AAI Ltd v Scott[2018] QMC 20

MAGISTRATES COURTS OF QUEENSLAND

The Application

1. [1]
   In this application the applicant applies for an order that a cost assessor be appointed to assess costs to be paid pursuant to a Release the parties agree settled a claim for damages between the parties. The damages have been paid. It is only the quantum of costs outstanding to finally resolve the matter.

2. [2]
   There is also dispute about exactly what costs are to be assessed because the applicant complains costs were thrown away when work was done in response to a first cost statement after a second costs statement was preferred by the respondent without forewarning the applicant of the amendments contained in the second statement.

3. [3]
   The application in this matter was filed 25 September 2018 together with the affidavit of Cameron Clark in support. I have also read the affidavit of Peter Clark filed 22 November in response. Oral and written submissions have been provided to the court.

Background

4. [4]
   The relationship of the parties arises as follows: The respondent was injured in a motor vehicle incident involving two vehicles. The applicant was the insurer of the “at fault” vehicle in the incident. A claim for damages was made by the respondent and then resolved between the parties without court proceedings being commenced. The claim was settled with a Release proffered by the applicant and signed by the respondent in which “costs to be agreed or assessed” were included.

The Law

5. [5]
   The application can only be granted if the parties come within the purview of the Legal Profession Act 2007 (“the Act”). The respondent submits the Act only governs the inter partes relationship between a solicitor and client which is not the case here. The respondent submits that the correct jurisdiction for determination of the costs issues between the parties is the Supreme Court. The respondent has now, on 1November 2018 filed a claim in this regard in the Supreme Court and seeks dismissal of the application before me.

6. [6]
   The long title to the Act is not helpful as a guide to the boundaries of the application of the Act. In section 3 the wide purposes of the Act are set out as follows— to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of consumers of the services of the legal profession and the public generally. However, there is nothing limiting the wide purposes to only solicitors and their clients or sub-variations of this relationship.

7. [7]
   There is no provision in the Act actively managing a choice between utilising cost assessment under the Act and commencing court proceedings to recover costs. A choice may be available given some comments in the 2004 matter Harris v Gilding and RACQ GIO Insurance related to application for a costs order based on a claim settled under the Motor Accident Insurance Act 1994. However, that case was heard prior to the passing of the Act in 2007 and so comments by Robertson J indicate choosing Court proceedings may well be frowned upon and a different attitude would be taken in light of the Act.^[1]

8. [8]
   The definition of “client” in the Act is wide providing “client” means a person to whom or for whom legal services are or have been provided: see both section 4 and section 334 of the Act. The Act does not by any positive words limit application of the Act to a direct solicitor and client relationship exclusively.

9. [9]
   The Act envisages that a third party payer may apply for an assessment of the costs payable by the third party payer at section 335(2) which provides a third party payer may apply for an assessment of the whole or any part of legal costs   payable by the third party payer.

10. [10]
    The Act also utilises the concept of a “third party payer” being a payer who, though not the client of the solicitor, is under a legal obligation to pay the legal costs for legal services provided to the client (my emphasis added): see section 301 of the Act. Section 301(3) further provides that a third party payer may be a “non-associated third party payer” because the legal obligation on an applicant to pay the legal costs for legal services provided to the respondent but not the law practice (directly).

11. [11]
    Explanation of these matters are found in the 2010 case of Legal Services Commissioner v Wright by McMurdo J as follows:

Under the present statute (meaning the Act), there must be a “legal obligation” and it must be an obligation to pay the costs in question.^[2]

And

…there are likely to be many cases where the burden of a lawyer’s bill will fall to a substantial extent upon someone other than the client and who therefore has more than an academic interest in having the costs assessed. But where the line is to be drawn, in defining who apart from the client should be entitled to an assessment, has been decided by the Parliament in unambiguous terms: it is according to the existence or otherwise of a legal obligation to pay the costs.^[3]

12. [12]
    I notice that commentators on the law leave open whether the application for assessment is exclusive to solicitor-client relationships preferring to use phrases such as “the common application for assessment” and “liability of a non-associated third party payer ordinarily arises out of”.^[4]

Findings

13. [13]
    I find that the proper question is whether or not the applicant is under a legal obligation, covered by the Act, to pay the respondent’s costs.

14. [14]
    I find nothing in the facts related to the relationship of the parties or the wording of the Release that might take the parties outside of the “legal obligation” to pay costs as spoken about by McMurdo J in Legal Services Commissioner v Wright.

15. [15]
    I find the Release dated 9 January 2018 offered by the applicant and signed by the respondent means there exists between the parties a contract or legal obligation on the applicant to pay the “costs to be agreed or assessed”.

16. [16]
    I find by their own action in filing the claim in the Supreme Court the respondent admits there is an obligation to pay the costs in question by the applicant.

17. [17]
    The omission of the respondent to forewarn the applicant there was an amended costs statement is an omission the applicant ought not to suffer without payment for their work done on the first costs statement.

Conclusion

18. [18]
    The purpose of the Act is a wide one with respect to “regulation of legal practice” and “for the protection of consumers of the services of the legal profession and the public generally.” These purposes are not refined in the Act and their application to direct solicitor – client relationships arises through common quantity rather than via any indication these are the only relationships the legislature intended to regulate.  I also notice the preference by the District Court in the case Harris v Gilding and RACQ GIO Insurance to have costs assessments undertaken outside of court proceedings and as part of the settlement process in cases similar to the present case.

19. [19]
    The position of the applicant as “a third party payer”, while perhaps not a comparatively common occurrence as compared to an inter partes relationship, is not ousted by any provision of the Act and fits exactly as provided for in section 335(2) of the Act.

20. [20]
    The Act is silent as to whether it refers to only the most common applicants for assessment or payers that ordinarily arise out of an obligation to pay costs, namely solicitor – client based relationships. This tends to support the position that the Act does not purport to be so exclusive as contended by the respondent.

21. [21]
    The Release imposed a legal obligation on the applicant to pay the “costs to be agreed or assessed” so as to make the applicant a third party payer under section 301(1) of the Act. That sufficed under section 335(2) of the Act to entitle the applicant to apply for an assessment of the costs payable by it.

22. [22]
    For completeness, I also conclude that while the respondent has now filed a claim related to the same contest in the Supreme Court the application before this court was filed previous to that action. The application before this court is capable of being resolved by this court in an expeditious manner which is one of the intentions of the Act. The applicants should not now be usurped so arbitrarily, especially when the respondent has been so slow moving to have the issues related to costs resolved. 

23. [23]
    The determination of the costs by the independent assessor must include the costs claimed by the applicant as thrown away because of the work done by them on a first cost statement after the second costs statement was preferred by the respondent without forewarning the applicant of the amendments contained in the second statement.

I ORDER

1. Application is granted.

2. a costs assessor, be appointed to assess:

1. (a)
   the standard costs payable by the applicant to the respondent in accordance with the Release dated 9 January 2018 compromising the compulsory third party claim of the respondent against the applicant arising from a motor vehicle accident on 29 June 2015; and

2. (b)
   costs payable by the respondent to the applicant for their work done in relation  to the costs statement delivered 11 July 2018 but thrown away when the respondent preferred a later amended costs statement;

such costs to be set off against each other.

3. Costs of this application are in the cause.