MJ Arthurs Pty Ltd v Quinn & Scattini Lawyers
[2020] QDC 316
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- Unreported Judgment
- MJ Arthurs Pty Ltd v Quinn & Scattini Lawyers[2020] QDC 316
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MJ Arthurs Pty Ltd v Quinn & Scattini Lawyers[2020] QDC 316
MJ Arthurs Pty Ltd v Quinn & Scattini Lawyers[2020] QDC 316
DISTRICT COURT OF QUEENSLAND
CITATION: | MJ Arthurs Pty Ltd & Anor v Quinn & Scattini Lawyers [2020] QDC 316 |
PARTIES: | MJ ARTHURS PTY LTD ACN 145 344 056 (First applicant) AND MICHAEL JAMES ARTHURS (Second applicant) v QS LAW PTY LTD TRADING AS QUINN & SCATTINI LAWYERS ACN 151 393 654 (Respondent) |
FILE NO: | DC No 3491 of 2016 |
DIVISION: | Civil |
PROCEEDING: | Hearing |
ORIGINATING COURT: | District Court at Brisbane |
DELIVERED ON: | 10 December 2020 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 18 September 2020 |
JUDGE: | Clare SC DCJ |
ORDER: | The parties are to prepare a draft order and have leave to make submissions as to costs. |
CATCHWORDS: | COSTS – COSTS ASSESSMENT ORDER – ambit of the order. COSTS – COSTS REASSESSMENT CERTIFICATE – calculation of the refund – whether the solicitors have an entitlement to retain moneys outside of the assessment. |
LEGISLATION: | Uniform Civil Procedure Rules 1999 (Qld) rr 681, 687. |
COUNSEL: | P Stockley for the applicants S Hartwell for the respondent |
SOLICITORS: | Stockley Pagano Lawyers for the applicants Quinn & Scattini Lawyers for the respondent |
Introduction
- [1]The applicants were overcharged by the respondents. A refund is due. The dispute is about how much.
- [2]Mr Arthurs and his company (Arthurs) are the former clients of Quinn and Scattini Lawyers (Quinn and Scattini). They paid Quinn and Scattini a total of $891,604.01 (or thereabouts). Invoices issued by Quinn and Scattini totalled $800,215.70 (or thereabouts). The Amended Cost Assessors Certificate declares the costs actually payable to be $440,287.88.[1] Arthurs contend they are entitled to a refund of $421,316.13, as the difference between what they paid and the assessed costs, less an agreed offset of $ 30,000 for various costs orders. Quinn and Scattini Lawyers maintain they are only liable to return $310,413.29 on the basis of an extra $105,000 worth of disbursements paid from the trust fund but not itemised in any invoice and not assessed.
The dispute
The application for assessment was filed on 31 August 2016. The supporting affidavit exhibited all of the invoices. Quinn and Scattini contend that the cost assessment was limited to the items on its invoices, and that not all disbursements were the subject of invoice. They argue those disbursements for which no invoice was given are outside of the assessment and therefore they are entitled to retain the full costs recorded in their trust account ledger. They particularise the amount of $105,994.91 with a spreadsheet.[2]
The order for reassessment
- [3]The nature of the dispute goes to the scope of the cost assessment undertaken.
- [4]The order of this Court on 28 September 2016 was for “an assessment of costs relating to services provided by the Respondents to the Applicants as set out in the schedule to the originating application filed on 31 August 2016.” The schedule set out all of the invoices issued by Quinn and Scattini to Arthurs, but nothing else.
- [5]Critically the order was directed at costs “relating to services provided by the Respondents …as set out” in the invoices. Accordingly, while all of the items in the invoices were subject to assessment, the terms of the order were not limited to them. The order extended to costs “relating” to those services. There is no suggestion that any particular proceeding or any area of the firm’s legal work for the client was not the subject of an invoice. Even if the particularised disbursements were not on the invoices, they must still relate to the same services provided by Quinn and Scattini which are the subject of invoices. They therefore appear to fall within the terms of the order. Such construction is consistent with the breadth of Arthurs’ complaint.
- [6]I can find no evidence that Arthurs were, or should have been, aware there was a substantial amount of disbursements not included in the assessment. Their application for the assessment relied on all of the invoices Quinn and Scattini issued to them. They did not isolate particular areas of concern. Their concern was the amount of costs generally. Almost all of the disbursements Quinn and Scattini now contend fall outside of the assessment are fees of counsel and adverse costs orders as extracted from their trust account ledger. Arthurs had been given complete trust account ledger statements at the conclusion of the retainer, but there is no indication that they ought to have realised substantial disbursements from the ledger would not be assessed. They had specifically secured the inclusion of counsels’ fees in the “detailed tax invoices” from Quinn and Scattini.[3]
- [7]On the other hand, if the trust account indicated Arthurs were liable for an additional $105,000 worth of disbursements, Quinn and Scattini should have identified it at some earlier point in the process, when those costs could be properly assessed. No real explanation has been offered as to how or why they overlooked it. In a more general sense, missing invoices and the quality of records in the files were issues throughout the protracted assessment process. Mr Kake, the solicitor from Quinn and Scattini who had acted for Arthurs, had left the firm before the process began. At various times, Quinn and Scattini suggested the blame must lay with their own former solicitor[4] as well as Arthurs and Arthurs’ prior solicitors[5]. They informed the court that they did not have a complete copy of the file in electronic form but the original documents were all stored in the paper file. Anything missing must have been lost by Mr Arthurs.[6] They had contended the costs assessor has invited them to perform an impossible task,[7] but in May 2018 they undertook to search for missing documents. They produced a substantial quantity some months later.
- [8]The scope of the costs order could not have taken Quinn and Scattini by surprise. They had drafted the order for assessment for the court because Arthurs did not have legal representation.[8] The order they drafted was consistent with Arthurs’ clear intent to secure assessment of the entirety of the legal costs charged to them by Quinn and Scattini. In fact, one of the complaints by Quinn and Scattini on the application for review was that the assessment procedure was “not efficient” because Arthurs had objected to every item in the invoices.
- [9]The assessor had received 32 boxes. He understood this to be the entirety of the files. He searched through them all. More than half of the documents the subject of claim were missing. He invited Quinn and Scattini to provide proof in relation to both invoiced and un-invoiced costs. He identified disbursements in the “detailed tax invoices” not in the original invoices. He also found records relating to some disbursements which were not in any invoice. He assessed all of those disbursements. On page 34 [125] of his reasons he said this:
“The order made on 28 September 2020 requires me to assess all the costs ‘relating to services provided by the Respondent to the Applicants as set out in the Schedule’.”
- [10]Quinn and Scattini had ample opportunity to advise of their intention to retain $105,000 for additional costs. It would appear they did not raise it with either the costs assessor or the court prior to the orders for assessment. They have not disclosed when the issue came to their attention, but the disbursements were particularised in their written submissions bearing the date of 2 December 2019. That is the first reference I have found. Those submissions did make their way to the court file until they were handed up on 18 September 2020, and after the reassessment certificate had been filed. Their written submissions may have been prepared for a hearing listed for 10 December 2019 but they were probably not made at that time because Arthurs had engaged new solicitors and the terms of a draft order for reassessment of costs resolved by consent. The draft did not refer to the items in the trust account ledger totalling $105,000.
The chronology
- [11]The original invoices were issued in 2014 and 2015. The invoices were in general terms.
- [12]On 31 August 2016, Arthurs applied for the costs assessment. The cost assessor was appointed by order made on 28 September 2016. Arthurs had requested an itemised account in accordance with their entitlement under the costs agreement. On 13 October 2016 Quinn and Scattini served “detailed tax invoices”. The assessor raised missing records and gave Quinn and Scattini the opportunity to address them. The certificate of the costs assessor issued on 23 October 2017. Quinn and Scattini sought reasons. The Reasons were filed on 12 March 2018. They comprised 5 filed volumes. On 15 March 2018 Quinn and Scattini applied for a review and filed the grounds on 17 May 2018.[9] They made written submissions in September 2018, with an affidavit exhibiting documents that had been missing from the boxes with the assessor. The affidavit was in 5 volumes.[10] Those issues were comprehensively considered by his Honour Judge Smith in a 59 page judgment delivered on 10 August 2018.[11] The parties were to prepare a draft order for reassessment in accordance with the judgment. On 10 December 2019, the parties settled the draft and Judge Smith made the order for reassessment in respect of specified item numbers.
- [13]The costs reassessment certificate was filed on 30 June 2020.
Evidence of disbursements
- [14]The contention of entitlement to unassessed disbursements is put on the barest of information. Quinn and Scattini provided the court with an extract of disbursements from the trust account ledger and prepared a spreadsheet to “show disbursements paid from the respondent’s trust account. As has been previously noted, some (but not all) of those disbursements appeared on the respondent’s invoices.”[12] The spreadsheet is 4 pages long. There is a column headed “Details (Copied from Trust Account Statement or Debtor’s [General] Ledger)”. Another column contains either invoice number, or the phrase “not on invoices assessed” or “assessed”. The heading for the final column is “Amounts not on invoices assessed.” They are totalled at $105,994.91. An explanatory affidavit by Mr Leneham, director of Quinn and Scattini, filed on 18 September 2020, attests that the specified disbursements were not part of the items assessed by the cost assessor. The affidavit does not offer any further detail about the disbursements. Mr Lenehan had had no personal involvement in the Arthurs’ litigation. Mr Hartwell, for Quinn and Scattini, told the court they relied upon all of the other material filed through the history of the matter. Submissions in relation to the final amount of the refund were in brief and general terms. The court was left to search the court files for itself.
- [15]The $105,000 includes $50,542.50 for the fees of Mr Cooper QC and Mr Bowden of Counsel, and $51,624.83 for payments to another law firm’s trust account. The balance of $3,927.58 is made up of sundry expenses such as process servers, transcripts and searches.
- [16]The costs assessment had resulted in a reduction, and even the disallowance, of items from the same categories (counsels’ fees, adverse costs orders and sundry expenses of the same kind). The records of Quinn and Scattini were found to contain inaccuracies. The details in their invoices and the trust account ledger were sparse and did not always record the same thing. The assessor found recorded dates that did not marry up. He also found duplications in billing with doubling up on the fees of counsel as well as other recurrent disbursements.
- [17]The court file now runs to 7 volumes. There were over 2700 items in the invoices issued to Arthurs. It is simply not possible at this point to have confidence that the most recently particularised disbursements do not involve duplication or the same deficiencies found to infect other costs that were assessed.
Fees of counsel
- [18]Mr Hartwell informed the court that Arthurs had specifically asked Quinn and Scattini to add the fees of counsel to the invoices. Quinn and Scattini did so in their “detailed tax invoices”. No explanation has been offered as to how or why they left $51,000 worth of fees off the detailed tax invoices.
- [19]The level of counsels’ fees and their incomplete disclosure had been part of Arthurs’s complaint. Quinn and Scattini had not obtained Arthurs’ agreement for the scale of counsels’ fees or the terms of the retainers.[13] The assessor reduced and in some instances, totally disallowed, counsel’s fees.
- [20]It is not alleged invoices Quinn and Scattini received from counsel were overlooked by the assessor. Rather, it appears those incoming invoices have never been produced. The assessor had invited Quinn and Scattini to provide all invoices. The assessor noted that on 5 July 2017 Quinn and Scattini sent copies of the invoices it could find, “other than counsel’s invoices”.[14] What is more, the trust account ledger does not record an incoming invoice number for any of the fees making up the $50,542.50. Such invoices could have provided at least some explanation for the fees. It is unclear as to why at least electronic copies of counsels’ invoices were not sourced, given the practice of Mr Cooper QC and Mr Bowden to send their invoices to Quinn and Scattini by email.[15].
- [21]The unsatisfactory state of the evidence is illustrated by the top entry on the second page of the spreadsheet.[16] The spreadsheet asserts this disbursement was not assessed. The entry however is very close to that on Invoice 16391 issued by Quinn and Scattini to Arthurs. Invoice 16391 was the subject of assessment. The spreadsheet lists the purpose as “Lindsay Bowden”. The assessed invoice 16391 is for the same file number and for exactly the same fees to Mr Bowden for “reading, conferring and attending QCAT on 12 February 2014”. The dates deviate only by a single day. The assessed invoice 16391 is dated 17 February 2014, whereas the date of payment recorded on Quinn and Scattini’s spreadsheet is 18 February 2014. They probably relate to the same costs.
Adverse Costs Orders
- [22]Quinn and Scattini wish to retain $51,624.83 for payments regarding file 140413 made to the Cronin Litigation Trust Account on 24 September 2014 and 21 January 2015 (as recorded in the trust account ledger). The mere fact that 2 payments were made from the trust account is not sufficient to establish Arthurs’ liability for these. In the course of the assessment, adverse findings were made against Quinn and Scattini in relation to costs orders. The assessor expressly found Arthurs had no liability for four costs orders. It seems the parties reached agreement in relation to other costs orders. At the hearing of the present application the court was told it was agreed $30,000 should be offset against the assessed deductions for “various costs orders”. There is no specific assertion that these two particular payments fall outside of that agreement.
- [23]Without any further information or assistance there is a limit to what can now be pieced together from the court file and other judgments. The file number 140413 in the trust account ledger relates to litigation against Portfolio involving Supreme Court proceedings. Published judgments of the Supreme Court confirm that Cronins acted for Portfolio. Arthurs won an appeal but were still subject to earlier adverse costs orders and a default costs assessment. Undue delay by Quinn and Scattini resulted in a statutory demand and bankruptcy notices against Arthurs, followed by remedial action to have them set aside. Four adverse costs orders were examined in the assessor’s reasons. All concern file 140413.[17] The assessor found that the 4 cost orders “could have been avoided had the Respondent’s solicitor carried out the work with due diligence…”[18] Inexplicable delay by Quinn and Scattini in setting aside orders due to their error had incurred additional costs.[19]
- [24]While the assessor found Arthurs were not liable for those four costs orders, he did not allow for them in the deductions because he did not have evidence that Arthurs had paid those costs orders or had an ongoing obligation to pay them.[20] It follows Quinn and Scattini should not now retain money for any of those costs orders.
- [25]The payment of 24 September 2014 from Quinn and Scattini’s trust account to the Cronin Litigation Trust Account followed shortly after the date of the last of the four costs orders examined by the assessor. The second particularised payment was made four months later. I have not found reference to the amount of costs payable for any of the four costs orders. The bald assertion now that the $51,624.83 (via 2 payments) was not assessed does not displace the inference that the costs order resulted from the default of Quinn and Scattini. I am not persuaded that those entries fall outside of the findings of the assessor.
- [26]Quinn and Scattini have had problems in tracing and distinguishing between the costs properly incurred by the client and those for which Quinn and Scattini were liable. For example the costs assessor found they had previously billed Arthurs for costs thrown away because of the mistakes the solicitors had made, even after expressly assuring Arthurs in writing they would not be billed. Those findings concern proceedings on 28 April 2014. Quinn and Scattini initially reported to the costs assessor that no costs had been charged for that day. Yet the costs assessor identified that Quinn and Scattin had in fact billed Arthurs for the legal services of both solicitors and Queen’s Counsel.[21] Quinn and Scattini then conceded those fees did not need to form part of the assessment.[22]
Conclusion
- [27]Quinn and Scattini grossly overcharged Arthurs. The overcharging was established only because Arthurs persisted. The process of correction has taken four years through court proceedings, assessment and reassessment. Nonetheless, Quinn and Scattini now assert their entitlement to 25 percent more than the costs assessed as payable. They do so on the basis the particularised disbursements were not assessed but they have not given any real explanation for their omission. The state of records left by their former solicitor was poor, but in the years that followed, Quinn and Scattini had an extended opportunity to raise these things with the assessor, or, if they believed the assessment order was too narrow to incorporate Arthur’s full liability, to apply to extend the ambit of the assessment. From the outset they knew that Arthurs sought an assessment of the entirely of their costs. By at least March 2018, they knew the assessment went beyond the items set out in their invoices.
- [28]The recently particularised disbursements are of the kind that were examined by the assessor. Quinn and Scattini rely upon the entries in the trust account ledger, but have not directed the court to any other document. They have not explained how these additional matters are distinguishable from very similar matters that were considered in the assessment. Their belief of entitlement is not enough to establish Arthurs have any additional liability outside of the reassessment certificate and the agreed amount for adverse costs orders.
- [29]For those reasons, the amount refundable to Arthurs is the full sum of what Arthurs paid to Quinn and Scattini, less the total of the assessed costs in the Amended Costs Assessor’s Certificate filed on 30 June 2020 and the agreed offset of $30,000.
- [30]The parties are to prepare a draft order and have leave to make submissions as to costs.
Footnotes
[1] The calculation of all 3 figures have varied in various documents from the applicant, respondent and the costs assessor. This difficulty in precision is a reflection of the long list of figures making up each calculation. As a result, while the method of calculating the refund pressed by each party is clear, the end total is not yet exact.
[2] Respondent’s outline of submission dated 2 December 2019.
[3] Mr Hartwell’s oral submissions on 18 September 2020.
[4] Costs Assessors Reasons, filed 12 March 2018, volume 1 at para [17]; Affidavit of R Leneham sworn 22 May 2018 at para [14].
[5] Affidavit of R Leneham sworn 22 May 2018 at para [12].
[6] (Although Quinn and Scattini did withhold letters and notes): Respondents’ grounds for review of the assessment, filed 17 May 2018, page 5 [13].
[7] Respondents’ grounds for review of the assessment, filed 17 May 2018, page 4 [13].
[8] Transcript of 28 September 2016, Smith DCJ.
[9] Court document 33.
[10] Court documents 39-43.
[11] MJ Arthurs Pty Ltd & Anor v QS Law Pty Ltd trading as Quinn and Scattini Lawyers [2018] QDC 150.
[12] Respondent’s Submissions dated 2 December 2019, para [6].
[13] Cost Assessor’s Reasons Part 1 of 5, pages 18 – 20.
[14] Cost Assessor’s Reasons Part 1 of 5, page 8 [34].
[15] Cost Assessor’s Reasons Part 1 of 5, page 18.
[16] Respondent’s Submissions dated 2 December 2019.
[17] Costs Assessor’s Reasons Part 1 of 5, para [37] refers to cost orders made on 28 April 2014, per Atkinson J, 1 August 2014, per Daubney J, 4 September 2014, per McMurdo J and 11 September 2014, per Mullins J.
[18] Cost Assessor’s Reasons Part 1 of 5, para [37].
[19] Cost Assessor’s Reasons Part 1 of 5, para [38].
[20] Cost Assessor’s Reasons Part 1 of 5, para [37].
[21] Cost Assessor’s Reasons Part 1 of 5, para [43(e)].
[22] Cost Assessor’s Reasons Part 1 of 5, para [44(d)].