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- Unreported Judgment
MCC Pty Ltd v TCS Solicitors Pty Ltd QDC 71
DISTRICT COURT OF QUEENSLAND
MCC Pty Ltd v TCS Solicitors Pty Ltd  QDC 71
MCC PTY LTD
TCS Solicitors Pty Ltd
District Court at Brisbane
10 May 2019
24 April 2019
THE ORDER OF THE COURT IS THAT:
THE COURT ALSO DIRECTS THAT:
PRACTICE AND PROCEDURE – COSTS – whether order for appointment of costs assessment should be made – whether directions should be given for trial.
Legal Profession Act 2007 (Q) ss 308, 315, 322, 323, 324, 325, 327, 328, 341
Uniform Civil Procedure Rules 1999 (Q) rr 26, 720, 721, 739G
HWL Ebsworth Lawyers v Pickering Auto Group Limited & Anor  QDC 222
Paroz v Clifford Gouldsen Lawyers  QDC 151
Radich v Kenway & Anor  QCA 301
Solicitors for the applicant
Mr C.K. George counsel for the respondent
Taylor David solicitors for the applicant
TCS Solicitors for the respondent
- This is an application by MCC Pty Ltd (“MCC”) for an order for the assessment of legal costs.
- As the argument developed the applicant sought directions so that the validity of the relevant costs agreements should be determined by the court before the assessment and directions in this regard were proposed.
- The respondent TCS Solicitors Pty Ltd (“TCS”) on the other hand agrees with the appointment of the costs assessor but opposes the directions submitting that there are no triable issues which need to be determined prior to the assessment of costs.
- Chad Gear has sworn an affidavit which was filed in this court on 11 March 2019.
- In the affidavit he says that he was informed by Christopher Scroope who is the sole director of MCC, that in or around early December 2016 Mr Scroope retained TCS to act on MCC’s behalf in relation to a dispute with Annie Street JV Pty Ltd. This dispute became the subject of litigation in the Brisbane Supreme Court by proceeding number 1260/16. Exhibit CWG4 is a true copy of the costs agreement. In the costs agreement the estimate of costs and fees was “between $50,000 and $80,000”.
- Between or on about 21 December 2016 and 28 February 2019, TCS issued invoices concerning that dispute in a total sum of $414,471.54.
- In or around early March 2017 Mr Scroope caused MCC to retain TCS to act on behalf of MCC in respect of a dispute with Mr Alvin Lowe. This dispute became the subject of litigation in the Brisbane Supreme Court by proceeding number 11709/17.
- The costs disclosure statement with respect to this dispute is contained in the affidavit of Nicholas James Morgan filed on behalf of the respondent.
- The estimate of fees was said to be $11,000.00 to $27,500.00. In that agreement the agreed work under clause 5 was:
“Commercial litigation between the client and Alvin Lowe, enforcement of any judgment obtained by the client against Mr Lowe, advice in relation to the contract between the client and Mr Lowe and any incidental attendances.”
- In clause 11 it was noted that the applicable scale was “District Court”.
- Between about 31 March 2016 and 31 May 2018 TCS issued invoices totalling $174,992.16 regarding the Alvin Lowe dispute.
- Mr Gear swears that Mr Scroope challenges the costs concerning the Annie Street dispute because the actual fees greatly exceeded the estimate of fees and costs and further alleges that for both matters as the work was not carried out in a reasonable way.
- Nicholas James Morgan has sworn an affidavit dated 23 April 2019. He swears he is a solicitor in the employ of TCS. He says that between 7 December 2016 and 13 February 2019 TCS, acting on behalf of MCC, regularly received instructions from MCC’s sole director Mr Scroope. He swears further that on 8 December 2016 MCC executed the client agreement concerning the Annie Street dispute.TCS was on the record for MCC in the Supreme Court proceedings concerning Annie Street. In that proceeding amongst other things, 80 court documents were filed as at 13 February 2019; there were three versions of MCC’s statement of claim, the most recent of which was 14,594 words along; there were nine versions of Annie Street defence and counter-claim; there were two versions of MCC’s reply and answer (the most recent of which was 29,406 words); there were two mediations with Queens Counsel as mediator and between 19 April 2017 and 13 February 2019 the proceeding was on the Supreme Court’s commercial list and subject to regular review by Jackson J.
- On 13 February 2019 Taylor David Lawyers informed TCS they now acted for MCC in the Annie Street dispute.
- As to the Alvin Lowe dispute, Mr Morgan swears that between 24 October 2017 and 13 February 2019 TCS acted on behalf of MCC in that dispute. During that dispute TCS regularly received instructions from Mr Scroope and employees of MCC. On 28 November 2017 TCS sent a client agreement concerning that dispute.As at 28 November 2017 there were only two District Court proceedings on foot, namely District Court proceeding 4164/17 which was a proceeding in which an adjudication certificate had been filed as a judgment for debt under s 31(1) of the Building and Construction Industry Payments Act 2004 (Qld) and District Court proceeding 4166/17 which was a proceeding in which an adjudication certificate had been filed as a judgment for debt under s 31(1) of the Building and Construction Industry Payments Act 2004 (Qld).
- On 8 November 2017 Mr Lowe commenced Supreme Court proceeding 11709/17 by filing a claim seeking amongst other things orders declaring void the adjudication decisions underlying the adjudication certificates which had been filed in the two District Court proceedings.
- Also, on 16 November 2017 MCC commenced Supreme Court proceeding 12115/17 by seeking an order from the Supreme Court that receivers or trustees for sale be appointed to Mr Lowe’s properties.
- On 29 January 2018 Jackson J made orders in the Supreme Court proceedings which restrained MCC from enforcing the two adjudication decisions or two judgments in the two District Court proceedings and adjourning MCC’s originating application in the Supreme Court until further order. In the Supreme Court proceeding 1179/17 amongst other things there were 76 court documents filed and between 23 August 2018 and 13 February 2019 Supreme Court proceeding 11709/17 was subject to regular review by Jackson J.
- On 13 February 2019 TCS was informed by Taylor David Lawyers they now acted for MCC.
- Mr Morgan swears that TCS consents to an order appointing Mr Adam Bloom as costs assessor.
Submissions by the applicant
- The applicant submitsthat prior to Mr Bloom assessing the legal costs, the court should determine the basis upon which the costs assessment should be conducted and therefore there should be directions given as to delivery of pleadings, the delivery of material and a hearing.
- MCC submits that with respect to the Annie Lane dispute there was non-disclosure concerning the increase in legal fees and this may render void the costs agreement.
- MCC submits that with respect to the Alvin Lowe dispute, TCS also did not comply with s 308 of the Legal Profession Act 2007 (Qld) (“LPA”) concerning the disclosure of further costs and outlays.
- It is submitted that the costs agreements are misleading or deceptive and further, there were insufficient updated costs disclosures provided as required by the LPA.
- It is submitted that the costs agreements are liable to be set aside.
- It was also submitted that the agreements could be set aside under section 328 of the LPA.
- In those circumstances pleadings were sought.
- In oral submissions the applicant repeated and relied on the written submissions. MCC submits that the costs agreements are void or alternatively, that there is a triable issue by reason of the provisions of s 328 of the LPA.
- It was submitted in those circumstances that pleadings should be ordered to be delivered and a trial set prior to the costs assessment.
- On the other hand, the respondent submitsthat orders should be made in terms of the originating application. It is submitted that TCS has repeatedly informed MCC’s solicitors that it consents to the terms of the originating application. In oral submissions it is submitted there are no grounds to think that the costs agreements are void and further, there has been no application pursuant to s 328 of the LPA.
- It is also submitted that in all of the circumstances there are no triable issues and the matter should be referred for a costs assessment with relevant directions to the costs assessor.
- Rule 743G of the Uniform Civil Procedure Rules 1999 (Q)(UCPR) requires this court to consider whether there is any question to be tried before costs are assessed including whether the costs agreement is void, whether the lawyer was negligent, whether the lawyer was in breach of the retainer or whether the lawyer acted contrary to instructions.
- In this case it is clear the application was solely for the appointment of a costs assessor. There is no application pursuant to s 328 of the LPA for an order that the costs agreements be set aside on the basis they are not fair or reasonable.
- If a party wishes to rely on a particular provision of an act in an application, UCPR r 26(6) requires this to be specified and the UCPR r 26(1) requires the relief sought to be set out. It may be thought that this reflects the requirements of procedural fairness.
- The applicant was given the opportunity for an adjournment or leave to amend the application but declined that invitation.
- I therefore put aside the submission that section 328 of the LPA is relevant at this stage.
- I next consider the submissions that there is a triable issue on whether the costs agreements are void.
- The applicant relied on s 327(1) of the LPA which provides:
“(1) A costs agreement that contravenes, or is entered into in contravention of, any provision of this division is void.”
- The words “this division” referred to in s 327(1) of the LPA referred to division 5.
- Division 5 relates to the making of costs agreements (s 322), conditional costs agreements (s 323), conditional costs agreements involving uplift fees (s 324) and contingency fees (s 325). It is my opinion none of these issues are raised on the material.
- However, a number of issues are raised as to whether there was been sufficient disclosure and whether the fees charged were reasonable or not.
- Section 308 of the LPA provides:
“(1) 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 any of the legal costs; and
- (b)the client’s right to—
- (i)negotiate a costs agreement with the law practice; and
- (ii)receive a bill from the law practice; and
- (iii)request an itemised bill after receipt of a lump sum bill; and
- (iv)be notified under section 315 of any substantial change to the matters disclosed under this section; and
- (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 those costs; and
- (d)details of the intervals, if any, at which the client will be billed; and
- (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
- (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
- (ii)the range of costs the client may be ordered to pay if the client is unsuccessful; and
- (g)the client’s right to progress reports under section 317; and
- (h)details of the person whom the client may contact to discuss the legal costs; and
- (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 a costs agreement under section 328; and
- (j)any time limits that apply to the taking of any action mentioned in paragraph (i); and
(k)that the law of this jurisdiction applies to legal costs in relation to the matter; and
(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
- (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.
Note for paragraph (l)—
The client’s right to enter into an agreement or give a notification as mentioned in paragraph (l) will be under provisions of the law of the other jurisdiction that correspond to section 303.
- (2)For subsection (1)(e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is stated or decided from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.
- (3)A regulation may make provision for the use of benchmark rates of interest, and in particular in relation to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates.
- (4)For subsection (1)(f), the disclosure must include—
- (a)a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client’s legal costs; and
- (b)if applicable, a statement that disbursements may be payable by the client even if the client enters a conditional costs agreement.
- (5)A law practice may disclose any or all of the details mentioned in subsection (1)(b)(i), (ii) and (iii), (g), (i), (j) and (l) in or to the effect of a form approved by the chief executive for this subsection, and if it does so the practice is taken to have complied with this section in relation to the details so disclosed.”
- Section 315 of the LPA imposes an ongoing duty of disclosure on the practitioner.
- It is my view that the matters raised under s 308 of the LPA are matters to be considered by the costs assessor on the assessment.
- Section 316 of the LPA provides:
“(1)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed, the client or associated third party payer, as the case may be, need not pay the legal costs unless they have been assessed under division 7.
Under section 341, the costs of an assessment in these circumstances are generally payable by the law practice.
- (2)A law practice that does not disclose to a client or an associated third party payer anything required by this division to be disclosed may not maintain proceedings against the client or associated third party payer, as the case may be, for the recovery of legal costs unless the costs have been assessed under division 7.
- (3)If a law practice does not disclose to a client or an associated third party payer anything required by this division to be disclosed and the client or associated third party payer has entered into a costs agreement with the law practice, the client or associated third party payer may also apply under section 328 for the costs agreement to be set aside.
- (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.
- (5)If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to the client solely because the retained law practice failed to disclose relevant information to the first law practice as required by section 309(2), then subsections (1) to (4)—
- (a)do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non-disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information; and
- (b)do apply to the legal costs owing to the retained law practice.
- (6)In a matter involving both a client and an associated third party payer if disclosure has been made to 1 of them but not the other—
- (a)subsection (1) does not affect the liability of the 1 to whom disclosure was made to pay the legal costs; and
- (b)subsection (2) does not prevent proceedings being maintained against the 1 to whom the disclosure was made for the recovery of those legal costs.
- (7)Failure by a law practice to comply with this division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner, or Australian-registered foreign lawyer, involved in the failure.”
- It is my view that the matters raised by the applicant are matters which are to be considered by the costs assessor when he carries out his assessment in this case particularly under section 316(4) of the LPA.
- The issue of non-disclosure and reasonableness goes to the amount to be assessed.
- Next, the applicant submits that the costs agreement concerning the Alvin Lowe proceedings is invalid because it refers to the District Court as the applicable scale. I do not agree with this. Clause 5 was widely drawn and incorporates all of the proceedings involving Mr Lowe. As it turns out matters relating to the District Court proceeded in the Supreme Court. MCC could not have been unaware of this.
- I do not think this goes to the validity of the agreement at all.
- The applicant relied on a number of cases in its submissions.
- In Paroz v Clifford Gouldsen LawyersMcGill SC DCJ said that if there was a more wide ranging dispute (for example whether the solicitor was negligent) then it may be more appropriate for this to be determined at a hearing prior to the assessment taking place.
- However in this case it is not alleged there is any such dispute. But in any event the costs assessor can receive submissions on whether work was done reasonably or was required.
- Indeed section 341 of the LPA specifically refers to such matters. This section provides:
“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.
- (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 practitioner or Australian-registered foreign lawyer acting on its behalf complied with this Act;
- (b)any disclosures made by the law practice under division 3;
- (c)any relevant advertisement as to—
- (i)the law practice’s costs; or
- (ii)the skills of the law practice, or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf;
- (d)the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter;
- (e)the retainer and whether the work done was within the scope of the retainer;
- (f)the complexity, novelty or difficulty of the matter;
- (g)the quality of the work done;
- (h)the place where, and circumstances in which, the legal services were provided;
- (i)the time within which the work was required to be done;
- (j)any other relevant matter.
- (3)In conducting an assessment of legal costs payable by a non-associated third party payer, the costs assessor must also consider whether it is fair and reasonable in the circumstances for the non-associated third party payer to be charged the amount claimed.”
- Further UCPR r 720 requires the costs assessor to accord natural justice to the parties. The way in which a costs assessor will conduct the assessment was discussed in Radich v Kenway & Anor.
- The applicant relies on HWL Ebsworth Lawyers v Pickering Auto Group Limited & Anor.In that decision Farr SC DCJ noted that the issue of whether a costs agreement is void should have been left to the magistrate and not the costs assessor. I agree entirely with his Honour, but for the reasons I have stated in this particular matter, I am of the view there is no triable issue on this question. In HWL there was a real issue on whether there was a retainer. In this case there is no material from MCC disputing the retainer.
- In conclusion, based on the submissions and the evidence to which I have had regard, I am not persuaded there are any triable issues concerning the validity of the costs agreements. There are certainly issues concerning disclosure and the reasonableness of the charges but these matters can be determined by the costs assessor.
- In the circumstances I decline to make the directions sought by the applicant but make the following orders in light of the agreed directions if I did not find in favour of the applicant:
THE ORDER OF THE COURT IS THAT:
- Mr Adam Bloom is appointed as the costs assessor to assess the costs described in paragraphs 1 and 2 of the Application for Costs Assessment filed 11 March 2019.
THE COURT ALSO DIRECTS THAT:
- In conducting the assessment, Mr Bloom is to consider any submissions in writing by the Applicant and the Respondent:
- (b)if there has been any non-compliance with sections 308(1) or 315 of the Legal Profession Act 2007 (Qld):
- (i)the amount submitted to be proportionate to the seriousness of that non-compliance; and
- Any submissions by the Applicant and the Respondent as provided for in paragraph 2 above are to be delivered to Mr Bloom and each other party:
- (a)By the Applicant: within 14 days after the date of these directions;
- (b)By the Respondent: within 14 days after receiving the Applicant’s submissions;
- (c)By the Applicant: any submissions in response, within 14 days after receiving the Respondent’s submissions.
- I will hear the parties on the question of costs.
Document 2- Affidavit of Chad Gear filed 11 March 2019.
Page 42 of the affidavit of Chad Gear filed 11 March 2019.
Page 23 of the affidavit of Nicholas James Morgan.
Pages 2-13 of the affidavit of Nicholas James Morgan.
Pages 17-47 of the affidavit of Nicholas James Morgan.
 QDC 151 at .
 QCA 301. Also see UCPR r 721.
 QDC 222 at  and .
 QDC 222 at .
- Published Case Name:
MCC Pty Ltd v TCS Solicitors Pty Ltd
- Shortened Case Name:
MCC Pty Ltd v TCS Solicitors Pty Ltd
 QDC 71
10 May 2019