Pott v Clayton Utz[2015] QDC 66

DISTRICT COURT OF QUEENSLAND

1. [1]
   This matter has a not uncomplicated history. The applicant is the executor of her husband’s estate. He, and then she in that capacity, instructed the respondent to act in legal proceedings from 2004.

2. [2]
   The fees incurred were substantial and covered a significant period of time. The respondent delivered bills from time to time. On occasion there was some dispute about them. These were, it seemed, resolved.

3. [3]
   Ultimately the applicant filed an originating application in the Supreme Court on the 29 March 2012 seeking orders in relation to legal costs charged by the respondent. The matter first came before Justice Boddice in the Supreme Court. The order sought in paragraph 1 of the originating application, a declaration that the costs agreement between the parties was void, was dismissed by his Honour. In the originating application the applicant also sought orders for the preparation of itemised bills in relation to the work performed by the respondent. The respondent conceded she was entitled to such bills in relation to invoices for work performed after the 31 July 2008 except with respect to eight particular invoices. In relation to these eight invoices Justice Boddice held that she had not discharged her onus to establish a basis to challenge the eight invoices. His Honour also dismissed the application with respect to those invoices delivered prior to the 31 July 2008.

4. [4]
   His Honour made orders, consistent with his Honour’s ruling and agreement between the parties, to allow the progression of the matter with respect to the remaining invoices. Those further orders were as follows:

“(4)On or before 19 July 2012 the applicant shall write to the respondent and identify the items and invoice in relation to which the applicant require further details, and the nature of the further details required;

3. (5)
   Within 60 days of receipt of the notification referred to in paragraph 4, the respondent shall take all reasonable steps to write to the applicant and provide the requested details about each item, to the extent that it is able to do so, or write to the applicant and state that it objects to providing the requested details about an item on the grounds of the information sought exceeds that required to enable the applicant to decide whether to proceed to have the item assessed, and why that is the case;

3. (6)
   Within 30 days of the respondent carrying out the steps in paragraph 6 above,^[1] the applicant shall file and serve an affidavit which:

1. (a)
   states which of the items identified by her pursuant to paragraph 4 above are required to be assessed;

2. (b)
   identifies the grounds on which she wishes to rely to dispute the amount of the costs or liability to pay each of the items identified by her pursuant to paragraph (a) above.

3. (7)
   Should the parties fail to agree within 30 days of the service of the affidavit as referred to in paragraph 6 above as to the amount payable in respect of the legal costs charged as identified by the applicant in her affidavit, then those costs shall be assessed pursuant to Part 3.4 Division 7 of the Legal Profession Act.”

5. [5]
   Subsequently, by letter of 18 July 2012 (which is at pages 57-61 of exhibit AJD6 to the affidavit of Anthony John Deane sworn 5 December 2014) the applicant identified a number of invoices for which she required further detail. Much of the work she identified involved counsels’invoices and not the respondent’s own work.

6. [6]
   The respondent delivered details in respect to the identified invoices on 14 September 2012 (see pages 60-93 of the same exhibit). After the applicant filed an affidavit of 16 December 2012, purportedly compliance with paragraph 6 of the orders of Justice Boddice, the respondent, dissatisfied with the applicant’s response, filed an application seeking dismissal of the originating application.

7. [7]
   The matter came before Justice Douglas. If his Honour had ordered in terms of the respondent’s application then of course the applicant would have lost her entitlement to assessment of the respondent’s costs. In fact his Honour declared that “the items identified by the applicant’s solicitor’s letter, dated 18 July 2012, Exhibit AJD2 to the affidavit of Mr Deane filed 2/11/12 are the items required to be assessed pursuant to paragraph 6(a) of (the order of Justice Boddice) made 19/6/12”. He also directed the applicant to identify the grounds on which she wished to rely to dispute the costs or liability to pay then, as referred to in paragraph 6(b) of that order by 13 December 2012.

8. [8]
   Justice Douglas also ordered that the affidavit of Mr Deane filed in the matter be placed in a sealed envelope and marked “Not to be Opened Except by Order of the Court or Judge”.

9. [9]
   That affidavit Mr Deane filed on 12 November 2012 was not read before me but I was told that the letter of 18 July exhibited thereto, and referred to in the order of Justice Douglas, was in fact exhibited to the applicant’s affidavit of 12 December 2012 which was read before me and to which I earlier referred.

10. [10]
    Justice Douglas thus required the applicant to file a further affidavit setting out the items still objected to and the reasons for such objection. That was to be done within 21 days of his Honour’s order.

11. [11]
    The applicant’s counsel submits that her affidavit complying with that order was her affidavit filed on 12 December 2012 and read before me. The respondent’s counsel submits that many of those items are not appropriate for determination on an assessment and should be determined, if they are to be determined, in a preliminary hearing prior to the matter being referred for assessment. I shall refer to such matters shortly.

12. [12]
    The matter has now been transferred to this court by consent. The amount which is now in dispute is $194,012.70, compared to an original sum of $788,361.87. It is important also to bear in mind that of that lower sum $165,737.12 involves the fees of senior and junior counsel who were engaged in the case, and only $28,275.88 are the solicitors own costs.

13. [13]
    The applicant, on 5 January 2015, filed an application in this court seeking directions as to the conduct for the proceedings in accordance with paragraph 7 of the order of Justice Boddice. The respondent submits that the applicant would not advise it what specific orders she was seeking until late in the afternoon of the day before the hearing of the application before me. Details of this are set out in an affidavit of Anthony Deane filed by leave before me. In my view, that issue is not of importance except perhaps as to costs.

14. [14]
    The respondent’s counsel submits that the orders proposed by the applicant are not appropriate having regard to observations of McGill SC DCJ in Paroz v Clifford Gouldson Lawyers [2012] QDC 151. His Honour said at paragraph 6 of that case:

“The reason for r 743G(2) and (3) is that, although disputes as to the quantum of costs are appropriately determined by a costs assessor, if there is a more wideranging dispute, for example as to whether the solicitor was negligent and should be deprived of some or all of the fees as a result, it is more appropriate for that issue to be determined by the court in a hearing, if necessary with witnesses, prior to the actual assessment taking place. The assessor can deal with the matter on the basis of findings by the court as to what the situation was. The position I think was the same here. If there was an issue as to the validity of the costs agreement, or as to the effect of non-disclosure, or as to any other matter which affected the bill in a substantial general way, it would have been better for the matter to have been decided by the court prior to referring the bill to the assessor.”

15. [15]
    The respondent in a letter of 3 July 2014, being Exhibit SH4 to the affidavit of Simon Harvey sworn 24 November 2014, says issues which require preliminary determination in such a way are raised in this matter.

16. [16]
    It submits that the affidavit of the applicant sworn on 12 December 2012 contains objections which an assessor could not properly adjudicate on. Perusal of the affidavit indicates that issues as to whether services provided by Kim Counsell, Blair Hall and Sidney Tang, employees of the respondent, were authorised, and the necessity for or usefulness of such work is in dispute. That is likely to involve issues of credit, significantly beyond a dispute merely as to the quantum of costs and, consistently with the observation of McGill SC DCJ in Paroz v Clifford Gouldson Lawyers (supra), should in my view be determined by the court in a hearing before the actual assessment takes place.

17. [17]
    The affidavit also asserts that the applicant was subject to unfair pressure to engage junior counsel and/or did not agree with respect to a fixed fee for a junior counsel’s work. Significant dispute is also raised in relation to senior counsel’s frees. The respondent submits that such issues also involve findings of credibility beyond the scope of an assessor’s duty and, furthermore, that the nature of the allegations requires that counsel be served so that they are appropriately part of the assessment. They clearly do involve significant findings of credit.

18. [18]
    Both parties before me accept that s 339 of Legal Profession Act 2007 (Qld) (LPA) makes the giving of notice of the costs application to counsel by the applicant mandatory. Both accept that the counsel are a “law practice to which the legal costs have been paid or are payable” within the meaning of that term as used in the LPA.

19. [19]
    Whether counsel then wish to participate in the costs assessment process is a matter for counsel but they are, under s 339(2) of LPA taken to be a party to the assessment and are bound by the assessment if the assessor so decides.

20. [20]
    The respondent’s counsel submits not to properly notify them by providing them with material relied on by the parties would be contrary to principles of natural justice, said in Radich v Kenway & Anor [2014] QCA 301, to be applicable to the assessment of costs. The court at paragraph 36 of that judgment said:

“Where a client is seeking an assessment of the whole of the bills, and that is ordered, all of the costs are to be assessed as they are the costs in dispute for the purposes of the UCPR. The assessment is not restricted to only those items specifically raised by the client. However, that assessment must be conducted fairly and efficiently, and in accordance with the rules of natural justice.”

21. [21]
    In my view that requirement of applying the principles of natural justice should apply not only to the assessment itself but to preliminary orders that might be made by a court to determine the scope of any assessment. Such preliminary orders would include orders relating to matters of general importance to the assessment spoken of by McGill SC DCJ in Paroz v Clifford Gouldson Lawyers (supra).

22. [22]
    The applicant’s counsel in written submissions submits I should now order an assessment and appoint an assessor to give effect to the final part of paragraph 7 of the order of Justice Boddice. The draft order provided by him provides for the service of the order for assessment upon both counsel, and for other consequential orders, but does not deal with issues of the sort spoken of in Paroz’s case, and does not give counsel an opportunity to be heard other than at the assessment or subsequently.

23. [23]
    In my opinion service of the order for the assessment as so contemplated does not however constitute compliance with s 339(1) of LPA. What is required is that they be given “notice of the costs application” and not just of orders made on the application. In my view natural justice requires that they be given such notice prior to final orders being made for the assessment rather than as provided in the draft order prepared by the applicant’s counsel. Accepting that pursuant to s 339(2)(b) of LPA they become a party to the assessment after being served with notice of the costs application, and noting that clause 6 of the applicant’s counsel draft order does give the parties’ liberty to apply for further orders, I nevertheless conclude it is appropriate, and in accordance with justice, that they be given notice of the proceedings and an appropriate opportunity to participate in the process of directions prior to a final order for assessment being made.

24. [24]
    I also conclude that the nature of the applicant’s dispute and the issues raised in her affidavit filed on 12 December require further directions, including directions as to the determination of matters which should be determined by a court, before cost assessors are appointed.

25. [25]
    The respondent’s draft order is in my view appropriate. It provides for service of all documents filed in the proceedings upon both counsel. They can thus be fully informed of what has occurred and make a properly informed choice as to what submissions they might make as to the determination of issues of the sort raised by McGill SC DCJ in Paroz’s case and as to their engagement and conduct prior to the matter being finally referred for assessment.

26. [26]
    The respondent’s counsel’s draft order also appropriately provides for the applicant to file and serve any application in relation to the adequacy of itemisations of the respondent’s bill 14 days after service of material on counsel. That affidavit too would need to be served on counsel who will then be a party. Orders with respect to delivery of material to the costs assessors are not in dispute.

27. [27]
    I will make orders as per the respondent’s draft, with minor amendments, as set out in the “order” section at the front of this judgment.