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Cannon & Co Law v Shaw[2019] QMC 11

Cannon & Co Law v Shaw[2019] QMC 11

 

MAGISTRATES COURTS OF QUEENSLAND

 

CITATION:

Cannon & Co v Shaw [2019] QMC 11

PARTIES:

Cannon & Co Law

(Applicant)

v

Martin Shaw

(First Respondent)

And

Shaw Commissioning Pty Ltd

(Second Respondent)

FILE NO/S:

M744/19

PROCEEDING:

Application for appointment of a costs assessor

ORIGINATING COURT:

Southport Magistrates Court

DELIVERED ON:

6 September 2019

DELIVERED AT:

Southport

HEARING DATE:

9 August 2019

MAGISTRATE:

A.H. Sinclair

ORDER:

See below

CATCHWORDS:

Costs Disclosure Agreements – Obligations of ongoing disclosure – obligations under retainer to provide invoices at certain times

Legal Profession Act 2007 ss.208, 315, 316, 341

Uniform Civil Procedure Rules 1999 r.743G

MCC Pty Ltd v TCS Solicitors Pty Ltd [2019] QDC 71.

SOLICITORS:

Ms Cannon for the Applicant

Mr Shaw on his own behalf and as Director of the Second Respondent.

  1. [1]
    The Applicant (law firm) sought the appointment of a costs assessor to assess bills sent to the Respondent (client). The Respondent would not consent. He maintained his objection based on the fact he was quoted $2,495 and without warning was billed $5,443.90.
  1. [2]
    He could have consented and had the costs assessor determine these issues. Instead he appeared not to realise that he would be paying for the work clearly done under the retainer at least at scale and that any failure of the Applicant to comply with the LPA could result in a deduction from his bill.
  1. [3]
    The central issue is whether there was a failure to comply with s.315 LPA and what if any outcome that should have on any order I make under r.743G.

Disclosure Made

  1. [4]
    The Applicant sent a costs disclosure agreement setting out 2 stages of work in February 2017. Only stage 1 was itemised. It was for $750-$950[1]. It was essentially to serve a reply and negotiate.
  1. [5]
    Mr Shaw signed an acknowledgment of having read and understood the disclosure notice on his own behalf and the companies. He did not sign the Client Services Agreement. The CSA provided that the Applicant was to bill the Respondent’s monthly. This was not done.
  1. [6]
    On 23 November 2017 the matter looked likely to go to trial. Counsel was engaged. The letter was sent and set out 5 stages of work. Stage 1 was for $1785 to $2495.
  1. [7]
    The stages were:
  1. Review defence, disclosure documents and attend to amending Claim and Statement of Claim, attend to drafting an Application for Leave to Amend along with supporting Affidavit matter and attend application hearing.
  1. Review Amended Defence and draft Amended Reply (if needed) - $750 to $985 [I note that none of this work was apparently done or billed for].
  1. Attend to further disclosure and/or seek further disclosure from Defendant (if needed) - $625 to $865. [I note that none of this work was apparently done or billed for].
  1. Prepare for trial including preparation of witness list, meet with client and witnesses to prepared for trial and liaise with Counsel - $3,000 to $6,000.
  1. Attend trial (based on an estimate of 1 to 2 days) - $3,000 to $6,000.
  1. [8]
    I note that as the Plaintiff, the Respondent had earlier legal advisors who were presumably responsible for the pleadings that needed redrafting.
  1. [9]
    On 11 July 2018 the Applicant sent a further CDA. The covering letter only alluded to changes in the rates. There were other changes including changing the billing cycle from monthly to at the end of each stage. The stages and amounts were the same as was set out in the November 2017 material.

The Work Done

  1. [10]
    On 13 March 2019 the Applicant billed the Respondent $5,443.90. That tax invoice covered work done from 1 Nov 2017 to 4 Feb 2019. All that work fell within Stage 1. It appears to have been more complex than first thought with the need for a formal statement and firm instructions on which to base the amended pleading.
  1. [11]
    On 25 March 2019 the Applicant billed the Respondent $1,759.40 for work done between 7 Feb 2019 and 25 March 2019. That work related to the successful completion of a negotiated settlement. This work was not covered by the stages set out in the 23 Nov 2017 letter or the 11 July 2018 CDA. It was covered by Stage 1 of the Feb 2017 CDA.

The purpose of Division 3 of Part  3.4 of the Legal Profession Act

  1. [12]
    Overcharging or under disclosing remain the two most frequently litigated matters between firms and their clients. Much of it could be avoided by diligent compliance with the requirements of the LPA and its purpose – to inform and protect consumers of legal services.
  1. [13]
    s.316 says that if the firm does not disclose anything required by the division it will ordinarily have to pay for that assessment. That is only fair.

(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.

Note—

Under section 341, the costs of an assessment in these circumstances are generally payable by the law practice.

  1. [14]
    Division 3 includes s.308 and 315.
  1. [15]
    The Applicant has arguably not complied with s.308(1)(c)[2] – it explains what the variables are but not how they might affect the total legal costs.
  1. [16]
    The Applicant has not complied with s.308(f)(ii)[3]– it does not set out the range of costs the unsuccessful client might have to pay. It simply says it may be more than his own legal bill. 
  1. [17]
    The Costs Disclosure Agreements in evidence are not unusual. Few CDAs make a satisfactory effort to set out the possible cost implications.
  1. [18]
    Few lay people are truly aware of the nature of legal costs, their capacity to ramp up quickly and to bear no proportionate relationship to the amount in dispute or the ability of the client to pay. If they were, fewer would litigate.
  1. [19]
    One of the primary reasons for the fall in the public perception of the legal profession relates to how it bills. Firms should also ensure their clients sign the costs disclosure agreements and not seek to rely on the giving of further instructions. This is a fairly simple step and it is hard to see any good reason why it cannot be done each and every time. Most people understand that signing something binds them to it and they tend to focus on the parts that have dollar signs in front of them. Again, if this were done as fulsomely as possible, fewer examples of ‘bill-shock’ might arise.
  1. [20]
    Cost disclosures should be comprehensive. They should be updated, in writing. Regularly.
  1. [21]
    Clients should be proactively informed of the running costs under a retainer. These are simply good business practice and to be expected from professionals charging many times the average wage for their efforts.

Retainer

  1. [22]
    The Applicant has not complied with the terms of its retainer. It did not bill monthly under clause 6(a) of the 15 Feb 2017 CDA.
  1. [23]
    Its letter of 23 Nov 2017 is not a complying costs agreement but might count as an updated estimate under the 15 Feb 17 CDA. It was well overdue under s.315.
  1. [24]
    By 23 Nov 2017 the Applicant’s billable work had reached 106 units of work or $4,372.50. No monthly bill was issued. All of this work was clearly within stage 1 despite the applicant wanting to classify some of the conferences as coming from later stages.
  1. [25]
    The Applicant therefore had already done more than the total the Stage 1 estimate before even issuing an estimate of that work as $1,785 to $2,495.
  1. [26]
    The whole of the work that was done for the 25 March 2019 bill of $1,759.40 was done without any update to the estimate in the Feb 2017 CDA of $750 to $950.

Consequences of non-disclosure

  1. [27]
    The matter came on for hearing and the parties agreed that a costs assessor needed to look at these issues. It was not until I explained it to him that the Respondent appeared to have understood that process.
  1. [28]
    The parties agreed I should give directions to the Costs Assessor about the contentious issues covered in r.743G. It provides:

743G Directions hearing

(1)The relevant court may hold a directions hearing in relation to an application for a costs assessment.

(2)At a directions hearing, the relevant court may consider the following matters—

(a)whether the application has been properly filed and served;

(b)whether notice has been given as required under the Legal Profession Act 2007, section 339(1);

(c)whether it is appropriate to refer the application to mediation;

(d)whether it is appropriate for any question to be tried before the costs are assessed, including, for example

(i)whether a person claimed to be liable to pay costs is liable to pay those costs; and

(ii)whether any costs agreement relied on by the lawyer concerned is void; and

(iii)whether the lawyer concerned was negligent; and

(iv)whether the lawyer concerned was in breach of the contract of retainer; and

(v)whether the lawyer concerned acted without the instructions of, or contrary to the instructions of, the client;

(e)whether anything else should be done before the costs are assessed.

(3)Also, the relevant court may—

(a)if the grounds of dispute relate only to the amount of costs—order that a particular costs assessor be appointed to carry out the costs assessment; or

(b)otherwise—order that the application be heard by the relevant court.

  1. [29]
    The Applicant did not comply with r.315 which is clearly a part of Div 3.

315 Ongoing obligation to disclose

A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this division as soon as is reasonably practicable after the law practice becomes aware of that change.

  1. [30]
    The agreement is not void under Division 5 – See MCC Pty Ltd v TCS Solicitors Pty Ltd [2019] QDC 71.
  1. [31]
    The Applicant was in breach of its retainer in relation to the billing cycle for all of the work relating to the $1,785.00 invoice. The Applicant failed to comply with the ongoing obligation of disclosure that invoice under the Feb 2017 CDA.
  1. [32]
    The Applicant was in breach of its retainer in relation to the billing cycle for most of the work relating to the $5,443.90 invoice. The Applicant failed to comply with the ongoing obligation of disclosure under the Feb 2017 CDA and the 13 March 2019 CDA.
  1. [33]
    The assessor must take into account the failure to disclose the 100% increase in the Feb 2017 estimate (negotiations) and in the Stage 1 costs under s.316(4) which provides:

(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.

  1. [34]
    My role is limited to r.743G. I do not consider mediation appropriate given the location of the parties and the entrenched position and the modest amount.
  1. [35]
    Under 743G(2)(d)(iv) the Applicant was in breach of both or either of the terms of the retainer by failing to bill monthly at first. I have determined there was a breach of s.315.
  1. [36]
    While it is a matter for the costs assessor, there is nothing in my initial look at the material in relation to the amount of work done or what was charged for it that appears untoward. Many similar bills are much higher and rates are also often much higher.
  1. [37]
    The Order of the Court is that:
  1. Mr Stephen Hartwell is appointed as the costs assessor to assess the costs described in paragraph 1 of the Application for Costs Assessment filed 3 June 2019.

The Court also directs that:

  1. In conducting the assessment, Mr Hartwell is to consider this ruling and any submissions of the parties as to
  1. (a)
    the amount submitted to be proportionate to the seriousness of that non-compliance; and
  1. (b)
    whether he should exercise his discretion under section 316(4) of the Legal Profession Act 2007 (Qld) to reduce the costs by that, or any other, amount.
  1. Any submissions by the Applicant and the Respondent as provided for in paragraph 2 above are to be delivered to Mr Hartwell and each other party:
  1. (a)
    By the Applicant: within 14 days after the date of these directions;
  1. (b)
    By the Respondent: within 14 days after receiving the Applicant’s submissions;
  1. (c)
    By the Applicant: any submissions in response, within 14 days after receiving the Respondent’s submissions.
  1. [38]
    I will hear the parties on the question of costs but my provisional view is that:
  1. Sections 316 and 341 apply and the Applicant should pay the costs of the assessment.
  1. As he could and should have consented to the appointment of a costs assessor and there was no basis for these matters not being determined before the costs assessor rather than the court, the Respondent should pay the costs of this application fixed on the scale.

A.H. Sinclair

Magistrate

Footnotes

[1] All figures given include GST.

[2]  (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 ...

[3]  (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 ...

Close

Editorial Notes

  • Published Case Name:

    Cannon & Co Law v Martin Shaw and Shaw Commissioning Pty Ltd

  • Shortened Case Name:

    Cannon & Co Law v Shaw

  • MNC:

    [2019] QMC 11

  • Court:

    QMC

  • Judge(s):

    Sinclair M

  • Date:

    06 Sep 2019

Appeal Status

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

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