Costs

Keeping Clients Informed: The Obligation to Revise Cost Estimates

In Luscombe v Australasian Solicitors Pty Ltd trading as HHG Legal Group [2023] WASCA 141, a client retained lawyers for a family law matter.

The lawyers' costs agreement estimated $35,000-$95,000 if proceedings became prolonged.

A short while afterwards, the lawyers requested $50,000 from the client's daughter's estate for costs. The client argued the lawyers failed to provide a revised estimate as required when there was a substantial change to the previous disclosure.

The client argued the lawyers failed to comply with their obligation to provide a revised estimate when there was a substantial change to the previous costs disclosure. She submitted that when new issues emerged, including the request for $50,000 from her daughter's estate in July 2019, no revised estimates were provided as required under section 267 of the Legal Profession Act 2008 (WA).

The lawyers submitted in response that the client did not properly articulate what the 'substantial change' was to the previous disclosure. They argued that because the original disclosure estimated a range of $35,000 to $95,000, the request for $50,000 from the estate did not amount to a substantial change requiring further disclosure under section 267. The $50,000 fell within the range originally estimated.

Key legal principles from Luscombe on revising cost estimates:

  • There was an implicit finding by the first instance Judge that by the date the $50,000 was requested, there had been a substantial change requiring a revised estimate under s267 Legal Profession Act 2008 (WA) (Mullins JA at [80]).

  • The lawyers' request for payment for trust money from an external party did not constitute proper written disclosure of the substantial change as required by s267 (Mullins JA at [81]).

  • Litigation lawyers should be capable of providing estimates of costs in difficult litigation along with variables affecting estimates (Vaughan JA at [7]).

  • Uncertainties in predicting required work can be reflected by appropriate qualifications of estimates (Vaughan JA at [7]).

  • What is required are estimates, not guaranteed predictions (Vaughan JA at [7]).

  • Lawyers should explain variables potentially affecting estimates and qualify estimates for uncertainties (Vaughan JA at [7]).

  • Estimates can be qualified where precise estimates are difficult due to imponderables (Vaughan JA at [7]).

  • Focus should be practical estimates based on experience, not guaranteed predictions (Vaughan JA at [7]).

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The 'Monumental' Costs of Large-Scale Litigation: Insights from the Santos-Fluor Dispute

A recent case in the Supreme Court of Queensland between Santos Limited and Fluor Australia Pty Ltd (Santos Limited v Fluor Australia Pty Ltd & Anor [2023] QSC 77) provides a clear picture of the financial scale associated with large-scale litigation.

The case centres around a dispute over alleged overpayments made by Santos to Fluor during a coal-seam gas project construction between 2011 and 2014.

Santos alleges overpayments to Fluor. Before initiating proceedings, Santos conducted a year-long investigation into these alleged overpayments​.

The court referred questions arising on pleadings to 3 referees. Hearings were heard before the referees between November 2021 and August 2022. The referees submitted a draft report on 7 March 2023 and allowed parties to make further written and oral submissions in April 2023​.

The sheer magnitude of this litigation is evident in the resources invested. Santos reported expending over 120,000 solicitor hours, $36.5 million in expert fees, $21 million in counsel fees, and $2.5 million in other costs. The scale of the litigation extended beyond financials, with the parties disclosing over 5.7 million documents, 14 experts producing 81 expert reports, and 90 lay witnesses providing 178 witness statements.

The Judge noted that the parties are “engaged in litigation on a monumental scale”, marked by numerous interlocutory disputes and appeals.

The Defendants applied to stay the conduct of the reference (to the Referees) until further order, presumably until the hearing and determination of the substantive application. In his reasons given for dismissing the application, the Judge stated that the costs associated with finalising the referee report were likely to be "relatively insignificant in the scheme of this litigation."

The Santos-Fluor dispute underscores the complexity and cost that can be associated with litigating large resource and infrastructure projects. As this case continues to unfold, it serves as a stark reminder of the potential financial implications of such large-scale disputes.

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Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505: The Importance of Accurate Legal Costs Estimates

Perth Lawyer Richard Graham

As a costs lawyer, I often come across situations where disputes arise between clients and their legal practitioners over the accuracy of legal costs estimates.

A recent decision from Victoria, Australia, Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505, highlights the importance of providing accurate legal costs estimates and the potential consequences of failing to do so.

In this blog post, I discuss the key takeaways from this decision and the importance of accurate legal costs estimates in maintaining a healthy client-lawyer relationship.

Accurate Legal Costs Estimates

In this case of Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505, Mr. Song argued that he was provided with an inaccurate cost estimate for a brief to be prepared for an expert witness.

This, he claimed, constituted misleading and deceptive conduct under section 18 of the ACL. However, the Tribunal found that the cost estimate provided to Mr. Song was not misleading or deceptive. It was found to be a genuine and honest assessment of the costs likely to be incurred at the time it was given.

Significantly, the Tribunal determined that the initial “quote” given by the law firm was not a fixed quote but an estimate that was based on assumptions, and these assumptions were made clear to Mr. Song. The Tribunal highlighted the importance of clear communication between the legal practitioner and the client when giving cost estimates, noting that the legal practitioner had taken reasonable steps to explain that the quote was an estimate and could be subject to change.

However, the Tribunal Member stated:

“I accept that Mr Song was misled by the estimate provided and that had Mr Song been informed of the actual cost prior to engaging PCL to prepare the brief, he may not have asked them to do so. Further, he has not obtained any benefit from that brief as he ultimately engaged a different expert and briefed that expert himself.”

Despite not finding the legal practitioner or the firm guilty of misleading or deceptive conduct, the Tribunal did order the law firm to refund Mr. Song the sum of $1,000.

This was based on the Tribunal's findings that the law firm had received the sum for the preparation of the brief, but that the brief had not been used, because Mr. Song had engaged a different expert and briefed that expert himself.

Furthermore, Mr. Song claimed for 'time waste and mental damage' due to delays in obtaining an expert report. However, the Tribunal did not find any loss or damage suffered as a result of this delay, as Mr. Song had ultimately filed his own expert report.

Potential Consequences

The Australian Consumer Law (ACL) and the Legal Profession Uniform Law (LPUL) set out the standards and obligations for legal practitioners when providing legal costs estimates.

Failure to comply with these obligations may lead to disputes and potential consequences, including:

  1. Refunds: In some cases, if a client has paid for a service based on misleading cost estimates, they may be entitled to a refund for the amount paid.

  2. Misleading and Deceptive Conduct: Under section 18 of the ACL, legal practitioners are prohibited from engaging in misleading or deceptive conduct. Breaching this provision may lead to legal action and potential penalties.

  3. Disciplinary Action: If a client believes that their legal practitioner has engaged in unsatisfactory professional conduct or professional misconduct, they may lodge a complaint with the relevant Legal Services Commissioner. Disciplinary proceedings may follow, leading to potential consequences for the legal practitioner.

Tips for Providing Accurate Legal Costs Estimates

To avoid disputes and potential consequences, legal practitioners should consider the following tips when providing legal costs estimates to their clients:

  1. Be thorough and realistic: Provide a detailed and realistic estimate based on a comprehensive understanding of the client's matter and the potential work involved.

  2. Communicate clearly: Ensure that the client understands the basis of the estimate and any factors that may impact the final costs, such as the complexity of the case or the possibility of additional work.

  3. Update the estimate as needed: Regularly review the costs estimate and update it as necessary to reflect any changes in circumstances or new information that comes to light.

  4. Keep the client informed: Maintain open communication with the client about their legal costs throughout the matter, addressing any concerns or questions they may have.

Key Take-Aways

  • Providing accurate legal costs estimates is an essential aspect of the client-lawyer relationship.

  • The case of Song v PCL Lawyers Pty Ltd (Legal Practice) [2023] VCAT 505 serves as a reminder of the importance of fulfilling this obligation and the potential consequences of failing to do so.

  • By being thorough, realistic, and transparent in their estimates, legal practitioners can help ensure that clients are well-informed and maintain a positive working relationship throughout the course of their legal matter.

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The Lifespan of Settlement Offers: A Closer Look

Richard Graham Perth Lawyer

In the context of legal proceedings, the offer of compromise is an indispensable tool. It not only hastens the resolution of disputes but also mitigates the potential financial and emotional toll of litigation on all parties involved.

One critical aspect of these offers, however, often stokes debate: the time in which an offer should remain open.

This question has been addressed through several judicial decisions, one of them being Tonkin -v- Heilongjiang Feng Ao Agricultural & Animal Husbandry Group Co Pty Ltd [2015] WASC 378 (S).

This case concerned a Calderbank offer, a specific type of settlement offer, based on the English case Calderbank v Calderbank [1975] 3 All ER 333.

In the Tonkin case, the court underscored the pivotal role of the Calderbank offer in facilitating dispute resolution. The defendant's offer, a Calderbank offer, was open for seven days until a specified date. However, the court had to determine whether the plaintiffs' rejection of this offer was unreasonable. This evaluation involved a holistic view of the circumstances surrounding the offer.

The court's approach towards Calderbank offers has been shaped by various decisions, both within Western Australia and across the Commonwealth. In the case of Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115, the court held that the test for awarding indemnity costs against a party who rejected a Calderbank offer was whether the rejection was unreasonable under the circumstances. The burden of proof falls on the offeree to establish unreasonableness.

A similar sentiment was echoed in the New South Wales Court of Appeal in Miwa Pty Ltd v Siantan Properties Pte Ltd [No 2] [2011] NSWCA 334. The court posited that a reasonable offer could alter the court's perspective on the costs award, particularly when the party rejecting the offer fails to obtain a better result in the judgment.

When assessing the reasonableness of rejection, several factors come into play. These were elucidated in Lo Presti and further elaborated by Beech J in McKay v Commissioner of Main Roads [No 7] [2011] WASC 223 (S). These include:

  • the stage of proceedings at which the offer was received;

  • the time allowed to the offeree to consider the offer;

  • the extent of the compromise offered;

  • the offeree's prospects of success, assessed at the date of the offer;

  • the clarity with which the terms of the offer were made; and

  • whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejection.

In Tonkin, the court examined these factors to determine the reasonableness of the rejection.

The offer was made within six months of the commencement of proceedings, which was considered marginally in favour of the defendant. However, the court viewed the seven-day timeframe as potentially too short for careful consideration and perhaps expert advice, suggesting 28 days might have been more appropriate.

Key Take-Aways

  • The time in which offers need to remain open is a nuanced issue and depends on various considerations.

  • It requires a careful balance between hastening dispute resolution and allowing enough time for the parties to make informed decisions.

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Malvina Park Pty Ltd v Johnson: Understanding Disclosure Obligations Under the Uniform Law

Perth Lawyer Richard Graham

The Uniform Law, effective from 1 July 2022, introduced several changes to the legal profession in Western Australia, particularly regarding costs disclosure.

This article examines the case Malvina Park Pty Ltd v Johnson [2019] NSWSC 1490, which explores disclosure obligations under the Uniform Law.

Due to the possible financial and disciplinary consequences for lawyers and law practices, ensuring compliance with these obligations is crucial.

To better understand the issues in this case, we first need to examine the relevant provisions of the Uniform Law.

The Uniform Law is outlined in Schedule 1 to the Legal Profession Uniform Law Application Act 2014 (Vic), which, through the Legal Profession Uniform Law Application Act 2022 (WA), applies in Western Australia.

Disclosure Obligations

Law practices' disclosure obligations are set out in s174 of Schedule 1.

Section 174(1), titled “main disclosure requirement,” stipulates that a law practice must provide the client with information disclosing the basis on which legal costs will be calculated in the matter and an estimate of the total legal costs as soon as practicable after instructions are initially given.

Additionally, it requires the law practice to disclose any significant changes to previously disclosed information, including changes to legal costs payable.

Section 174(2) deals with “additional information to be provided,” requiring a law practice to inform clients of their rights, such as negotiating a costs agreement, billing method, receiving a bill, requesting an itemized bill, and seeking assistance from the designated local regulatory authority in the event of a legal costs dispute.

This section also covers the information to be provided when there is a significant change in a previous disclosure and legal costs.

Section 174(3), titled “Client’s consent and understanding,” states that if a disclosure is made under subsection (1) or (2), a law practice must take all reasonable steps to satisfy itself that the client has understood and given consent to both the proposed course of action for the conduct of the matter and the proposed costs.

Malvina Park Pty Ltd v Johnson: Case Analysis

In Malvina Park Pty Ltd v Johnson[1], the Plaintiff argued that their fixed-price costs agreement should be enforced, while the Defendant contended that the agreement was void due to non-compliance with s174(3).

The Court observed that instead of making arrangements to meet with the Defendant to discuss and explain the Cost Agreement, the Plaintiff chose to send three confusing and complex letters to their client[2].

There was no evidence put forward by the Plaintiff confirming they took any steps to satisfy themselves that the Defendant understood the Cost Agreement and was providing his consent to the proposed course of action and conduct of the matter, other than simply sending it to the client and asking him to sign and return it[3].

The Court found that the Plaintiff sought to rely on Mr. Firth’s evidence in relation to his state of mind and whether he formed a “reasonable opinion” about his client’s understanding of the costs agreement[4]. However, the Court commented that such matters may be relevant for the purpose of s174(3), but the evidence of those subjective beliefs of Mr. Firth as a principal of the law practice needs to be assessed in the light of the actions taken by the law practice at the time of the disclosure under s174 and, in particular, the actual steps taken by the law practice to meet its obligations under s174(3)[5].

The Court accepted that the legislation does not prescribe how a law practice must discharge the duty under s174(3), and that this reflects the

The Court accepted that the legislation does not prescribe how a law practice must discharge the duty under s174(3), and that this reflects the reality that what will be necessary to discharge the duty will vary according to the circumstances of the case and the client[6].

The steps a law practice may need to take will be influenced by the attributes of the client and what the client communicates before and after receiving the disclosure documents[7].

The Court also accepted the Defendant’s submissions that there was no evidence that the Defendant was informed as to the risks occasioned by a fixed-price agreement[8].

The risks went both ways, but the risks for the Defendant were twofold. First, the risk that the legal practice may be incentivized to minimize the work contributed to a particular matter. Secondly, and more significantly, there was a risk that the client will pay more than a matter is objectively worth under such an agreement, even if the discounts under the costs agreement were applied[9].

The Court found that the approach taken by Mr. Firth did not constitute reasonable steps to satisfy himself that the client had understood and given consent to proposed costs when formulated on a fixed-price basis, let alone, the proposed course of action for the conduct of the matter[10].

That approach being that he had surmised the client understood and consented from the surrounding circumstances and the client’s communications and that, if asked, he would have dealt with any query in that respect.

Furthermore, no inquiry was made of the client as to his understanding or consent specifically in relation to the fixed-price component of the costs agreement and its implications in the context of the specific litigation under consideration.

Takeaways

  • Compliance with disclosure requirements does not only involve ensuring that you disclose to a client in writing the matters referred to in s174. A law practice is also required to take all reasonable steps to satisfy itself that the client has understood and given consent to both the proposed course of action for the conduct of the matter and the proposed costs.

  • The obligation applies to the “law practice.” The steps required to discharge this obligation will depend on the circumstances of the case and client, including the client’s sophistication. It will not be sufficient for a lawyer to rely on their subjective assessment from the surrounding circumstances that the client understood and consented. Active steps are required.

  • If this obligation is not met, the costs agreement may be rendered void under s178(1)[11].

Endnotes

Here are the endnotes for the revised article:

[1] [58].

[2] [59].

[3] [115].

[4] [50].

[5] [59].

[6] [54-57].

[7] [113].

[8] [116].

[9] [116].

[10] [116].

[11] This article does not consider or discuss the application of regulation 72A of the Legal Profession Uniform General Rules 2015 (NSW) which makes provision for the disapplication of s178(1) and (2) in certain circumstances.

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A Closer Look at Bingham v Bevan [2023] NSWCA 86 Decision

Perth Costs Lawyer Richard Graham

A recent decision by the New South Wales Court of Appeal, Bingham v Bevan [2023] NSWCA 86, offers insights into the repercussions of not adhering to the terms set forth in a costs agreement.

Read my earlier blog post here about a previous NSWSC single judge decision in this dispute, which was about the costs estimates aspect of things

In this blog post, I analyse the NSWCA decision and explain the Court’s rationale with respect to the enforceability of costs certificates.

The Bingham v Bevan Case

The Bingham v Bevan case is centred around a dispute between a solicitor (Bingham) and a barrister (Bevan) regarding the payment of legal fees.

The dispute arose from a costs agreement between the parties that contained a clause (cl 4) specifying that the barrister's fees were contingent upon the solicitor recovering funds from the sale of the client's property or through the client's bankruptcy.

The barrister sought a costs assessment, and the costs assessor found that the costs agreement was void due to non-compliance with the disclosure requirements of the Legal Profession Uniform Law Application Act 2014 (NSW) (the Application Act).

Despite the void costs agreement, the assessor issued a certificate specifying the amount of costs to be paid by the solicitor to the barrister.

The barrister filed the certificate and obtained a judgment in the Common Law Division, which the solicitor appealed.

The main issue in the appeal was whether the barrister was entitled to recover the assessed fees, given the contingent nature of the costs agreement and the fact that the contingency had not been satisfied.

Analysis of the Decision

The Court of Appeal, in its judgment, found that the costs agreement was void due to the solicitor's non-compliance with the disclosure requirements under the Application Act.

However, the Court emphasised that the enforceability of the costs agreement was not solely dependent on compliance with these requirements.

The Court also noted that the recovery of the barrister's fees was contingent on the solicitor obtaining funds from the sale of the client's property or through the client's bankruptcy, as stated in cl 4 of the costs agreement.

Since the contingency had not been met, the Court held that the barrister was not entitled to recover the fees.

The Court allowed the appeal, set aside the judgment in the Common Law Division, and ordered the barrister to reimburse the solicitor for the amount paid pursuant to a garnishee order.

Key Takeaways:

These 2 NSWSC Bingham v Bevan decisions highlight the following:

  1. Compliance with disclosure requirements: Legal practitioners must ensure they comply with the disclosure requirements set out in the Application Act, as non-compliance can render a costs agreement void.

  2. Enforceability of costs agreements: The terms of a costs agreement, including any contingent fee arrangements, must be clear and enforceable. Failure to satisfy the contingencies can render the fees non-recoverable.

  3. Costs assessment and judgment: Obtaining a costs assessment and judgment based on a void costs agreement can lead to complications and potential reversal of the judgment, as seen in the Bingham v Bevan case.

  4. Importance of clear communication: Legal practitioners should ensure they communicate clearly with their clients and fellow professionals about the terms and conditions of a costs agreement, including any contingent fee arrangements. Proper communication can help avoid disputes and misunderstandings between the parties involved.

  5. Consequences of a void costs agreement: It is essential for legal practitioners to be aware of the potential consequences of a void costs agreement, as it may impact their ability to recover fees. In the Bingham v Bevan case, the barrister was unable to recover the assessed fees due to the void costs agreement and the unsatisfied contingency.

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Determining Factors in a s16(4) Costs Application in a Guardianship and Administration Matter in Western Australia

Perth Lawyer Richard Graham

In this blog post, I explore the factors to be considered in determining a s16(4) costs application in a guardianship and administration matter in the State Administrative Tribunal of Western Australia.

This discussion will rely on the case of Y and CO [2020] WASAT 166 and relevant legislation, including the Guardianship and Administration Act 1990 (WA) (the GA Act) and the State Administrative Tribunal Act 2004 (WA) (SAT Act).

1. The Tribunal's Power to Make Costs Orders

Section 16(4) of the GA Act grants the State Administrative Tribunal the power to order that costs be paid by, or out of the assets of, a represented person if it is satisfied that a party to the proceedings has acted in the best interests of the represented person or the person in respect of whom an application is made [1][21].

The principle in s 87(1) of the SAT Act states that parties usually bear their own costs in a proceeding of the Tribunal [22].

2. Factors to Consider

In determining whether to exercise its discretion to order a represented person to pay another party's legal costs, the Tribunal may consider several factors outlined in Re WA and IA, Ex Parte AA and JA [2011] WASAT 33 [32][59-60].

These factors include:

  • Whether the application would have been made without the applicant seeking legal advice;

  • The presence of serious allegations of abuse, requiring legal advice and representation;

  • Conflict between significant parties that may prevent them from presenting a coherent case without legal assistance;

  • The complexity of the application requiring legal advice and representation;

  • Whether the application is contentious and unique;

  • Whether the application raises a special point of law.

It is important to note that awards of costs pursuant to s 16(4) of the GA Act are not common [60].

3. Acting in the Best Interests of the Represented Person

Section 16(4) of the GA Act conditions the positive exercise of the Tribunal's discretion on being satisfied that the person seeking costs has acted in the best interests of the represented person [33].

However, more than merely acting in the best interests of the person is required to succeed in a costs order under s 16(4) [37].

4. The Amount of Costs Awarded

The amount of costs that may be awarded should be such costs relative to those proceedings as the Tribunal sees fit. The award is not referable solely to the costs incurred by that party [33].

5. The Tribunal's Wide Discretion

The Tribunal has a wide discretion under s 16(4) of the GA Act to award costs, but it should not be read independently of the costs regime in the SAT Act and the starting position that parties bear their own costs [36].

6. Relevant Case: Y and CO [2020] WASAT 166

In the case of Y and CO [2020] WASAT 166, the Tribunal made a costs order of $5,000 under s 16(4) [59].

The reasons for this finding include the applicant (Y) acting in the best interests of the represented person (CO), and that it was unlikely the application, which ultimately benefitted CO, would have been made without legal advice sought by Y [41][46].

Key Take-Aways

  • Determining factors in a s16(4) costs application in a guardianship and administration matter in Western Australia involves a careful consideration of various factors and circumstances.

  • The Tribunal has a wide discretion to award costs but must be satisfied that the person seeking costs has acted in the best interests of the represented person, among other considerations.

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Factors to be considered in determining costs application in a guardianship and administration matter in the State Administrative Tribunal of Western Australia (other than pursuant to s 16(4))

Perth Lawyer Richard Graham

When it comes to costs applications in guardianship and administration matters before the State Administrative Tribunal of Western Australia (SAT), other than pursuant to s 16(4) of the Act, there are various factors to consider.

In this blog post, I discuss these factors, referencing the decision MD [2022] WASAT 45 and relevant legislation, to provide an overview of the key principles and considerations in determining costs applications in such matters.

Starting Point: Parties Bear Their Own Costs

As a starting point, s 87(1) of the SAT Act sets the principle that parties typically bear their own costs in a proceeding of the Tribunal.

This principle was affirmed in RK [2020] WASAT 53 (S) (RK), where the Full Tribunal found that the parties to guardianship and administration proceedings should bear their own costs [10].

Discretion to Award Costs

However, the Tribunal does have discretion to award costs in any proceeding, except as otherwise provided in an enabling Act [11].

This includes the power to order a party to pay the costs of another party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding [12].

In exercising this discretion, the Tribunal must consider all of the circumstances of the particular case and whether it is fair and reasonable for one party to bear the costs of another [14][15].

Key Considerations

Some of the key considerations guiding the Tribunal's assessment include whether:

  1. A party has conducted itself in a way that unnecessarily prolongs the hearing, has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious, or the proceedings in some other way constitute an abuse of process. This includes where proceedings should not have been maintained against a party because it is clearly untenable, and no reasonable person would have believed they could be successful [16].

  2. Costs have been incurred unnecessarily by a failure of a party to act appropriately in a particular circumstance in the conduct of the proceedings (where the conduct of the party was unreasonable and unfairly caused the increased costs) [16].

Vexatious Proceedings

In the decision of MD [2022] WASAT 45, the term 'vexatiously' was defined under s 3 and s 4 of the SAT Act, with reference to the definition in the Vexatious Proceedings Restriction Act 2002 (WA) under s 3.

Vexatious proceedings are those that are an abuse of the process of a court or a tribunal, instituted to harass or annoy, to cause delay or detriment, or for any other wrongful purpose, or conducted in a manner so as to harass or annoy, cause delay or detriment, or achieve any other wrongful purpose [26].

Section 88(2) of the SAT Act and Costs

While s 88(2) of the SAT Act empowers the Tribunal to order that all or any of the costs of a proceeding be paid by a party, s 88(1) defines 'costs of a proceeding' for this section as those 'other than the costs of a party,' excluding the legal costs sought by a party in a proceeding [28].

Section 87(3) of the SAT Act and Costs

The Tribunal does have the power to order payment of costs by a party under s 87(3) of the SAT Act 'to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding' [29].

However, as noted in Blaskiewicz, discussing Questdale, the legal rationale for ordering costs is not to punish the person against whom the order is made [17].

Key Take-Aways

  • In summary, while the general principle in the SAT Act is that parties bear their own costs in guardianship and administration proceedings, the Tribunal does have discretion to award costs in specific circumstances.

  • Key factors to consider when determining costs applications include the conduct of the parties, the reasonableness of their actions, and whether the proceedings were vexatious.

  • The Tribunal will carefully examine each case, considering all relevant factors, and determine whether it is fair and reasonable for one party to bear the costs of another.

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The Importance of Fair and Reasonable Legal Fees: Understanding Overcharging and its Consequences

Perth Costs Lawyer Richard Graham

Overcharging clients is a topic that has been repeatedly scrutinised in the legal profession.

It not only damages the reputation of individual practitioners but also erodes public trust in the profession as a whole.

This blog post provides a general understanding of the issue of overcharging, drawing on extracts from 3 Western Australian State Administrative Tribunal decisions: Legal Profession Complaints Committee and O'Halloran [2013] WASAT 105, Legal Profession Complaints Committee and Park [2017] WASAT 89, and Legal Profession Complaints Commitee and Penn [2015] WASAT 145.

The Vulnerability of Clients

One of the main reasons courts and disciplinary tribunals take a serious view on overcharging is the inherent power imbalance between lawyers and their clients (Veghelyi v The Law Society of New South Wales).

Clients are often in a vulnerable position when making decisions, as they may not know what work needs to be done or what charges are fair and reasonable.

Lawyers, on the other hand, are in a position of advantage, as they can inform themselves of the necessary work and appropriate charges.

This power imbalance and the trust clients place in their solicitors can lead to the misuse of such advantage and potentially result in adverse findings against lawyers by regulatory bodies and tribunals.

The Consequences of Overcharging

Overcharging can lead to significant consequences for legal practitioners, including suspension or striking off from the profession. In the O'Halloran case, the Tribunal found that the practitioner engaged in a course of conduct of grossly overcharging clients over a period of approximately six years. This conduct was considered to demonstrate that the practitioner was not a fit and proper person to remain a member of the profession.

In the Park case, the Tribunal considered overcharging by 15% to 20% of the proper costs of the criminal proceedings to be very serious.

In the Penn case, the Tribunal examined a situation where the practitioner was alleged to have overcharged their client by a significant margin. The initial amount charged to the client for obtaining a grant of probate, administration of the estate, and representation in various proceedings was $69,028.89. However, after an assessment of the work done, it was determined that a reasonable sum of costs for a competent and diligent practitioner should have been $28,959.80.

Although the practitioner argued that the assessment conducted by the Costs Consultant called by the Legal Profession Complaints Committee as an expert witness (Mr. Forbes) was incomplete, and failed to take into account the entire scope of work performed, the Tribunal ultimately accepted Mr. Forbes' evidence as to the appropriate charge.

The practitioner eventually conceded to a revised figure of $51,363.28, which still represented a significant overcharging of $17,665.61 or 25.6%.

The Tribunal found this level of overcharging to be excessive and agreed with the Committee's submission that such misconduct warranted disciplinary action.

The Penn case highlights the importance of transparency and fairness in legal billing, as well as the consequences practitioners may face for overcharging their clients, even when the practitioner disputes the extent of the overcharging.

Key Take-Aways

  • The issue of overcharging in the legal profession is a serious matter that not only affects the reputation of individual practitioners but also the profession as a whole.

  • Clients are often in a vulnerable position, and the trust they place in their lawyers should not be abused.

  • Legal practitioners have a responsibility to ensure they charge their clients fairly and reasonably, and those who fail to do so may face severe consequences, including disciplinary action and damage to their professional reputation.

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Do You Need a Signature for a Costs Agreement? Criteria for Determining Retainers with Lawyers

Perth Lawyer Richard Graham

As a costs lawyer in Western Australia, I am sometimes asked whether a signature is required for a costs agreement and what criteria apply for determining if a retainer exists with a lawyer.

In this blog post, I address these questions and provide a general understanding of the subject matter.

I rely on the recent decision in Cappello v Homebuilding Pty Ltd [2022] NSWDC 725, which offers useful insights into the issue, while also referencing other relevant cases.

Is a Signature Required for a Costs Agreement?

The short answer is no, a signature is not always required for a costs agreement.

As established in Arjunan v Neighbourhood Associates No DP 285853 [2022] NSWSC 691, a costs agreement that is "unsigned but executed by conduct" is still valid.

Issues arise only when the costs agreement imposes a highly specific requirement for signing and returning the documents, as was the case in O'Neill v Wilson [2011] QSC 220.

Criteria for Determining If a Retainer Exists with a Lawyer

A retainer can exist even without a formal costs agreement, as long as there is evidence of an obligation to pay the lawyer's costs. Here are some key points to consider:

1. A strong presumption of a contract of retainer exists when a solicitor appears on the record for a party, and the party is aware of this (Halliday v SACS Group Pty Ltd [1993] HCA 13; 67 ALJR 678 at [7]).

2. Proof of a retainer can be implied from conduct (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [17]).

3. A party claiming under a party/party costs order needs only to provide enough evidence to infer that they were obliged to pay their solicitor's costs (Grundmann v Georgeson [2000] QCA 394 at [6] and [9]).

4. Courts generally accept the existence of a retainer when a solicitor has performed work on behalf of a person with their knowledge and assent, in circumstances consistent with that person being the solicitor's client (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [19]).

5. The onus of proving the absence of a retainer lies with the party who challenges its existence (Halliday v SACS Group Pty Ltd [1993] HCA 13; 67 ALJR 678 at [7]).

6. To displace the rule, a party against whom a costs order has been made (i.e. the opposing party in a party-party taxation of costs) must prove that under no circumstances does the client (their opponent, to whom they have been ordered to party-party costs) have any liability to pay costs to their solicitors (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [20]; Davies v Taylor (No 2) [1974] AC 225).

7. In the absence of a costs agreement, a solicitor can still recover costs from a client on a "fair and reasonable" basis, under a type of statutory quantum meruit (see, by analogy, s 319 of the Legal Profession Act 2004).

Conclusion

  • In summary, a signature is not always required for a costs agreement, and a retainer can exist even without a formal costs agreement.

  • The key is to look at the conduct of the parties involved and whether there is an implied obligation to pay the lawyer's costs. It is important to be aware of these factors when dealing with costs agreements and retainers in a legal context.

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