A Law Firm v RT - [2021] WASC 149

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   A LAW FIRM -v- RT [2021] WASC 149
CORAM:   REGISTRAR WHITBREAD
HEARD:   25 NOVEMBER 2020
DELIVERED          :   14 MAY 2021
FILE NO/S:   LPA 9 of 2020
BETWEEN:   A LAW FIRM
Applicant
AND
RT
First Respondent
PJK
Second Respondent
RMK
Third Respondent

Catchwords:

Solicitors' costs agreement - Whether adequate costs disclosure has been given - Standard of disclosure required to meet the statutory disclosure obligation pursuant to s 260 and s 267 of the Legal Profession Act 2008 (WA) - Where clients not experienced litigants - Determination of costs reduction consequent on inadequate costs disclosure

Legislation:

Legal Practitioners (Supreme and District Courts) (Contentious Business) Determination 2018 (WA)
Legal Profession Act 2008 (WA), s 260, s 267, s 268, s 302

Result:

Reduction in costs charged to clients

Category: B

Representation:

Counsel:

Applicant	:	Not published
First Respondent	:	Not published
Second Respondent	:	Not published
Third Respondent	:	Not published

Solicitors:

Applicant	:	Not published
First Respondent	:	Not published
Second Respondent	:	Not published
Third Respondent	:	Not published

Case(s) referred to in decision(s):

Alman v Macdonald Rudder (A Firm) [2001] WASCA 375
DG Ogle v Bowdens [1979] Qd 507
Jovetic v Stoddart & Co (1992) 7 WAR 208
Stoddart & Co v Jovetic (1993) 8 WAR 420
Zaghloul v Woodside Energy Ltd [2019] WASCA 187

TABLE OF CONTENTS

A: The Issues on the Application

B: Issues relating to costs

B1: Factual matters

(1)      Background to the retainer
(2)      The law firm's costs disclosures
(3)      Correspondence between the law firm and the clients relevant to costs
(4)      Invoices delivered and amounts paid

B2: Costs disclosure obligations and consequences of non‑compliance

(1) The statutory framework
(2) The standard of disclosure required to meet the statutory disclosure obligation

B3: Did the law firm fail to disclose to the clients anything required to be disclosed under the Act?

(1)      The parties' submissions on disclosure
(2)      Chronology of costs incurred in the proceedings
(3)      The proceeding
(a)      The injunction application
(b)     Defence and counterclaim
(c)      The summary judgment application
(d)     The stay application
(3)      Conclusion on adequacy of disclosure

C: Issues as to whether work was done with proper advice and instructions

C1: Whether the interim injunction application should have been opposed

C2: Whether the summary judgment application should have been made

D: Conclusion: Determination of quantum of costs reduction consequent on failure to disclose.

D1: Should the amount of costs be reduced by the taxing officer by an amount proportionate to the seriousness of the failure to disclose?

D2: How should the reduced costs be assessed?

REGISTRAR WHITBREAD:

A: The Issues on the Application

On 9 March 2020 the law firm (the law firm) filed an application (the application) for assessment of costs under the Legal Profession Act 2008 (WA) (the Act) in relation to two invoices respectively dated 12 November 2019 and 9 December 2019. A bill of costs was filed on 24 September 2020 (the bill of costs).
On 23…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading A Law Firm v RT

Details

AGLC: A Law Firm v RT [2021] WASC 149
Case: [2021] WASC 149
Decision Date

CaseChat Overview and Summary

In the case of A Law Firm v RT, the law firm sought to recover the unpaid amounts of two invoices totaling approximately $124,000, which they issued to their clients, RT and PJK, in November and December 2019. The firm's retainer was in the context of a proceeding in the Supreme Court, where the clients were the defendants. The law firm had previously issued two undisputed invoices for initial advice and cash disbursements. The clients, however, refused to pay the disputed invoices, prompting the law firm to seek an assessment of these invoices.

The legal issues before the court were whether the law firm had adequately disclosed the costs to the clients and whether the law firm was entitled to recover the amounts claimed. The court had to consider the adequacy of the costs disclosure provided by the law firm to the clients and whether the law firm had acted within the scope of its retainer and in accordance with professional ethical standards. Additionally, the court needed to determine if the clients were liable to pay the disputed invoices under the terms of the costs agreement.

The court found that the law firm had not provided adequate costs disclosure to the clients, which was a critical aspect of their retainer. The law firm did not provide a meaningful breakdown of costs, nor did they estimate the total costs expended on various applications and proceedings. As a result, the clients were unable to assess their exposure to costs. Furthermore, the court noted that the matter was far from ready for trial at the time the law firm's retainer was terminated, and significant costs had been incurred in defending interim injunction applications and preparing for a proposed summary judgment application. Given these circumstances, the court held that the law firm had not met the standard of meaningful costs disclosure required under professional ethical standards.

Consequently, the court dismissed the law firm's claim for the unpaid amounts of the invoices dated 12 November 2019 and 9 December 2019. The court ruled that the law firm was not entitled to recover the amounts claimed from the clients. The court's decision was based on the failure of the law firm to provide adequate costs disclosure, which was a fundamental aspect of their retainer agreement.

Orders

Orders of the court

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Background

Background to the litigation

Background to the retainer It is convenient to start by setting out the history of the retainer and placing the retainer in the context of what was taking place in the proceeding in which the law firm was retained to represent the clients. The law firm delivered four invoices to the clients. One, on 7 August 2019 for initial advice, is not in dispute. The law firm delivered an invoice on 28 October 2019, which related solely to cash disbursements, which is also not in dispute. The law firm delivered two further invoices, one dated 12 November 2019 in the sum of $117,905.00 and one dated 9 December 2019 in the sum of $6,198.00. The law firm seeks an assessment of the 12 November 2019 and the 9 December 2019 invoices. The retainer was in the context of an action wherein two of the clients, RT and PJK, were, respectively, the first and second defendants in a proceeding commenced by writ of summons in the Supreme Court (the proceeding). RMK, as a director of RT, signed the costs agreement on behalf of RT, and is the guarantor of the costs incurred under the costs agreement. By writ of summons, the plaintiffs in the proceeding allege, in summary, that:(i)Pursuant to a deed of sublease entered into between WAM as landlord, the first defendant as tenant, and the plaintiffs as subtenants, the first defendant granted to the plaintiffs a sublease (the sublease) over two Crown Reserves (the land).(ii)The initial term of the sublease was to expire 17 May 2020. (iii)Pursuant to the terms of the sublease, the plaintiffs are entitled to peaceable and quiet possession without interruption from the first defendant.(iv)In breach of the terms of the deed of sublease the first defendant has purported to take possession of the land to the exclusion of the plaintiffs. Shortly after the writ was filed the clients went to the law firm and retained them to provide some initial legal advice. On 7 August 2019 the practitioner, being a partner of the law firm with the conduct of the matter (the solicitor), provided a preliminary advice to the clients.[1] The advice given is general in nature as to the dispute. The law firm's costs disclosures[1] TWE affidavit, Annexure TWE1, pages 5 to 7. In relation to costs, the law firm's preliminary advice letter of 7 August 2019 firstly, attaches an invoice for the preliminary advice (which invoice is not in dispute) and secondly, states that it annexes a further disclosure notice and costs agreement giving an estimate for a trial of two days and advising court fees of $1,450 to lodge a counterclaim. The law firm asks for $5,000 to be placed in trust on account of costs. A copy of the 7 August 2019 further costs disclosure notice was not annexed to the TWE affidavit. The clients' evidence as to the 7 August 2019 letter is found at paragraph 4 of the RMK affidavit. RMK was not cross‑examined on her affidavit and I accept that affidavit's contents as to the fact that an initial disclosure notice was sent to the clients on 7 August 2019 (the initial disclosure notice). RMK deposes that the initial disclosure notice related to the preliminary advice given, which was invoiced in the sum of $3,000 on 7 August 2019.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Conclusion on adequacy of disclosure From the history set out above, it can be seen that the law firm was acting for the clients in respect of four primary issues: (i) the interlocutory injunction application; (ii) drafting and filing of the defence and counterclaim and amendments thereto; (iii) whether the plaintiffs were correct in their assertion that an arbitration clause governed the wages claim by the second defendant, which contention resulted in the stay application; and (iv) whether a summary judgment application should be pursued by the second defendant in respect of the wages claim, which resulted in the summary judgment application on the counterclaim. Throughout the relevant period the solicitor was seeking instructions from the clients and was providing some advice to the clients. There are no signed instructions from the client on the law firm's file and the law firm relies on its 28 October 2019 letter as a summary of instructions given up to that date.[13] [13] ts 12.7 (25 November 2020). Over that period of time, the parties arrived at the legal costs position set out in the table above. The interim injunction costs, the partial summary judgment costs and the costs of opposing the stay application all sat, to some degree separate to the costs which would be incurred in usual programming of the matter to trial. Whilst some of those incurred costs might have been incurred anyway in the normal ambit of work required in order to progress the matter to trial, the clients were given no breakdown that could assist them in understanding the context of their growing legal costs exposure and how the costs, that had been incurred were related to progressing the matter to trial. As at the termination of the law firm's retainer, on or about 5 December 2019, pleadings had not closed in the proceedings; discovery had not occurred and the matter was, in my view, far from ready for entry for trial. The legal costs billed had largely been incurred in relation to defending the interim injunction application; the interlocutory injunction application, and in relation to the proposed summary judgment application. It is hard to see how, in that context, that this matter, or any part of it, was substantially ready for trial as submitted by the law firm. For example, final witness statements could not have properly been taken until discovery was complete and inspection of the plaintiff's documents had taken place. Meaningful costs disclosure was absent at this time. An estimate as to likely discovery costs (based on the documents provided by all of their parties) could have been given; it was not. An estimate of the total costs expended on the injunction applications could have been given; it was not. An estimate of the costs of the stay application could have been given, it was not. It would have been simply impossible for the clients to assess where they sat on costs exposure unless the solicitor gave them a meaningful breakdown of costs; which never occurred.

Ratio Decidendi

Legal Principle Established

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