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Unreported Judgment

Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers[2020] QDC 301Jarro DCJ
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Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers[2020] QDC 301

DISTRICT COURT OF QUEENSLAND

CITATION:	Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers [2020] QDC 301
PARTIES:	VAL ECO HOMES PTY LTD (IN LIQ) ACN 104 030 462 (applicant) v JASON HALL T/A JHL LAWYERS ABN 26 312 281 326 (respondent)
FILE NO:	BD No 2625 of 2020
DIVISION:
PROCEEDING:	Application
ORIGINATING COURT:
DELIVERED ON:	27 November 2020
DELIVERED AT:	Brisbane
HEARING DATE:	12 November 2020
JUDGE:	Jarro DCJ
ORDER:	I will hear from the parties as to the form of the order and costs.
CATCHWORDS:	STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – GENERAL APPROACHES TO INTERPRETATION – GENERALLY – where the applicant was a non-associated third party payer within the meaning of Part 3.4 of the Legal Profession Act 2007 – where a liquidator was appointed to the applicant – where the applicant made the present application under s 335 of the Act – where the respondent contends that the application has been brought out of time – where the applicant contends that a request for pre-payment is not a request for payment within the meaning of s 335(5)(a) of the Act – whether the request for payment made on 9 July 2019 was a request for payment within the meaning of s 335(5)(a) of the Act – when the 12 month period commenced STATUTES – ACTS OF PARLIAMENT – INTERPRETATION – GENERAL APPROACHES TO INTERPRETATION – GENERALLY – where the application for the earlier bills is made out of time – where s 335(6) of the Act permits an extension beyond the time limit imposed in certain circumstances so long as the applicant is not a sophisticated client or a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned – where the applicant contends that the court can deal with the application after considering the reasons for delay – whether the applicant is excluded from an extension beyond the time limit
LEGISLATION:	Legal Profession Act 2007, s 301, s 330, s 332, s 335
CASES:	Queensland Law Group – A New Direction Pty Ltd v Crisp [2019] 2 Qd R 467, applied Re Stanhill Consolidated Limited [1967] VR 749, cited
COUNSEL:	M Doyle with M J Hafeez-Baig for the applicant D A Skennar QC with P J Trout for the respondent
SOLICITORS:	Dowd & Co for the applicant JHL Lawyers for the respondent

Introduction

[1]
The applicant applies for:
1. (a)
  itemised bills in relation to nine tax invoices;
2. (b)
  costs agreements;
3. (c)
  an assessment of 27 tax invoices (including the nine for which itemised bills are sought);
4. (d)
  the appointment of a costs assessor.
[2]
The application is opposed.

Factual Matters

[3]
On 19 February 2019, the applicant borrowed $600,000 from KTEHF Pty Ltd as trustee for the KTEHF Trust (“KTEHF”) pursuant to a loan facility deed (“deed”). The applicant was required to indemnify KTEHF for its costs, expenses, fees and disbursements in relation to various matters associated with the deed as per the following clause which appeared in the deed:

“10.Costs and indemnities

10.1What the Borrower agrees to pay

The Borrower must, on demand by the Lender, pay to, or as directed by, the Lender, and indemnify the Lender against, all costs, losses, charges, expenses, liabilities, damages, fees and disbursements (including all reasonable legal costs on a solicitor and own client basis) paid or incurred by the Lender of or incidental to:

(a)
the negotiation, preparation, execution and (if applicable), stamping and registration of this Deed and the security and of all other deeds, Deeds, licences, documents and other instruments to be negotiated, prepared, executed and (if applicable), stamped and registered under or for the purposes of this Deed or the security;

(b)
any breach of, or default under, this Deed or the security by the Borrower or any guarantor (including the fees of all professional consultants properly incurred by the Lender in consequence of or in connection with, any such breach or default);

(c)
the exercise or attempted exercise of any right, power, privilege, authority or remedy of the Lender under or by virtue of this Deed or the security; and

(d)
all taxes (excluding any income tax payable by the lender), outgoings, penalties, fines, demands, charges or costs, stamp and other duties and assessments imposed by any court or by any federal, state or municipal, statutory or other authority or otherwise (including any related bank charges, financial institutions duties and debits taxes) directly or indirectly upon this Deed or the security or any receipt or payment under this Deed or the Security.”^[1]

[4]
The respondent, a law firm, acted for KTEHF in relation to the deed. It provided legal services to KTEHF and issued bills to KTEHF for legal costs. It is common ground that the applicant is a “non-associated third party payer” within the meaning of Part 3.4 of the Legal Profession Act 2007 (Qld) (“the Act”) because it was obliged to pay KTEHF’s legal costs in relation to the services described in the deed, and that obligation was owed to KTEHF and not the respondent.
[5]
Over a period of time, the respondent has issued the 27 bills to KTEHF, totalling $474,104.31, namely as follows:

No.	Date	Invoice No.	Matter No.	Amount
1	21.09.2018	11497	1802178	$12,142.35
2	11.02.2019	11820	1900177	$5,894.09
3	13.02.2019	11822	1900177	$2,726.90
4	15.02.2019	11824	1900177	$7,829.10
5	12.04.2019	11947	1900690	$2,310.00
6	30.04.2019	11970	1900177	$4,166.80
7	31.05.2019	12094	1900690	$21,402.15
8	31.05.2019	12097	1900989	$4,785.00
9	11.06.2019	12121	1900705	$2,385.25
10	12.06.2019	12125	1900705	$22,770.00
11	28.06.2019	12162	1900690	$153.45
12	28.06.2019	12186	1901079	$73,138.96
13	05.07.2019	12197	1901079	$36,175.95
14	11.07.2019	12199	1901290	$39,472.40
15	19.07.2019	12206	1901290	$33,927.70
16	26.07.2019	12211	1901290	$31,135.00
17	26.07.2019	12213	1901290	$2,041.00
18	26.07.2019	12214	1901290	$38,529.72
19	31.07.2019	12238	1901290	$2,035.00
20	31.07.2019	12249	1901290	$30,146.27
21	02.08.2019	12256	1901290	$22,588.14
22	09.08.2019	12259	1901290	$20,663.40
23	16.08.2019	12287	1901290	$14,727.98
24	23.08.2019	12292	1901290	$14,164.15
25	29.08.2019	12326	1901290	$18,740.70
26	17.09.2019	12337	1901290	$21,168.95
27	27.09.2019	12381	1901290	$16,883.90

[6]
The applicant has helpfully categorised the invoices as “earlier bills” and “later bills”. The earlier bills are bills 1 to 13, which were issued pursuant to an earlier costs agreement (or costs agreements) which has (or have) not been provided to the applicant. The later bills, being bills 14 to 27, were issued pursuant to a costs agreement that the respondent sent to KTEHF on 5 July 2019 and all have the same matter number “1901290”. It is in this respect I note that on 27 June 2019, the respondent sent a letter to the applicant advising that there had been a breach of the deed and on 5 July 2019:
1. (a)
  The director of KTEHF requested the respondent to prepare a summary of all costs incurred to date in relation to the applicant and the costs for further work to be undertaken; and,
2. (b)
  The respondent opened matter no. 1901290 with KTEHF as the client and sent a costs agreement. A payment in advance of $220,000 was required.^[2]
[7]
On 9 July 2019, the respondent sent a letter to the applicant and the then solicitor for the applicant attaching a statement of costs incurred as a result of a breach of the deed and requested that the sum of $396,740.76 be paid.^[3] The statement of costs provided a breakdown of the sum of $396,740.76, said to be:
1. (a)
  $195,880.00 for reimbursement to KTEHF for its legal costs incurred prior to 9 July 2019;^[4]
2. (b)
  $7,700 for reimbursement to KTEHF for barrister’s fees;
3. (c)
  $31,000 to KTEHF for accounting fees payable in advance sought by accountants, McKern & Associates;
4. (d)
  $220,000 to KTEHF for legal costs to be undertaken on behalf of KTEHF as a consequence of the breach of deed.^[5]
[8]
The amount of $396,740.76 was banked into the respondent’s trust account shortly thereafter and was subsequently applied to KTEHF’s incurred costs as per the statement of costs.^[6]
[9]
Between 10 July 2019 and 29 August 2019, the $220,000 payment in advance was applied to legal fees pursuant to the deed.^[7] The invoices rendered and paid in relation to the $220,000 were the later bills (more particularly bills 14 to 24).
[10]
After the funds paid in advance were exhausted ($220,000), the respondent sent a new costs agreement to KTEHF for further works and estimated the fees payable by KTEHF.^[8]
[11]
On 12 August 2019, Gavin Morton was appointed liquidator of the applicant. In circumstances where the respondent’s legal fees charged ($502,000) appear to be disproportionate to the loan amount ($600,000), it is not unsurprising the liquidator has real concerns about the amounts charged by the respondent.^[9]
[12]
On 25 September 2019, the applicant:
1. (a)
  requested, pursuant to s 335(7) of the Act, that the respondent provide a copy of each bill issued to KTEHF;
2. (b)
  requested, pursuant to s 332(1) of the Act, that in relation to any bills that are lump sum bills, the respondent provide an itemised bill.^[10]
[13]
On 23 October 2019, the respondent provided the applicant with the 27 bills.^[11]
[14]
On 16 September 2020, the applicant filed the present application.

Legislative Provisions

[15]
Section 301(1) of the Act provides that a person is a “third party payer” if the person is not a client and:
1. (a)
  is under a legal obligation to pay any or all of the legal costs for legal services provided to the client; or,
2. (b)
  being under such an obligation, has already paid all or part of those legal costs.
[16]
The applicant is the third party payer.
[17]
Section 335 of the Act permits the applicant to apply for an assessment of the costs payable by it. The section states:

“335 Application by clients or third party payers for costs assessment

(1)
A client may apply for an assessment of the whole or any part of legal costs.

(2)
A third party payer may apply for an assessment of the whole or any part of legal costs payable by the third party payer.

(3)
The costs application may be made even if the legal costs have been wholly or partly paid.

(4)
If any legal costs have been paid without a bill, the client or third party payer may nevertheless make the costs application.

(5)
A costs application by a client or a third party payer must be made within 12 months after—

(a)
the bill was given, or the request for payment was made, to the client or third party payer; or

(b)
the costs were paid if neither a bill was given nor a request was made.

(6)
However, a costs application made out of time, otherwise than by any of the following, may be dealt with by a costs assessor or a court if, under the Uniform Civil Procedure Rules, the assessor or the court decides to deal with it after considering the reasons for delay—

(a)
a sophisticated client;

(b)
a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned.

(7)
If the third party payer is a non-associated third party payer, the law practice must provide the third party payer, on the written request of the third party payer, with sufficient information to allow the third party payer to consider making, and if thought fit to make, a costs application.

…”

[18]
A bill may be in the form of a lump sum bill or an itemised bill.^[12] If a lump sum bill is given, any person entitled to apply for an assessment of the legal costs to which the bill relates may request an itemised bill.^[13] The law practice must comply with the request within 28 days.^[14]
[19]
In accordance with s 335(5) of the Act, an application for an assessment of the whole or any part of legal costs must be made within 12 months of:
1. (a)
  delivery of the bill to the third party payer;
2. (b)
  a request for payment is made of the third party payer; or
3. (c)
  the payment of costs if neither a bill was given, nor a request was made.
[20]
I was referred to the authority of Queensland Law Group – A New Direction Pty Ltd v Crisp [2019] 2 Qd R 467, where Sofronoff P (Morrison and Philippides JJA agreeing) held (emphasis added):

“[17] The statute does not make the delivery of an itemised bill, or indeed the delivery of any kind of bill, a condition precedent to the right to make a costs application. This is consistent with the absence of an idea that it is a bill that is to be assessed. Section 335 does not refer to an assessment of a bill but to “an assessment of the whole or any part of legal costs”. The legal costs may be those referred to in a lump sum bill or an itemised bill. But they may also be the legal costs that have been the subject of the “request” or the payment that are also referred to in s 335(5). It is not only the delivery of a bill that triggers the beginning of the limitation period; it is triggered by a solicitor’s request for payment or by a client’s payment of costs. It can therefore be concluded that there is nothing in s 335 that, for the purposes of an application for an assessment of legal costs, promotes the importance of an itemised bill over a lump sum bill or even that distinguishes between them.

…

[21] It is true that s 300 defines “itemised bill” as a bill made up in a way that would allow legal costs to be assessed. This suggests that, before there can be a useful assessment, such a bill must be brought into existence and, consistently with that consideration, s 332(1) empowers “any person who is entitled to apply for an assessment” to request the delivery of such a bill. However, none of these provisions can be read as meaning that an “itemised bill” is a bill that is made up in a way that would allow a client to determine whether to apply for an assessment or that it is a bill that is made up that way for that purpose. There is no need for such a provision because the Act allows ample time for an application to be made even if an itemised bill is not delivered in the first instance. Within the interval of 12 months, a request for delivery must be met by the law practice within a mere 28 days. In the case of inordinate delay beyond the limitation period, such delay would furnish a ground upon which to extend time under s 335(6).

[22] There are considerations that militate against the conclusion that the delivery of an itemised bill after a lump sum bill has already been delivered triggers a fresh limitation period. If that were the case, then the client who has received a lump sum bill would be in a position to extend the limitation period to one of two years merely by making a request for an itemised bill. Nothing in the statute suggests that such a form of self-help was intended.”

Disposition of Application

[21]
The primary issue for determination is whether a costs application can be brought for an assessment of the whole or any part of the relevant legal costs.

Later Bills

[22]
The applicant highlighted that bills 14 to 27 (being the “later bills”) were issued pursuant to a costs agreement that the respondent sent to KTEHF on 5 July 2019. They all have the same matter number “1901290”. Bills 1 to 13 (being the “earlier bills”) were issued pursuant to a prior costs agreement (or costs agreements) which has (or have) not been provided to the applicant.
[23]
Regarding the later bills, it was submitted that under s 335(5)(a) of the Act, the start of the 12 month period is the earlier of when the bills were given to the applicant or requests for payment were made of the applicant. The applicant was first provided with the later bills on 23 October 2019. No request for payment in relation to them was made prior to that date.^[15] It was submitted that the letter from the respondent dated 9 July 2019 requesting pre-payment of $220,000 for legal costs is not a “request for payment” within the meaning of s 335(5)(a) of the Act. That provision, it was submitted, contemplates a request for payment of costs for services that have already been provided:
1. (a)
  under s 341, a costs assessment is concerned with whether it was reasonable to carry out the work, whether the work was carried out in a reasonable way, and the fairness and reasonableness of the amount of legal costs in relation to the work; and,
2. (b)
  it would therefore be nonsensical for the time limit for a costs assessment application to start running before the work that is to be the subject of a costs assessment has been performed.
[24]
It was submitted that, accordingly, the applicant had until 23 October 2020 to apply for an assessment of the costs the subject of the later bills. It was submitted the applicant did so within that 12 month period as it filed the present application on 16 September 2020.
[25]
I have difficulty accepting the applicant’s submissions because a request for payment was made to the applicant in relation to, among others, the amount of $220,000.^[16] It was the request that was made on 9 July 2019 and the applicant’s director requested the statement of costs and, indeed, paid the amount requested.^[17] The legal costs were paid (irrespective of whether a bill was given at the time or a request was made). The invoices rendered and paid in relation to the $220,000 were:

Date	Invoice No.	Amount
11.07.19	12199	$39,472.40
19.07.19	12206	$33,927.70
26.07.19	12211	$31,135.00
26.07.19	12213	$2,035.00
26.07.19	12214	$38,529.72
31.07.19	12238	$2,035.00
31.07.19	12249	$30,146.27
02.08.19	12256	$22,588.14
09.08.19	12259	$20,663.40
16.08.19	12287	$14,727.98
23.08.19	12292	$12,739.39^[18]
	TOTAL	$220,000.00

[26]
It seems to me that following a request for payment on 9 July 2019, payment of the legal costs occurred on each of those dates of the invoices. The amount of $220,000, which was first requested on 9 July 2019, was eventually depleted by the issuance, and payment, of the final invoice (invoice 12292) on 23 August 2019. Therefore in my view, plainly time commenced from, at the earliest, 9 July 2019 when the applicant’s director requested the statement of costs and paid the amount requested^[19], or by 23 August 2019 at the latest. Moreover on any view, the application filed 16 September 2020 is outside the requisite 12 month period granted by s 335(5) for most of the later bills (being bills 14 to 24) as they were issued outside the 12 month time period. The legislation does not stipulate whether it is the earliest or latest date upon which the 12 month limitation period runs, that is, whether it is when the bill is given, a request for payment is made or when the costs were paid (if neither a bill was given nor a request was made). I accept, as was submitted by the respondent, that in relation to the $220,000 either:
1. (a)
  a request for payment was made in relation to the $220,000 on 9 July 2019; or,
2. (b)
  legal costs were paid (irrespective of whether a bill was given or a request was made); or,
3. (c)
  a request for payment was made on each of the dates of the invoices; or,
4. (d)
  payment of the costs occurred on each of the dates of the invoices.
[27]
In any event, the application for most of the later bills (being bills 14 to 24) has been brought out of time.
[28]
That then leaves bills 25, 26 and 27 being invoices 12326, 12337 and 12381 issued on 29 August and 17 and 27 September 2019 respectively. In relation to:
1. (a)
  bill 25 (invoice 12326), it is outside the 12 month period in which to seek the assessment because the costs were paid on 6 September 2019 ^[20];
2. (b)
  bills 26 and 27 (invoices 12337 and 12338), given costs were paid on 18 September and 10 October 2019, the application has been brought within the requisite time such that an assessment of those costs can occur.
[29]
Regarding the earlier bills which have been determined to fall outside the 12 month time limit imposed under s 335(5) (i.e., bills 1 to 25), s 335(6) of the Act permits an extension beyond the time limit imposed, subject to the assessor or court being persuaded of the reasons for the delay and so long as the person seeking the extension does not fall into either a “sophisticated client” or “a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned”. In the present instance, I am not satisfied s 335(6) applies given the applicant company is in liquidation and the liquidator, for the purposes of the Act, is not an ordinary consumer of legal services and it is indeed considered to be a “sophisticated client” under the Act.^[21] The applicant referred to the decision of Re Stanhill Consolidated Limited [1967] VR 749 at 753 where Menhennitt J said:

“On the appointment of a liquidator all of the powers of the directors of the company cease … it does not follow that the liquidator thereby has all the powers of the company or that he is equivalent to the company. For one thing, directors have only portion of the company’s powers, those powers being exercised in part by the members and in part by the directors. …”

[30]
Whilst it is uncontroversial that upon appointment the liquidator steps into the shoes of the company, I am not persuaded that the wording of s 335(6) permits the liquidator to simply seek to persuade the assessor or the court as to the reasons for the delay in making an application outside the time imposed; otherwise there would not be a need for a specific provision such as s 335(6)(a) and (b). I am not satisfied that s 335(6) permits an extension for the later bills.

Earlier Bills

[31]
The applicant accepts that for present purposes, insofar as the application seeks a costs assessment of the costs the subject of the earlier bills, the application is made outside the 12 month period granted by s 335(5) of the Act. However the applicant relies upon s 335(6) as it is of the view that the court can deal with it after considering the reasons for delay. It points to a number of features regarding the reasons for delay. Compelling as those features might be, I am not persuaded for the reason expressed above, that such an approach is permissible under s 335(6), without reference to s 335(6)(a) or (b). Therefore the application for the earlier bills has also been brought outside the requisite 12 month period and I am not satisfied that s 335(6) permits an extension to apply.

Conclusion

[32]
I find the applicant is entitled to an assessment of part of the legal costs, more particularly for bills 26 and 27 (being invoices 12337 and 12381) and any ancillary orders relating to same. The application is otherwise dismissed. I will hear the parties as to the form of the order and costs.

Footnotes

[1] Affidavit of David John Dowd sworn 14 September 2020, Exhibit DJD-2 at page 36.

[2] Affidavit of Jason Andrew Hall, sworn 27 October 2020 at [5] and [6] and Exhibit JAH-2.

[3] Affidavit of Jason Andrew Hall, sworn 27 October 2020 at [7] and Exhibit JAH-3. See also Affidavit of David John Dowd sworn 14 September 2020, Exhibit DJD-3, pages 42 – 45.

[4] See also Affidavit of David John Dowd sworn 14 September 2020, Exhibit DJD-6 as to the specific invoices and work performed in relation to same.

[5] Affidavit of Jason Andrew Hall, sworn 27 October 2020 at [8].

[6] Affidavit of Jason Andrew Hall, sworn 27 October 2020 at [9], [10] and Exhibit JAH-4.

[7] Affidavit of Jason Andrew Hall, sworn 27 October 2020 at [12].

[8] Affidavit of Jason Andrew Hall, sworn 27 October 2020, Exhibit JAH-7.

[9] Affidavit of David John Dowd, affirmed 10 November 2020 at [4].

[10] Affidavit of David John Dowd, affirmed 14 September 2020 at [9] and Exhibit DJD-5.

[11] See [5] above.

[12] Section 330(1) of the Act.

[13] Section 332(1) of the Act.

[14] Section 330(2) of the Act.

[15] See affidavit of David John Dowd sworn 10 November 2020 at [10].

[16] See affidavit of David John Dowd, sworn 14 September 2020 at Exhibit DJD-3, page 43.

[17] See affidavit of David John Dowd, sworn 14 September 2020 at Exhibit DJD-4.

[18] Total bill for invoice 12292 dated 23 August 2019 was $14,164.15.

[19] See affidavit of David John Dowd, sworn 14 September 2020 at Exhibit DJD-4.

[20] See affidavit of Jason Andrew Hall, sworn 27 October 2020 at [15] – [17] and Exhibits JAH-5 and JAH-6.

[21] Sophisticated client is defined in s 300 to mean: “a client to whom, because of s 311(1)(c) or (d), disclosure under s 308 or 309(1) is not or was not required”. Section 311(1)(c)(iv) refers to “a liquidator”.

Editorial Notes

Published Case Name:
Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers
Shortened Case Name:
Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers
MNC:
[2020] QDC 301
Court:
QDC
Judge(s):
Jarro DCJ
Date:
27 Nov 2020

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Qld Law Group – A New Direction Pty Ltd v Crisp	[2019] 2 Qd R 467; [2018] QCA 245	2 citations Jump To Cite 1 - [2019] 2 Qd R 467 Cite 2 - [2019] 2 Qd R 467
Re Stanhill Consolidated Limited	View on:VR[1967] VR 749	2 citations Jump To Cite 1 - [1967] VR 749 Cite 2 - [1967] VR 749

Cases Citing List of cases on Queensland Judgments citing this Judgment

Case Name	Full Citation	Frequency
Hall v Val Eco Homes Pty Ltd (in liq)	[2021] QCA 236	2 citations
Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers	[2021] QDC 182	2 citations

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Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers[2020] QDC 301