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

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.

The Importance of a Concerns Notice under the Uniform Defamation Laws in Australia

The Uniform Defamation Laws in Australia require an aggrieved person to provide a concerns notice before commencing defamation proceedings.

A recent case, Hooper v Catholic Family Services trading as Centacare Catholic Family Services [2023] FEDCFAMC2G 323, highlights the significance of this requirement.

In this blog post, I discuss the mandatory nature of a concerns notice under the Uniform Defamation Laws and the implications of not adhering to this requirement.

The Uniform Defamation Laws

Defamation laws in Australia were historically inconsistent across different states and territories. However, the introduction of the Uniform Defamation Laws (these particular amendments yet to apply in WA) sought to harmonise these laws across the country, recognising the need for consistency in an era where publications can be disseminated instantaneously throughout Australia. The Uniform Defamation Laws introduced several key amendments to defamation law, including the requirement of a concerns notice before commencing defamation proceedings.

Mandatory Nature of a Concerns Notice

Section 12B(1) of the South Australian Defamation Act (DA) mandates that an aggrieved person cannot commence defamation proceedings unless they have provided a concerns notice to the proposed defendant. The concerns notice must specify the alleged defamatory imputations, the serious harm caused, and include a copy of the allegedly defamatory material.

In Hooper v Catholic Family Services, the court found that the plaintiff failed to comply with the mandatory provisions of the DA concerning the provision of a concerns notice, resulting in the summary dismissal of the defamation aspects of her claim.

Imperative vs. Directory Provisions

The High Court in Clayton v Heffron distinguished between imperative (mandatory) and directory provisions in the context of statutory requirements. Imperative provisions require strict compliance, with non-compliance rendering the resulting action null and void, while directory provisions do not have such fatal consequences, although substantial compliance is still necessary.

The court in Hooper v Catholic Family Services agreed with Gibson DCJ's view in Teh v Woodworth that section 12B(1) of the DA is an imperative provision, emphasizing the use of the word "cannot" in the provision.

Consequences of Non-Compliance with the Concerns Notice Requirement

Failure to comply with the concerns notice requirement can result in the dismissal of the defamation aspects of a claim, as demonstrated in Hooper v Catholic Family Services. The court in M1 v R1 also held that leave could not be granted to retrospectively validate defective concerns notices under the Uniform Defamation Laws.

Key Take-Aways

• The Hooper v Catholic Family Services case serves as a reminder of the importance of complying with the mandatory concerns notice requirement under the Uniform Defamation Laws in Australia.

• Failing to provide a proper concerns notice can lead to the summary dismissal of defamation claims, and such defects cannot be retrospectively remedied by amendment.

• As such, it is essential for those pursuing defamation claims to ensure strict adherence to the concerns notice provisions of the DA.

Can a Guardian Initiate Divorce Proceedings on Behalf of a Represented Person in Western Australia?

Guardianship law is a complex area, and one question that often arises is whether a guardian can initiate divorce proceedings on behalf of a represented person.

In this blog post, I explore this topic in the context of Western Australian guardianship law, with reference to the decision in LWL [2008] WASAT 35.

The Guardianship and Administration Act (GA Act)

The GA Act is the key legislation governing the appointment and role of guardians in Western Australia.

However, the Act is silent on whether a guardian can initiate divorce proceedings on behalf of a represented person.

To understand the relevant provisions, we need to look at sections 45 and 46 of the GA Act.

Plenary Guardians (s 45)

Section 45(3)(d) of the GA Act explicitly states that a plenary guardian cannot give consent in relation to the marriage of a minor, sign a notice of intended marriage, or take part in the solemnisation of a marriage under the Marriage Act 1961 (Cth).

However, there is no mention of divorce proceedings in this section.

Under s 45(2)(g) of the GA Act, a plenary guardian may commence, conduct, or settle any legal proceedings on behalf of the represented person, as their next friend, except proceedings relating to the person's estate.

This provision may suggest that a plenary guardian has the authority to initiate divorce proceedings, but it is not explicit.

Limited Guardians (s 46)

Section 46 of the GA Act allows for the appointment of a limited guardian with specific functions vested in them by the Tribunal.

A limited guardian, if given the function under s 45(2)(g), may have the authority to initiate divorce action for a represented person by way of a case guardian, as per Pt 6.3 of the Family Law Rules 2004 (Cth).

LWL [2008] WASAT 35

In LWL [2008] WASAT 35, the Tribunal addressed the issue of whether a guardian could initiate divorce proceedings on behalf of a represented person.

It was decided that the matter required obtaining legal advice on behalf of the represented person, as the issue was at a preliminary stage.

The Tribunal then appointed a limited guardian, MIL, with the function of seeking legal advice on whether divorce proceedings could be initiated against the represented person's spouse.

The Tribunal also directed MIL to seek directions from the Tribunal pursuant to s 74 of the GA Act once the legal advice had been obtained.

Key Take-Aways

• While the GA Act does not explicitly address whether a guardian can initiate divorce proceedings on behalf of a represented person, the decision in LWL [2008] WASAT 35 suggests that a limited guardian may have the authority to do so, provided they have been granted the relevant function under s 45(2)(g).

• However, it is important to obtain legal advice on the matter, as was the case in LWL.

Appellate Reviews of Findings of Fact: A Closer Look

Appellate review of findings of fact is an important aspect of the legal process, ensuring that trial judges' decisions are carefully scrutinised for potential errors.

This blog post provides an overview of appellate reviews of findings of fact, including the principles that guide appellate courts in conducting these reviews.

The Real Review Standard

In Robinson Helicopter Co Inc v McDermott, the High Court articulated the standard of review for appellate courts when examining findings of fact.

Appellate courts are required to conduct a "real review" of the evidence and the trial judge's reasoning, and determine whether the judge has erred in fact or law.

However, appellate courts should not interfere with a trial judge's findings of fact unless they are:

• glaringly improbable,

• contrary to compelling inferences, or

• demonstrably wrong based on incontrovertible facts or uncontested testimony.

Inferences from Findings of Fact

There has been some debate regarding whether the standard set forth in Robinson Helicopter applies to inferences drawn from findings of fact.

While the High Court has not directly addressed this issue, it has been resolved in other cases that the standard does not apply to inferences.

Instead, appellate courts are generally considered to be in as good a position as the trial judge to draw proper inferences from undisputed facts or facts found on the evidence.

Nevertheless, appellate courts must make "due allowance" for the fact that they have neither seen nor heard the witnesses, recognizing the trial judge's advantages in evaluating witness credibility and the overall "feeling" of a case (Fox v Percy).

Respect for the Trial Judge's Conclusions

Appellate courts should give respect and weight to the conclusions reached by the trial judge.

However, once the appellate court has conducted its real review and reached its own conclusion, it must give effect to that conclusion, even if it differs from the trial judge's decision.

The appellate court is still required to conduct a real review of the trial and the judge's reasoning, ensuring that any errors in fact or law are identified and corrected.

Economic Loss Arising from Defamation: Impaired Capacity to Work

Defamation cases can have a significant impact on a person's ability to work, especially when the defamatory material is published widely and causes reputational damage.

In this blog post, I discuss the issue of economic loss arising from defamation, focusing on the impairment of a person's capacity to work.

I reference the decision in Poniatowska v Channel Seven Sydney Pty Ltd [2020] SASCFC 5, as well as other relevant cases, to provide an understanding of this subject matter.

Economic Loss in Defamation Cases

In defamation cases, economic loss may be claimed by the plaintiff if they can prove that the defamatory material published has caused a negative impact on their capacity to work.

In the case of Poniatowska v Channel Seven Sydney Pty Ltd [2020] SASCFC 5, the plaintiff claimed that the publication of the defamatory material led to a relapse in her psychiatric conditions (depression and anxiety) and caused her incapacity to work. Furthermore, her loss of reputation adversely affected her prospects of obtaining employment.

Causation: Effect of Publication on Capacity to Work

To establish a causal link between the publication of defamatory material and the plaintiff's incapacity to work, expert evidence may be required.

In Poniatowska's case, the expert evidence of Dr. Czechowicz was crucial in proving that the publication had caused a relapse of her psychiatric conditions, which in turn resulted in her incapacity to work.

In some cases, the defamatory material may only be one of several contributing factors to the plaintiff's impaired capacity to work.

In Poniatowska, the court acknowledged that the defamatory publication was one of several factors that contributed to her psychological dysfunction.

Assessment of Damages for Economic Loss

Determining the appropriate amount of damages for economic loss in defamation cases can be challenging.

In some cases, a mathematical approach can be taken by multiplying the value of the lost opportunity by the percentage chance that the opportunity would have materialized. In other cases, a more holistic assessment may be required.

In Poniatowska, the court opted for a broad-axe holistic assessment of the economic loss, considering the adverse circumstances caused by the defamatory publication that impacted her earning capacity. These circumstances included the:

• exacerbation of her psychological dysfunction, which affected her job-seeking efforts, motivation; and

• capacity to seek employment in various roles.

The court ultimately assessed her economic loss at $80,000.

Key Take-Aways

• Economic loss arising from defamation can have a significant impact on a person's capacity to work.

• The Poniatowska v Channel Seven Sydney Pty Ltd [2020] SASCFC 5 decision provides valuable insights into how courts assess the causal link between the publication of defamatory material and the plaintiff's incapacity to work, as well as the appropriate damages for economic loss.

• When pursuing a defamation claim, it is essential to gather strong evidence to establish causation and to ensure that damages for economic loss are accurately assessed.

The Challenges in Assessing Damages for Defamation: Striking the Right Balance

Defamation law is an important tool for protecting individuals from damage to their reputation.

In Australia, the assessment of damages for defamation involves ensuring an appropriate and rational relationship between the harm suffered by the plaintiff and the damages awarded.

This can be a complex process, with several inherent challenges.

In this blog post, I discuss these challenges, drawing on relevant cases, including the decision in Nine Network Australia Pty Ltd & Ors v Wagner & Ors [2020] QCA 221.

The Appropriate and Rational Relationship Between Harm and Damages

Section 34 of the Defamation Act requires courts to ensure that there is an appropriate and rational relationship between the harm sustained by the plaintiff and the amount of damages awarded.

The concept of an "appropriate and rational relationship" was discussed in the case of Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327, where it was noted that reputation is not a commodity with a market value, making comparisons between awards for defamation difficult.

Furthermore, because the remedy for defamation is damages, courts must have regard to what is allowed as damages for other types of non-economic injury.

The Role of Vindication in Damages Calculations

In assessing damages for defamation, courts must consider three purposes:

• consolation for personal distress and hurt,

• reparation for harm done to the plaintiff's reputation, and

• the vindication of the plaintiff's reputation.

Vindication looks to the attitudes of others and is often considered in tandem with the first two purposes.

The appellants in the Wagner case argued that the size of the final awards was indicative of an excessive allowance for vindication.

They suggested that if a substantial sum is awarded for injury to reputation and hurt feelings, it is unnecessary to add a further sum for vindication, as the substantial sum will serve to vindicate the respondent's reputation.

However, this approach may not necessarily conform to the global assessment of damages usually employed by courts.

Comparing Awards Across Different Cases

The appellants in Wagner did not advance any arguments based on comparison with other awards of damages for non-economic loss in other cases of damages for defamation or possibly relevant awards of damages for personal injuries or false imprisonment.

This highlights the difficulty in comparing awards across different cases, as each case is unique, and there may not be a clear "external standard" against which to measure the required "appropriate and rational relationship."

Key Take-Aways

• Assessing damages for defamation is a complex process, with inherent challenges such as determining the appropriate and rational relationship between harm and damages, comparing awards across different cases, and the role of vindication in damages calculations.

• Courts must balance these factors to ensure a just outcome for both plaintiffs and defendants in defamation cases.

The Significance of a Failure to Apologise in Defamation Law: The Role in Aggravated Damages

In defamation law, the role of a defendant's failure to apologise in assessing damages for non-economic loss, including aggravated damages, can be significant.

This blog post discusses the general importance of an apology in defamation cases and its influence on aggravated damages.

Carson v John Fairfax & Sons Ltd

A starting point for understanding the role of an apology in defamation cases is the 1993 High Court decision in Carson v John Fairfax & Sons Ltd.

In this case, the court found that the absence of an apology does not necessarily aggravate damages, as it does not increase the plaintiff's hurt or widen the area of publication.

However, subsequent case law has contradicted this view, suggesting that the failure to apologise can indeed aggravate damages.

Clark v Ainsworth

In the 1996 case of Clark v Ainsworth, the Court of Appeal of NSW distinguished the passage from Carson, stating that it related to aggravated damages, not ordinary damages.

The court held that the absence of an apology could be taken into account as something that extended the publication's vitality and capability to cause injury to the plaintiff.

Ali v Nationwide News Pty Ltd

The Court of Appeal of NSW in Ali v Nationwide News Pty Ltd further held that failure to apologise can aggravate damages.

It was established that damages for failure to apologise can be awarded as part of general compensatory damages, as the harm from the original publication may be prolonged and intensified by the absence of an apology, or as aggravating compensatory damages.

Trigell v Pheeney and Herald & Weekly Times Ltd v McGregor

In Trigell v Pheeney and Herald & Weekly Times Ltd v McGregor, the relevance of a failure to apologise to aggravated damages was considered.

This cases suggested that the conduct of the defence may be taken into account as improperly aggravating the injury done to the plaintiff if there is a lack of bona fides in the defendant's conduct or it is improper or unjustifiable.

Bauer Media Pty Ltd v Wilson

In Bauer Media Pty Ltd v Wilson, the Court of Appeal of Victoria found that the defendant's failure to apologise was not justifiable or bona fide due to their knowledge of the false imputations conveyed by the articles and their motive for publication.

The failure to apologise from the outset was considered improper and justified an award of aggravated damages.

Conclusion

• Although the mere absence of an apology does not automatically aggravate damages in defamation cases, it can be a factor considered by courts depending on the specific circumstances of each case.

• The failure to apologise can prolong and intensify the harm caused by the defamatory publication and may be taken into account when assessing both general compensatory damages and aggravated damages.

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

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.

Understanding Special Costs Orders: When Are They Made?

In certain complex and important legal matters, special costs orders can be made to address the inadequacy of the costs allowable under the applicable costs determinations.

In this blog post, I discuss the legal principles surrounding special costs orders and the circumstances under which they may be granted, with reference to the case of BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 5) [2023] WASC 116.

Legal Principles

The power to make special costs orders is found in sub-section 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA). This section replaced section 280(1) of the Legal Profession Act 2008 (WA) but is relevantly identical, meaning that authorities dealing with the previous section remain applicable.

As per the Court of Appeal decision in Sino Iron Pty Ltd v Mineralogy Pty Ltd (No 2) [2017] WASCA 76 (S), special costs orders may be made if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity, or importance of the matter. These orders are considered special and are only made if specified conditions are met.

Two Essential Components

To exercise the power to make a special costs order, the court must form an opinion that has two components:

1. The court must form the view that the maximum amount allowable under the relevant scale item is inadequate, in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount greater than the limit imposed by the relevant cost determination.

2. The court must also form the opinion that the inadequacy of the costs allowable under a costs determination arises because of the "unusual difficulty, complexity or importance of the matter."

Establishing a Fairly Arguable Case

A fairly arguable case will not be established merely because a party incurred greater costs than those allowable under the relevant determination.

However, if a party has applied significantly greater legal resources to each step in the litigation than those for which allowance is made under the relevant determinations, and this is viewed in the context of the difficulty, complexity, or importance of the matter, the conclusion that there is a fairly arguable case may be sustained.

The term "unusual" in this context qualifies only the "difficulty" of the matter, and not its "complexity" or "importance." It means unusual when compared to the usual run of civil cases determined in the court.

Case Example: BCBC Singapore Pte Ltd v PT Bayan Resources TBK (No 5) [2023] WASC 116

In this case, the court was satisfied that the Freezing Orders Proceedings were complex and important, justifying the special costs orders.

The nature and importance of the proceedings led the court to conclude that Bayan was justified in engaging counsel with greater experience and expertise in commercial litigation than in the usual run of civil cases, as well as solicitors who charged more than the scale rates.

Key Take-Aways

• Special costs orders are made in cases of unusual difficulty, complexity, or importance when the maximum amount allowable under the relevant scale item is inadequate.

• These orders are not made lightly, and the court must be satisfied that there is a fairly arguable case that the amount of costs allowable is inadequate because of the specific nature of the matter.

At what stage should the question of Serious Harm be considered in defamation cases under the Uniform Defamation Laws?

The recent decision in GRC Project Pty Ltd trading as GRC Property Management v Lai [2023] NSWDC 63 provides an insightful look into when the issue of serious harm is addressed in defamation cases under the uniform defamation laws. (Note: the serious harm test does not yet apply in Western Australia).

Serious Harm: A Key Element in Defamation Cases

As a result of amendments that took effect on 1 July 2021, proof of serious harm is a necessary element in the cause of action in defamation cases in New South Wales (Wilks v Qu (Ruling) [2022] VCC 620 at [40]–[4] and Wilks v Qu (Ruling 2) [2022] VCC 1503 at [6]–[11]).

The purpose of establishing serious harm is to discourage the bringing of cases likely to result in modest awards where the costs are out of proportion to the damages (Newman v Whittington [2022] NSWSC 249 at [30]–[46]).

Timing and Determination of Serious Harm

Under the uniform defamation laws, the question of serious harm must be determined early in the litigation unless there are “special circumstances” (s 10A(5)).

Special circumstances, as outlined in GRC Project Pty Ltd trading as GRC Property Management v Lai [2023] NSWDC 63 at [48], include situations where:

1. The nature of the publications (e.g., slanders in a foreign language) requires the trial judge to hear the evidence and manner of publication before determining serious harm.

2. Serious harm cannot be disentangled from other trial issues, such as financial loss or the grapevine effect.

3. The determination of serious harm could take a significant amount of time, requiring many witnesses to give evidence twice, which would result in additional costs, emotional burdens, and time constraints for the court.

The court also relied on guidance from English decisions, such as Ames v The Spamhaus Project Ltd [2015] EWHC 127 (QB), where it was determined that the proceedings were "not ripe" for a preliminary hearing on serious harm, as the facts deserved further examination.

Where the burden lies

The burden of satisfying the court that there are special circumstances justifying the postponement of the determination of serious harm to a later stage in the proceedings lies on the plaintiff (Hossein v Ali (Ruling) [2022] VCC 2195 at [45]).