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- Stevens v Hopgood Ganim Lawyers[2024] QCAT 584
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Stevens v Hopgood Ganim Lawyers[2024] QCAT 584
Stevens v Hopgood Ganim Lawyers[2024] QCAT 584
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
CITATION: | Stevens v Hopgood Ganim Lawyers [2024] QCAT 584 |
PARTIES: | Karyn Stevens (applicant) v hopgood Ganim lawyers (A Firm) (respondent) |
APPLICATION NO: | OCL040-23 |
MATTER TYPE: | Other civil dispute matters |
DELIVERED ON: | 13 December 2024 |
HEARING DATE: | 19 November 2024 |
HEARD AT: | Brisbane |
DECISION OF: | Judicial Member Stilgoe OAM |
ORDERS: |
|
CATCHWORDS: | PROFESSIONS AND TRADES – LAWYERS – REMUNERATION – COSTS AGREEMENTS – OTHER MATTERS – where the applicant was a client of the respondent law firm – where the applicant entered into a costs agreement with the respondent – where the applicant applied to the District Court for an assessment of her legal costs – where the applicant applied to the Tribunal to have the respondent’s costs agreement set aside pursuant to s328(1) of the Legal Profession Act 2007 (Qld) – whether the applicant is estopped from bringing the application – whether the cost agreement should be set aside Legal Profession Act 2007 s 3, s 32, s 299, s 328 Uniform Civil Procedure Rules 1999 r 743G Bell Lawyers Pty Ltd v Pentelow (2019) 269 CLR 333 Hartnett Lawyers v Chapman [2017] QDC 110 In re Lynch & Co Bill of Costs [2000] QSC 3 McLaren v Wiltshire Lawyers Pty Ltd (2019) 3 QR 158 Paroz v Clifford Gouldson Lawyers [2012] QDC 121 Port of Melbourne Authority v Anshun Pty Ltd (1981)147 CLR 589 Stevens v HopgoodGanim Lawyers (a Firm) [2023] QDC 96 Stevens v HopgoodGanim Lawyers (A Firm) [2024] QCA 18 UBS v Tyne (2018) 265 CLR 77 Weiss v Barker Gosling (No. 2) (1993) 118 FLR 218. |
APPEARANCES & REPRESENTATION: | |
Applicant: | BWJ Kidson, instructed by Cardew Salmon |
Respondent: | JA Hughes instructed by Hopgood Ganim Lawyers |
REASONS FOR DECISION
- [1]At the end of long and complicated family court proceedings, Karyn Stevens had paid Hopgood Ganim Lawyers (HGL) around $277,000, pursuant to a costs agreement she signed in 2019. She thought that amount was excessive.
- [2]
- [3]It is not disputed that HGL had a fiduciary obligation to Ms Stevens as outlined and defined in Re Stuart; Ex parte Cathcart[3]. Ms Stevens advances that her claim is that HGL has not acted in a fair and reasonable manner She submits that HGL’s mode of obtaining the agreement was unfair and the agreement itself contained unreasonable clauses.
- [4]HGL says Ms Stevens is estopped from advancing any claim against them by reason of the dismissal of the earlier action in the District Court or, alternatively, that it would be an abuse of process to allow the Ms Stevens’ claim.
Is Ms Stevens estopped from bringing this proceeding?
- [5]HGL relies on the well-known principles of Anshun estoppel which precludes the assertion of a claim, or the raising of an issue of fact or law, if that claim or issue is so connected with the subject matter of previous proceedings that it would have been unreasonable not to have raised the issue in the earlier proceeding.[4]
- [6]HGL submits Ms Stevens should have raised her concerns about the status of the costs agreement in the District Court proceeding. In addition to the Anshun principles, HGL relies upon r 743G of the Uniform Civil Procedure Rules 1999 (UCPR) and the application of that rule in Paroz v Clifford Gouldson Lawyers[5] and Hartnett Lawyers v Chapman.[6]
- [7]Rule 743G provides that the relevant court[7] may, at a directions hearing in relation to a costs assessment, consider:
whether it is appropriate for any questions to be tried before the costs are assessed, including, for example, whether any costs agreement relied on by the lawyer concerned is void; and
whether anything else should be done before costs are assessed.
- [8]Rule 743G is permissive. A court may consider whether it is appropriate for any question to be tried before the costs are assessed, including whether the agreement is void. It does not and cannot allow the relevant court to consider or make a finding as to whether a costs agreement should be set aside under s 328 of the Legal Profession Act 2007 (LPA). That jurisdiction is reserved to the Supreme Court or the Tribunal.
- [9]In Harnett, McGinness DCJ neatly set out the position by referring to the earlier decision of Casey v Quabba in which the Court of Appeal held that “void means void”[8] and then stated “it follows that it is not necessary for a party to the agreement to avoid it, nor for there to be an order of the court setting it aside, as can occur under s 328 LPA, where the agreement is valid unless and until the Court or Tribunal makes an order”.[9] If Ms Stevens had argued the costs agreement was void, then Hartnett would apply. Here Hartnett offers HGL no assistance.
- [10]In Paroz, McGill DCJ was similarly not concerned with an argument that the costs agreement was voidable under s 328 but whether there was some reason why the solicitor should be deprived of some or all of its costs. Unsurprisingly, he stated that it was more appropriate for that issue to be decided before the assessment took place. His Honour found that the costs agreement in question was void because there was a failure to comply with mandatory disclosure provisions. His Honour was not being asked to set aside an agreement under s 328 of the LPA. Paroz offers HGL no assistance.
- [11]HGL submits that even though the District Court had no jurisdiction under s 328 of the LPA, Ms Stevens still should have brought forward her claim if only to permit the Court to decide whether the issue should be determined separately and in advance of any costs application. It points out that the District Court proceedings are now, potentially, otiose and its time and costs associated with that proceeding will be “utterly wasted”.
- [12]HGL’s hyperbole is unwarranted. It has a costs order in the District Court and the Court of Appeal. Maybe those proceedings would be otiose; perhaps they would not. There is no doubt that it would have been better for everyone, including Ms Stevens, if she had flagged the s 328 challenge earlier.
- [13]HGL submits that the outcome of this application may be contradictory to the outcome of the District Court proceeding – that Ms Stevens is inviting the Tribunal to grant relief that would wholly circumvent or undermine aspects of the District Court’s judgment because she will be entitled to an assessment of all her costs not just the last five invoices rendered.
- [14]Certainly, a finding that the costs agreement should be set aside may mean that Ms Stevens is entitled to have all her costs assessed. That does mean that the Tribunal will be declaring different rights. But is not the same as it was in Anshun where the same court was being asked to come to a different decision based on a different argument on the same facts.
- [15]HGL also submits these proceedings are an abuse of process. The arguments advanced by HGL overlap with the submissions for the estoppel argument. The question is ‘whether in all the circumstances a party’s conduct is abuse’.[10] HGL invites the Tribunal to infer that Mrs Stevens has mounted a ‘collateral attack’. There is no such evidence before the Tribunal.
- [16]Ms Stevens is entitled to seek an order to set aside the costs agreement. Even if the sequence of hearings is not ideal, it does not reach the high bar that is required to show an abuse of process. This is not a case where the principles in Anshun apply because the District Court was neve in a position to consider the effect of s 328 LPA.
Is the Tribunal satisfied that the costs agreement is not fair or reasonable?
- [17]The Tribunal may order that a costs agreement be set aside if satisfied the agreement is not fair or reasonable. Ms Stevens bears the onus of proof. She takes issue with five matters:
- Paragraph 1.2 of the disclosure notice which allowed postage to be charged at $10 per invoice;
- Clauses 6.1 and 6.3 of the costs agreement, relating to the briefing of counsel;
- Clause 12.3, which enables HGL to seek payment of costs and disbursements associated with a recovery action for any unpaid account;
- Clause 19.2, by which Ms Stevens released and indemnified HGL from any claims as a result of another person intercepting or interfering with any email or facsimile communication;
- The consequences of a general retainer in the event of a natural break in services.
- [18]HGL argues that none of these provisions is unreasonable. I agree, but that is not Ms Stevens’ argument. She submits that these provisions are not fair. She relies on the two passages in the decision of Martin J in McLaren v Wiltshire Lawyers Pty Ltd[11]:
These clauses allow the solicitor to escape the cost of preparing the bill – even a lump sum bill – and transfer that cost to the client. It is a piece of contractual legerdemain which places the solicitor in a position of advantage with respect to the client and, so, should have been brought to the client’s attention. It was not.
In the absence of any explanation to the client and in the absence of any acceptance by the client in light of such an explanation, these clauses render the costs agreement unreasonable and on that basis alone I would set the agreement aside.[12]
- [19]That is a basis on which I have assessed these paragraphs.
Postage charges
- [20]Paragraph 1.2 in the disclosure notices authorises HGL to add postage charges of $10.00 plus GST per invoice. It is one of a number of disbursements for which it may charge including document production, couriers, binders, and motor vehicle costs. Clause 5.1 of the costs agreement allows HGL to charge actual out of pocket expenses.
- [21]Ms Stevens submits that paragraph 1.2 amounts to a “tax” and that this is “profit taking” by HGL because HGL can charge that amount even if it does not incur any postage costs.
- [22]I am not persuaded that this is a basis for setting aside the costs agreement for four reasons. Firstly, the authority is not contained within the costs agreement. Secondly, the charge is not automatic; HGL may charge for that service and, as it turns out, it never did. Thirdly, the Scale[13] also provides for payment of disbursements that have been reasonably incurred. The fourth reason is that, on any view, a charge of $11 per invoice for postage can hardly be considered unfair.
Briefing Counsel
- [23]Clause 6.1 of the costs agreement authorises HGL to retain and brief a barrister to appear on Ms Stevens’ behalf. Except in circumstances of urgency or where it is otherwise impracticable, HGL will discuss with, and take into account, Ms Stevens’ wishes.
- [24]Ms Stevens argues that this clause is analogous to that considered by Fogarty J in Weiss v Barker Gosling (No. 2)[14] in which he stated that, if the solicitor wants the client to hand over complete discretion as to briefing counsel, the significance of that must be clearly brought to the client’s attention.[15]
- [25]I am not persuaded that the effect of clause 6.1 is to hand over complete discretion to HGL for two reasons. Firstly, HGL must forward the barrister’s costs disclosure notice prior to appointing the barrister. At that point, Ms Stevens would have the option of requiring a different appointee. Secondly, HGL would need good reason to brief a barrister that did not take account of Ms Stevens’ wishes. Arguably, an appointment without good reason would be a breach of the costs agreement.
- [26]Clause 6.3 of the costs agreement provides that Ms Stevens accepts personal liability for the fees of any barrister who was engaged on her specific instructions.
- [27]Ms Stevens submits that the effect of clause 6.3 is that a barrister will have a right of enforcement directly against her in the event of a fee dispute. She submits that this is contrary to the ordinary course where HGL would have to pay the disputed fee and then recover from the client. She submits that, in that ordinary course, the client would be able to plead a set-off or cross-claim against HGL but that a client is much less likely to have a set-off or cross-claim against a barrister.
- [28]HGL says that clause 6.3 does not make the client personally liable for a barrister’s fees. It says that, because there is no privity of contract between the client and the barrister, a barrister could not take action directly against the client.
- [29]Counsel for HGL freely acknowledged that he could not discern any reason for clause 6.3 if it does not disrupt the usual relationship between the firm, a client, and a barrister engaged specifically at the client’s direction.
- [30]The logical conclusion is that clause 6.3 allows HGL to avoid liability if the barrister accepts the brief knowing about the clause. Clause 6.3 may transfer liability to the client and should have been the subject of a thorough explanation of its effect. HGL’s failure to do so renders the clause unreasonable within the test set out by Martin J in McLaren.
Costs of recovery actions
- [31]Clause 12.3 provides that if HGL takes steps to recover payment of any outstanding bill of costs, it may also seek payment of the costs and disbursements associated with the recovery action.
- [32]
- [33]Ms Stevens signed the costs agreement in June 2019; the High Court’s decision was published on 4 September 2019. She argues that the effect of Bell should have been brought to her attention pursuant to s 315 of the LPA which requires HGL to disclose in writing any substantial change to anything already included in a disclosure notice. A failure to comply with s 315 entitles a client to apply to set aside a costs agreement.
- [34]HGL did not disclose the effect of Bell, but I am not persuaded that it failed to disclose a substantial change. Bell was to Ms Stevens’ benefit and HGL points out that clause 27 of the costs agreement states that, if anything in the agreement is unenforceable, illegal or void, it is severed, and the balance of the agreement remains in force. In my view, that is a complete answer to the effect of clause 12.3 after Bell.
- [35]But Ms Stevens’ complaint is not just that HGL could take action against her to recover costs. She complains about the basis for charging her for any recovery action: clause 12.3 provided that HGL could charge the recovery costs at the hourly rates specified in schedule 2 of the costs agreement (Schedule 2).
- [36]Ms Stevens has four complaints about this aspect of clause 12.3. The first is those rates are, of course, well above Scale. The second is that it includes pre-litigation steps which are not included in the Scale. The third is that HGL may charge out the recovery costs at its fee rate even if the work is performed by another firm at a lower rate. The fourth is that Schedule 2 includes rates for librarians, secretaries, clerks, and paralegals.
- [37]Any enforcement action would probably be in the District Court, so Mrs Stevens is correct that the Schedule 2 rates are well above Scale.[18] If HGL did charge for any recovery action in accordance with schedule 2 it would be making a profit. Ms Stevens submits that the clause would confer a substantial benefit on HGL to her detriment.
- [38]I do not agree that clause 12.3 allows recovery of “pre-litigation” steps. The clause allows HGL to recover costs and disbursements associated with recovery action. It is a broad, if inelegant, way of referring to the recovery process as a whole.
- [39]I agree that the clause as drafted does allow the possibility that HGL may engage another firm, or debt collectors, to conduct the recovery proceedings and that the other entity may charge a lower fee. I also agree that this would be unfair.
- [40]There is nothing in the fact that Schedule 2 allows for attendances by “employees”. Of course, those attendances would have to be relevant and there is a similar provision in the Scale.
- [41]On balance, for a period of 3 months, clause 12.3 was unfair in that it allowed HGL to charge recovery costs at a rate far in excess of the Scale and in a way that may have resulted in a profit to the firm.
- [42]HGL points to matters which, it says, ensured Ms Stevens was fully informed. It refers to the statement in the disclosure notice which recommended that Ms Stevens take the time to read the documents and encouraged her to contact HGL if she had questions. The disclosure notice also pointed out that Ms Stevens had the right to negotiate the costs agreement.
- [43]Clause 1.5 of the disclosure notice which the relevant Scale and notes that the Scale is different from the rates in Schedule 2.
- [44]Clause 21.2 of the costs agreement states that, by signing it, Ms Stevens confirms that she understood the matters set out in the agreement.
- [45]By clause 25 of the costs agreement Ms Stevens acknowledged and confirmed that she has received the disclosure notice and that, among other things, she has the right to obtain independent legal advice, that it is in her interests to obtain independent legal advice, and that HGL’s professional fees exceed any applicable court scale.
- [46]In light of McLaren all of those steps are not enough. Because it had the potential to profit from the operation of the clause to Ms Stevens’ detriment, HGL should have explained the effect of clause 12.3 and how it differed from the usual position. It was obliged to make a full and frank disclosure. The failure to do so made clause 12.3 unfair.
Release and indemnity
- [47]Clause 19.2 states that HGL does not accept any risk associated with utilising email and facsimile. It goes on to states that, by signing the costs agreement, Ms Stevens fully releases and indemnifies HGL from any claims which she may otherwise have as a result of another person intercepting or interfering with any communications or any other defect arising from the use of such communication. By clause 9.2 Ms Stevens requested HGL to issue all bills of costs electronically.
- [48]Ms Stevens has two complaints about this clause. The first is that HGL communicated with her almost exclusively by email. There is nothing in this. Ms Stevens had the right to ask for her bills to be sent by post.
- [49]The second complaint is that the interception of emails and scamming of bank account details is well-known. Ms Stevens does not take issue with providing an indemnity for the malicious acts of a third party over which HGL has no control, but she submits that the release and indemnity goes further than that and purports to absolve HGL from its own negligence or default.
- [50]Even though HGL states that it does not accept any risk associated with using facsimile or email, the reference to “another person”, in my view, limits the release to factors outside its control. The release would require specific and clear wording to absolve HGL of any negligent act by someone within HGL.
- [51]Despite taking a restricted view of the effect of clause 19.2, I consider that the potential effects of internet fraud and/or scams through the email service are sufficiently serious that HGL should have explained the effect of the clause and that, without the explanation, the clause is unfair.
Natural break in services
- [52]Ms Stevens says that she did not know the costs agreement was a general retainer, and, therefore, did not understand the effect that this may have on her rights.
- [53]Section 333(2) of the LPA states that legal costs that are the subject of an interim bill may be assessed either at the time of the interim bill or at the time of the final bill. Section 335(5) states that an application for assessment must be made within 12 months after the bill was given.
- [54]If there are distinctly identifiable parts of a retainer that would constitute a separate retainer for the purposes of billing, or if a natural break occurred in the conduct of the litigation, an interim bill may become a final bill.[19] Ms Stevens submits that she thought she was getting a specific retainer – to act for her in a family law property dispute. She says that if the costs agreement had been a specific retainer, she would not have lost her right to have 31 of 36 bills assessed because she made the application outside the 12-month period.
- [55]As HGL points out, Ms Stevens’ distinction between a general retainer and a specific retainer is misconceived. The cases clearly contemplate that a natural break can occur in a specific retainer.[20] A natural break did occur. It would have occurred whether the retainer was specific or general.
Was the costs agreement void under s327 of the LPA?
- [56]Ms Stevens argues that clauses 9.1 and 11.2 of the costs agreement purport to convert each of the monthly bills into a final bill in breach of ss 335(1) and (5) of the LPA.
- [57]A costs agreement will be void under s 327 of the LPA if is contravenes any provision of “this division”. That must mean Division 5 – Costs agreements. Sections 333 and 335 appear in Division 7 – Costs assessments. Ms Stevens has not pointed to any breach of a provision in Division 5. The costs agreement is not void on that basis.
What is the appropriate order?
- [58]I have found that the costs agreement was unfair in two respects. That does not mean that the costs agreement is automatically set aside; the wording of s 328(1) is permissive, not mandatory.
- [59]Ms Stevens had engaged HGL previously. Presumably, through that engagement, she was aware generally of the terms of the costs agreement, although I note that neither Ms Stevens nor HGL provided a copy of the first costs agreement.
- [60]Ms Stevens must have been aware of her right to get legal advice about the terms of the retainer. She received the costs agreement in April but didn’t sign it until June.
- [61]In all her material, Ms Stevens never questions or criticises the quality of the work HGL performed. As HGL points out, the disputed clauses did not, in fact, operate to Ms Stevens’ detriment. She was not charged for postage. She was not personally liable for counsel’s fees. She was not charged recovery costs because there was no recovery action taken. There was no need for the release and indemnity provisions to take effect.
- [62]If there had been any force in her submissions about the difference between a specific and a general retainer, Ms Stevens might, at first blush, have been unfairly treated in practice. However, there are numerous factors that militate against that finding.
- [63]Clause 9.4 of the costs agreement provides that each bill of costs is a final bill of costs. Clause 8.3 of the disclosure notice advises Ms Stevens that, if she wants to have the costs assessed, she must apply within 12 months after the costs were paid if neither a bill of costs was requested or given.
- [64]As is evident from the facts set out in the decision of Rosengren DCJ,[21] Ms Stevens began to question HGL’s fees even before the natural break that occurred at the end of the Family Court hearing. Ms Stevens’ fear that HGL would not act in her best interests if she queried the fees cannot be sustained when the proceedings had been concluded.[22] The work that followed the delivery of judgment were billed to a separate file.[23] If she was dissatisfied with the fees, Ms Stevens could have engaged different, less expensive lawyers to perform this work.
- [65]Ms Stevens did not lose her right to have the bills assessed because of the natural break in the retainer; she lost her right through her own actions.
Conclusion
- [66]I agree that two of the clauses in HGL’s costs agreement are unfair unless their effect on a client is explained in a full and frank manner. That said, it is to no-one’s benefit to add clauses and explanations to an already lengthy costs agreement and disclosure notice. Those documents are already difficult to understand. Further explanations will not make it any easier.
- [67]It is also important to note that many people come to lawyers in times of distress and anxiety. This is especially true of a person involved in Family Court proceedings. Clients need simple, clear language.
- [68]Adding a detailed explanation about the operation of these unfair terms will not assist an anxious client.
- [69]It is not for me to comment on policy, but I note the Queensland Law Society already has Guidance Statements, including Guidance Statement No 2 on the ongoing costs disclosure obligations. If the clauses complained of here are common throughout the profession then, perhaps, the Queensland Law Society might provide further guidance on their inclusion, effect, and ramifications for both lawyers and client.
Orders
- 1. Application dismissed.
- 2. Any application for costs is to be filed and served within 14 business days of the publication of these reasons.
Footnotes
[1] Stevens v HopgoodGanim Lawyers (a Firm) [2023] QDC 96.
[2] Stevens v HopgoodGanim Lawyers (A Firm) [2024] QCA 18.
[3] [1893] 2 QB 201, 204-205.
[4] Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, 601-602.
[5] [2012] QDC 151 (‘Paroz’).
[6] [2017] QDC 110 (‘Harnett’).
[7] That is, the court hearing the application for costs to be assessed.
[8] [2007] 1 Qd R 297, 299.
[9] Harnett, [23].
[10] UBS v Tyne (2018) 265 CLR 77, [88].
[11] (2019) 3 QR 158 (‘McLaren’).
[12] Ibid 169 (citations omitted).
[13] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sch 3 (the Scale).
[14] (1993) 118 FLR 218.
[15] Ibid 245-246.
[16] (2019) 269 CLR 333.
[17] As described in Bell at para [1]: “as a general rule, a self‑represented litigant may not obtain any recompense for the value of his or her time spent in litigation. Under an exception to the general rule [the Chorley exception], a self‑represented litigant who happens to be a solicitor may recover his or her professional costs of acting in the litigation.”
[18] Uniform Civil Procedure (Fees) Regulation 2019 sch 1.
[19] In re Lynch & Co Bill of Costs [2000] QSC 3, [11]-[12] (Chesterman J).
[20] See, for example, Mishra v Bennett & Philp Pty Ltd (2021) 8 QR 206.
[21] Stevens v HopgoodGanim Lawyers [2023] QDC 96.
[22] Ibid [14]-[15], [42].
[23] Ibid [19].