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Carter Capner Law v Clift & Ors

 
Unreported Citation: [2020] QCA 125
EDITOR'S NOTE

There were two key issues in this case. First, whether a conditional costs agreement between the appellant and each of the respondents contained an “uplift fee”. Second, whether the primary judge had erred in exercising the court’s inherent jurisdiction to order that an itemised bill of costs be delivered to the respondents. Significantly, the Court of Appeal explained the meaning of an uplift fee under the Legal Profession Act 2007 in addressing the first issue.

Fraser and Philippides JJA and Crow J

9 June 2020

The appellant, CCL, appealed against orders made in favour of five former clients that each of their costs agreements was void pursuant to s 327 Legal Profession Act 2007 (LPA) and orders requiring it to deliver to them itemised bills of costs. [1].

The first issue in dispute turned on the validity of the costs agreement. At issue was item 25 of CCL’s scale of costs: [4]

“In addition to an amount that is to be allowed under the above Items, a further proportion thereof to reflect the solicitor’s care, consideration, skill and conduct of a proceeding or transaction that is considered by an independent costs assessor to be reasonable having regard to the matter including, for example …

PROVIDED THAT where a fee/cost payment deferral or no-win no-fee arrangement applies, the further allowance must be not less than 15% of the aggregate of all time based Items performed.”

There was no question that the costs agreements were conditional costs agreements. [5]. Section 324 LPA provides that a conditional costs agreement may provide for an “uplift fee” if certain conditions are met. [6]. Fraser JA agreed with the primary judge that the costs agreement did not provide an estimate of the uplift fee as required by s 324(3). [8]. Accordingly, the costs agreements would be invalid under s 327(1) LPA if item 25 constituted an uplift fee. In considering this question, his Honour first turned to the definition of “uplift fee” in the LPA. [12]. However, a difficulty in construing the definition arose because the definition does not describe “what it is that distinguishes an uplift fee from the other legal costs to which it must be additional”. [13]–[14].

Fraser JA then turned to the legislative history of the LPA, which was of little assistance. [15]. His Honour then addressed the statutory context, and noted that there are three ways in which the LPA expressly singles out uplift fees for “additional treatment”:

1. Under s 313(1), where a costs agreement includes an uplift fee, it must specify the legal costs, the uplift fee or the basis for its calculation and the reasons why it is warranted. [18]. This plainly distinguishes between uplift fees and legal costs. [19].

2. Section 324 permits conditional costs agreements to include an uplift agreement, provided certain conditions are met about the form and content of the conditional costs agreement. [20]. This “suggests that the justification for an uplift fee is that payment of some or all of the costs for the performance of the legal services is conditional on the successful outcome of the matter to which those costs relate”. [20]. This finds further support in s 324(2)’s requirement for the basis of calculation of the uplift fee to be separately calculated. [21].

3. Under s 327(4), law practices are prohibited from recovering uplift fees under conditional costs agreements entered into in contravention of s 324. [22]. This “conveys that the justification for an uplift fee lies otherwise than in the performance of the legal services, the costs of which remain recoverable pursuant to s 327(2)”. [22].

That context and the “consumer protection purposes” suggests that “legal costs” to which an uplift fee may be added in a conditional costs agreement are those that would be payable for legal services to be performed were the payment of costs not conditional upon a successful outcome. [23]. Thus, “the addition to a law practice’s usual costs of a premium to take into account that the law practice will not become entitled to payment unless and until a successful outcome is achieved is an uplift fee”. [23]. A “corollary”“ of this interpretation is “that an uplift fee may be found to be concealed within the rates or other modes of calculation of costs for legal work specified in a conditional costs agreement which, in contravention of the statutory requirements, does not reveal the existence of any uplift fee”. [29].

Against this context, Fraser JA was satisfied that item 25 constituted an uplift fee. [29]. Accordingly, his Honour dismissed the appeal against the primary judge’s declaration. [34].

CCL also appealed against the order that it deliver an itemised bill of costs to each respondent. This order had been made pursuant to the court’s inherent jurisdiction over legal practitioners on the grounds that it had failed to respond to a reasonable request by the respondents for a “report” of costs. [40]. Significantly, the respondents sought to argue that “report” referred to an itemised bill only on the day of the hearing below. [53]. While CCL had sought leave to adduce new evidence to rebut this point, leave was refused. [52]. However, leave to adduce that evidence on appeal was granted. [51]. In light of this new evidence, Fraser JA was satisfied that the respondents had not in fact made a request for an itemised bill. [55]. As the “exercise of the discretion to make any such order in the inherent jurisdiction must be informed by evidence of the material circumstances in the particular case”, and the “evidence does not disclose a good reason to make the order”, the appeal on this ground was allowed. [61]–[64].

In the event, Fraser JA, with whom Philippides JA and Crow J agreed, allowed the appeal against the order for an itemised bill, and dismissed the appeal against the declaration. [65]–[67].

M Paterson