Pott v Clayton Utz[2016] QDC 39

DISTRICT COURT OF QUEENSLAND

2. [2]
   In this matter I have previously published a judgment, Pott v Clayton Utz [2015] QDC 66.  Justice Boddice in the Supreme Court has also published a judgment, Pott v Clayton Utz [2012] QSC 167.  Something of the history of the matter can be gleaned from those judgments.  Essentially, the applicant, who is the executor of her husband’s estate, is engaged in a dispute with the respondent, who were the solicitors acting for her husband and then for the estate in legal proceedings from 2004.  In the course of that relationship, senior counsel, Mr Thompson QC, and junior counsel, Ms Fitzgerald, were engaged by the respondents to act for the deceased and his estate in those proceedings.

3. [3]
   The applicant disputes various items in the bill rendered by the respondent and seeks an assessment of its costs. Her objections relate to both work of the respondent, and to work undertaken by both Mr Thompson QC and by Ms Fitzgerald. The respondent does not dispute counsels’ bills and the proposed assessment relates only to the bill which the respondent delivered to the applicant, but includes dispute as to the disbursements, being counsels’ fees.

4. [4]
   The matter was commenced by originating application filed in the Supreme Court seeking orders in relation to assessment of the respondent’s legal costs. Justice Boddice made orders allowing the applicant to challenge only some of the respondent’s invoices, and none in respect of work performed prior to 31 July 2008. The items required ultimately to be assessed were subsequently identified by Justice Douglas in an application in the matter. The matter was subsequently transferred to the District Court.

5. [5]
   When the matter first came before me I made orders on 2 April 2015 pursuant to s 339 of the Legal Profession Act 2007 (Qld). I directed, inter alia, that the applicant effect service of copies of all documents as filed in these proceedings on both Mr Thompson QC and Ms Fitzgerald.  I also ordered that the applicant file and serve any application in relation to the adequacy of itemisation on or before 2 May 2015 or 14 days after service of material on counsel.  I made various other orders designed to facilitate the future conduct of the matter. 

6. [6]
   The applicant then filed, on 30 April 2015, an application seeking orders:

1. That the respondent provide further itemisation of its costs by replacing what it had described as “rolled up items” into single claims for particular amounts.  36 specific items, totalling some $24,035.30, are identified in the application as being the subject of the need for such itemisation.

2. That Ms Fitzgerald “properly itemise” three invoices “so as to allow costs to be assessed under provision 7 of the Legal Profession Act” and that senior counsel, Mr Thompson QC, similarly itemise four invoices.

7. [7]
   Although that application was filed on 30 April 2015, the matter only came before the court on 15 December 2015. On that occasion the applicant sought orders:

1. directing that the parties file written submissions on the application to properly itemise the accounts of the respondent and of counsel;

2. that required that matter to be determined prior to a hearing in this court of issues, described in my earlier judgment as “Paroz v Clifford Gouldson” issues, and that those issues be determined, prior to the assessment of costs by an assessor; and

3. that paragraphs [2] and [3] of the application filed on 30 April 2015 be amended to seek orders requiring the respondent to procure the proper itemisation of those accounts, rather than ordering counsel to provide them as sought in the application as filed.

8. [8]
   The respondent agreed that written submissions should be made in respect to the itemisation issue but had a somewhat different proposal for how that should occur. The application to amend paragraphs [2] and [3] of the application of 30 April 2015 was opposed.

9. [9]
   The principal issue before me then was whether or not to allow the proposed amendments to the application filed 30 April 2015. I am also required to determine the form of the orders designed to allow the application that the respondent provide further itemisation of its costs to proceed and to regulate the hearing of the “Paroz v Clifford Gouldson” issues.

10. [10]
    The decision by the applicant to seek to amend the application was one made only late on the afternoon before the hearing. Counsel for Ms Fitzgerald indicated that her submission was to the effect that the application should be dismissed, principally on the basis that her client was not a party to the proceedings and the court did not have jurisdiction to make orders directly against her. In any case, she opposed the amendment on the basis that the respondent had given the applicant a detailed itemisation of Ms Fitzgerald’s fees sufficient to allow the applicant to be properly advised and to make a determination as to whether or not to proceed to an assessment of those fees.

11. [11]
    Senior counsel, in an email to the applicant’s solicitors, also indicated he was not a party to the proceeding merely because a direction had been made that he be served with copies of material. He indicated that, until such time as he was ordered to be a party to the proceedings, his view was that it was unnecessary for him to either appear or be represented. His email was provided to me and was made Exhibit 1 in the proceedings.

12. [12]
    As I have said, the respondent opposes the applicant being granted leave to amend the application. Furthermore, it seeks orders pursuant to r 375 of the Uniform Civil Procedure Rules (“UCPR”) to remove from the application the paragraphs seeking orders requiring the respondent to obtain further particularisation of counsels’ invoices.  That rule empowers the court to amend the application “in the way and on the conditions the court considers appropriate”.

13. [13]
    In my earlier judgment I had noted that many of the items to which the applicant objected, including items relating to both junior and senior counsel’s fees, are items that were “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”. In so determining I relied on observations made by McGill SC DCJ in Paroz v Clifford Gouldson Lawyers [2012] QDC 151.  Such issues in this case involved consideration of issues of credit which I concluded were beyond the scope of an assessor’s duty and should be determined by a court.

14. [14]
    The application to amend the application, as filed on 30 April 2015, seeks to effectively shift the onus of properly itemising counsel’s invoices onto the respondent, rather than on counsel. To consider this issue it is necessary to again consider the provisions of s 339 of the Legal Profession Act.  That section provides:

15. [15]
    It was pursuant to the provisions of s 339(1)(a) that I ordered the applicant to give notice of the costs application to both senior and junior counsel, Both the applicant and respondent accepted that each was a law practice to whom the legal costs had been paid or were payable, within the meaning of that term as used in s 339(1)(a) of the Act. Pursuant to subsection (2), after being given such notice, both counsel were then (a) entitled to participate in the costs assessment process; and (b) taken to be a party to the assessment. Furthermore, pursuant to sub-subsection (c) of that subsection, if the costs assessor decided, both could be “bound by the assessment”. I noted in my earlier judgment that principles of natural justice applied to the assessment of costs and said at paragraph [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).”

16. [16]
    Having regard to the need for natural justice I determined that it was necessary not only that counsel be served with “notice of the costs application”, as referred to in s 339(1) of the Act, but also that they be given such notice prior to final orders being made for the assessment.  I concluded that natural justice required that counsel be given an appropriate opportunity to participate in the process prior to final orders for assessment. 

17. [17]
    In [26] of the judgment I said:

“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.”

18. [18]
    A dispute arose on the application before me in December 2015 as to the meaning of the words underlined above. Both the respondent’s counsel and counsel for Ms Fitzgerald submitted it meant no more than that, pursuant to s 339(2)(b) thereof, counsel would be taken to be a party.

19. [19]
    The applicant’s counsel submitted that:

“At [26] your Honour was confining your remarks to the application for itemisation… your Honour was indicating there that in the context of an application for adequacy of itemisation, counsel will be a party to that application”. 

20. [20]
    The wording of s 339 is perhaps somewhat unusual. It does not specifically provide that a person, such as counsel, served with notice of the costs application under subsection (1) is a party. Rather, they are “taken to be a party”. In this case counsel are not a party to the assessment in the sense that orders are sought in the assessment which can require them to refund money to the applicant.

21. [21]
    Both counsel for the respondent and for Ms Fitzgerald submitted that the effect of s 339 is that they were taken to be a party to the assessment, but should not be seen as a party to the application for itemisation.

22. [22]
    The originating application relates to the assessment of a solicitor’s account to their client. The amount of barrister’s fees payable as a disbursement by the applicant is relevant to that assessment. But if an assessor ultimately allows only part of the barrister’s fees, that is a matter which directly impacts only the client and the solicitor. The solicitor can recover from the client only that part of the fee allowed by the assessor. The barrister is not, by that assessment, required to repay any part of his or her fees to the solicitor. Issues relating to this were discussed by Woods AJ in Ipex Itg Pty Ltd v McGarvie [2011] VSC 675. What s 339 does is to require the applicant to “give notice of the costs application” to a barrister whose fees, rendered to the solicitor, and then billed by the solicitor to the client as a disbursement, are the subject of an application for assessment by the client of the solicitor’s costs.  Having been given such notice the barrister is “entitled to participate in the costs assessment process”, and is “taken to be a party”. 

23. [23]
    In my view, that process includes an application relating to what I have termed “Paroz v Clifford Gouldson” issues, if they involve the barrister’s fees. The barrister is taken to be a party in relation to that issue.  As I sought to explain in my earlier judgment, natural justice requires their entitlement to participate not just in the assessment by the assessor but in ancillary matters relating to that process. 

24. [24]
    An entitlement to participate, and their being “taken to be a party” does not, however, equate to them being a party who can be required to refund sums paid to them by the solicitors. The provision in s 339 that they are “taken to be a party” and can be “bound by the assessment”, in my view, gives them various entitlements and subjects them to some obligations but does not give the solicitor’s client rights to recover fees from counsel. For example, counsel might seek a review of any assessment relating to their fees, or, appeal from orders made relating to such a review. The reason for that, in my view, is not that they can as a result of the assessment be required to repay their fees, or part of them, to the client but rather is because a determination by the assessor concerning their fees may have other important consequences for a barrister. An adverse finding could, for example, impact on their professional reputation. It might weaken their position in any subsequent negotiations with their solicitors about whether they should repay some part of their fees to the solicitor. Those matters can be of critical importance. In addition, there is power under s 343 for an assessor or the court to ask the registrar to refer a matter to the Legal Services Commissioner to consider disciplinary action. All those matters are matters of importance which justify a barrister being given notice of the assessment. But in my view the provisions of s 339 do not mean the assessor of a bill between a client and a solicitor can direct a barrister to repay fees to the solicitor or to the client. They are not a party in that sense.

25. [25]
    The question remains whether the fact that a barrister is “taken to be a party to the assessment” and has rights and can face consequences of the kind I have referred to, means he or she can also be required to provide further itemisation of the barrister’s invoices.

26. [26]
    Generally, interlocutory orders in a matter are made only against a party against whom final relief may be granted: see Patrick Stevedores v MUA (1998) 195 CLR 1 at 33, a case helpfully referred to me by counsel for Ms Fitzgerald.  But the making of orders against non-parties is not unknown.  The power in the UCPR to make orders for disclosure against non-parties is an obvious example.

27. [27]
    In my view, the provisions of s 339(2)(b) empower the court to make orders against a party given notice as required by s 339(1)(a), as has here occurred and so taken to be a party to the assessment, if such orders are needed to ensure the effective exercise of the jurisdiction to assess the legal costs.

28. [28]
    I consider that conclusion is supported from the words used in s 339 and from the fact that the provisions of division 7 of part 3.4 of chapter 3 of the Act, which includes s 339, are designed to provide for “protection of consumers” of such services. Those words are taken from the second reading speech of the Attorney-General when he discussed that division when introducing the Bill to Parliament from 19 April 2007.

29. [29]
    To conclude otherwise could place a client of a legal firm in an invidious position on an assessment. If a barrister has provided an invoice to solicitors and failed or refused to provide sufficient particulars to enable the client to make an informed choice as to whether to challenge the solicitors claim for such fees as a disbursement, there would be no way to ensure the client’s protection. In saying that, I am not otherwise suggesting that in this case either of the counsel involved have not provided adequate itemisation of their accounts. That is a matter for another day. But that possibility informs my interpretation of the meaning of the section.

30. [30]
    I therefore determine that I have power to order that both senior and junior counsel itemise their accounts so as to provide such information as is necessary to enable the applicant to make an informed choice as to whether to challenge the solicitor’s recovery of the barristers’ fees.

31. [31]
    I conclude, therefore, the application as filed on 30 April 2015, which sought to have counsel “properly itemise” a number of identified invoices, was in an appropriate form. I do not think it appropriate to make the respondent responsible for providing such information. Whilst not suggesting the barristers in this case if able to provide further itemisation would not provide such further itemisation if asked to do so by the solicitors, to make the order in the form of the proposed amendment is unsatisfactory. The court is in my view empowered by s 339 to direct, if it is appropriate to do so, that the barristers itemise the invoices referred to in paragraphs [2] and [3] of the application.

32. [32]
    In that circumstance it is, in my view, inappropriate that paragraphs [2] and [3] of the application be amended in the way the applicant’s counsel has sought. Whether further itemisation should be indeed is a matter yet to be determined.

33. [33]
    The remaining issue concerns the form of the appropriate directions for progressing this matter.

34. [34]
    The applicant’s draft order seeks only that each of the parties serve written submissions in support or in opposition of the application of 30 April 2015, on or before designated dates. The order proposed by the respondent’s counsel is somewhat more fulsome. In addition to the orders for written submissions she also seeks orders requiring statements of outstanding issue which should be tried by the District Court (the identification of Paroz v Clifford Gouldson issues) before the appointment of a costs assessor. I think that the orders sought by the respondent’s counsel are appropriate in relation to those matters.

35. [35]
    The terms of the following orders were agreed upon by the parties and are made upon the publication of these reasons.

36. [36]
    I order;

1. The Application to amend paragraphs [2] and [3] of the application filed 30 April 2015, so as to provide that the Respondent procure the proper itemisation of counsel’s invoices is dismissed.
2. The Applicant’s solicitors serve a copy of this or order and these reasons on Mr GA Thompson QC.
3. Counsel be given leave, if they wish, to appear on the hearing of the application filed 30 April 2015.
4. Any party who wishes to seek costs of the application heard on 15 December 2015 shall serve submissions in support of such application on the other parties and email a copy of such submissions to my associate by 4.00pm, Tuesday 5 April 2016.
5. Any parties against whom such costs are sought serve submissions in response on the parties seeking costs and email a copy to my associate by 4.00pm, Tuesday 12 April.
6. Any further submissions in reply be served on the parties and emailed to my associate by 4.00pm, Wednesday 13 April 2016.
7. In the event no submissions as ordered in paragraph 4 hereof are served b 4.00pm on 5 April 2016 then it will be ordered that costs of the application of 15 December 2015 be reserved.
8. The Application filed 30 April 2015 is adjourned to 10.00 am on Friday, 10 June 2016.
9. The Applicant file and serve written submissions in support of the Application filed 30 April 2015 on or before 4.00pm Friday, 3 June 2016.
10. The Respondent file and serve written submissions in response to the Applicant’s submissions on or before 4.00pm Wednesday 8 June 2016.
11. Either counsel file any written submissions on which they intend to rely by 4.00pm Thursday, 9 June 2016.
12. The Applicant submit to the Respondent and counsel a concise statement of the outstanding issues which she contends should be tried by the District Court before a costs assessor is appointed on or before 4.00pm Friday, 13 May 2016.
13. The Respondent and either counsel (if they wish) shall indicate in writing on or before 4.00pm Friday, 27 May 2016:
    1. (a)
       whether they agree as to the issue(s) outstanding;
    2. (b)
       provide an alternative statement of outstanding issue(s);
    3. (c)
       add any additional outstanding contentious issue(s); and
    4. (d)
       identify any issue(s) which is/are conceded as no longer contentious and for which no evidence will be required to be called.
14. The Applicant is to file and serve any affidavit material on which she intends to rely on or before 4.00pm Friday, 17 June 2016.
15. The Respondent and either counsel (if they wish) are to file and serve any affidavit material on which they intend to rely on or before 4.00pm Friday, 1 July 2016.
16. The parties file a Form 48 (Request for Trial Date) on or before 4.00pm Friday, 8 July 2016.
17. Liberty to apply by either party on five clear working days' notice in writing to the other party and counsel.