSTS AGREEMENTS – OTHER MATTERS – where costs billed substantially exceeded estimates – whether timely change in disclosure notification given – whether invoices notified substantial change Acts Interpretation Act 1954 (Qld), s 14A, s 32C Australian Solicitors Conduct Rules 1 June 2012, r 4.1.2, r 4.1.5, r 7.1 Family Law Act 1975 (Cth), s 121 Legal Profession Act 2007 (Qld), s 3, s 299, s 300, s 302, s 305, s 308, s 309, s 310, s 311, s 315, s 316, s 319, s 322, s 323, s 324, s 325, s 327, s 328, s 341 Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 12, s 13, s 15, s 60, s 164 Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r 48, r 81 Quick on Costs, Thomson Reuters Westlaw AU Dal Pont, Law of Costs (LexisNexis, 5th ed 2021) Regulatory Guide 9, Legal Services Commission (Qld) Lord Diplock, The Lawyer and Justice (Sweet and Maxwell, 1978), 274 AB v CD [2020] QCAT 295 Amos v Walter [2020] QCAT 360 Ashney v Pippa Colman & Associates Law Practice Pty Ltd [2022] QCAT 281 Baker v Legal Services Commissioner [2006] QCA 145 Connollys Lawyers Pty Ltd v David William Davis [2013] QCA Council of the Queensland Law Society v Roche [2003] QCA 469 Donald Edward Barclay & Ors v McMahon Clarke (A firm) [2014] QSC 20 Frost v Miller [2015] QSC 206 Heppingstone v Stewart (1910) 12 CLR 126 King v Queensland Law Society [2012] QCAT 489 Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 Maddock v IALPG Pty Ltd [2020] QCAT 475 Mango Boulevard Pty Ltd v Whitton [2019] FCA 490 Marino Law v VC [2021] QCAT 348 McLaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305 Re Law Society of the Australian Capital Territory and Roche (2002) 171 FLR 138 Setschnjak v Derek Geddes Pty Ltd [2017] QCAT 009 Service v Guerrera [2022] QCATA 87 The Chief Executive Officer, Office of Fair Trading, Department of Justice and Attorney General v Wyeth Management Pty Ltd & Ors [2021] QCAT 38 Till and Till ATF The Till Family Trust t/as Mt Cotton Truck Hire v Rose [2015] QCATA 173 Till & Anor v Rose [2016] QCA 127 Veghelyi v The Law Society of New South Wales (unreported, 405y of 1991, 6 October 1995) Walton’s Stores (interstate) Ltd v Maher (1988) 164 CLR 387 Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445 X v Australian Prudential Regulation Authority (2007) 226 CLR 630 |
APPEARANCES & REPRESENTATION: | |
Applicant: | Mr T Waller, director of the Applicant |
Respondent: | In person, self-represented |
REASONS FOR DECISION
Introduction
- [1]In issue in this case is the liability of a former client to a family law practice for professional costs, the timeliness of professional costs disclosure to the client, the existence or validity of a “do and charge” costs agreement, whether the client received costs estimate updates, and whether waiver or estoppel by representation lies against either party.
Parties
- [2]The Applicant, Waller, is an incorporated legal practice specialising in family law matters in Queensland. Trent Waller is an Australian legal practitioner and its’ legal director and was so at all relevant times.
- [3]The Respondent is by profession a commercial lawyer. He first consulted it in July 2018 whilst still in practice and subsequently instructed Waller in November 2018 to act for him in connection with an imminent family law dispute.
- [4]Waller acted for the Respondent for a time in the family law proceedings. I will refer to him as AB because privacy constraints in the federal family law jurisdiction in Australia prohibited publication[1] of the identity of parties and families.
Claim
- [5]Waller applies in the Tribunal’s minor civil dispute jurisdiction to recover $12,468.00 from AB as a minor debt for legal costs said to be owing under a Client Services Agreement for services rendered by it in the family law dispute.
Response
- [6]AB’s Response is that Waller’s claim be dismissed on the following basis.
- (a)The content of a Costs Disclosure Notice (on 31 July 2018)[2] formed part of the Agreement to engage the Applicant and the terms contained therein were incorporated by reference.
- (b)The amount sought to be recovered by Waller exceeds the maximum amount specified in the Agreement.
- (c)The amount that he paid to the Waller for invoices rendered exceeds the maximum amount specified in the Agreement.
- (d)A Waller Invoice dated 31 May 2019 refers to an outstanding disbursement that he previously paid to Waller.
- (e)Mr Waller told AB that he did not intend to recover the amounts alleged to be outstanding.
- (f)AB relied on that representation when settling the family law dispute with his former wife which resulted in him “receiving little to no cash.”
- (g)AB did so to his detriment because he would have fought for a more favourable settlement had he known he would be expected to have to pay the outstanding invoices.
- (a)
- [7]AB’s Response is somewhat broadened and clarified in submissions to which I will refer later. So is Waller’s claim. Though a Court of record,[3] this Tribunal is neither a Court of law[4] nor a Court of pleading. Claims and defences are often broadened in submissions to which regard must also be had in adjudicating disputes.
Jurisdiction
- [8]Though by section 12(1) and (4)(a) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (the QCAT Act) this Tribunal may adjudicate Waller’s claim in debt, the following statutory constraints apply.
- (a)AB is prevented from asking, in the alternative, for an order setting aside the Costs Agreement for unreasonableness; he must apply in a different division of this Tribunal if he wishes to do so.[5]
- (b)As the Adjudicator constituting the Tribunal, I have no power to make a declaration,[6] for example – a declaration that the Client Services Agreement with Waller is void.
- (c)Quantum, that is – the amount of the claim for legal costs invoiced by Waller, cannot be disputed by AB because the Tribunal is not empowered in minor civil disputes to assess the reasonableness or otherwise of a solicitor’s costs claimed in a minor civil dispute.[7]
- (d)AB may not file a counter application against Waller in this proceeding because the Tribunal’s Rules forbid it.[8]
- (e)Though a consumer of Wallers legal services at the time, AB cannot apply for relief against Waller under the Australian Consumer Law because a lawyer falls within the scope of the exclusion in the definition of “trader” in Schedule 3 of the QCAT Act, namely -
- (a)
A person that acts in the exercise of a discipline that is not ordinarily regarded as within the field of trade or commerce.”[9]
- [9]Central to resolving the dispute in this case is the meaning and effect of the costs provisions in Part 3.4, Divisions 1 to 7, of the Legal Profession Act 2007 (Qld) (the LPA), the main purposes of which Act are to provide for law practices to make disclosure to clients regarding legal costs;[10] to regulate the making of costs agreements relating to legal services;[11] and to regulate the billing of costs for legal services.[12]
- [10]I am required in the process to apply relevant statute law, common law, and the rules of equity,[13] to the facts in deciding the dispute but I note that the LPA is not an enabling Act for minor civil dispute purposes. In other words, though I must apply relevant provisions of the Act, the LPA does not confer jurisdiction and powers on the Tribunal in this minor civil dispute jurisdiction additional to those in the QCAT Act.
- [11]Section 13(1) of the QCAT Act requires me to make orders that I, as Adjudicator constituting the Tribunal, consider fair and equitable to the parties to resolve the dispute but, if I consider it appropriate, I may make an order dismissing the application.
- [12]In conjunction with the dismissal power in section 13(1), section 13(2)(a) of the Act provides[14] that, for purposes of subsection (1), I may only make the following final decisions to resolve the dispute for a claim to recover a debt or liquidated demand of money –
- (i)An order requiring a party to the proceeding to pay a stated amount to a stated person.
- (ii)An order that a stated amount is not due or owing by the applicant to a stated person or by any party to the proceeding to the applicant.
- (i)
Facts
- [13]I find the following relevant facts.
- [14]AB came to see Mr Waller about Family Court proceedings in general.[15] There were no proceedings on foot then[16] but they were imminent. Mr Waller’s file note of the same date[17] records that it was decided to start proceedings in the Family Court of Australia (then called the Federal Circuit Court) with an initiating Application and Financial Statement.
- [15]The next day, Waller sent AB a letter together with a Costs Disclosure Notice and Client Services Agreement and other documents by email for consideration together with a second letter also dated 31 July 2018 with a draft initiating Application and Financial Statement for completion.
- [16]The Disclosure Notice included the following clauses.[18]
- (a)Clause 1(b) stated that it “provides you with information about the legal services we will provide to you, the cost of those services and your rights.”
- (b)By reference to a Schedule, it estimated maximum prospective costs exclusive of GST at $10,000.00 in item 2 of it, and described the proposed scope of work in the first part of item 1 as being – “to provide you advice on and begin and conduct a Court Application in the Family Court for and (sic) final property orders to the end of a case assessment conference.”
- (a)
- [17]The scope of work referred to in the second part of item 1 of the Schedule in the Disclosure Notice would include:
Attending with you and others relevant to the matter; telephone attendances with you and others necessary and relevant to the scope of work; drafting, settling or reading financial documents, court documents, reports, submissions, outlines, letters and emails; preparing for and attending listed Court mentions; preparing for an (sic) attending a case assessment conference.
- [18]A case assessment conference is a type of directions hearing in the Family Court to identify issues and give directions on who is to do what, when.[19]
- [19]A Client Services Agreement dated 31 July 2018[20] signed on behalf of Waller accompanied the Disclosure Notice and provided as follows.
- (a)Clause 1 contained an acknowledgment of receipt of the Disclosure Notice and having read it and a statement that it contained information required by the LPA and that –
- (a)
The work you have instructed us to provide is the provision of legal services as required from time to time throughout the duration of this agreement.
- (b)Clause 2 was in terms amongst others that the document was an offer to enter into the Agreement for the provision of legal services, acceptance of which may occur in various ways.
- (c)Clause 3 set out the various charge out rates and Clause 4 provided for billing, interest charges and the contact person.
- (d)Clause 5 pertained to engagement of others and Clause 6 provided that the Agreement would be “ongoing” until terminated by either party and provided for various other matters.
- (e)Clause 7 concerned payment of fees on termination.
- (f)Clause 12 related to payment of money and Clause 13 related to what to do if a problem arose.
- [20]Insofar as concerned the work to be performed, the Client Services Agreement contained the following.
- (a)Clause 2(d) provided that the work the client had instructed be performed was “the provision of legal services as requested from time to time throughout the duration of this Agreement”.
- (b)Clause 2(e) provided that, throughout the duration of the Agreement, a separate Disclosure Notice “in accordance with the requirements of the Act” would be forwarded “upon the receipt of a new set (sic) of instructions”.
- (c)Clause 2(f) was in the following terms:
- (a)
The provision of further instructions to us to provide you with additional legal services may be confirmed by signing and returning to us any additional (sic) Disclosure Notices we send you.
- [21]At 3:04 PM on 31 July 2018, AB emailed Mr Waller asking that he and Ms Limerick of the firm hold off for the time being on further action due to an issue arising with the purchaser of his shares in a previous law firm that might make it difficult for him to fund legal proceedings in the next month or so.[21]
- [22]AB again conferred with Mr Waller on 19 November 2018 for further advice and said he wanted to give away law and do something completely different.
- [23]AB’s wife served him with an initiating application filed on 22 November 2018 together with an affidavit and financial statement,[22] at about which time he accepted Waller’s offer in the Client Services Agreement, which he signed and returned, and Waller commenced acting for AB in those proceedings.
- [24]Mr Waller said that the wife “jumped in first,” that the work to be done was “the same work, whether you’re the applicant or the respondent, there are mirror documents that are produced,”[23] and that “the strategy at the beginning in July to leave parenting to one side and focus on property changed, the work changed because the wife had started court proceedings.”[24]
- [25]Subsequently, Waller sent AB a second Disclosure Notice dated 21 March 2019[25] which differed in content from the first in the following material respects.
- [26]By reference to items 1 and 2 of Schedule in it, Waller disclosed estimated costs of $15,000.00 plus GST for the following further work to be performed:
(To) provide you advice on and prepare for and attend a Conciliation Conference on 20 May 2019, then attend before Judge Spelleken for mention and respond to (X’s)[26] Application in a Case filed 13 March 2019 and all other relevant work to the end of 20 May 2019.”
- [27]
- [28]What the other “relevant work” might be was not stated but the scope of works would, the second Disclosure Notice stated, include:
Attending with you and others necessary and relevant to the scope of work; telephone attendances with you and others necessary and relevant to the scope of work; drafting, settling, or reading financial documents, court documents, reports, submissions, outlines, letters, and emails; preparing for and attending a Conciliation Conference.
- [29]Like the first, the second Disclosure Notice stated that AB had the right to negotiate a Client Services Agreement with Waller, that the Law of Queensland would apply to “the proposed Agreement we have offered to enter into with you.”
- [30]Waller did not give AB the further Costs Agreement to which the Notice referred. No Agreement was proposed.
- [31]The sum of the costs estimates in the two Disclosure Notices from Waller was $27,500.00, being $11,000.00 including GST in the first and $16,500.00 including GST in the second.
- [32]
- [33]Mr Waller’s explanation for not including reference to Conciliation Conference and a cost estimate to that stage in the first Costs Disclosure Notice was that the proceedings commenced by the wife were children’s matters.
- [34]He said that “it wasn’t until later that orders were made to progress the property part of her application and there’s a great deal more work that has to be undertaken between starting and a conference assessment conference to - case assessment conference to conciliation conference, because that’s where disclosure is.”[29]
- [35]On 29 August 2021, AB informed Mr Waller that he could no longer afford Waller’s services[30] and represented himself in the family law proceedings after that.
- [36]Between November 2018 and August 2019, Waller billed AB a total of $37,057.83 by the following tax invoices[31] each prefaced “PROPERTY AND PARENTING”:
- (a)10766 dated 26 November 2018 for $1,798.38.
- (b)10783 dated 13 December 2018 for $2,244.00.
- (c)10828 dated 26 February 2019 for $10,047.45.
- (d)10851 dated 21 March 2019 for $2,255.00.
- (e)10900 dated 30 April 2019 for $5,445.00.
- (f)
- (g)10999 dated 30 August 2019 for $3,410.00.
- (a)
- [37]The invoices were tendered at the hearing on 15 November 2021 and are marked R1 as a bundle. Waller filed a Reconciliation of the Invoices and payments entitled Financial Summary 103195 Property and Parenting with the Tribunal on 13 June 2022 as directed at the second hearing on 6 June 2022.
- [38]Simple arithmetic confirms that:
- (a)Waller billed AB a total of $16,344.83 in the period to 21 March 2019, $5,344.83 over the cost estimate of $11,000.00 in the first Disclosure Notice before giving AB the second Disclosure Notice.
- (b)Waller billed AB a total of $20,713.00 between the date of giving AB the second Disclosure Notice on 21 March 2019 and 30 August 2019 which was the day after AB’s termination of the Client Services Agreement, $4,213.00 over the cost estimate of $16,500.00 including GST.
- (c)From inception of commencing to act for AB until the day after his termination of the Client Services Agreement, Waller billed AB $9,557.83 more than the GST inclusive sum of the first and second cost estimates combined.
- (d)AB paid Waller all but $12,468.00 of the total of $37,057.83 for fees and outlays invoiced between November 2018 and August 2019 as appears in Waller’s reconciliation of invoices.
- (a)
- [39]Waller requested payment of $5,500.00 on 18 April 2019 for purposes of obtaining a Family Report and AB paid this to Waller’s Trust account on 26 April 2019 but invoice number 103195 dated 31 May 2019 (above) referred to an outstanding $5,500.00 disbursement for a Consultant’s Family Report.
- [40]The inconsistency is explained by the fact that Waller applied AB’s payment of $5,500.00 in reduction of fees as appears from Waller’s Trust Account Statement dated 30 August 2019.[33]
- [41]Whether Waller misapplied the sum of $5,500.00 in trust for the consultant’s report is irrelevant to the outcome in this case because the overall arithmetic of the claim for a combination of fees and outlays is not disputed and it does appear from the client file[34] that the Consultant was paid $5,500.00 by a cheque drawn on Waller’s general account.
- [42]I find the following facts regarding AB’s professional status.
- [43]AB, previously an equity partner in a Brisbane law practice, moved to another firm before he first consulted Mr Waller on 30 July 2018.[35] He practised commercial law until January 2019 and thereafter worked in hospitality.[36] In his words he was, in January 2019, a non-practising, non-employed, solicitor but held a current practising certificate.[37]
- [44]As of 15 November 2021, AB was again practising law. Originally Mr Waller said that that AB was a sophisticated client for purposes of the LPA, thus exempting Waller from disclosure obligations under section 308, but he subsequently abandoned the submission despite the undisputed facts to which I have just referred.[38]
- [45]
Disputed Matters
- [46]Waller asserts that its Client Services Agreement was not void and is enforceable, that the second Costs Disclosure Notice was given in a timely manner and that Mr Waller never waived the right to recover outstanding legal costs.
Statute Law
Acts Interpretation Act 1954 (Qld)
- [47]Section 14A(1) of the Acts Interpretation Act 1954 (Qld) requires that in the interpretation of a provision of an Act the interpretation that will best achieve the purpose of the Act is to be preferred to any other interpretation.
- [48]Section 32C(a) and (b) provides that, in an Act, words in the singular include the plural and words in the plural include the singular.
The Legal Profession Act 2007 (Qld)
- [49]The LPA is a technically complex statute. I recite the matrix of relevant provisions comprehensively so they are understood in context and interaction.
- [50]Section 3 of the LPA states that the purpose of the legislation is to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally.[41]
- [51]A “costs agreement” is defined in section 300, Part 3.4, Division 1, of the LPA as meaning an agreement about the payment of legal costs. A “litigious matter” means one that involves, or is likely to involve, the issue of proceedings in a court or tribunal.
- [52]A “sophisticated client” means a client to whom, because of section 311(1)(c) or (d), disclosure under section 308 or 309(1) is not or was not required.[42]
- [53]Section 302 provides that this part (Part 3.4, Division 2) applies to a matter if the client first instructs the law practice in relation to the matter in this jurisdiction. By section 305 of the LPA, a client first instructs a law practice in relation to a matter in a particular jurisdiction if the law practice first receives instruction from or on behalf of the client in relation to the matter in that jurisdiction, whether in person or by post, telephone, fax, email or other form of communication.
- [54]Section 322 in Part 3.4, Division 5, of the LPA provides that a costs agreement may be made between a client and a law practice retained by the client;[43] must be written or evidenced in writing;[44] may consist of a written offer under subsection (4) that is accepted in writing or by other conduct;[45] (and which) amongst other things must clearly state - that it is an offer to enter into a costs agreement.[46]
- [55]Section 327 in Part 3.4, Division 5, of the LPA provides that a costs agreement that contravenes, or is entered into in contravention of, any provision of this division is void;[47] subject to this section and division 7, legal costs under a void agreement are recoverable as set out in section 319(1)(b) or (c);[48] however, a law practice is not entitled to recover, as set out in section 319(1)(b) or (c), any amount in excess of the amount the law practice would have been entitled to recover if the costs agreement had not been void and must repay any excess amount received.[49]
- [56]Section 308 in Part 3.4, Division 3, of the LPA prescribes the disclosure of costs to clients. In summary, a law practice must disclose the basis on which legal costs will be calculated including whether a scale of costs applies to any of the legal costs;[50] the client’s right to negotiate a costs agreement,[51] to receive a bill from the law practice,[52] to request an itemised bill after receipt of a lump sum bill,[53] and to be notified under section 315 of any substantial change to the matters disclosed under the section;[54] an estimate of the total legal costs if reasonably practicable, or, if not, a range of the estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs;[55] and details of billing intervals;[56] the rate of any interest charged on overdue legal costs and whether that is a stated or benchmark rate;[57] if the matter is litigious, the range of costs recoverable by the client if successful and payable by the client if unsuccessful;[58] the client’s right to progress reports under section 317;[59] the details of the legal practice contact person;[60] the following avenues open under the Act in the event of dispute – viz. costs assessment under division 7[61] and the setting aside of a costs agreement under section 328;[62] any time limits for those purposes;[63] that the law of this jurisdiction applies to legal costs in relation to the matter;[64] and information about the client’s right to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter[65] or to notify under a corresponding law and, within the time allowed by it, the law practice in writing that the client requires the corresponding provisions of it to apply to the matter.[66] (Note for purposes of s. 308(1)(l) the corresponding provisions of s. 303)
- [57]Section 308(5) provides that a law practice may disclose any or all of the details mentioned in subsection (1)(b)(i), (ii) and (iii), (g), (i), (j) and (l) in or to the effect of a form approved by the Chief Executive for the subsection and is deemed to have complied with the section in relation to the details disclosed in that event.
- [58]Nowhere in the provisions of the LPA is there a statement that a Costs Disclosure Notice is an offer to enter into a costs agreement.
- [59]Section 310 in Part 3.4, Division 5, of the LPA provides that disclosure under section 308 must be made in writing before, or as soon as practicable after, the law practice is retained in the matter;[67] disclosure likewise under section 309(1) is required where another law practice is retained;[68] and disclosure made to a person before the law practice is retained in a matter is taken to be disclosure to the client for sections 308 and 309.
- [60]Section 311(1)(c)(i) of the LPA provides that disclosure under section 308 or 309 is not required if the client is a law practice or an Australian legal practitioner.
- [61]Section 315 in Part 3.4, Division 3, of the LPA provides that 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. Section 326 provides that subject to Division 5 and Division 7, a costs agreement may be enforced in the same way as any other contract.
- [62]By section 316(1), a client need not pay legal costs if a law practice does not disclose to the client anything required by this division[69] to be disclosed.” Section 316(2) provides amongst other things that a law practice that does not disclose to a client anything required by this division to be disclosed may not maintain proceedings against the client for the recovery of legal costs unless the costs have been assessed have been assessed under division 7.[70] Upon such assessment, section 316(4) provides that 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. Section 316(7) provides that failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct of any Australian legal practitioner involved in the failure.
- [63]Section 319(1) in Part 3.4, Division 5, of the LPA provides that, subject to division 2,[71] legal costs are recoverable –
- (a)Under a costs agreement made under division 5 or the corresponding provisions of a corresponding law; or
- (b)If paragraph (a) does not apply – under the applicable scale of costs; or
- (c)If neither paragraph (a) nor (b) applies – according to the fair and reasonable value of the legal services provided.
- (a)
(Note for paragraph (c) – See section 341(2) for the criteria that are to be applied on a costs assessment to decide whether legal costs are fair and reasonable.)
Case Law
- [64]In Ashney v Pippa Colman & Associates Law Practice Pty Ltd [2022] QCAT 281 (Ashney) Mellifont J, President, declined to set aside a costs agreement but referred at [163] in passing to a detailed scope of works contained in the costs agreement in that case and at [174(b)] that the costs agreement clearly set out the nature of the representation and the scope of work it related to.
- [65]In McLaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305 (McLaren) Martin J, in setting aside a costs agreement, referred at [32] to the fiduciary position of a solicitor in the making of a costs agreement and to the decision in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 (Foreman), 435 – 436 in which Mahoney JA extracted the following propositions from authority.
- (a)The obligations to a client exist not merely in the carrying out of an agreement already made between a solicitor and client but also in respect of the making of it.
- (b)The content of such obligations, that is, what is necessary to be done in order to discharge them, varies with the circumstances of the particular case; and
- (c)Such obligations ordinarily, or at least frequently, involve: that the client because of independent advice or otherwise, be seen not to have entered into the agreement in reliance upon her relationship with or trust of the solicitor; that there be full and frank to the client of all information known to the solicitor which the client should know, and that if there be aspects of the contract in respect of which the solicitor may be in a position of advantage with respect to the client, then these matters be brought to the client’s attention so the client can decide whether or not to enter into the contract.
- (a)
- [66]Fraser JA in Connollys Lawyers Pty Ltd v David William Davis [2013] QCA 231 (Connollys) at [21] observed –
When considering the requirements of sections such as s 308 & s 315, it is appropriate to take account of the main purpose of such provisions which is outlined in the Legal Profession Act.
Section 299(a) provides that the main purposes include ‘to provide for law practices to make disclosures to clients regarding legal costs.
The main purposes of the Legal Profession Act include ‘to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally.[72]
- [67]In reference to the meaning of “disclosure” in section 308(1) of the LPA, Fraser JA, as he then was, said at that the section should not, in the context of the main purposes of the Act, be given an unduly narrow meaning,’ and that it is arguable that the obligation in section 315 of the LPA to disclose any substantial change to anything included in disclosure as soon as is reasonably practicable after becoming aware of the change is not satisfied by the delivery of invoices which take the total invoiced amounts above the estimated costs.
- [68]In Frost v Miller [2015] QSC 206 (Frost) the then Chief Justice at [48] said -
During the Second Reading debates, Mr Moorehead made clear reference to the consumer protection objectives of the framework governing costs under the LPA:
(T)he provisions on legal costs of this bill will provide greater protection. The important safeguards with respect to costs contained in the bill include stricter disclosure requirements, provision for the setting aside of unfair costs agreements, prohibition of contingency fees, capping of uplift fees, better billing practices and costs assessments under the rules of court.
The issue of regulation of legal costs is an important question not only to fair trade practices but of access to justice. The reality for many in our community is that the major barrier to accessing our courts of justice is the cost of legal representation. People who seek legal advice to vindicate their legal rights need the opportunity to be very clear about what it is they will end up paying for their legal representation. People need to make an informed consideration of their prospects when they instruct lawyers.[73]
And at [49] that -
The need for consumer protection emanates from the imbalance of power between a legal practitioner and client.[74] Furthermore, it promotes public confidence in the judicial system, and facilitates improved access to justice.
- [69]In Frost, the Court declared a conditional costs agreement void for contravening sections 323(3)(d)-(e) of the LPA. Though the agreement contained a statement that the client had been informed of the right to seek independent legal advice, it lacked the prescribed statement that the client had been advised of the right to seek independent legal advice before formation of the contract. The Chief Justice held that a void contract would, by definition, not be amenable to being set aside for unreasonableness because:
(I)t is deemed not to have existed ab initio and requires no election from the aggrieved party to terminate or avoid the contract.”[75]
- [70]As regards costs estimation required by the LPA, Justice D G Thomas, then QCAT President, in Setschnjak v Derek Geddes Pty Ltd [2017] QCAT 009 (Setschnjak) at [139] – [140] said the following
Where the law practice decides to provide the estimate broken down by reference to stages in the proceedings, then, it follows, that those stages, and the estimates provided with respect to each of those stages, should be referrable to the likely steps which will be taken in the particular matter. Otherwise, it becomes obvious that the practitioner has not taken the necessary steps to exercise judgment and to make an approximate calculation.
This allows the client to understand the scope of the obligation being accepted in the context of retaining the law practice and achieves the aim of the protection of the consumers of services of the legal profession which is a main purpose as described in section 3 LPA.
- [71]The parties referred to other cases which I will consider in addressing their submissions.
Legal Texts
- [72]Quick on Costs[76] (Quick) at 60.120 says that in order to stand as a binding agreement, a costs agreement must contain all the terms of the proposed contract[77] and, in a non-inclusive list of matters that should be included in a costs agreement, says that “an accurate description of the scope of work to be covered by the costs agreement is important” though “it is open to the legal practice and client to agree to a master contract governing all work to be undertaken on behalf of the client” as is “commonly seen where corporations engage firms as a part of their legal panel.”
- [73]Dal Pont, Law of Costs (LexisNexis, 5th ed 2021) (Dal Pont) at 3.4, citing English and Australian authority, states the following.
A prudent lawyer will, therefore, ensure that the terms of the costs agreement are sufficiently clear, so that the client may appreciate his or her cost exposure and, if he or she wishes, obtain outside advice as to the reasonableness of the agreement, before signing it.
- [74]In Regulatory Guide 9, albeit in reference to fixed fee agreements, the Legal Services Commission (Qld) summarises key principles concerning scoping of work to be performed, relevantly -
- 4.Lawyers are typically in a position of distinct advantage over their clients in negotiating costs agreements, fixed fee or otherwise, especially vulnerable clients and clients who are unfamiliar with the legal system and processes. Lawyers in these circumstances are far better placed than their clients to scope the legal services that may be required and to come to decide whether the proposed fee is fair and reasonable. A lawyer’s fiduciary duty to a client implies that the lawyer must not take unfair advantage of the client in these circumstances and must not prefer their own interests over their client’s interests.
- [75]Referring to an earlier footnote 3 in the Guide, the Commission notes that family law matters amongst other categories make up the vast majority of complaints at the Commission including costs complaints, that “retail clients” are “reliant on lawyers to fully and frankly explain their options, likely costs, technical terms, and unusual terminology in proposed costs agreements, and bill them fairly and reasonably.”[78]
Submissions
- [76]I disagree with some of the submissions of Waller and AB respectively. They are also incomplete. It is appropriate that I summarise, italicise for differentiation, and address, each submission in turn.
Waller’s Submissions
- [77]Waller’s submissions dated 8 February 2022 are as follows.
- (a)The Disclosure Notice and Client Services Agreement (the retainer documents) that AB received complied with Division 3, particularly s. 308 and s. 310, and Division 5 of the LPA.
- (a)
I accept that the Costs Disclosure Notice complied with sections 308 and 310 of the LPA in that amongst other things it identified with some degree of particularity the work to be performed. However, it is not in my view a “retainer document” because that is not what the LPA provides. Suggesting otherwise erroneously conflates disclosure with contract. I accept that disclosure does evidence the client’s instruction before contract along with other prerequisites. Whether the Client Services Agreement drafted by Waller complied with section 322 read with the statutory purpose in section 3 of the LPA applying section 14A(1) of the Acts Interpretation Act 1954 (Qld) is a core issue I discuss later.
- (b)AB’s only complaint in the Response[79] with respect to the retainer documents is that Waller seeks to include costs disclosure given from time to time as an essential term of the Client Agreement; for that submission to succeed, Waller would need to establish that the costs disclosure (when given) was incorporated into the Client Agreement.
That is one of AB’s complaints in submissions and the Response.
- (c)A plain reading of the retainer documents establishes that the terms of the Disclosure Notice are incorporated into the Client Services Agreement because the former discloses the nature of, and information about, the legal services to be provided pursuant to the terms of the latter, and there is no requirement that both be contained in a single written document.
The submission is partly incorrect. Though it is the case that a costs agreement may be evidenced in writing by reference to several documents, including for example an accompanying letter, referral in the costs agreement to antecedent costs disclosure does not, without more, incorporate the Disclosure Notice in a contractual sense. Though section 310 of the LPA states that disclosure must (my emphasis) precede contract, it does not follow that the terms of a Costs Disclosure Notice are automatically incorporated in a costs agreement.
- (d)Following the requirements of the LPA, Waller’s Client Services Agreement constituted an offer to provide legal services and, in considering whether to accept that offer, AB was (as required) provided with the Disclosure Notice stating the services to be provided, the costs of the services and AB’s rights.
I agree that the Client Services Agreement was expressly, in accordance with the requirements of section 322 of the LPA, Waller’s offer. The first Costs Disclosure Notice recorded what the prospective instructions of AB were if and when[80] the contract was formed by acceptance of the terms of the Client Services Agreement. It was not the offer.[81]
- (e)AB does not assert that he misunderstood, or required further or other explanation or clarification of, the legal services to be provided as contained in item 1 of the Schedule to the Disclosure Notice before he accepted the offer to enter into the Client Services Agreement.
The issue is not whether AB understood the legal services to be provided in terms of item 1 of the Disclosure Notice, rather it is whether Waller complied with statutory requirements of the LPA insofar as they relate to disclosure and costs agreements and what expressly or by implication a costs agreement must contain.
AB does not assert that the Client Services Agreement contravenes Division 5 of the LPA, and nor does it, or that the legal costs were unreasonable, or that it be set aside as unreasonable and nor has he applied for that.
Whether or not AB asserts that the Client Services contravenes Division 5, it is Waller that bears the onus of proving the contractual basis of the claim, that is – a costs agreement that it is not void.
- (f)The general, bland and unparticularised assertion of AB, a legal practitioner, that the retainer documents were vague, uncertain, or illusory, is delusional and lacks force in that he does not rely on any provision of the LPA in support.
There is no evidence upon which I could conclude that AB lacks legal capacity.
AB’s Submissions
- [78]AB’s submissions dated 27 June 2022 in response are as follows.
- (a)The provisions of the LPA governing legal costs agreements are “in addition to the fundamental precepts of Contract Law” and do not override common law prerequisites for formation of contract, including “capacity, certainty, consideration, etc.”
- (a)
I agree. Clear language would be required to indicate a contrary statutory intention. The provisions of the LPA do not displace the essential common law elements of contract.
- (b)
A retainer is simply a contract for professional services in return for remuneration. It is therefore governed by the ordinary principles of the law of contract subject to any special terms agreed by the parties or imposed by statute or otherwise by law.
That is so, subject to LPA requirements. I will refer to the cases as Baker and Whitton respectively.
- (c)A contract otherwise void or voidable at law is not enforceable merely because it complies with Division 5 of the LPA.
I do not understand the submission. A contract void at common law for uncertainty is void for all purposes. It simply does not exist.
- (d)The provisions of the LPA do not dilute the essential prerequisites for formation of a contract at common law.
That is so.
- (e)Interpreting the provisions of Division 5 in a way that dilutes the common law principles of the law of contract would be inconsistent with the fundamental purposes of the LPA to provide regulation of the Legal Profession.[84]
That is so.
- (f)
That is so. Nowhere in the LPA do I find a provision that condones non-compliance with LPA prescription in Part 3.4 of the Act and elsewhere. Strict compliance with the statutory requirements of the LPA is required. Albeit concerning a conditional costs agreement which the Court held was void, see the approach in Frost at paragraphs [56] to [60]; [63] to [69]; [70]; [82].
- (g)Waller’s claim should be dismissed because the Client Services Agreement neither stated the “particular services” to be supplied, nor the total cost thereof, and was therefore void for uncertainty.
The submission is partly incorrect insofar as it refers to total cost. Unless a costs agreement is a fixed price or a lump sum costs agreement, the LPA only requires pre-contractual disclosure of the solicitor’s estimate or range of estimates of the likely cost of the work to be performed, to be updated from time to time as and when circumstances and estimates may change. Whether the costs agreement is void for uncertainty I discuss later.
- (h)In the alternative, if the Disclosure Notice(s) and the Client Services Agreement are to be read together such as to remedy the uncertainty then the claim must still be dismissed because the fees billed for the services exceeded the limits referred to in the former, as also did the legal costs paid by AB.
The submission begs the question – did the Client Services Agreement cover the services referred to in the second Disclosure Notice as well as the first in the way required by the provisions of the LPA and the costs agreement? I discuss that later.
Waller’s Reply Submissions
- [79]Waller’s submissions dated 17 July 2022 in reply are as follows.
- (a)As regards AB’ complaint that legal fees charged exceed the sum of estimates in the two Disclosure Notices, section 328(1)(c) of the LPA indicates that non-disclosure might demonstrate the costs agreement was unfair, but the Act also permits consideration amongst other things of the of the “circumstances and conduct of the parties before and when the agreement was made.”
- (a)
Reference to section 328(1)(c) is erroneous. The criteria to be considered with respect to unfairness are those referred to in 328(2) of the LPA.
- (b)The circumstances in this case are that AB was a legal practitioner at the time, accustomed to how lawyers charge, and paid almost all of Waller’s Tax Invoices without complaint. See the decision of Byrne SJA as he then was in Donald Edward Barclay & Ors v McMahon Clarke (A firm) [2014] QSC 20.
I do not read Donald Edward Barclay & Ors v McMahon Clarke (A firm) (Barclay) as authority for the proposition that legal practitioner status of a client absolves a solicitor from the obligation to comply with all applicable provisions of the LPA and the duty of the utmost good faith to the client. The issue in that case was the sufficiency of costs disclosure. Byrne SJA, as he then was, held at [29] – [30] that an omission to fully comply with the statutory prescription for costs disclosure did not render a costs agreement unfair because it gave the clients a “fair understanding of the costs agreement, that they must have understood its operation, and that they made a free choice to enter into it.” There is in the present case no evidence that AB had family law knowledge, expertise, or experience. That, I infer, is why as a consumer of legal services he went to see Mr Waller. That AB paid most of Waller’s invoices without complaint is irrelevant to the issue of whether he is liable for the unpaid balance of Waller’s invoices.
- (c)By section 327, Waller’s costs agreement is only void if it contravenes, or is entered into in contravention of, any provisions of Division 5 of the LPA. AB does not particularise any grounds for, or assert, that.
AB did submit that an agreement that is void from the outset for want of an essential term, that is – an ascertainable scope of works, is not amenable to being set aside because it does not exist at all,[87] relying on Whitlock and Frost. However, the onus lies with Waller to prove a compliant contract for legal services.
- (d)Rather, in relying on Legal Services Commissioner v Baker (No 2) [2006] 2 Qd R 249, AB accepts that a retainer is a contract for professional services in return for remuneration and therefore governed by the ordinary principles of the law of contract.
AB did refer to Baker in support of the submission that the LPA does not displace contractual essentials under common law, implicitly if not expressly - that both the Act and common law principles of contract apply to costs agreements. That is so. Reference in Baker to a retainer is consistent with the language in section 310(1) of the LPA concerning the retainer of a legal practice by entering into a costs agreement.
- (e)However, AB relies on Mango Boulevard Pty Ltd v Whitton as authority (Waller says) for the proposition that a retainer is not a costs agreement; it is something different.
I did not understand AB to be saying that a retainer is not a costs agreement. Even if described as a retainer, the real issue is whether Waller’s costs agreement is void and whether a compliant costs agreement existed at all for the scope of works described in the second Disclosure Notice, which I discuss later. Whitton was a case concerning a costs agreement between solicitors for clients and Counsel, the validity of which was challenged by parties ordered to pay them.
- (f)The workings and interplay between Division 3 and 5 of the LPA maps the overview of the interaction between a client and a law practice, as has occurred in this case, to be –
- By section 322, a single costs agreement in writing consisting of a written offer clearly stating that it is an offer to enter into a costs agreement, that the offer can be accepted in writing or by other conduct and the type of conduct that will constitute acceptance.
- A Costs Disclosure Statement complying with section 308 of the LPA and specifying the scope of work that is to be provided to the client at the time of delivery of the costs agreement, exhibit A2 in this case.
- By section 315, any further Costs Disclosure Statements to be provided to the client upon any substantial change to the original disclosure as soon as the law practice becomes aware of the change, exhibit A4 in this case.
I disagree with the submission in the following respects.
First, though it may often be the case, there is nothing in Divisions 3 and 5 or anywhere else in the LPA that requires a single costs agreement in writing between a solicitor and a client. Reference in section 322(1) to “a costs agreement” is to be interpreted in accordance with section 32C of the Acts Interpretation Act 1954 (Qld)[88] - words in the singular include the plural. There may be more than one costs agreement depending on circumstances. A subsequent costs agreement in writing may be required where a client who originally retained a solicitor for a limited purpose, for example – to act for the client in only one stage of proceedings, subsequently asks the solicitor to undertake additional legal work not within the original scope of work agreed.
Second, contrary to Waller’s submission, notice pursuant to section 315 of the LPA is not in terms that would require a further costs disclosure statement pursuant to section 308. Conflating the two is in my opinion erroneous because section 315 requires, and only requires, that a law practice must disclose to a client any substantial change to anything included in a disclosure already made[89] under Division 3 as soon as is reasonably practicable after the law practice becomes aware of that change. Statutory notices pursuant to section 308 on the one hand and section 315 on the other hand are fundamentally different species, in character and effect.
- (g)Waller’s costs agreement cannot be declared void unless it contravenes Division 5 of the LPA, which is not the case.
Whether Waller’s costs agreement is void for contravention of Division 5 of the LPA is one of the issues to be decided.
- (h)AB has not provided any authority for the proposition that Division 5 must operate in addition to the common law rules surrounding formation of contracts.
AB did refer to the High Court decision in Whitlock v Brew[90] (Whitlock) which concerned a contract to grant a lease to a petroleum product supplier “upon such reasonable terms as govern such a lease.” The plurality (Taylor, Menzies and Owen JJ in joint judgment, and Kitto J) ruled that the contract was void ab initio for want of an essential term because the quoted phrase was neither certain nor divisible.[91]
AB said that the Waller costs agreement was void for uncertainty because “… it doesn’t state what the solicitor will do, what the costs will be and, you know, the salient details.”[92] However, instruction given by AB from time to time in the future would in my opinion be ascertainable in that event, so the costs agreement was not void for uncertainty at common law in the Whitlock sense. Rather, the issue is whether the absence of “salient terms” or specificity in scope of works rendered Waller’s costs agreement void for contravention of Division 5 of the LPA.
- (i)But even if it is declared void, Waller’s costs under a void costs agreement remain recoverable under section 319(1)(c) of the LPA.
Section 319(1)(c) envisages recovery of costs according to the fair and reasonable value of the legal services provided where there is no costs agreement and no applicable scale of costs. Costs are also recoverable under section 319(1)(b) where there is an applicable scale of costs. Section 314(2) sets out the criteria that are to be applied on a costs assessment to decide whether legal costs are fair and reasonable. Until assessment, there can be no recovery. See Whitton (supra) in which Rangiah J at [134] to [135] said –
Whether the LPA (NSW) or the LPA (Qld) applies, Mr Douglas’ costs agreement in respect of the Review Proceeding is void for non-compliance with ss 324(4) or 324(3)[93] respectively. The consequence is that he is entitled to, and is only entitled to, recover the fair and reasonable value of his legal services. …….. It follows, that under the indemnity principle, the applicants’ liability to pay the respondents Mr Douglas’ costs under the costs order of 2 December 2015 is confined to the fair and reasonable value of the services to be provided. I will make a declaration to that effect.
Discussion/ Further findings
Sophisticated Client or not?
- [80]As I earlier noted, at the second hearing Mr Waller withdrew the original submission that AB was a sophisticated client, that is - in the sense referred to in the definition in Schedule 2 and section 300 in reference to section 311(1)((c)(i). I am not convinced that AB was legally unsophisticated. However, the issue abates for the following reasons.
- [81]Firstly, parties are bound by the way they run their cases, especially where they are, or are represented by, solicitors. I am reminded of the observations of Senior Member Stilgoe OAM (as she then was) in Till and Till ATF The Till Family Trust t/as Mt Cotton Truck Hire v Rose [2015] QCATA 173[94] (Till)[95] in referring at [6] to the High Court decision in University of Wollongong v Metwally (No. 2) [1985] HCA 28 (Metwally) at p 71 that an appeal tribunal starts from the proposition that –
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case has been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
- [82]Secondly, in acting for AB, Waller conducted itself as though he was an unsophisticated client by giving him several Costs Disclosure Notices which contained differing scopes of work, estimates, and representations, on which AB relied. An equitable estoppel of the kind considered by the High Court in Walton’s Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 therefore lies against Waller departing from the assumption that AB was an unsophisticated client and that cost estimates would not be exceeded unless updated in a timely way.
- [83]Thirdly, the Client Services Agreement itself provided that separate Disclosure Notices “throughout the duration” of the Agreement would issue upon receipt of new instruction[96] and section 310(3) of the LPA says that disclosure to a person (AB in this case) before the law practice is retained is taken to be disclosure to the client for sections 308 and 309.[97] There is no prohibition in section 311(1) of the LPA against a solicitor giving a Costs Disclosure Notice to a sophisticated client and an Australian legal practitioner who becomes a client of a specialist family law practice is in my opinion no less a consumer of legal services on that account. The consumer protection imperative in the LPA is not, and cannot be, displaced.
Is the Client Services Agreement Void?
- [84]There is no express permission or prohibition anywhere in the LPA concerning a do and charge retainer of the Waller type where the scope of work is determined only by reference to instructions given by a client from time to time, section 322(4) saying nothing of what a costs agreement must contain in that regard. However, sections 322 and 327 of the LPA must be considered in their statutory context[98] which is as follows.
- [85]The consumer protection features in Divisions 3 and 5 of Part 3.4 of the LPA considered with the consumer protection purpose in section 3 of the Act applying the interpretative imperative in section 14A(1) of the Acts Interpretation Act 1954 (Qld) in my opinion require that a costs disclosure notice as well as[99] a costs agreement each state with some particularity the scope of work by reference to each and all reasonably foreseeable stages of the work to be undertaken. Nebulous generality will not suffice because a client in that event has no means of knowing what prospectively the legal work will likely involve overall and, by reference to costs disclosure before contract, the likely cost within a range estimated by the solicitor. The solicitor, on the other hand, has specialist qualifications, skills, and expertise, and the correlative professional duty to ascertain and explain these things to a client. In my opinion, the legislature cannot reasonably be understood to have envisaged, let alone sanctioned, a general do and charge costs agreement lacking particularity when the definition of a costs agreement and what it must contain is considered in the context of:
- (a)stringent costs disclosure obligations and the consumer protection purpose set out in the LPA summarised earlier in these reasons.
- (b)
- (c)a solicitor’s fiduciary duty of the utmost good faith arising in the costs disclosure stage[101] and enduring from formation of a costs agreement until termination of it.
- (a)
- [86]Only by spelling out the scope of works comprehensively and with some particularity in a proposed costs agreement will a solicitor be obliged in antecedent costs disclosure to ensure the client is informed of the estimable costs or costs range for the gamut of prospective services so the client may make an informed decision on whether to retain the solicitor, having regard to affordability and budgetary criteria and the importance of not running out of money part way through. Informed decision making is also important in circumstances where, but for incomplete piecemeal disclosure, money spent on substantial legal costs might otherwise have been applied in early settlement of a family law dispute.
- [87]I am supported in my analysis and conclusions by the statements of principle in the excerpts quoted earlier from the decisions in Ashney, McLaren, Frost, and Setschnjak, the authors Quick and Dal Pont on costs, and the Legal Services Commission in its Regulatory Guide 9. AB was a retail client of Waller in the sense described in that Guide. Waller’s costs agreement with AB was not a master contract of the type referred to by Quick, commonly used by corporations engaging firms as part of their legal panel. Rather - it was a contract with a private individual with no prior experience in the family law jurisdiction and no knowledge of the stages and costs in litigating there, whether as applicant or respondent. Therein lay a material power imbalance between Waller as solicitor and AB as client, of the type considered in Frost and McLaren.
- [88]Waller’s Client Services Agreement with AB is in my opinion therefore void for contravention of Part 3.4, Division 7, of the LPA. Though I have no power to make a declaration in those terms, section 60(1) of the QCAT Act provides that the declaration power is in addition[102] to an order the Tribunal could make. I may order that the amount claimed by Waller is not due or owing or that the application for minor debt is dismissed. The result is the same. Though in entirely different circumstances, see The Chief Executive Officer, Office of Fair Trading, Department of Justice and Attorney General v Wyeth Management Pty Ltd & Ors [2021] QCAT 38 at [31] where the Tribunal avoided making a formal declaration of liability that the Agents Financial Administration Act 2014 (Qld) otherwise apparently required but found liability neverthless.
Was there a costs agreement for the scope of works stated in the second Costs Disclosure Notice?
- [89]In case I am wrong in concluding that the Waller costs agreement is void, I must next decide whether there a costs agreement in writing or evidenced in writing in the sense required by section 322 of the LPA for purposes of the new scope of works referred to in the second Costs Disclosure Notice came into existence.
- [90]Waller gave the second Costs Disclosure Notice pursuant to section 308 of the LPA in accordance with its’ requirements, in addition to the first Notice, not in replacement or update of it.[103] The second Notice was not, and did not purport to be, a notice to AB pursuant to section 315 of the LPA of a substantial change to anything included in the first Notice. It was not, and could not be, incorporated in the pre-existing Client Services Agreement because, insofar as it made disclosure of costs in respect of a different scope or new phase of work not identified at formation of the Client Services Agreement with Waller, section 310 of the LPA[104] required that such disclosure be made in writing before[105] entering into a costs agreement in respect of the new stage, or as soon as practicable thereafter.
- [91]Therefore, Waller had to present a new costs agreement in writing for AB’s acceptance. Otherwise, none would exist for the proposed scope of works. I am supported in that conclusion by the fact that, as required by section 308(1)(b)(i) of the LPA, the second Costs Disclosure Notice stated (as it had to) that AB had the right to negotiate a costs agreement, that is - a new costs agreement in respect of the new scope of works, albeit in another stage of the same litigation. Waller is, as I said earlier, bound by its conduct in giving AB the second Costs Disclosure Notice.
- [92]In summary, the statutory consequence is that Waller was obliged by the combination of sections 308 and 322 to offer AB a new costs agreement for the next stage of the work. It didn’t. Therefore, no costs agreement for the next stage came into existence as required, so Waller’s claim, if any, lies only in quantum meruit pursuant to section 319(1)(b) of the LPA earlier recited in these reasons, subject to assessment. Until assessed, Waller has no cause of action in respect of any of the outstanding invoices for work done within the scope of works referred to in the second Disclosure Notice and therefore nothing is owing.
Did Waller’s costs materially exceed the sum of the two costs estimates without notice of material change, with what consequence?
- [93]In case I am wrong in concluding that there was no costs agreement for the scope of works stated in the second Costs Disclosure Notice when one was required, I must next decide whether Waller’s claim should be dismissed on account of the fact that Waller billed AB $9,557.83 more than the GST inclusive sum of the costs estimates in the first and second Costs Disclosure Notices, $5,344.83 over the first estimate and $4,213.00 over the second.
- [94]The excess of costs billed over costs estimated in the two Costs Disclosure Notices was material and substantial. Waller did not give AB notice of substantial costs estimate change. I can see no good reason to allow a claim for unpaid legal costs in that circumstance. Doing so would condone Waller’s breach of the statutory duty to update costs estimates in a timely way under section 315 of the LPA, frustrating the consumer protection purpose in the LPA and rewarding Waller’s breach of the fiduciary duty in delivering the professional services for which it was retained. See King v Queensland Law Society [2012] QCAT 409 at [15] and Lord Diplock, The Lawyer and Justice (Sweet and Maxwell, 1978), 274, quoted in Frost[106] and earlier footnoted in these reasons. The invoices themselves did not serve as notice of substantial change in costs estimates required by section 315. See Fraser JA’s observation in Connollys to which I referred earlier. Section 316(2) of the LPA applies in any event. Proceedings are not maintainable until costs assessment.
Was the second Cost Disclosure Notice given in a timely way?
- [95]In case I am wrong in concluding that Waller’s claim should be dismissed because Waller billed AB $9,557.83 more than the sum of the costs estimates in the first and second Costs Disclosure Notices without costs estimate updates, I must next decide whether the second Costs Disclosure Notice was given in a timely way.
- [96]Upon it being established that AB did not receive the second Costs Disclosure Notice dated 21 March 2019 until after being billed $5,344.83 over the $11,000.00 cost estimate in the first, the onus shifted to Waller to explain the reason for the delay. Mr Waller said that the second Notice was given “at the first available opportunity,”[107] that “going over by $4,000.00 on an ongoing file is, in my submission, an acceptable estimate,”[108] and that “files move, they move quickly.”[109] However, the first opportunity presented itself some four months earlier when AB’s wife served him with proceedings in late November 2018. The itemisation in the run of Waller’s invoices from the invoice dated 13 December 2018 onward proves Waller’s awareness of the additional scope of work then.
- [97]Rule 81(2) of the Tribunal’s Rules requires parties to a proceeding for a minor debt claim to make all relevant documents available to the hearing. Though relevant, Waller did not produce its work in progress printouts for the client file[110] at the hearing or at all. In content, they were also relevant to the timeliness or otherwise of the second Costs Disclosure Notice, in itemising the dates and accumulating amounts of related work in progress. Overall, I am not satisfied on the balance of probabilities that the late delivery of the second Costs Disclosure Notice has been credibly explained and justified. The fact that AB continued for a time to instruct Waller after receipt of the second Disclosure Notice and further invoices, some of which he paid, cannot in my opinion absolve Waller of the duty of giving timely disclosure of costs estimates and notice of material change in compliance with the LPA and Waller’s breach of that duty. The second Costs Disclosure Notice was not given in a timely way.
Did Waller waive the right to claim outstanding costs and is it estopped by promise or conduct from recovery?
- [98]In case I am wrong in each and all my findings to this point concerning liability, I must consider whether Waller, by Mr Waller, said it did not intend to recover outstanding costs and is estopped from recovering them on that account as alleged by AB.
- [99]AB bore the onus of proving the representation and waiver, his reliance on it, and the alleged subsequent detriment. There is no solicitor’s file note on the client file in terms that corroborate AB’s assertion of cost waiver. Waller’s subsequent handing over recovery of the alleged debt to a debt collection agent is inconsistent with the waiver assertion.
- [100]AB did not produce or rely upon a file note of his own or confirmatory correspondence to corroborate his waiver assertion, nor did he produce any documents to prove the terms of the settlement agreement reached with his wife and that it was on less favourable terms than would otherwise have been the case had the cost waiver not been promised.
- [101]AB’s waiver and estoppel defence to Waller’s claim has therefore not have been made out on the balance of probabilities.
Guidance
- [102]Therapeutic jurisprudence suggests that I should not miss this opportunity for guidance on prudent practice in respect of costs agreements, costs disclosure, costs estimation, and costs updating, in litigious matters.
- [103]Though circumstances differ and each case depends on its own facts and merits, problems such as those arising in this case may be avoided if a solicitor -
- (a)ascertains all reasonably foreseeable stages of the entire litigation process at the first conference.
- (b)explains them at the first conference in a way that ensures a client’s understanding of broadly what the services could ultimately cost the client, in addition to the client’s possible costs liability to others.
- (c)estimates at the outset the foreseeable costs of performing the work for each stage.
- (d)gives the client comprehensive disclosure in writing pursuant to section 308 before contract.
- (e)refers specifically to the scope of works by reference comprehensively to each of the stages in both[111] the Costs Disclosure Notice and the proposed Client Services Agreement, thus satisfying the LPA consumer protection purpose.
- (f)avoids conflating costs disclosure with contract.
- (g)avoids conflating costs disclosure with costs estimate updates.
- (h)is vigilant in reviewing and monitoring the value of work in progress against prior cost estimates to ensure prompt and timely notification of substantial costs increases in the costs of any stage, as required by section 315 of the LPA.
- (a)
Order/s
- [104]My several findings in the alternative on liability present a dilemma.
- [105]If Waller’s application to this Tribunal is neither one for a minor debt nor one for a liquidated demand of money, then it must be dismissed for want of jurisdiction.
- [106]On the other hand, if the claim is one for a minor debt or liquidated demand of money but fails for non-compliance with LPA requirements, then it is within the Tribunal’s minor civil dispute jurisdiction, but the money is not owed.
- [107]In the circumstances, dismissal is appropriate to cover all contingencies.
- [108]I therefore order that the Application for minor civil dispute – minor debt claim is dismissed.
Footnotes
[1]As to privacy principles, see the unrelated decision in AB v CD [2020] QCAT 205 at paragraphs [2] to [4] and s. 121 of the Family Law Act 1975.
[2]See paragraph [2] of the Response.
[3]QCAT Act, s. 164(1).
[4]See AB v CD [2020] QCAT 295 at [38] to [75].
[5]Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), s. 15 and Practice Direction 2 of 2015; Legal Profession Act 2007, s. 328 and definition of tribunal in Schedule 2; see also the principles and authorities summarised by Daubney J (then QCAT President) in Maddock v IALPG Pty Ltd [2020] QCAT 475 at [4] – [5].
[6]Ibid, s. 60(5).
[7]AB referred on the record to a lesser reasonable figure he was prepared to pay to resolve the dispute which Waller declined to accept.
[8]Queensland Civil and Administrative Tribunal Rules 2009 (Qld), r. 48(3).
[9]See Marino Law v VC [2021] QCAT 348, at [57]; Amos v Walter [2020] QCAT 360, at [100].
[10]Legal Profession Act 2007, s. 299(a).
[11]Ibid, s. 299(b).
[12]Ibid, s. 299(c).
[13]See Service v Guerrera [2022] QCATA 87 at [48].
[14]Subject to monetary limits of jurisdiction referred to in s. 13(3) of the QCAT Act.
[15]Transcript 6 June 2022, T1-34 line 10.
[16]Ibid, T1-35, line 1.
[17]Exhibit A5 filed 6 June 2022.
[18]Exhibit A2 filed 6 June 2022.
[19]Ibid, T1-32 lines 29 to 46.
[20]Exhibit A3 filed 6 June 2022.
[21]Exhibit A7 filed 6 June 2022.
[22]Ibid, T1-34 lines 14 to 16 read with T1-35 line 30.
[23]Transcript 6 June 2022, T1-35 lines 22 to 35.
[24]Ibid, T1-38 lines 16 to 24.
[25]Exhibit A4 filed 6 June 2022.
[26]I have omitted AB’s wife’s name.
[27]Transcript 6 June 2022, T1-32 lines 30 to 33.
[28]Ibid, T1-28 lines 17 to 20.
[29]Ibid, T1-33 lines 18 to 32 and see also lines 33 to 47.
[30]File Note tendered and marked A1.
[31]Exhibit R1 tendered at hearing on 15 November 20221.
[32]Wrongly identified as 103195 in paragraph 8 of the Response.
[33]Part of Exhibit R1.
[34]A copy of which the Tribunal as a Court of record necessarily retained.
[35]Exhibit A5 filed 6 June 2022.
[36]Transcript 6 June 2022, T1-51 lines 14 to 24.
[37]Transcript 15 November 2021, T1-15 lines 20 to 39 with reference to T1-3 lines14 to 15.
[38]Transcript 6 June 2022, T1-44 lines 18 to 28.
[39]Ibid, T1-44 lines 26 to 42.
[40]Ibid, T1-45 lines 8 to 30.
[41]LPA, s. 3(a).
[42]Ultimately, Waller withdrew its assertion that AB was a sophisticated client so it is unnecessary to recite the related provisions.
[43]LPA, s. 322(1)(a).
[44]Ibid, s. 322(2).
[45]Ibid, s. 322(3).
[46]Ibid, s. 322(4).
[47]Ibid, s. 327(1).
[48]Ibid, s. 327(2).
[49]Ibid, s. 327(3).
[50]LPA, s. 308(1)(a).
[51]Ibid, s. 308(1)(b)(i).
[52]Ibid, s. 308(1)(b)(ii).
[53]Ibid, s. 308(1)(b)(iii).
[54]Ibid, s. 308(1)(b)(iv).
[55]Ibid, s. 308(1)(c).
[56]Ibid. s. 308(1)(d).
[57]Ibid, s. 308(1)(e).
[58]Ibid, s. 308(1)(f)(i) and (ii).
[59]Ibid, s. 308(1)(g).
[60]Ibid, s. 308(1)h).
[61]Ibid, s. 308(1)(i)(i).
[62]Ibid, s. 308(1)(i)(ii).
[63]Ibid, s. 308(1)(j).
[64]Ibid, s. 308(1)(k).
[65]Ibid, s. 308(1)(l)(i).
[66]Ibid, s. 308(1)(l)(ii).
[67]LPA, s. 310(1).
[68]Ibid, s. 310(2) - though not relevant in this case.
[69]Division 3 of Part 3.4 of the LPA.
[70]Division 7 regulates costs assessment procedures.
[71]Application of Part 3.4 of the LPA.
[72]Legal Profession Act 2007 (Qld) s. 3(a).
[73]Queensland, Parliamentary Debates, Legislative Assembly, 22 May 2007, 1576 (Evan Moorehead).
[74]Queensland, Parliamentary Debates, Legislative Assembly, 22 May 2007, 1573 (Steve Wettenhall).
[75]Ibid, at paragraph [80].
[76]Thomson Reuters Westlaw AU.
[77]Heppingstone v Stewart (1910) 12 CLR 126; [1910] HCA 59.
[78]Council of the Queensland Law Society v Roche [2003] QCA 469; Re Law Society of the Australian Capital Territory and Roche (2002) 171 FLR 138; Law Society of New South Wales v Foreman (1994) 34 NSWLR 408; and Veghelyi v The Law Society of New South Wales (unreported, 405y of 1991, 6 October 1995).
[79]At paragraph 5.
[80]My emphasis.
[81]Ibid.
[82]Baker v Legal Services Commissioner [2006] QCA 145.
[83]Mango Boulevard Pty Ltd v Whitton [2019] FCA 490.
[84]Per s. 3 of the Legal Profession Act 2007 (Qld).
[85]See King v Queensland Law Society [2012] QCAT 409, at [15].
[86]Lord Diplock, The Lawyer and Justice (Sweet and Maxwell, 1978), 274, quoted in Frost v Miller [2015] QSC 206.
[87]Transcript 15 November 2021, T1-11 lines 31 to 38.
[88]Supra.
[89]My emphasis.
[90]Whitlock v Brew [1968] HCA 71; (1968) 118 CLR 445.
[91]My vernacular, not the phraseology of their Honours.
[92]Transcript 15 November 2021, T1-11 lines 30 to 38.
[93]Of the LPA (Qld).
[94]Subsequently confirmed by the Queensland Court of Appeal.
[95]Confirmed by the Court of Appeal in Till & Anor v Rose [2016] QCA 127.
[96]See my fact findings earlier.
[97]My emphasis.
[98]See X v Australian Prudential Regulation Authority (2007) 226 CLR 630, [116].
[99]My emphasis.
[100]Australian Solicitors Conduct Rules 1 June 2012, Rules 4.1.2 – honesty and courtesy in all dealings, 4.1.5 compliance with the rules and the law, and 7.1 – provision of clear and timely advice to assist a client to make informed choices about action to be taken consistent with engagement terms.
[101]See McLaren and Frost considered earlier.
[102]My emphasis.
[103]Transcript 6 June 2022, T1-48 lines 29 to 34.
[104]Supra.
[105]My emphasis.
[106]Supra.
[107]Transcript 6 June 2022, T1-30 lines 29 to 32.
[108]Ibid, T1-31 lines 12 to 26.
[109]Ibid, T1-28 lines 14 to 39 and line 40 in particular.
[110]Ibid, T1-46, lines 1 to 6.
[111]Again, my emphasis.