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- Franklin v Barry & Nilsson Lawyers (No 2)[2011] QDC 55
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Franklin v Barry & Nilsson Lawyers (No 2)[2011] QDC 55
Franklin v Barry & Nilsson Lawyers (No 2)[2011] QDC 55
DISTRICT COURT OF QUEENSLAND
CITATION: | Franklin v Barry & Nilsson Lawyers (No 2) [2011] QDC 55 |
PARTIES: | EYLECE PATRICIA FRANKLIN (Applicant) V BARRY & NILSSON LAWYERS (Respondent) |
FILE NO/S: | 2607/09 |
DIVISION: | Civil |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 21 April 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 22 March 2011 |
JUDGE: | Irwin DCJ |
ORDER: |
|
CATCHWORDS: | COSTS – ASSESSMENT – application to review costs assessor’s decision – where in 2003 the parties entered into a costs agreement for legal work directed to the Family Court – where in 2007 the proceedings were transferred to the Federal Magistrates Court – where the District Court held that the 2003 costs agreement was void with respect to new work done after transfer – where the Court subsequently ordered that eight bills be assessed by a costs assessor pursuant to s 319(1)(c) of the Legal Profession Act 2007 – whether the costs assessor erred in failing to properly consider the matters prescribed in s 341(1) of the Act – whether the costs assessor erred in finding that the solicitors had failed to make disclosure pursuant to Chapter 3, Part 3.4, Division 3 of the Act – whether the costs assessor erred by applying the scale of costs under the Family Law Rules 2004 as a basis for determining a fair and reasonable value of legal services provided by the solicitors. Family Laws Rules 2004, r 19.18, r 19.19, schs 3, 4 and 6 (cl 6.19) Federal Magistrates Court Rules 2001, r 21.09 Legal Profession Act 2007, s 308, s 310, s 311, s 315, s 316(4), s 319, s 335, s 341, s 342, s 732, s 734, s 736(2) Queensland Law Society Act 1952, s 48, s 48F, s 48I Uniform Civil Procedure Rules 1999, r 738, r 742, r 743H Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621, applied Bannerot v Waddington [2008] QDC 332, considered Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404, applied D.G. Ogle Pty Ltd v Bowdens (1979) Qd R 507, considered Franklin v Barry & Nilsson Lawyers, unreported, District Court of Queensland, Clare SC, DCJ, No. 2607 of 2009, 13 November 2009, considered. Gallagher v R (1986) 160 CLR 392, applied Gilbert v Kozicki [2007] QSC 268, considered Herald v Worker Bee (Brisbane) Pty Ltd [2004] 2 Qd R 263, considered Hill v Peel (1870) L.R.5.C.P 172, cited House v The King (1936) 55 CLR 499, applied Langdale v Danby [1982] 3 All ER 129; [1982] 1 WLR 1123, applied Re Bain Gasteen & Co’s Bill of Costs [1990] 1 Qd R 412, applied Re Feez Ruthning’s Bill of Costs [1989] 1 Qd R 55, considered Re O'Sullivan, Wilson v Bedford (1937) St R Qd 50, considered Robertson v Commissioner of Stamp Duties, New South Wales (1906) 3 CLR 829, considered Schweppes Ltd v Archer (1934) 34 S.R.(NSW) 178; 51 WN 71, applied Stubberfield v Lippiatt & Co [2003] QDC 034, considered Warry v P B Pty Ltd [1999] QCA 154, applied Weiss v Barker Gosling (1993) 16 Fam LR 728, cited Weiss v Barker Gosling (No 2) (1993) 17 Fam LR 626, considered |
COUNSEL: | G.A. Robinson for the applicant A.K. Cooper (solicitor) for the respondent |
SOLICITORS: | Neumann & Turnour Lawyers for the applicant Barry & Nilsson Lawyers for the respondent |
- [1]This is an application that within 14 days the respondent pay to the applicant the sum of $37,195. The basis of the application is to give effect to a costs assessor’s certificate that the total amount repayable by the respondent to the applicant pursuant to the assessment is $35,841.87, plus a sum of $1353.13 which relates to a fee the costs assessor notes was paid twice. The claim for this fee is not in dispute.
- [2]On the return date of the application, the respondent opposed the orders sought, in effect seeking a review of the costs assessor’s decision. Pursuant to orders by the court the respondent filed a formal application to set aside the costs assessor’s certificate.
- [3]Both applications are now to be determined. Where necessary it is convenient to refer to the applicant to give effect to the costs assessor’s certificate as “Ms Franklin” and to the respondent to that application, Barry & Nilsson lawyers as “the firm”, when referring to each application.
Background
Matrimonial property proceedings and the costs agreement
- [4]The firm were retained to act for Ms Franklin in a matrimonial property settlement from June 2003 to late 2008. The parties entered into a costs agreement in 2003. In 2005 Ms Franklin filed an application in the Family Court. On 21 February 2007 the proceedings were ordered to be transferred to the Federal Magistrates Court. The parties did not make a fresh costs agreement. Between July 2003 and September 2008, 38 interim accounts were prepared in accordance with the original costs agreement and sent to Ms Franklin. She paid them all. She has sought to recover part of what she paid the firm.[1]
Decision of Clare SC, DCJ
- [5]On 13 November 2009, on Ms Franklin’s application Clare SC, DCJ declared there was no valid costs agreement between her and the firm in respect of the work conducted in the Federal Magistrates Court. However her application for an itemised Bill of Costs was refused.[2]
- [6]Her Honour held that once Ms Franklin’s case moved to the Federal Magistrates Court, any binding costs agreement had to comply with the Queensland Law Society Act 1952 (“QLSA”) and because the 2003 agreement did not comply there was no valid costs agreement for work performed thereafter in the Federal Magistrates Court. As her Honour expressed it, the 2003 costs agreement was void with respect to this new work and the firm should have made a new agreement with Ms Franklin if it wished to avoid the statutory fee cap which applied under the QLSA in the absence of a cost’s agreement.[3]
- [7]In coming to this conclusion Her Honour observed that at the time when the parties made their costs agreement in 2003, the legal work was directed to the Family Court. It therefore bound them for work done in that court, and was regulated by the Family Law Rules to the exclusion of the QLSA. The 2003 agreement complied with those rules.[4] However, costs agreements for work done in the Federal Magistrates Court are regulated under the state regulatory regime. The 2003 agreement did not comply with this more onerous regime as set out in the QLSA.[5]
- [8]As Her Honour also recognised, while the validity of the costs agreement was dependent upon the QLSA, any application for assessment of costs had to be made under the Legal Profession Act 2007 (“LPA”)[6] which commenced on 1 July 2007. This is accepted by the firm which conceded, in particular the application of Chapter 3, Part 3.4 (costs disclosure and assessment) of the LPA to the issues to be resolved in the proceedings before me.[7]
Order of Samios DCJ
- [9]On 24 June 2010 Samios DCJ ordered that pursuant to s 335 of the LPA, eight bills delivered by the firm to Ms Franklin be assessed. These bills were dated 28 February 2007, 11 April 2007, 13 June 2007, 11 September 2007, 18 April 2008, 30 June 2008 and 15 September 2008.[8]
- [10]His Honour also ordered that Douglas Anthony Kerr (Mr Kerr) be appointed to assess the bills and they be assessed pursuant to s 319(1)(c) of the LPA.
Mr Kerr’s assessment
- [11]Ms Franklin’s current solicitors enclosed her file for assessment under cover of a letter to Mr Kerr, dated 30 July 2010.[9]
- [12]On 20 August 2010 the firm sent their submissions in relation to the assessment to Mr Kerr by facsimile.[10]
- [13]Ms Franklin’s solicitors enclosed a reply to the firm’s submissions in a letter to Mr Kerr, dated 23 August 2010.[11]
- [14]It was agreed by the parties that I am entitled to refer to these submissions for the purpose of determining the applications.[12]
The firm’s submissions
- [15]The firm’s submission was under the hand of Mr Cooper who is its special counsel. He represented the firm in the proceedings before Clare SC, DCJ, Samios DCJ and before me.
- [16]This short submission noted that it had been ordered that the firm’s bills be assessed pursuant to s 319(1)(c) of the LPA, “that is, what is fair and reasonable”. It then addressed whether reference should be had to the scale of costs in the Family Court in determining this, and what should be had regard to for this purpose.
- [17]It was submitted there were three problems with Ms Franklin’s argument that reference should be made to the Family Court scale of costs. These were:
It was central to Ms Franklin’s case for assessment that there was no valid client’s costs agreement because the work was not conducted in the Family Court.
There is no applicable scale of costs for matters conducted in the Federal Magistrates Court. In support of this proposition, reference is made to the decision of McGillSC, DCJ in Bannerot v Waddington.[13]
In Herald v Worker Bee (Brisbane) Pty Ltd,[14] Fryberg J held that the scale of costs for the Supreme Court under the Uniform Civil Procedure Rules 1999 (“UCPR”) did not apply to assessment of costs between solicitor and client. The same applies to the scale of costs under the Family Law Rules 2004 (“FLR”). FLR 19.18 is limited to a method of calculation of costs after the Family Court makes an order for costs. FLR 19.19 then goes on to state that the maximum “party/party” costs that may be recovered pursuant to that order is set out in the scale. There being no order for costs in the Family Court, the scale has no application.
- [18]The submission continued, that while the firm appreciated Ms Franklin’s reliance on the Family Court scale is to make reference “to what is fair and reasonable”, it knew of no family lawyer in Australia who charges clients for work pursuant to that scale. With reference to this it was said:
“Plainly, we will lead material from our family law colleagues to show what they charge, if necessary to establish what is far (sic) and reasonable.”
- [19]Reference was also made to s 341(2) of the LPA as providing some guidance as to what is “fair and reasonable” and fortifying their argument that what is likely to be “fair and reasonable” is more likely to be:
“1.Pursuant to a putative agreement that, at least when the retainer existed, both we and your client assumed it to be valid;
- Pursuant to what is routinely charged by family lawyers in Brisbane for the proceedings your client was involved in; and
- Which cannot be understated your client paid without question.”
In those circumstances, it was submitted that the bills would not be assessed downwards.
Ms Franklin’s submissions
- [20]The submission in reply was under the hand of Mr Robinson of counsel who has also represented Ms Franklin in all proceedings before this court.
- [21]This submission commenced by making reference to what was described as Ms Franklin’s “objections”, which at paragraphs 12 to 20 set out the argument for adopting the Family Court scale in the particular factual circumstances of the case. This is a reference to exhibit “EPF 2” to Ms Franklin’s affidavit sworn on 25 May 2010, which sets out particulars of objections to the tax invoices delivered to her by the firm.[15] As these objections are incorporated into Ms Franklin’s submission to Mr Kerr and are exhibited to an affidavit, a copy of which was enclosed for his reference with the 30 July 2010 letter, I consider that I am also entitled to refer to it for the purpose of determining the applications.
- [22]The submission characterised the observation by Fryberg J in Herald v Worker Bee as obiter while recognising that it had been applied by A. Lyons J in Gilbert v Kozicki.[16] Reference was made to the discussion of those cases in Bannerot v Waddington in which, it was submitted, McGill SC, DCJ held that as between solicitor and client there is no applicable scale for work done in the Federal Magistrates Court.
- [23]However it was not asserted that the costs assessor was bound to adopt a particular scale. Rather it was acknowledged that the issue for the costs assessor to determine was what constituted “a fair and reasonable value of the legal services provided” for the purpose of s 319(1)(c) of the LPA. It was argued that as at 1 January 2008[17] had the work been undertaken in the Family Court in circumstances where there was no valid costs agreement in place, the maximum rate which could have been recovered by the solicitor was the rate set out at schedules 3 and 4 of the relevant Family Court scale in force at the time. Because family type work conducted in the Family Court is of a more complex nature than the same type of cases dealt with in the Federal Magistrates Court, it was reasonable that work of the type conducted in the latter court should not attract a higher level of remuneration than that which would have applied to a solicitor (at that time) doing work in the Family Court without a costs agreement with the client.
- [24]Further it was argued there were other matters which appeared to have been ignored in submissions, which had to be taken into account given the effect of s 316(4) of the LPA which provides:
“316 Effect of failure to disclose
- (4)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose.” (emphasis added).
With reference to this it was argued that in the circumstances of this case, there was a complete and utter failure on the part of the firm to make disclosure of anything required to be disclosed under the LPA.
- [25]It was submitted that the firm has sought to rely on s 341(2) without addressing argument to the important issues dealt with in paragraphs (a) and (b), which are:
“341 Criteria for assessment
- (2)In considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any or all of the following matters –
- (a)whether the law practice and any Australian legal practioner or Australian-registered foreign lawyer acting on its behalf complied with this Act;
- (b)any disclosure made by the law practice under division 3;”
In this case, it was submitted, there had been a total failure by the firm to comply with the relevant provisions of the LPA and, further no disclosure whatever had been made pursuant to the provisions of Division 3.
- [26]With reference to the firm’s reliance on an assumption by it and Ms Franklin that the costs agreement was valid, it was submitted that whether a solicitor and/or client thought incorrectly that a valid agreement existed is not a proper basis for the solicitor to be entitled to a higher fee than might otherwise be the case.
- [27]In relation to the firm’s submission that in determining what is fair and reasonable regard be had to what is routinely charged by family lawyers in Brisbane for proceedings of this nature, it was submitted that it would be inappropriate to have regard to this because of the gross breach by the firm of the disclosure requirements of the LPA together with the sanctions under s 316(4) for the breach.
- [28]In response to the submission as to the relevance of Ms Franklin paying without question, it is observed that it is an everyday occurrence that people acquiring goods and services may be overcharged without realising this. It is argued that their failure to question whether they are being overcharged at the time can scarcely be raised in defence of the party responsible for the overcharging and submitting that no reduction in the overcharge should be made.
- [29]It was also noted that although the costs agreement which applied from the outset of the retainer in the Family Court provided for certain hourly rates to be charged by the authors of the work done on behalf of Ms Franklin, Mr Cooper was brought in at a higher rate than any for which provision had been made in the agreement.
- [30]In summary it was submitted that the matter for the assessor’s consideration was to decide on what was a “fair and reasonable value” of the legal services provided, but having regard to:
The total failure of the respondent to comply with all relevant disclosure provisions of the LPA; and
The seriousness of the failure on the part of the respondent to disclose all of the matters required under Division 3 of the LPA and the reduction which should be made otherwise which is proportionate to the seriousness of that failure, with regard to s 316(4) of the LPA.
- [31]In the objections which are incorporated into this document and provided to the costs assessor, reference was made to s 736(2) of LPA as having the effect that the firm was bound to comply with the disclosure provisions of Chapter 3, Part 3.4, Division 3 as to disclosure as soon as practicable after the relevant day, 1 January 2008.[18] As I have stated, the firm accepts that these provisions apply to the issue to be resolved in the current proceedings.
- [32]It was then asserted that the firm failed to make disclosure as required under ss 308 and 315 of the LPA, in consequence of which s 316(4) was enlivened. Therefore it was argued that in determining what was a fair and reasonable value for the legal services provided, the assessor was required to give effect to s 316(4).[19]
- [33]The submissions about this were summarised as follows:
“ (i) The solicitor failed to comply with his mandatoryduty to enter into a costs agreement with the client upon the matter being transferred to the Federal Magistrates Court (s 48 of the Queensland Law Society Act 1952);
- (ii)The solicitor failed to enter into a new costs agreement under the provisions of s 322 of the Act which came into force on 1 July 2007 or of the transitional provisions of the Act which remained in force until 31 December 2007;
- (iii)The solicitor failed to make disclosure under s 308 of the Act at any time during which those statutory provisions applied;
- (iv)In consequence of the solicitor’s failure to comply with the mandatory disclosure provisions, he is thereby exposed to the provisions of s 316(4) of the Act.”
- [34]Therefore it was clearly brought to the firm’s attention in the objections exhibited to Ms Franklin’s affidavit filed on 3 June 2010 prior to the order by Samios DCJ on 24 June 2010 that reliance was squarely placed on the alleged failure of disclosure and the consequences under s 316(4) of the LPA in support of her claim for reduction in the quantum of legal costs charged in the bills.
- [35]This position was also central to the submission which was forwarded to the costs assessor on 23 August 2010 on behalf of Ms Franklin.
Communications between the Costs Assessor and the parties
- [36]By letter dated 26 November 2010, Mr Kerr informed Ms Franklin’s solicitors, (with a copy to the firm), that the total costs assessed from the invoices referred to in the order of Samios DCJ was $23,426.26.[20]
- [37]Prior to this and following the receipt by Mr Kerr of the parties’ submissions at the end of August 2010, he and the parties communicated in writing.[21] Mr Kerr’s letters to the firm, dated 6 October 2010, 11 October 2010, 12 October 2010, 26 October 2010, 10 November 2010, 11 November 2010 and 23 November 2010 are exhibits to Ms Franklin’s affidavit, filed on 14 February 2011.[22] Mr Cooper responded on behalf of the firm by letters dated 19 October 2010, 1 November 2010, 3 November 2010 and 19 November 2010. These are also exhibited to Ms Franklin’s affidavit.[23] Although this correspondence is directed to the submission of materials relevant to the assessment of the items in the bills, it is significant that at no time was any communication made by the firm with Mr Kerr responding to the submission on behalf of Ms Franklin that there had been a failure of disclosure by the firm, with the consequences asserted to flow from that.
The Costs Assessor’s Certificate
- [38]The Cost Assessor’s Certificate, dated 3 December 2010 and filed on 7 December 2010 included:
“3. I have assessed the costs payable by the Respondent to the Applicant pursuant to the Order dated 24 June 2010 in the amount of twenty three thousand four hundred and twenty six dollars twenty six cents ($23,426.26) comprising:
a. Professional Fees $23,331.43
b. Disbursements $ 94.83
- The respondent has acknowledged receipt of payment of the costs referred to in the eight invoices ordered to be assessed in the order of 24 June 2010 in the sum of $50,358.13, and the balance owing to the applicant thereby is $26,931.87.
- The costs of the assessment are payable by the respondent pursuant to s 342(2)(a) of the Legal Profession Act 2007. The fee of $8,910.00 has been paid by the applicant, and a refund of this amount is payable by the respondent to the applicant.
- The total repayable by the respondent to the applicant pursuant to this assessment is thirty five thousand eight hundred and forty one dollars eighty seven cents ($35,841.87).”
The Costs Assessor’s reasons
- [39]Mr Kerr gave written reasons which were dated and filed on the same date as the certificate. These reasons were volunteered of his own initiative rather than being provided in response to a party requesting reasons for any decision included in the certificate under UCPR 738.
- [40]The reasons were:
“Paragraph 3 of the order of 24.06.10 of Samios DCJ provides that the costs are to be assessed pursuant to S.319(c) of the Legal Profession Act 2007, LPAQ, what is fair and reasonable.
Section 341(2) LPAQ provides criteria that are to be applied on a cost assessment to decide whether legal costs are fair and reasonable: “In considering what is fair and reasonable, the cost assessor may have regard to any or all of the (10) following matters …” These matters include (c) “any disclosures made by the law practice under division 3; …”
The respondent concedes in its letter to me dated 20.08.10 that it assumed the retainer with the applicant for the Family Court remained valid after the action was transferred to the Federal Magistrates Court.
Consequently, the respondent had failed to comply with the disclosure requirements of the LPAQ.
S.316(4) LPAQ provides that “If a law practice does not disclose to a client … anything required by this division to be disclosed, then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the cost assessor to be proportionate to the seriousness of the failure to disclose.”
Judge McGill QC DCJ, in Bannerot v Waddington [2008] QDC 332 held that as between lawyer and client there was no applicable scale for work done in the Federal Magistrates Court.
The respondent submits in its letter of 20.08.10 that the Family Court scale “is limited to a method of calculation of costs after the Family Court makes an order for costs.”
A decision of Hoare J (a former taxing master) in DG Ogle v Bowdens [1979] QR 507 established that the Supreme Court scale is not so limited, when holding that the costs of a conveyancing matter should be taxed by reference to the Supreme Court scale, a decision supported by Thomas J in Re Bain Gasteen & Co’s Bill of Costs [1990] 1 Qd R. 412 and by the decisions of Carter J, Re Feez Ruthning’s Bill of Costs [1989] 1 Qd R. 55, and Re Skinner & Smith’s Bill of Costs (1), (unreported) O/S 928/1986, and there is no reason why the Family court scale should be limited as the respondent submits.
In Robertson v the Commissioner of Stamp Duties 23 WN (NSW) 60, the High Court determined that there was an applicable scale, but went on to add that had there been none, then the appellants would on the principle stated in Kauri Timber Co v The “Woosing” (1987) 14 WN (NSW) 38 have been entitled to have their costs taxed on the same footing as if the question had been tried under some other jurisdiction of the court in which similar questions could be determined and there was an applicable scale (emphasis added). See “Quick on Costs” [2.1291].
Dal Pont “Law of Costs”, [15.77], notes that “For any costs not provided for in any relevant scale the court or taxing officer may allow costs by way of analogy according to the item in the scale most nearly analogous to it, and if there is no such item the costs are fixed at a sum as the court or taxing officer considers adequate in the circumstances.”
A reference to Herald v Worker Bee [2004] 2 Qd R does not assist the respondent, as the ratio of that case was directed to the determination under S 48 of the now repealed Queensland Law Society Act as to non-compliances that failed to void the costs agreement under S 48F(1), in that case the non delivery of a copy of the court scale to the client.
The Family Court scale was considered by Fogarty J. “as the prima facie measure of the reasonableness,” in Weiss v Barker Gosling (No. 2) [1993] 17 Family LR 626 at 642-643. Moreover, “it was not possible to validly compare the hourly agreement charge and the hourly scale rate because the costs agreement provided a flat charge-out rate whereas Sch. 2 to the Family Law Rules 1984 was an item scale with items for time costing, … and the use of the scale could provide an effective hourly rate of $150-$180-$200,” pg 635-639, compared to the then hourly rate of $107.40.
I consider that on the application of S.341(2) and 316(4) LPAQ and the decision in Robertson (supra), it is fair and reasonable to adopt a similar rate of remuneration for professional fees of the respondent by reference to the remuneration allowed by the Family Court in which similar questions are determined. I have also allowed a care and consideration component not included in the Family court scale to the respondent despite the adoption of this rate of item remuneration.
I further consider that any reduction in the scale rates compared to the “market price” of what solicitors with valid cost agreements commonly charge is a reduction proportionate under S.316(4) LPAQ to the seriousness of the failure of the respondent to make disclosure to the applicant.
I accept the submissions of the applicant concerning the recording of time, and have deducted a total of 3 minutes from the total of each time claim based on whole 6 minute units.
A number of items in the itemized invoice submitted for assessment have been disallowed as they were individual attendances of a care and consideration nature. This has not operated to preclude a general award for care and consideration, see Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd, (SC(NSW)), Waddell CJ endorsed by O'Loughlin J in Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 11; see ‘Law of Costs’ [15.81], GE Dal Pont, 2nd Edition, though such award is limited for work of this nature.
The respondent agreed on a fixed fee of $1300.00 for the sale of a property jointly owned by the applicant and her former husband. The respondent charged this fee twice through a separate work-author (CRN), and also charged a number of attendances by other work authors (SRK, AKC) which in my view were part at what was covered under the conveyancing fixed fee agreement.
It is noted that R.722 does not apply to this assessment under part 7 of the UCPR.
The respondent is liable for the costs of the assessment, because the costs were reduced from $50,358.13, the total of the eight invoices ordered to be assessed, to $23,426.26.
The professional fees paid by the applicant to the respondent pursuant to the costs agreement for legal services while the matter was before the Family Court of Australia amounted to $55,630.50, and the respondent has been paid $50,358.13 by the applicant for costs in the Federal Magistrates Court, a total of $105,988.63.
Ms Franklin’s application
- [41]On 14 February 2011 the application to give effect to the costs assessor’s certificate was filed on behalf of Ms Franklin. As indicated, this application is that the firm pay her $37,195.00. The additional $1,353.13 relates to the fee which Mr Kerr noted was paid twice. The claim for payment of this fee is not contested.[24]
The firm’s application
- [42]On 25 February 2011, pursuant to the orders by the court to which I have referred, the firm filed an application to set aside the costs assessor’s certificate.
- [43]This application is expressed as being made under UCPR 743H. No point is taken on behalf of Ms Franklin that the application should have been made under UCPR 742(1).[25] Accordingly the proceedings before me were heard as if the application for review had been made pursuant to that provision.
- [44]In fact Mr Cooper’s affidavit, sworn and filed on 24 February 2011 in support of the review application refers to UCPR 742 and with respect to that provision pleads:
“(a) In preparing the cost certificate, the cost assessor erred in law in that he failed to consider the matters prescribed in section 341(1) of the Legal Profession Act 2007 sufficiently or at all.
- (b)In preparing the cost certificate, the cost assessor erred in law when he found that the respondent had failed to make disclosures pursuant to Part 3.4, Division 3 of the Legal Profession Act 2007 when such a finding is without foundation.
- (c)In preparing the cost certificate, the cost assessor erred in law by applying as a basis of what is a fair and reasonable value of legal services provided by the respondent to the applicant the scale of costs being schedule 3 to the Family Law Rules 2004, when such scale is not applicable as an assessment of costs between solicitor and client.”
Consideration
The firm’s application
- [45]It is necessary to first address the firm’s application. Only if it is dismissed does Ms Franklin’s application fall to be considered.
Onus of Proof
- [46]
“… the exercise of the jurisdiction to review a taxation of costs is subject to no narrower limitation than that which was stated by Bovill CJ and Brett J in Hill v Peel (1870) L.R.5.C.P:- “A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after careful consideration of each case; and where after properly considering the matter the master has arrived at a decision, it lies upon those who impeach his decision satisfy the court that he is wrong. Where a principle is involved the Court will always entertain the question, and if necessary give directions to the master; but where it is a question of whether the master has exercised his discretion properly, or it is only a question as to the amount to be allowed, the Court is generally unwilling to interfere with the judgment of its officer, whose peculiar province it is to investigate and to judge of such matters, unless there are very strong grounds to show that the officer is wrong in the judgment which he has formed. (emphasis added).”
Principles
- [47]
“The role of the taxing officer is therefore an extremely important one. The breadth of that discretion is emphasised in Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 C.L.R. 621, 627-628 which states the salutary rule that courts, generally speaking, regard a taxing officer’s decision on quantum as final, and will review the decision of a Taxing Master only if he proceeded on a wrong principle or if there has clearly been an error in the exercise of his discretion.”
Having observed that the extreme reluctance to interfere with such decisions mentioned by Kitto J is particularly identified with questions of quantum, his Honour also said:
“However whilst a court will, in a clear case, interfere with a taxing officer’s decision, most functions of the taxing officer contain a discretionary element and are subject to the well-known limitations of review expressed in House v The King (1936) 55 C.L.R. 499, 504.”
- [48]This is consistent with Kitto J also saying in Australian Coal and Shale Employees’ Federation v The Commonwealth[29] that while the discretion of a taxing officer is generally speaking final, and it must be a very exceptional case in which a court will entertain an application to review the decision, there is no absolute proposition that a judge will never review a taxing officer’s decision on a question of quantum only. His Honour adopted the summary of the law by Jordan CJ (with whom the other members of the court agreed) in Schweppes Ltd v Archer:[30]
“In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances: Western Australian Bank v Royal Insurance Co.; Clark, Tait & Co. v Federal Commissioner of Taxation, but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case”.
- [49]It is clear from the decision in Australian Coal and Shale Employees’ Federation v The Commonwealth that Kitto J reaches this view as to the principles to be applied by a court in reviewing a taxing officer’s decision by analogy to the principles in House v The King[31] because immediately before applying the above statement from Hill v Peel[32] he said:[33]
“The true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should be affirmed unless the court of appeal is satisfied it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to some extraneous or irrelevant matter, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v The King (1936) 55 CLR 499 at 504, 505.
- [50]Similarly in D. G. Ogle v Bowdens Lucas J with whom the other members of the Full Court agreed said that the question was whether in performing his task the taxing officer had mistaken the facts, or had regard to irrelevant considerations, or had failed to have regard to some relevant consideration, or had committed some error of principle.[34]
- [51]These principles apply by analogy to the review by a court of the discretionary judgment exercised by a costs assessor.
Whether the costs assessor erred by failing to consider the matters prescribed in s 341 of the LPA.
- [52]The firm draws to attention that by the order of Samios DCJ the costs assessor was ordered to conduct an assessment pursuant to s 319(1)(c) of the LPA, that is “according to the fair and reasonable value of the legal services provided” but has instructed himself to assess costs according to “what is fair and reasonable”. It is submitted that the distinction is important. Reference is made to the statement by Fogarty J in Weiss v Barker Gosling that “a judge or taxing master is not at liberty to give effect to personal opinion, formed by reference to some standard of personal justice, that fees charged by solicitors and barristers are generally ‘too high’”.[35] It is submitted that the costs assessor was led into error by failing to appreciate the correct test.
- [53]Further, it is submitted that nowhere in the costs assessor’s reasons is there any evidence, or indication, that he complied with s 341(1) of the LPA which provides:
“341 Criteria for assessment
- (1)In conducting a costs assessment, the costs assessor must consider -
- (a)whether or not it was reasonable to carry out the work to which the legal costs relate; and
- (b)whether or not the work was carried out in a reasonable way; and
- (c)the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 340 applies to any disputed costs.”
The point is made that s 319 of the LPA notes that assessments conducted pursuant to sub-s (1)(c) must have recourse to s 341.[36]
- [54]However the note for s 319(1)(c) directs attention to s 341(2). Section 319(1)(c) has the effect that legal costs are recoverable “according to the fair and reasonable value of the legal services provided.” The note to the provision is then in the following terms:
“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.”
- [55]In addition, there is no proper basis to assume that the costs assessor did not consider s 341(1)(a) and (b). As I have already observed the costs assessor’s reasons were volunteered by him rather than being provided in response to specific issues directed to his response by a party requesting reasons under UCPR 738. In these circumstances I accept Mr Robinson’s submission that they are to be interpreted in the context that they have been drafted more generally than if they had been provided in a response to such a request in relation to any specific decision included in the certificate.
- [56]In my view the focus of the reasons on s 341(1)(c) is to be interpreted as being based on a finding or assumption by the costs assessor that s 341(1)(a) and (b) had been satisfied. That is he proceeded to conduct the assessment on the basis that it was reasonable to carry out the work to which the legal costs relate and that work was carried out in a reasonable way; and being so satisfied he proceeded to direct his assessment of those costs pursuant to s 341(1)(c) as directed by Samios DCJ. It does not necessarily follow that by answering s 341(1)(a) and (b) in the affirmative the assessor would allow all the costs charged. It also does not follow that s 341(1)(c) will also be answered in the affirmative. To determine this question the costs assessor may have regard to the criteria set out in s 341(2), which includes (a) whether the law practice has complied with the LPA and (b) any disclosures made by the law practice under Division 3.
- [57]Having regard to the principles set out in paragraphs [47] to [50] of this judgment, I am therefore not satisfied that the costs assessor failed to exercise his discretion properly.
- [58]I am also not satisfied that the costs assessor failed to appreciate the correct test to apply under s 319(1)(c) because of the use of the words “what is fair and reasonable” rather than “according to the fair and reasonable value of the legal services provided.”
- [59]The first point to be noted is that while “according to the fair and reasonable value of the legal services provided” is the language of s 319(1)(c), the note which follows directs attention on to s 341(2) for the criteria to be applied on a costs assessment to decide whether legal costs are “fair and reasonable”. Section 341(1)(c) then makes it mandatory for the costs assessor to consider the “fairness and reasonableness” of the amount of legal costs in relation to the work, and s 341(2) then identifies the criteria which the costs assessor may have regard to in considering “what is fair and reasonable”. It therefore follows that “fair and reasonable” is a convenient shorthand adopted in the legislation itself to express “the fair and reasonable value of the legal services provided.”
- [60]Secondly, the paragraph of the costs assessor’s reasons which gives rise to the firm’s complaint is:
“Paragraph 3 of the order of 24.06.10 of Samios DCJ provides that the costs are to be assessed pursuant to s 319(c) of the Legal Profession Act 2007, what is fair and reasonable.”
As he has adopted the term “fair and reasonable” in conjunction with a reference s 319(1)(c) which is in terms of “the fair and reasonable value of the legal services provided.” I am unable to conclude that he was unaware of that language, but consider he has also used “fair and reasonable” as a convenient shorthand way of expressing this. Although he uses the term again in the following paragraph this is in the context of referring to s 341(2) which in fact uses the words “fair and reasonable”. Where he again uses the term in the first paragraph of page 3 of his reasons this is also in the context of s 341(2).
- [61]I also observe that the firm adopted the terminology, “fair and reasonable” in its submission of 20 August 2010 to the costs assessor.[37] In particular it states:
“It has been ordered that you assess our bills pursuant to s 319(1)(c) of the Legal Profession Act 2007, that is, what is fair and reasonable.” (emphasis added).
The first paragraph of the court’s assessor’s reasons, of which complaint is made, is expressed similarly.
The submission also states:
“Plainly, we will lead material from our family law colleagues to show what they charge, if necessary, to establish what is fair and reasonable.
Next, we look to section 341(2) of the Act, which provides some guidance to what is fair and reasonable. In our opinion, this fortifies our argument that what is likely to be fair and reasonable is more likely to be: …” (emphasis added).
The term “fair and reasonable” is repeated on two other occasions in that submission.
- [62]For these reasons I am not satisfied that the costs assessor erred in law in that he failed to consider matters prescribed in s 341(1) of the LPA sufficiently or at all, or that he failed to appreciate the correct test to apply for the purposes of s 319(1)(c) of the LPA.
Whether the costs assessor erred by finding the firm failed to make disclosures pursuant to Part 3.4, Division 3 of the LPA.
- [63]The firm submits that the assessment was determined, inter alia, on the flawed basis that as a consequence of the declaration that there was no valid costs agreement, the firm had failed to comply with the disclosure requirements of the LPA. Particular reference is made to paragraphs 3 and 4 of the costs assessor’s reasons. These are as follows:
“The respondent concedes in its letter to me dated 20.08.10 that it assumed the retainer with the applicant for the Family Court remained valid after the action was transferred to the Federal Magistrates Court.
Consequently, the respondent failed to comply with the disclosure requirements of the LPAQ.”
- [64]Reference is also made to paragraph 2 on page 3 of the reasons, where it is stated:
“I further consider that any reduction in the scale rates compared to the “market price” of what solicitors with valid cost agreements commonly charge is a reduction proportionate under s 316(4) LPAQ to the seriousness of the failure of the respondent to make disclosure to the applicant.”
- [65]It is argued that this statement implies:
- (a)That the firm has charged what might be considered “market price of what solicitors with valid costs agreement commonly charge”, which is at least tacit acknowledgement by the costs assessor that, armed with a valid costs agreement, the costs charged by the respondent for its legal services provided to the applicant were fair and reasonable;
- (b)That the firm has failed to make disclosures pursuant to the LPA; and
- (c)That a “reduction” in what the firm should have charged to the scale of costs pursuant to the FLR is an appropriate way of dealing with the failure to disclose.
- [66]The firm submits that it is not stated with any particularity by the assessor what specifically it has failed to disclose. It accepted during argument that the costs disclosure provisions in Division 3 of Part 3.4 of Chapter 3 of the LPA applied, but submits that it made the necessary disclosure under s 308. Although it is conceded in both written and oral submissions that not every item listed in that section had been disclosed to Ms Franklin, it is submitted the costs assessor’s decision was made on the erroneous presumption that no disclosure whatever had taken place.
- [67]The basis on which the firm submits that it made disclosure in the manner prescribed by the LPA is by the costs agreement which Clare SC, DCJ held was not valid for work done from the time that the matrimonial property settlement proceedings were transferred to the Federal Magistrates Court, as well as the regular accounts rendered to Ms Franklin. It is argued that simply because the agreement was not a valid costs agreement from that date does not mean that Ms Franklin was not informed of matters she was required to be informed of by virtue of s 308 of the LPA. It is argued that the invoices provided Ms Franklin with further and updated disclosure of the matters set out in that section.
- [68]It is conceded by the firm that because this submission was not raised with the costs assessor it requires leave to raise it in support of the present application. In this regard UCPR 742(5) provides:
“On a review, unless the court directs otherwise –
- (a)the court may not receive further evidence; and
- (b)a party may not raise any ground of objection not stated in the application for assessment or a notice of objection or raised before the costs assessor.” (emphasis added).
- [69]Mr Robinson submits on behalf of Ms Franklin that leave should be refused. His objection appears to be most strongly based on the proposition that the application for the court to direct that the firm can raise a ground of objection not raised before the costs assessor, is in reality an application for a direction that the court receive further evidence which was not provided to the costs assessor under s 742(5)(a).
- [70]The importance of this is that if the application is in truth for a direction under s 742(5)(a) it is arguable that the appropriate principles governing the reception of new evidence on an application for review are those adopted by a Court of Appeal in considering an application to adduce new evidence: Civil Procedure Queensland – Uniform Civil Procedure Rules 1, [r. 742.1] at 19,669 with reference to Re O'Sullivan, Wilson v Bedford where Henchman J said:[38]
“O.XCI., r. 120, gives the Judge a discretion to allow on review evidence that was not before the Taxing Officer. That discretion must, of course, be exercised judicially, i.e. in accordance with legal principles. One of these is that, in general, evidence which was available to a party before a hearing should not be allowed to be adduced by him on a rehearing.”
- [71]Before new evidence will be received, three conditions must be fulfilled. First it must be shown that the evidence could not have been obtained with reasonable diligence for use at the trial; second, the evidence must be such that, if given, it would probably have an important influence on the result of the case, although it need not be decisive; third, the evidence must be such as is presumably to be believed or in other words, it must be apparently credible, though it need not be incontrovertible.[39]
- [72]However the firm submits that the application is limited to raising a ground of objection not raised before the costs assessor, pursuant to UCPR 742(5)(b). It submits that no test is provided as to how to exercise this discretion and directs me to Stubberfield v Lippiatt & Co[40] where Samios DCJ considered an application for leave to both adduce evidence and raise a further ground of objection. His Honour does not appear to have applied any particular test but rather listed a range of considerations relevant to informing the exercise of his discretion.[41] Considerations which caused his Honour to direct that the applicant could raise new grounds of objection included:
The applicant was unrepresented;
The applicant had made it clear to the respondent solicitors his intention to contest the costs statement;
There was a duty upon the Registrar to assess the costs in accordance with the rules and the scale, and the Registrar was not confined by the Notice of Objection;
If particular items were allowed in whole or in part, that possibly could have an impact on the additional allowances and upon the assessment fee.
- [73]These are the considerations that I interpret are relied upon by the firm for the following matters which it submits are relevant to the exercise of my discretion, accepting that the firm was not unrepresented:
The respondent was informed in a timely manner of the new ground;
The costs assessor had a duty to consider all matters referrable to the assessment, and not just those put to him in the course of submissions;
The new ground of review added gravitas to the review generally.
- [74]Against this background the firm submits that leave should be granted for the following reasons:
Ms Franklin was made aware of the new ground well before the hearing. The submissions were annexed to the affidavit delivered at the mention before McGillSC, DCJ on 23 February 2011.
Because a central plank of the costs assessor’s decision was the issue of disclosure, it was incumbent on him to consider the issue carefully. However as is apparent on page 1 of his reasons, the assessor has acknowledged that there was a failure of disclosure by virtue of the assumption as to the validity of the costs agreement. The question of a “total” failure was not addressed properly.
The importance of the ground is formed by the proposition that if because of a “total” failure of disclosure, a reduction of over 53% of the billed amount ($50,358.13 to $23,426.26) in the context of having charged Ms Franklin in the same fashion from 2003 to 2007 without any reduction, is “a fair and reasonable value of the legal services provided” (which is denied) then a reduced proportion must apply where there is not a total failure of disclosure.
- [75]Consistently with my understanding as to the real thrust of Mr Robinson’s submissions as stated at paragraph [69], he said that if the argument were confined to whether leave to raise a new ground should be given, there is perhaps some relevance in the submissions for the firm that Ms Franklin has known of this new ground since the day on which the matter was mentioned before McGill DCJ, SC.
- [76]Notwithstanding this concession I do not grant leave for the firm to raise the further ground of objection that it made disclosure in the manner prescribed by the LPA.
- [77]Unlike Mr Stubberfield, the firm has at no time been an unrepresented party. It has been representing itself, and, as conceded in the submission, can be assumed to have some knowledge of the law of costs. Although it observed that Mr Stubberfield also had some knowledge in this area, as Samios DCJ said:[42]
“Be that as it may, Mr Stubberfield’s ability is not equivalent to what I would expect from a solicitor experienced in the area of assessment costs.”
- [78]More significantly, the firm at no time communicated to the costs assessor responding to the submission on behalf of Ms Franklin that there had been a failure of disclosure by it, with the consequences asserted to flow from that. This was despite the fact that as stated at paragraph [34] it was clearly brought to its attention in objections exhibited to Ms Franklin’s affidavit filed on 3 June 2010 prior to the order by Samios DCJ on 24 June 2010 that reliance was squarely placed on the alleged failure of disclosure and the consequences under s 316(4) of the LPA, in support of her claim for reduction in the quantum of legal costs charged in the bills. This was before the firm’s submission to the costs assessor of 20 August 2010. Ms Franklin’s submission in reply of 23 August 2010 not only incorporated the previous objections about failure of disclosure, but argued that there had been a complete and utter failure by the respondent to make disclosure of anything required to be disclosed by the LPA. It was also described as a total failure to comply with these disclosure provisions of such seriousness that a reduction should be made which is proportionate to the seriousness of the failure, with regard to s 316(4) of the LPA. Despite subsequent correspondence by the firm with the costs assessor, it at no time took the opportunity to dispute these contentions.
- [79]The firm’s silence in the face of this submission has the consequence that no weight can be given to the submission that the question of “total” failure to disclose has not been properly addressed. Although the costs assessor may have had a duty to consider all matters referrable to the assessment and not just those put to him in the course of submissions, he could not be expected to consider the 2003 costs agreement and the regular accounts rendered to Ms Franklin as constituting the required disclosure, if no submission was made by the firm to him to that effect in the context of the strong submissions on behalf of Ms Franklin that there had been a failure to disclose. The costs assessor’s position was far removed from that of the Registrar in Stubberfield v Lippiatt & Co.[43] who was rightly said to be under a duty to assess the costs in accordance with the rules and the scale and not to be confined by the Notice of Objection. The Registrar could be expected to be aware of the rules and scale. The costs assessor in this case could not be expected to be aware of the submissions on behalf of the firm that there had been a disclosure, when neither the fact of that failure nor the extent of it, was at any time put in contention by it before he issued his costs assessment.
- [80]For these reasons I decline to make a direction allowing the firm to raise the ground of objection that the costs assessor erred in law when he found that it had failed to make disclosures pursuant to Part 3.4, Division 3 of the LPA when such a finding is without foundation.[44] The firm’s submission that it made the disclosure in the manner prescribed by the LPA by virtue of the 2003 costs agreement and the regular accounts rendered to Ms Franklin is the basis of this objection.
- [81]Further, as Mr Robinson submits, the application is in reality for a direction that the court receive further evidence which was not provided to the costs assessor, at least so far as the 2003 costs agreement is concerned. This is because the costs assessor could only determine whether disclosure was made by virtue of the 2003 costs agreement if it had been provided to him to enable him to consider whether it complied with the requirements of the LPA.
- [82]There is no evidence before me to support the proposition, whether directly or by inference that the 2003 costs agreement was delivered to the costs assessor. There is nothing in the submission by either party to the costs assessor which suggests that this was the case.[45]
- [83]In the circumstances, the application by the firm to rely on the 2003 costs agreement in support of its objection that the costs assessor erred when he found that it had failed to make requisite disclosure, must involve an application to adduce further evidence on this review.
- [84]However, as that agreement was available to the firm prior to the costs assessor being ordered to undertake the assessment, it cannot be shown that this evidence could not have been obtained with reasonable diligence for use by costs assessor in assessing the firm’s bills to Ms Franklin.
- [85]As I have said in circumstances where the firm remained silent in face of Ms Franklin’s submission in reply of 23 August 2010 to the costs assessor which argued there had been a complete and utter failure by the firm to make disclosure of anything required to the LPA it cannot be said that this condition for the admission of such evidence has been fulfilled.
- [86]For this reason I decline to make a direction that I receive the 2003 costs agreement as further evidence on this application.[46]
- [87]Further, I do not find that the second condition for reception of this further evidence has been fulfilled, in that I do not consider the costs agreement would have an important influence on the result of this application. The document is available to me as annexure “GPS-1” to the affidavit of Geoffrey Paul Sinclair; sworn and filed on 21 October 2009, and relied on by the firm for the purposes of this application. For the reasons I will give, even if I directed that the firm can raise the ground of objection based on it and the accounts subsequently rendered to Ms Franklin, and that the 2003 costs agreement be received as further evidence on this application, this would not satisfy me that the costs assessor erred in law when he found that the firm had failed to make the requisite disclosure.
- [88]In submitting that the firm has made the requisite disclosure by virtue of the 2003 costs agreement it is asserted that the fact it was invalid for work performed after 21 February 2007 when the matter was transferred from the Family Court to the Federal Magistrates Court does not mean that Ms Franklin was not informed of the matters required by s 308 of LPA.[47] Notwithstanding this, Mr Cooper accepted Mr Robinson’s analysis as to the extent of non disclosure and disclosure, as follows:[48]
“The requirements of s 308(1) of the Act are dealt with in the 2003 costs agreement between the parties as follows:
(1) A law practice must disclose to the client under this Section -
(a) the basis on which legal costs will be calculated, including whether a scale of costs applies to any of the legal costs; and
The basis on which legal costs will be calculated is set out in the costs agreement; whether a scale of costs applies has not been disclosed.
(b) the client’s right to -
(i) negotiate a costs agreement with the law practice; and
Not disclosed.
(ii) receive a bill from the law practice; and
Not disclosed.
(iii) request an itemised bill after receipt of a lump sum bill; and
Not disclosed.
(iv) be notified under section 315 of any substantial change to the matters disclosed under this section; and
Not disclosed.
(c) an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of these costs; and
Not disclosed.
(d) details of the intervals, if any, at which the client will be billed; and
Disclosed.
(e) the rate of interest, if any, that the law practice charges on overdue legal costs, whether that rate is a stated rate of interest or is a benchmark rate of interest as mentioned in subsection (2); and
The rate of interest imposed in the costs agreement (9.55%) is higher than the maximum permitted under the Act.
(f) if the matter is a litigious matter, an estimate of -
(i) the range of costs that may be recovered if the client is successful in the litigation; and
Not disclosed.
(ii) the range of costs the client may be ordered to pay if the client is unsuccessful; and
Not disclosed.
(g) the client’s right to progress reports under section 317; and
Not disclosed.
(h) details of the person whom the client may contact to discuss the legal costs; and
Not disclosed.
(i) the following avenues that are open under this Act to the client in the event of a dispute in relation to legal costs -
i. costs assessment under division 7;
ii. the setting aside of costs agreement under section 382; and
Client’s right to apply for assessment disclosed, right to apply to set aside the costs agreement not disclosed.
(j) any time limits that apply to the taking of any action mentioned in paragraph (i); and
Disclosed.
(k) that the law of this jurisdiction applies to legal costs in relation to the matter; and
Not disclosed.
(l) information about the client’s right -
i. 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; or
Not disclosed.
ii. to notify under a corresponding law, and within the time allowed by the corresponding law, the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.
Not disclosed.”
- [89]This demonstrates that only four of the 17 cumulative disclosure requirements have been complied with in whole or in part. And even the partial disclosure for the purpose of s 308(i)(i) of the right to apply for an assessment, was a right to file a notice in the Family Court,[49] which would no longer be applicable after the transfer to the Federal Magistrates Court. As Mr Robinson submits, the firm understates the position when it argues simply that not every item listed in s 308 has been disclosed to the applicant. I consider that this is more correctly described, as a failure by the firm to comply with the disclosure requirements of the LPA.[50] It is important to appreciate that the costs assessor does not expressly state that “no disclosure whatever took place” as submitted by the firm. He simply says in his reasons “the respondent has failed to comply with the disclosure requirements of the LPAQ” and “the failure of the respondent to make disclosure to the applicant.”[51] I consider this to be an accurate description of the non disclosure by the firm.
- [90]In any event I do not consider that a costs agreement which was sent to Ms Franklin on 17 June 2003 and came into effect in relation to proceedings which were then in the Family court when she signed it on 23 June 2003,[52] a little over four years before the LPA came into effect, can constitute disclosure for the purposes of that legislation.
- [91]As indicated the firm accepts that the LPA disclosure provisions apply to the issue to be resolved in these proceedings. One of these provisions is s 310(1) which provides:
“Disclosure under section 308 must be made in writing before, or as soon as practicable after, the law practice is retained in a matter.”
By virtue of Section 736(2) of the LPA the firm was bound to comply with the disclosure requirements of Part 3.4, Division 3 “as soon as practicable after the relevant day” of 1 January 2008.[53]
That section provides:
“(2) Part 3.4, division 3, applies to the law practice (the practice) in relation to the client for the matter on and after the relevant day with the following changes –
- (a)section 310(1) applies to the practice and the relevant practice must disclose to the client the matters required to be disclosed by the subsection as soon as practicable after the relevant date and before the costs agreement was entered into.”
There was no disclosure to Ms Franklin as soon as practicable after 1 January 2008 by virtue of the 2003 costs agreement. This is the position irrespective of whether the agreement was valid or invalid.
- [92]Although s 311(1)(b) provides an exception to the requirement of disclosure in circumstances which must include:
“(i) the client has received 1 or more disclosures under section 308 or 309(1) from the law practice in the previous 12 months,”
the 2003 costs agreement did not provide disclosure to Mr Franklin in a 12 month period before any date that is relevant to this application.
- [93]Although it is submitted on behalf of the firm that until the decision by Clare SC, DCJ it proceeded under the misapprehension that the 2003 costs agreement was valid, as did Ms Franklin, I agree with Mr Robinson that upon the transfer of the matter from the Family Court to the Federal Magistrates Court the firm should reasonably have turned its mind to the validity of this agreement and the consequences which flowed from that. Mr Cooper submits that it did this, but as Clare SC DCJ found it came to the wrong conclusion. However I consider that the firm should have been aware of the need to make a fresh costs agreement with Ms Franklin once the case was transferred to the Federal Magistrates Court.
- [94]This is because as Clare SC DCJ stated:[54]
“[9] The Family Court and the Federal Magistrates Courts are separate and distinct courts. When the Family Court transfers a matter to the court below, it must relinquish control over the case, except to the extent of any provision to the contrary. Rule 21.05 of the Federal Magistrates Court Rules provides that upon a transfer of a matter from the Family Court, the Federal Magistrates Court assumes jurisdiction for costs, including costs accumulated before the transfer, unless the Family Court has made a specific order. In other words, once a case is transferred, costs are governed by the Federal Magistrates Court unless the Family Court otherwise orders. Under the commonwealth scheme, the effect of a transfer is to narrow the reach of the Family Court in relation to costs, rather than to extend it.
[10] While rule 21.09(3) of the Federal Magistrates Court Rules makes it clear that those rules do not generally regulate the fees between lawyer and client, the note to the rule directs fee disputes to the applicable state legislation. There is no reference to the Family Court Rules. Similarly, the Family Court rules do not specifically refer to costs agreements in the Federal Magistrates Court.
…
[13] The absence of commonwealth legislation in respect of costs agreements in the Federal Magistrates Court means that the application of the state regime to the Federal Magistrates Court is not inconsistent with any commonwealth law. Mr Cooper accepted that the state regime will generally apply to fill the void, consistent with the note to rule 21.09. It seems to me that the acceptance of the general application of the state regime is fatal to the firm’s submissions concerning some deficiency in the Federal Magistrates Court Rules which would trigger the application of the Family Court Rules by necessary implication.” (emphasis added).
- [95]Federal Magistrates Court rule 21.09 provides relevantly:
“…
- (3)Unless otherwise provided, these rules do not regulate the fees to be charged by lawyers as between lawyer and client in relation to proceedings in the court.”
Subsection (3) is followed by a note in the following terms:
“For any dispute between a lawyer and a client about the fees charged by the lawyer, see the State or Territory legislation governing the legal profession in the State or Territory where the lawyer practices.”
It was in these circumstances that her Honour concluded:[55]
“Once Ms Franklin’s case moved to the Federal Magistrates Court in February 2007, any binding costs agreement had to comply with the 1952 Act. The 2003 agreement did not comply, it was therefore void in respect of their work and the firm should have made a fresh agreement with Ms Franklin if it wished to avoid the statutory fee cap.”
- [96]In my view, particularly having regard to Mr Cooper’s concession that the state regime will generally apply to fill the void, consistent with the note to rule 21.09, the firm should have appreciated this and either have made a fresh costs agreement in compliance with the requirements of s 48 of the QLSA or have provided disclosure to Ms Franklin in compliance with s 308 of the LPA as soon as practicable after 1 January 2008. It did not do so. The 2003 costs agreement relating to work in, or incidental to the Family Court did not fulfill either of these requirements.
- [97]However even if the 2003 costs agreement was to be regarded as providing some limited disclosure with reference to the four items identified in paragraph [88] there was a failure to comply with the mandatory ongoing disclosure obligation in relation to the balance of the items which the firm accepts have not been disclosed; and as indicated it remains a costs agreement relating to work in, or incidental to the Family Court. This ongoing obligation of disclosure arises under s 315. That provision is as follows:
“315 Ongoing obligation to disclose
A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.”
- [98]Therefore I am not satisfied on the basis of the 2003 costs agreement that the costs assessor erred in law when he found that the firm failed to make disclosures pursuant to Part 3.4, Division 3 of the LPA. I am not satisfied on this basis that the finding was without foundation.
- [99]The position is no different when regard is had to the accounts rendered to Ms Franklin after 21 February 2007. I agree with Mr Robinson’s submission concerning this.[56]
- [100]The starting point is s 308(1)(a) of the LPA which provides:
“A law practice must disclose to a client under this division –
- (a)the basis on which legal costs will be calculated including whether a scale of costs applies to the legal costs; and … (emphasis added)
- [101]It is clear that the obligation of disclosure in relation to the legal costs to which the accounts relate is prospective. Accounts advise the client of the rate which the solicitor has charged for past legal services. This is retrospective. As such it is not a disclosure of the nature required to be made by that section.
Whether the costs assessor erred by applying the scale of costs under the FLR
- [102]In support of the proposition that the costs assessor erred in law by applying as a basis for what is a fair and reasonable value of legal services provided by the firm to Ms Franklin, the scale of costs being Schedule 3 of the FLR, when such scale is not applicable as an assessment of costs as between a solicitor and client, Mr Cooper commenced by reminding me that Clare SC, DCJ held that in the absence of a costs agreement it is the state regime which applies to fill any deficiency in the Federal Magistrates Court Rules and not the FLR.
- [103]He submitted that in addition to the Family Court and the Federal Magistrates Court the state Supreme and Magistrates Court retain jurisdiction to hear matrimonial matters. It was argued that in these circumstances, where the Federal Magistrates Court did not have a scale of costs applicable to assessing fees to be charged by lawyers as between lawyer and client in relation to proceedings in that court, it was not a natural progression to look to the FCR.
- [104]Mr Cooper’s position was that regard could not be had to the scale of costs under the FCR as a guide in assessing costs in the circumstances of this case. He submitted that this scale of costs is only referrable to the application of FLR 19.18 which speaks exclusively of costs as between the parties ordered by the court, and not as between solicitor and client. FLR 19.18(2) states:
“If costs are payable under the Act or these Rules, or the court orders the costs be paid and does not specify the method of their calculation, the costs are assessed on a party/party basis (emphasis added).
- [105]He relies on Herald v Worker Bee (Brisbane) Pty Ltd[57] and Bannerot v Waddington[58] in support of the proposition that the scale which is applicable to determine solicitor and client costs is not the same, nor is it equally applicable, to a scale of costs between parties. The proposition as to the distinction between solicitor and client costs on the one hand and costs between the parties on the other, may be readily accepted. As stated in Gilbert v Kozicki by A Lyons J with reference to a submission:[59]
“The consequence is that a solicitor could only charge his own client what could be recovered on a party and party basis which is a substantially lower figure.”
In Herald v Worker Bee an issue arose as to whether it was necessary for solicitors to not only send the schedule to the QLSA but also to send the scale of fees set out in the UCPR in order to comply with s 48(4) of the QLSA which provided:
“The notice in the schedule must be completed by the practitioner or firm and given to the client, together with a copy of any scale for the work provided under an Act, before the client signs the client agreement.”
Fryberg J held that the scale in the UCPR is not a scale contemplated by that section. His Honour stated:[60]
“The scale is used for the purposes of assessing costs on a party and party basis and on the standard basis, that is, for assessing costs on the standard basis between parties.
It expressly does not apply to an assessment of costs as between a solicitor and his client. To include it in the documents sent out with a solicitor’s agreement would be, in my view, to create confusion. If the scale meant anything, it would be likely to convey to the client that the solicitor’s fees would be calculated on the basis of it. If this scale is anything, it certainly is not that.”
Therefore his Honour said:[61]
“That fact, together with the misleading effect which the inclusion of the scale would have, leads me to think that it is most unlikely that the Act requires this scale to be included with the agreement. It is much more likely that the Act was drafted, which fixed solicitor and client costs.”
As McGill SC, DCJ observed in Bannerot v Waddington this approach was adopted in Gilbert v Kozicki as a basis to hold that Sch 1 of the UCPR, although entitled “Scale of Costs – Supreme Court”, was not a scale provided under an Act for work done in connection with a proceeding in the Supreme Court, because it did not purport to be a scale applicable between lawyer and client.
- [106]Mr Cooper refers to paragraph 6 on page 2 of the costs assessor’s reasons in which it is said that Herald v Worker Bee,
“… does not assist the respondent, as the ratio of that case was directed to the determination under s 48 of the now repealed Queensland Law Society Act as to non-compliances that failed to void the costs agreement under s 48F(1), in that case the non delivery of a copy of the court scale to the client.”
He submits in response that the case is directly on point because it was the firm’s failure to comply with s 48 of the LPA which lead Clare SC, DCJ to declare there was no valid costs agreement between the parties.
- [107]It is submitted, with reference to Herald v Worker Bee that it was incorrect for the costs assessor to use the scale under the FLR which speaks exclusively of costs as between the parties and is not a scale which governs costs as between solicitor and client.
- [108]It is asserted that approaching the assessment in this manner is to adopt an arbitrary measure to reduce what might well be the market price of what solicitors with valid costs agreements commonly charge.
- [109]Mr Cooper submitted a proper way for the costs assessor to approach any reduction of the legal costs was:[62]
“… in order to properly make a proportionate reduction from what might be fair and reasonable under costs agreement, I ought to look at perhaps circumstances in which this has happened previously, or alternatively in circumstances where the level of the seriousness of the disclosure, even if – the complete failure of disclosure, how that affected the relationship between the applicant and the respondent, how that affected the capacity of the applicant to properly engage her lawyers, and therefore, as I say, make a proportionate reduction downwards.”
- [110]Although Mr Cooper’s principle argument was that the scale under the FCR was not applicable to assess costs as between solicitor and client he was also critical of the costs assessor’s approach in applying a scale of a different court, such as the Family Court, simply because it adjudicates on similar matters. He was particularly critical of the costs assessor’s reference to Robertson v Commissioner of Stamp Duties, New South Wales[63] in support of that proposition. The reference to this decision at paragraph 4 on page 2 of the decision was:
“In Robertson v the Commissioner of Stamp Duties 23 WN (NSW) 60, the High Court determined that there was an applicable scale, but went on to add that had there been none, then the appellants would on the principle stated in Kauri Timber Co v The “Woosing” (1987) 14 WN (NSW) 38 have been entitled to have their costs taxed on the same footing as if the question had been tried under some other jurisdiction of the court in which similar questions could be determined and there was an applicable scale (emphasis added). See “Quick on Costs” [2.1291].”
- [111]It is argued that it is wrong to say that this case is authority for the proposition that the scale of another court where similar questions may be tried is applicable to the assessment of costs. It was said this followed from the fact that the High Court held that when a party has a right to recover costs in the Supreme Court, whatsoever the matter of jurisdiction, it should be taken that it was intended that the litigant recover on the scale most favourable to it in that court.
- [112]Criticism was also made of the cost assessor’s statement in the final paragraph on page 2 of his reasons:
“The Family Court scale was considered by Fogarty J. “as the prima facie measure of reasonableness,” in Weiss v Barker Gosling (No. 2) [1993] 17 Family LR 626 at 642-643.”
While it was accepted that this might be so, it was said this proposition was not relevant to this case. It was submitted that although his Honour referred to this amongst other criteria by which costs and charges may be measured, it could not seriously be argued the scale constituted a prima facie case for fairness and reasonableness. It was also emphasised that as the case concerned work done in the Family Court, it was not suggested by Fogarty J that the Family Court scale was a prima facie measure for reasonableness for work done in any other court, and particularly not for the Federal Magistrates Court which did not exist in 1993.
- [113]For completeness I note that the firm also submits the costs assessor failed to properly consider Ms Franklin’s payment of the firm’s accounts, without asking for them to be itemised. This is asserted to be a critical aspect to the nature of the fairness and reasonableness of the fees charged by it throughout its retainer with her, spanning 5 years.
- [114]The starting point for addressing the firm’s submissions is the approach taken by the costs assessor in assessing the bills pursuant to s 319(1)(c) of the LPA, as I interpret his reasons. In coming to a conclusion about this, I remain conscious that these were not reasons provided in response to a party requesting reasons for any decision included in a certificate under UCPR 738. Therefore they can be expected to have been drafted more generally than if this were to be the case. Their interpretation is not to be approached as if they were a judgment of a court.
- [115]It is also relevant in coming to this conclusion, that I have found that the costs assessor did not err in finding that the firm failed to make the requisite disclosure under the LPA and this finding was relevant in considering what is a fair and reasonable amount of legal costs, by virtue of s 341(2)(b). The consequences provided in s 316(4) for the failure to disclose “anything” required, on an assessment, is that the amount of the legal costs may be reduced by an amount considered by the costs assessor to be proportionate to the seriousness of that failure.
- [116]Against this background I consider a proper interpretation of the reasons to be that, the costs assessor having found the firm failed to make the requisite disclosure, he then proceeded to determine the amount of the reduction of the legal costs claimed which was proportionate to the seriousness of that failure. It is inherent in this that he took as his starting point what was claimed in the bills. I consider that this is what he meant when he said at paragraph 2 of page 3 of the reasons:
“I further consider that any reduction in the scale rates compared to the “market price” of what solicitors with valid cost agreements commonly charge is a reduction proportionate under s 316(4) LPAQ to the seriousness of the failure of the respondent to make disclosure to the applicant.”
This was not a tacit admission, as argued by the firm that, armed with a valid costs, agreement, the costs charged by it for the legal services provided to Ms Franklin were fair and reasonable.
- [117]I also consider that in undertaking this exercise in circumstances where it is accepted there was no applicable scale of costs for work done in relation to the Federal Magistrates Court, the costs assessor was entitled to refer to another appropriate scale of costs, including the scale of another court.
In D. G. Ogle v Bowdens,[64] which was referred to in the costs assessor’s reasons the Full Court held that while the scale of costs in the second schedule of the Rules of the Supreme Court had no direct application to a bill of costs for conveyancing work it was open to the taxing officer to refer to any applicable items in that scale if appropriate to the matter before him. However the taxing officer was not bound by that scale nor was he required to use it to the exclusion of any other scale which he considered to be properly prepared, even though that scale had no statutory basis. Therefore it could be appropriate for the taxing officer to refer to the scale of charges suggested as being reasonable by the Law Society, viz, its conveyancing scale. As Lucas J (with whom the other members of the court agreed) said at 510:
“In my opinion it is quite open to the Taxing Officer to use the scale in the Second Schedule if he thinks in any case that it is appropriate to the matter before him. But in my opinion he is not required to use it to the exclusion of any other scale which he considers, in his experience as having been properly prepared, even though that other scale has no statutory basis.”
As his Honour also said at 512 with reference to the Law Society scale:
“Such a scale, in my opinion, constitutes a useful guide to the Taxing Officer; he is of course not bound by it, any more than he is bound by the scale in the second schedule.”
And at 513 his Honour said:
“… he is not bound by either scale; he is entitled to use the considerable knowledge and experience which he gains from the performance of his duties, and he must, as he said, bear in mind that “each case depends on its own circumstances and must be taxed accordingly.””
- [118]Although in Re Bain Gasteen & Co’s Bill of Costs Thomas J said the Queensland Law Society scale of fees for conveyancing, should not be blindly and superficially applied so as to displace more fundamental considerations such as time spent, difficulty involved and the value of the professional service in the particular matter, he also observed that it was by no means devoid of relevance.[65]
- [119]Importantly the decision in D. G. Ogle v Bowdens that it was open to use the Second Schedule of the Rules of the Supreme Court in assessing a bill of costs for a conveyancing matter, supports the proposition that the application of those rules, are not limited to taxation pursuant to a court order.[66]
- [120]I also do not consider that the costs assessor erred in his application Robertson v Commissioner of Stamp Duties, New South Wales in determining how to approach his assessment. In my view he understood that the principle in that case was that as expressed accurately in the head note, if there had been no scale applicable under the rules, a successful appellant would have been entitled to have his costs taxed on the same footing as if the question had been tried under some other jurisdiction of the Court in which similar questions could be raised and determined.
I consider that the costs assessor was reasoning by analogy to this decision, that there is no reason not to refer to the scale in the FLR in determining what legal costs are fair and reasonable in this case, given that the Family Court and the Federal Magistrates Court are jurisdictions in which similar questions are determined. His reference immediately following this to Dal Pont, “Law of Costs” confirms that this is what he has done.
For reasons that I will give I consider he was entitled to reason by analogy to this decision and the decision in D. G. Ogle v Bowdens that in assessing the fair and reasonable value of the legal services provided by the firm to Ms Franklin for the work done in relation to the Federal Magistrates Court, he was entitled to refer to another appropriate scale of costs, including the scale of another court.
- [121]This is supported to an extent by the firm’s oral reminder to me that a circumstance which made the use of the scale under the FLR arbitrary was that there were other courts retaining jurisdiction in matrimonial matters. If these scales were to be taken into account in a costs assessment for work done in the Federal Magistrates Court that would also involve the use of scales from other courts.
- [122]In determining how to exercise his discretion in assessing the fair and reasonable value of the legal services provided by the firm for the work done in relation to the Federal Magistrates Court, in circumstances where s 316(4) applied because of the failure by the firm to make the requisite disclosure, the costs assessor was faced with a situation, where as accepted by the parties there was no applicable scale of costs.
- [123]In exercising this discretion, it is to be expected, as recognised by the Full Court in D.G. Ogle v Bowdens, that the cost assessor draw on his own experience in this field of expertise. It is this experience which will inform him as to what factors, including scales of costs to take into account in discharging his obligations. The factors in this case will include the failure to comply with the disclosure requirements under s 308 and the consequences of the failure under s 316(4).[67] He was entitled to use for this purpose a costs scale which he considered in his experience had been properly prepared.[68]
- [124]I consider that it was within his discretion to have reference to a costs scale used by a court in which similar questions are determined, as he did at the first paragraph on page 3 of the decision. Such a scale is likely to be of more value than that of the Queensland Supreme and Magistrates Court where such questions rarely arise by comparison.
- [125]As Mr Robinson submits, the work of the Family Court is more complex than the same type of cases dealt with in the Federal Magistrates Court. If the work has been conducted in the Family Court at the same time in circumstances where there was no valid costs agreement in place, the maximum rate which could have been recovered by a legal practitioner was upon the applicable scale under the FLR. He submits that this is the rate set out in Schedule 3 and 4 as in force at that time.
- [126]Clause 6.19 of Schedule 6 of the FLR provides:
“6.19Maximum amount chargeable
- (1)This clause sets out the maximum amount of costs a lawyer may charge and recover for work done for a case, or in complying with pre-action procedures:
- (a)for a client;
- (b)if the court orders that costs are to be paid and does not fix the amount; and
- (c)if a person is entitled to costs under these Rules.
- (2)The maximum amount of costs that a lawyer may charge and recover is as follows:
- (a)for fees – an amount calculated in accordance with Schedules 3 and 4;
- (b)for an expense mentioned in Schedule 4 (other than item 101) – the amount specified in Schedule 4 for that expense;
- (c)for any other expenses – a reasonable amount.
- (3)However, for lawyer and client costs only, if there is a valid costs agreement between a lawyer and a client:
(a) subclause (2) does not apply: and
- (b)the maximum amount of costs that the lawyer may charge and recover is the amount calculated in accordance with the costs agreement.” (emphasis added)
It can be seen, that in the absence of a valid costs agreement, the maximum amount of costs that a lawyer may charge and recover for work done for a case in the Family Court for fees is an amount calculated in accordance with Schedules 3 and 4. As provided by FLR 19.18 if costs are payable under the FCR they are to be assessed on a party/party basis.
- [127]Therefore absent the existence of a valid costs agreement the upper limit of what a legal practitioner could recover from a client for work done in that court was an amount calculated in accordance with those Schedules on a party/party basis.
- [128]I agree with Mr Robinson that it is reasonable less complex work of the type done in the Federal Magistrates Court should not attract a higher level of remuneration than this, where there was no valid costs agreement in place, and taking into account the consequences provided by s 316(4) of the failure to comply with the disclosure requirements under the LPA.
- [129]
- [130]As McGill SC, DCJ recognised in Bannerot v Waddington the conclusion by Fryberg J in Herald v Worker Bee which was applied by A Lyons J in Gilbert v Kozicki to hold that the scale in Schedule 1 of the UCPR, was not a scale provided for by an Act for work done in connection with the Supreme Court, because it did not purport to be a scale applicable between lawyer and client, was dicta.[72] As his Honour also said, Fryberg J decided the case on the basis that, even if this were an applicable scale and there was a failure to include it with the schedule required to be given to a client under s 48(4) of the QLSA, the failure to comply with that obligation did not have the effect of rendering the client agreement void pursuant to s 48F, because of the terms of that section.[73] McGill SC, DCJ also said with reference to the decision in Gilbert v Kozicki that a submission to her Honour that at the time the relevant provisions of the QLSA were introduced by the Civil Justice Reform Act 1998 there were no scales under legislation fixing costs as between solicitor and client, so parliament must have intended that the reference to scales was to the scales which then existed, even though they purported to fix only costs payable under an order, that is ordinarily between parties to litigation, was wrong. That was because, as his Honour said, at the time of the enactment of the 1998 Act, the Supreme Court Rules, 091 r 30 applied to the situation as between solicitor and client, as well as in relation to taxation under court orders.[74] His Honour also said the position in the District Court was essentially the same.[75]
- [131]However, in my view, whether or not the decisions in Herald v Worker Bee or Gilbert v Kozicki, are correct on this issue, neither they nor the decision in Bannerot v Waddington prevented the costs assessor having regard to the costs as between parties under the FLR in making his assessment in the circumstances of this case.
- [132]Each of those cases depends on the interpretation of specific legislative provisions. In Herald v Worker Bee the question was whether the scale of fees under the UCPR was “a scale for the work provided under an Act”. His Honour’s conclusion was that it was more likely that s 48(1) of the QLSA was drafted with scales in mind which fixed solicitor and client costs rather than the schedule to the UCPR which he considered were used for assessing costs on the standard basis between parties.[76] In addition as I have said those observations were dicta, and the case was decided on a different basis.
- [133]In Gilbert v Kozicki A Lyons J applied the reasoning of Fryberg J to conclude that the scale in the schedule of the UCPR was not “a scale for the work provided under an Act” for the purposes of s 48I(1)(b) of QLSA.[77]
- [134]In Bannerot v Waddington McGill SC, DCJ held that Schedules 3 and 4 of the Federal Magistrates Court Rules were not “a scale for the work provided under an Act” for the purposes of the same provision of the QLSA. Although it was recognised that those schedules did not in terms purport to provide a scale of costs to be used as between lawyer and client, it was argued that they provided a scale identified in s 48I(1)(b) of the QLSA and the fees and costs were to be assessed in accordance with that scale. However his Honour held to the contrary because he concluded that s 48I(1)(b) would apply only scales which were, directly or indirectly, under the control of the Queensland legislature.[78]
- [135]Although in none of those cases did the scale in issue qualify as “a scale for the work provided under an act”, and in two cases this was because it was considered that this was a reference to a scale which fixed solicitor and client costs rather than a scale which was used for assessing costs between parties, I do not consider that those decisions extend to the discretion to be exercised by a costs assessor in assessing the fair and reasonable value of legal services provided to a client under s 319(1)(c) of the LPA, so as to prevent the assessor from having regard to a scale as to costs between parties, particularly in the circumstances of this case, as set out in paragraphs [125] to [128] of this judgment.
- [136]It is essential to remember that in adopting, as the assessor put it, “a similar rate of remuneration for professional fees of the [firm] by reference to the remuneration allowed by the Family Court in similar circumstances”, this is not the starting point of the assessment, which has thus been reduced by an amount considered by the costs assessor to be proportionate to the seriousness of the failure to disclose as required by s 316(4). As I have previously stated I consider that he took as the starting point what was claimed in the bills, and then made the proportionate reduction for the failure, so that he arrived at a point where he considered, “that any reduction in the scale rates compared to the “market price” of what solicitors with valid costs agreements commonly charge is a reduction proportionate under s 316(4) LAPQ to the seriousness of the failure of the [firm] to make disclosure to [Ms Franklin]”. In my view it also follows from this that in drawing on his own experience, the costs assessor has taken into account the “market rate” of what is routinely charged by family lawyers in Brisbane for work of this nature in coming to his decision.
- [137]Further, as I interpret the decision, the costs assessor has ameliorated this reduction by having “allowed a care and consideration component not included in the Family Court scale to the respondent despite the adoption of this rate of item consideration” as opposed to time costing provided for in the 2003 costs agreement.
- [138]Accordingly I am not satisfied that the costs assessor erred in law by applying the scale of costs under the FCR as a basis for determining what is a fair and reasonable value of legal services provided by the firm to Ms Franklin.
- [139]In coming to this decision I have taken into account it is also submitted that the costs assessor failed to properly consider Ms Franklin’s payment of the firm’s accounts without asking them to be itemised, in the context of fees charged by it throughout the five years of his retainer.
- [140]When Clare SC, DCJ held that the 2003 costs agreement was void in respect of the new work undertaken after the transfer of the matter to the Federal Magistrates Court on 21 February 2007 and that the firm should have made a fresh agreement with Ms Franklin if it wished to avoid the statutory fee cap,[79] her Honour recognised that the consequence probably was that Ms Franklin had been overcharged for that work.[80] The costs assessment confirms this, subject to the effect of Ms Franklin’s payment for the work without asking for an itemised account.
- [141]While Clare SC, DCJ refused Ms Franklin’s application for an itemised Bill of Costs on the basis that her payment of the bills operated as a waiver of such an entitlement,[81] the issue of whether the costs assessor failed to properly consider this is a different issue.
- [142]I agree with Mr Robinson, that if Ms Franklin has been overcharged, her failure to question this can not be raised by the party responsible for the overcharging. This is particularly so where the party responsible for the overcharge is a legal firm which I have found should have appreciated that it was necessary to make a fresh costs agreement in compliance with the QLSA after the transfer or to have provided disclosure to Ms Franklin in compliance with s 308 of the LPA as soon as practicable after 1 January 2008. Although Ms Franklin may not be unsophisticated and a business person,[82] she was a lay person and not a lawyer. It is the lawyer who can have been expected to be aware of the need to comply with those legislative requirements with the probable consequence they were overcharging her by relying on a costs agreement entered into for work done for the Family Court proceedings in relation to work done for the Federal Magistrates Courts proceeding after transfer. The fact that Clare SC, DCJ held that Ms Franklin could not complain about inadequate detail in the bills because the 2003 costs agreement notified of her right to request a detailed account of costs, up to 30 days after the date of the bill, and she paid without requesting further details,[83] does not affect this. On the issue of waiver, her Honour held that there was no relevant distinction between the former regime and the LPA. Although by paying those bills, Ms Franklin waived her right to an itemised account, she did not waive her right to the protection of the LPA and its disclosure requirements. She especially did not waive her right not to be overcharged.
- [143]Therefore I am not satisfied that the costs assessor erred by failing to properly consider Ms Franklin’s payment of the firm’s accounts without asking for them to be itemised.
- [144]I do agree with Mr Cooper that the observations by Fogarty J in Weiss v Barker Gossling (No 2) did not provide a basis for applying the scale of costs under the FCR as a basis for determining a fair and reasonable value of legal services provided by the firm to Ms Franklin.
- [145]Fogarty J did not say that this scale was a prima facie measure of reasonableness. The words were actually used by counsel for the applicant who sought a declaration that a scale of costs was invalid and/or should be set aside. With reference to this submission his Honour said;[84]
“In my view the scale is a legitimate, objective starting point in this exercise.”
- [146]Further, this was a decision concerning whether an agreement in relation to proceedings in the Family Court itself could be characterised as reasonable. It was not whether it was sufficiently analogous with the conduct of proceedings in another court in which similar questions were determined as to provide an objective starting point, yardstick or guideline for determining what legal costs were fair and reasonable in the latter proceedings. As Fogarty J recognised the court was not concerned at that stage with individual charges in the bill but whether the terms of the agreement were reasonable in the particular case.
- [147]However, while I agree with Mr Cooper about this, it does not affect the conclusion I have expressed at paragraph [138], as this conclusion was reached for the other reasons given.
Conclusion
- [148]Therefore I am not satisfied that the costs assessor has erred in law in making his assessment of costs in any of the ways particularised in the firm’s application. There is no error in the exercise of his discretion of the type required by House v The King. Further I am not satisfied that the costs assessor gave effect to the personal opinion of the sort identified by Fogarty J in Weiss v Barker Gossling[85]as set out at paragraph [52] of this judgment.
- [149]Accordingly, I dismiss the firm’s application to review the costs assessor’s decision and to set aside the certificate of the costs assessor filed 7 December 2010.
Ms Franklin’s application
- [150]The dismissal of the application for review has the consequence that Ms Franklin’s application filed on 14 February 2011 that within 14 days the firm pay to her the sum of $37,195.00 falls to be considered.
- [151]As indicated at paragraph [38] of this judgment, in the Costs Assessor’s Certificate, Mr Kerr found :
The applicant had paid the respondent the sum of $50,358.13 in respect of the bills assessed;
The bills were assessed in the sum of $23,426.26; and
A refund was due to the applicant in the sum of $26,931.87.
- [152]The costs assessor has stated in the certificate that under s 342(2)(a) of the LPA the costs of the assessment are payable by the firm. The certificate acknowledges that this fee of $8,910.00 has been paid by Ms Franklin. Accordingly, it is certified a refund of this amount is payable by the firm to Ms Franklin.
- [153]On this basis it is certified that the total amount repayable by the firm to Ms Franklin pursuant to the assessment is $35,841.87.
- [154]As previously stated, the additional $1353.13 relates to a fee which the costs assessor notes was paid twice, and the claim for this fee is not in dispute.
- [155]In dismissing the application by the firm to review the costs assessor’s decision, I have addressed all issues relevant to my decision as to whether to make the order sought by Ms Franklin.
- [156]Having resolved these issues in Ms Franklin’s favour I therefore order that within 14 days the firm pay to Ms Franklin the sum of thirty-seven thousand, one hundred and ninety-five dollars ($37,195.00).
Order
- [157]Reverting to the terminology of Ms Franklin being the applicant and the firm being the respondent, the order of the court is as follows:
- The respondent’s application to review the costs assessor’s decision and to set aside the certificate of the costs assessor filed 7 December 2010 is dismissed.
- That within 14 days the respondent pay to the applicant the sum of thirty-seven thousand, one hundred and ninety-five dollars ($37,195.00).
- [158]I will hear the parties in respect of the costs of the applications.
Footnotes
[1]Franklin v Barry & Nilsson Lawyers, District Court of Queensland, Clare SC, DCJ, No 2607 of 2009, unreported, 13 November 2009, paras [1] and [2]; see also Ms Franklin’s affidavit filed 14 February 2011, para [2].
[2] Franklin v Barry & Nilsson Lawyers, District Court of Queensland, Clare SC, DCJ, No 2607 of 2009, unreported, 13 November 2009, paras [30] and [31].
[3]Ibid, paras [14] and [27].
[4]Ibid, paras [3] and [4].
[5]Ibid.
[6]Ibid, para [18]
[7]T1-21 l 54 to T1-22 l 2.
[8]There were two invoices dated 15 September 2008.
[9]Exhibit “EPF 1” to Ms Franklin’s affidavit, filed 14 February 2011.
[10]Exhibit “EPF 2” to Ms Franklin’s affidavit, filed 14 February 2011.
[11]Exhibits “EPF 3” and “EPF 4” to Ms Franklin’s affidavit, filed 14 February 2011.
[12]T1-50 l 10 to T1-51 1 10.
[13][2008] QDC 332.
[14][2004] 2 Qd R 263 at 264, 265.
[15]Ms Franklin’s affidavit, filed 3 June 2010, para [7].
[16][2007] QSC 268.
[17]1 January 2008 was the date when the time for compliance with the transitional provisions of the LPA expired. It was the “relevant day” for the purpose of those provisions.
[18]Exhibit “EPF 2” to Ms Franklin’s affidavit, sworn 25 May 2010 and filed 3 June 2020, para [14].
[19]Ibid, paras 15 and 16.
[20]Exhibit “EPF 16” to Ms Franklin’s affidavit, filed 14 February 2011.
[21]Exhibits “EPF 5”-“EPF 15” to Ms Franklin’s affidavit, filed 14 February 2011.
[22]Exhibits “EPF 6”, “EPF 7”, “EPF 8”, “EPF 10”, “EPF 11” and “EPF 15”.
[23]Exhibits “EPF 9”, “EPF 13” and “EPF 14”.
[24]T1-6, ll 30-41.
[25]T1-4, l 1 to T1-5 l 50.
[26]D. G. Ogle v Bowdens (1979) Qd R 507 at 512 with reference to the costs assessor’s predecessor, the taxing officer.
[27](1953) 94 CLR 621 at 627-628.
[28](1990) 1 Qd R 412 at 415.
[29](1953) 94 CLR 621 at 628.
[30](1934) 34 S.R. (NSW) 178 at 183, 184; 51WN 71 at 73.
[31](1936) 55 CLR 499.
[32](1870) L.R.5.C.P. 172.
[33]Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 at 627.
[34](1979) Qd R 507 at 512.
[35](1993) 16 Fam LR 728 at 770.
[36]The full submission was that in order to comply with s 341(1), a mandatory requirement, the costs assessor must turn his mind to the three questions posed. If, having answered each of those questions in the affirmative, then it is reasonable to assume the assessor would allow all the costs charged, notwithstanding a failure to have a valid client agreement in place. It is only having answered one or more of these questions in the negative that the assessor then may determine the scope of what part of the value of the legal services provided was not charged for in a fair and reasonable way. By failing to conduct this exercise, it was submitted that the assessment was fundamentally flawed.
[37]Exhibit “EPF 2” to Ms Franklin’s affidavit, filed 14 February 2011.
[38](1937) St R Qd 50 at 62.
[39]Langdale v Danby [1982] 3 All ER 129 at 137-138; [1982] 1 WLR 1123 applied in Clarke v Japan Machines (Australia) Pty Ltd [1984] 1 Qd R 404 at 408, and Warry v PB Pty Ltd [1999] QCA 154 at [18]; See also the similar considerations identified by the High Court to guide a court of criminal appeal in deciding whether a miscarriage of justice has occurred because of evidence now available which was not led at trial: Gallagher v R (1986) 160 CLR 392 per Gibbs CJ at 395-396.
[40][2003] QDC 034.
[41]Ibid at [51].
[42]Stubberfield v Lippiatt & Co. [2003] QDC 034 at [51](a).
[43][2003] QDC 034.
[44]This is ground 3(b) of Mr Cooper’s affidavit, sworn and filed on 24 February 2011 in support of the review application. See para [44] of this judgment.
[45]I have come to this conclusion after further reflection on the state of the evidence before me, notwithstanding my original observation during argument at T1-49 ll 20-35 that the costs assessor must have had access to the 2003 costs agreement as part of the material provided to him. Despite Mr Robinson responding at T1-49 ll 44-45 that he was content for Mr Cooper to inform me from the bar table if this be the case, Mr Cooper has not subsequently done so, including in his addendum outline of argument directed to whether leave was to be given under UCPR 742(5).
[46]I accept that the regular accounts rendered to Ms Franklin were evidence provided to the costs assessor, as it was these accounts that Samios DCJ ordered to be assessed. Accordingly no issue arises as to whether to give a direction under UCPR 742(5)(a) for them to be received on this application. However for reasons I have given I decline to make a direction under UCPR 742(5)(b) to raise an objection that the costs assessor erred when he found the firm had failed to make the requisite disclosure, on the basis these accounts had been rendered to Ms Franklin.
[47]Mr Cooper’s submission is that although there are disclosure requirements which have not been complied with pursuant to the LPA because the costs agreement was compiled in 2003, the key issue was it told Ms Franklin the basis on which she would be charged, the document was capable of disclosure and as such the level of disclosure diminishes. (T1-14 ll 17-27; T1-20 ll 35-45).
[48]This analysis is to be found in the Applicant’s Outline of Argument, filed 18 March 2011, pp 6-8. At T1-23 ll 35-39 Mr Cooper accepted what Mr Robinson said about this.
[49]Annexure “GPS-1” to Mr Sinclair’s affidavit, sworn and filed on 21 October 2008, para 12.
[50]I note that it is not suggested that the disclosure requirements under s 309 of the LPA are relevant in this case.
[51]I have added the emphasis in each case.
[52]Mr Sinclair’s affidavit, sworn and filed on 21 October 2008, paras 2 and 3, and annexure “GPS-1”.
[53]“relevant day” means the day which is six months after the day of commencement (s 732 of the LPA). The commencement date was 1 July 2007. Therefore the relevant date was 1 January 2008. Section 736(2) applied because by virtue of s 736(1) it applies to a law practice which may enter into a client agreement under s 734 but has not done so and work for the matter remains to be performed on the relevant date. Section 734 allowed a law practice to which Part 3.4 applied to make a client agreement as if the QLSA, s 48 had not been repealed. The firm had not done so.
[54]Unreported, District Court of Queensland, No 2607 of 2009, 13 November 2009 at [9] to [11].
[55]Ibid, para [14].
[56]Applicant’s Supplementary Submissions, 24 March 2011, paras [8]-[9].
[57](2004) 2 Qd R 263.
[58][2008] QDC 332.
[59][2007] QSC 268 at [45].
[60](2004) 2 Qd R 263 at 265.
[61]Ibid.
[62]T 1-28 ll 44-53.
[63](1906) 3 CLR 829.
[64](1979) Qd R 507.
[65](1990) 1 Qd R 412 at 414.
[66]See also Re Feez Ruthning’s Bill of Costs [1989] 1 Qd R 55 where it was held by Macrossan and Derrington JJ that the Rules of Supreme Court regulated the procedural steps to be taken under the provisions of the Costs Act, so that the objection procedure of 0.91 rr 117 to 120 applied to the taxation of the bill. See in particular Derrington J at 102.
[67]See also s 341(2)(b) by virtue of which in considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any disclosures made by the law practice under Division 3.
[68]D.G. Ogle v Bowdens (1979) Qd R 507 at 510.
[69][2004] 2 Qd R 263.
[70][2007] QSC 268.
[71][2008] QDC 332.
[72]Ibid at [5].
[73]Ibid at [6].
[74] Ibid at [6]-[8].
[75]Ibid at [9].
[76][2004] 2 Qd R 263 at 265.
[77][2007] QSC 268 at [46].
[78][2008] QDC 332 at [13]-[16].
[79]Franklin v Barry & Nilsson Lawyers, unreported, District Court of Queensland, Clare SC, DCJ, No 2067 of 2009, 13 November 2009 at [14].
[80]Ibid at [8].
[81] Ibid at [24]-[26].
[82]As Mr Cooper submitted at T1-24 ll 27-28.
[83]Franklin v Barry Nilsson Lawyers , unreported, District Court of Queensland, Clare SC, DCJ, No 2067 of 2009, 13 November 2009 at [26].
[84]Ibid at 643.
[85](1993) 16 Fam LR 728 at 770.