BGM v Australasian Lawyers Group Pty Ltd t/as Butlers Barristers & Solicitors - [2014] WASC 290

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BGM -v- AUSTRALASIAN LAWYERS GROUP PTY LTD t/as BUTLERS BARRISTERS & SOLICITORS [2014] WASC 290

CORAM: MASTER SANDERSON

HEARD: 20 MAY & 23 JUNE 2014

DELIVERED : 14 AUGUST 2014

FILE NO/S: CIV 2710 of 2013

BETWEEN: BGM
Plaintiff
AND
AUSTRALASIAN LAWYERS GROUP PTY LTD t/as BUTLERS BARRISTERS & SOLICITORS
Defendant

Catchwords:

Costs - Application by client to set aside costs agreement - Whether disclosure by defendant sufficient

Legislation:

Nil

Result:

Agreement set aside

Category: A

Representation:

Counsel:

Plaintiff: Mr S V Forbes
Defendant: Mr S Penglis & Ms M Coulson

Solicitors:

Plaintiff: Stewart Forbes, Barrister & Solicitor
Defendant: Coulson Legal

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

Cerini v McLeods (a firm) [2004] WASC 45
Computer Accounting & Tax Pty Ltd v Bowen Buchbinder Vilensky [2009] WASC 171

MASTER SANDERSON: This was the plaintiff's application to set aside a Costs Agreement he entered into with the defendant. The application was supported by two affidavits of the plaintiff, the first sworn on 12 November 2013, the second sworn on 21 March 2014. The defendant relied on three affidavits of John Wesley Butler, the first sworn on 11 February 2014, the second sworn on 11 March 2014 and the third sworn on 16 May 2014. Each of the deponents was cross‑examined on their affidavits.

The plaintiff's evidence

In the two or three years prior to February/March 2010 the plaintiff's relationship with his then wife broke down. In February 2010 he decided to seek legal advice in relation to his matrimonial affairs. He says on 25 February 2010 he met with Mr John Butler the principal of the defendant. After that first meeting he had a subsequent meeting on 9 March 2010. At that second meeting he advised Mr Butler the relationship had broken down irretrievably, he was intending to move out of the matrimonial residence which he was then sharing with his wife and that in round figures the asset pool which would be the subject of dispute was approximately $16 million.
After general discussion Mr Butler indicated he was prepared to act on the plaintiff's behalf. The plaintiff says at the conclusion of the meeting he was handed what he describes as a 'Butler's folder'. That folder contained documents which detailed Butler's commitment to their clients and a number of brochures. The plaintiff lists these brochures as being 'Chapter 19 Costs Notice, Marriage Families & Separation, Pre‑action Procedures for Financial Cases, Financial Cases (Brochure 1 and 2), Duty of Disclosure, Wills and Estate Planning Information, Choosing an Executor, Duties of an Executor, Testamentary Trusts and Credit Card Authority'.
It is not entirely clear from the plaintiff's affidavit whether he says these discussions took place at the meeting with Mr Butler on 25 February 2010 or the subsequent meeting on 9 March 2010. This was the subject of some dispute between the parties and it is an issue which I will deal with later in these reasons. For present purposes it is important to note in his affidavit evidence the plaintiff says there were two meetings - 25 February and 9 March 2010. There is no dispute between the parties that at one of those meetings the discussion outlined by the plaintiff took place. Nor is there any dispute that a Butler's folder was handed to the plaintiff at one of the meetings. The contents of that folder was the subject of disagreement between the parties. Again I will deal with that dispute later in these reasons.
The plaintiff says at the meeting on 9 March 2010 he was handed a letter. That letter appears as attachment A to his affidavit. The letter is titled 'Basis of our Professional Services'. The letter gives an overview of the services the defendant would provide to the plaintiff and the basis upon which the plaintiff would be charged. The letter says that attached to it are a Costs Agreement setting out the defendant's schedule of charges, a credit card authority and a reply paid envelope. The letter goes on to say:
The Legal Profession Act 2008 requires us to give you important additional information about your legal costs. We therefore enclose the Law Society's Explanatory Notes for clients. (original emphasis)
The letter then goes on to say there are a number of brochures enclosed. The brochures listed are those which the plaintiff says in his affidavit he received in the Butler's folder. There then is information provided under a series of subheadings. For present purposes the important subheading is 'Estimate of Costs and Disbursements'. Under that subheading there appears the following:
We are required to provide you with an estimate of your costs and disbursements. Based on the instructions you have provided us to date, we estimate our fees and disbursements are likely to be between $2,000.00 and $3,500.00 for the initial stage of proceedings.
However, please note that each case is unique in its preparation and presentation. That is why it is not possible for us to furnish you with a fixed estimate of how must it will cost for us to represent you. The overall costs will be directly related to the complexity of your case, the time spent in preparing and presenting it, the work carried out on your behalf whether at your direct request or where necessary to advance your case, and the out‑of‑pocket expenses and disbursements incurred. Further, these matters are also likely to be affected by the behaviour of your former spouse and the manner in which the case is conducted by your former spouse and her lawyer.
At the foot of the letter there appears a box headed 'Checklist to Becoming a Client'. There are five items mentioned in the checklist and it reads as follows:
1.Read through Attached Costs Agreement
2.Ensure all documents referred to in this letter are included in kit
3.Sign copy Costs Agreement by signing where tabs are located
4.Complete & sign Credit Card Authority or Place Funds in Trust
5.Post back in reply Paid Envelope/email/fax/hand deliver signed copies of Costs Agreement & monies for trust/Credit Card Authority
On the right hand side of the box there is a space under a heading 'Completed (tick)'. Clearly what is intended is a person handed the letter and the accompanying documents will read them and ensure the checklist is completed. The Costs Agreement which is referred to in the letter appears as attachment B to the plaintiff's affidavit. It was signed by the plaintiff on 12 March 2010. It is of course at the heart of this dispute. It must be examined in detail. However before detailing its terms I will complete the summary of the plaintiff's evidence.
The plaintiff says he trusted Mr Butler to act on his behalf and he assumed the Costs Agreement was in a standard form used by most solicitors. The plaintiff does not say in his evidence he read the Costs Agreement before signing it, nor does he say he read any of the brochures given to him. What his evidence does make plain is that he says he did not receive the Law Society's Explanatory Notes for Clients which were referred to in the letter of 9 March 2010. This is another area of disagreement between the parties and another matter to which I will return later in these reasons.
On 15 March 2010 the plaintiff received a letter from the defendant advising of an increase in the hourly rate charged by the defendant for work performed for the plaintiff. That means the plaintiff had been provided with a Costs Agreement by the defendant on 9 March 2010 which specified hourly rates. The plaintiff had signed and returned that document to the defendant on 12 March 2010, that day being a Friday. On 15 March 2010, the following Monday, he was advised of a rate increase. He says he considered changing solicitors at that time but decided to remain with the defendant. He says he felt committed to the defendant. He did not voice any complaint to anyone associated with the defendant.
It is clear the dispute between the plaintiff and his former wife was bitter and the property settlement was hard fought. There were numerous interlocutory applications. Eventually the matter was listed for a four day trial which commenced on 18 March 2013. On the morning of the last scheduled day of trial, 21 March 2013, the plaintiff decided he had had enough. He instructed his solicitors to settle the matter. The defendant and senior counsel who had been instructed advised against settlement but the plaintiff would not be dissuaded. Eventually the matter was settled on the basis his former wife received 44% of the asset pool.
From time to time during the course of the proceedings the defendant did provide to the plaintiff what are described as 'Costs Disclosures'. There were six of these Costs Disclosures provided by the defendant to the plaintiff. They were dated 24 December 2010, 18 April 2011, 23 August 2011, 22 February 2012, 10 May 2012 and 15 March 2013. These Costs Disclosures appear as attachments H1 ‑ H6 to the plaintiff's first affidavit. Each Costs Disclosure is in largely the same form. The notice is said to be issued pursuant to r 19 of the Family Law Rules 2004 (Cth). The plaintiff is advised it is the defendant's obligation to update the plaintiff with respect to costs. It is also the defendant's obligation to pass a copy of the advice on to his wife's solicitor. There is then a heading 'Costs to date'. That is then broken down into two parts. First the plaintiff is advised of the costs billed to date and the amount of any outstanding unpaid costs. Second the plaintiff is advised of an approximate amount for work completed but not yet billed.
The second part estimates the future costs. In this section the defendant sets out work which has to be undertaken and the likely costs involved. An estimate is then provided for how much work into the future might be.
All of this can be illustrated by reference to the Costs Disclosure of 24 December 2010. Under the heading 'Costs to date' the defendant advised the plaintiff he had been billed a total of $32,306.13. He had paid $28,157.01 leaving a balance of $4,149.12. He was further advised that unbilled costs would be approximately $5,000. Under the section for estimating future costs there are five subparagraphs. For instance par 2.1 reads as follows:
[F]rom the conclusion of the Procedural/Interim Hearing today up to the Conciliation Conference, including the preparation of your Conciliation Conference Particulars, approximately $5,000.00 plus GST.
After the breakdown in subparagraphs the plaintiff is advised his costs from the date of the letter 'could well total in excess of $51,000.00'. The letter then goes on to advise so far as future costs are concerned what has been put is an estimate. The plaintiff is warned the actual costs could be somewhat higher. The reasons why that may be so are stated.
It is relevant to note the plaintiff entered into the Costs Agreement with the defendant on 12 March 2010. The estimate contained in the defendant's letter of 9 March 2010 for initial advice was that the costs would be between $2,000 and $3,500. The first Costs Disclosure was not made until nine months later by which time the total fees rendered were just over $32,000. When the next Costs Disclosure was made on 18 April 2011 the amount billed was $52,103.81. The plaintiff was warned his costs from the date of the Costs Disclosure could total in excess of $57,000.
Of particular significance is the Costs Disclosure of 15 March 2013. This Costs Disclosure was given on the Friday before the trial was due to commence on the Monday. The defendant advised that as at the date of the Costs Disclosure he had billed an amount of $326,720.26. An amount of $15,990.35 had not been paid. The defendant estimated that unbilled costs from 8 March 2013 to 15 March 2013 were $29,000.
The defendant estimated the future costs at $40,000. This was broken down to $5,000 per day for the solicitors attending trial and $5,000 per day for senior counsel. The plaintiff was then warned his total costs from 15 March 2013 to the conclusion of the trial could be in excess of $55,000.
All of the figures I have quoted to date are net of GST. Of course GST is payable on all of the amounts I have mentioned. But the parties consistently referred to net figures and that is the measure that I have adopted.
The plaintiff says at the time he decided to settle with his former wife he understood his total costs including counsel fees and GST would be $419,120. In fact on 22 March 2013 he received an additional account from the defendant for $69,361.33 and an account from senior counsel for $77,440. Subsequently he has received further accounts from the defendant. In total he has been billed an amount of $498,981.07. That is just under $80,000 more in costs than he anticipated paying at the time he settled the matter.
In par 38 of his first affidavit the plaintiff sets out certain matters he says he was not aware of until July 2013 when he consulted solicitors with respect to the defendant's costs. Because these form the heart of the plaintiff's complaints I will set them out as they appear in the affidavit:
a.in the absence of a costs agreement, the Defendant would only have been entitled to charge costs pursuant to the relevant Family Court Determinations;
b.Attachment 'B' provides for time to be recorded in 6 minute units and where less than 6 minutes time is spent the time is rounded up to the next complete unit, whereas the applicable Determinations do not provide for 6 minute units nor do they provide for time to be rounded up;
c.the rates provided for in Attachment 'B' exceeded the rates provided for by the Legal Practitioners (Family Court of Western Australia) Determination 2009;
d.the 2009 Determination and subsequent Determinations do not provide for typing charges as set out in paragraph 1.5 of Attachment 'B';
e.the 2009 Determination and subsequent Determinations do not provide for clerical attendances as provided for in paragraph 1.6 of Attachment 'B';
f.the 2009 Determination and subsequent Determinations do not provide for charges for legal assistants as provided for in paragraph 1.7 of Attachment 'B';
g.the 2009 Determination and subsequent Determinations do not provide for charges by members of a support team as provided for in paragraph 1.8 of Attachment 'B';
h.the 2009 Determination and subsequent Determinations do not provide for disbursements of the nature as provided for in paragraph 2 of Attachment 'B';
i.the 2009 Determination and subsequent Determinations do not provide for a solicitor to have the right to increase their fees at will as provided for in paragraph 3.1 of Attachment 'B';
j.the Legal Profession Act 2008 does not provide for a 30 day time limit for requesting an itemised bill of costs as stipulated in paragraph 9.1(c) of Attachment 'B';
k.the Legal Profession Act 2008 does not provide for the matters set out in paragraph 9.3 of Attachment 'B';
l.the Legal Practice Act 2003 did not apply, contrary to the provisions of paragraph 9.3 of Attachment 'B';
m.the costs provided for by the 2009 Determination and subsequent Determinations are generally lower than the fees charged by the Defendant, contrary to the statement in the last paragraph of paragraph 10.1 of Attachment 'B';
n.the effect of having signed Attachment 'B' on Friday 12 March 2010, Attachment 'B' gave the Defendant the contractual right to increase the hourly rates chargeable to me in terms of Attachment 'B' to those contained in Attachment 'C', which was a general increase to all clients of the Defendant;
o.the estimate of fees and disbursements of between $2,000.00 and $3,500.00 contained in Attachment 'A' for the 'initial stage of the proceedings' was, in the circumstances, wholly inadequate.
The plaintiff's second affidavit was filed in reply to Mr Butler's first two affidavits. Three significant matters are raised in this affidavit. First the plaintiff maintains his first meeting with Mr Butler took place on 25 February 2010. He has a copy of Acknowledgement of Receipt of Letter of Engagement to that effect and he encloses as attachment A a copy of that document.
Second he says he did not receive the 'Explanatory Notes for Clients' prepared by the Law Society when he was handed the letter by Mr Butler. He says having been provided with a copy of the Explanatory Notes he was unable to reconcile these notes with the Costs Agreement. He still does not say whether or not when the Costs Agreement was initially provided to him he read the document.
Finally he points out the Costs Disclosure given on 15 March 2013 was inaccurate. He is correct and the extent of the inaccuracy and the reasons for it will be examined later in these reasons.

Costs Agreement

The Costs Agreement is headed 'Costs Disclosure and Offer to Enter into Costs Agreement Applicable to this Matter'. Under that there appears the name of the plaintiff and then the further subheading 'Application of the Legal Profession Act 2008 (the Act)'. Under that between two lines appears the word 'Advice'.
After what might be seen as an introductory paragraph there is a subheading 'Basis of Calculating Costs'. The rest of the agreement appears under that subheading. The client is advised the defendant employs a time costing system and time is recorded in six minute units. If a full six minutes is not spent on a matter the time is rounded up to the next complete unit.
There then appears 15 sub‑subheadings. The first of these is 'Fees'. The agreement then sets out hourly rates for four different categories of professional. The first is 'Principal' at $380 per hour, the second is 'Senior Solicitor' at $320 per hour, the third is 'Solicitor' at $280 per hour, and the fourth is 'Migration Solicitor' at $280 per hour. This subsection goes on to specify typing will be charged at $15 per page, attendances by a clerk will be charged at $20, and time spent by legal assistants will be charged at $120 per hour.
The second item is 'Disbursements'. Some items and the costs attached thereto are unremarkable. For instance photocopying and printing are charged at 30 cents per page. However there are two items which deserve mention. 'Sending and receiving facsimiles' is charged at $1 per page. 'Sending emails with attachments' is charged at $3 per email. The bulk of the items mentioned are just said to be 'as incurred'. For instance courier fees, process service and counsel's or barrister's fees all fall into that category.
The third item is 'Increase in fees'. Clause 3.1 is in the following terms:
We reserve the right to give you written notice of our intention to increase our fees. If you do not accept that increase then you must write to us as soon as possible telling us that. Then the agreement between us comes to an end except you will owe fees for any unbilled services up to the date you write to us.
Of the remaining items only one, item 7, is of particular relevance. That is under the heading 'Costs Determination'. The subclause reads as follows:
If there is a dispute or query regarding the legal costs incurred in your matter, a cost determination may be sought pursuant to Division 5 of the Act.
As I have noted above the Legal Profession Act 2008 (WA) is defined as 'the Act'.
As a standalone paragraph to the agreement there appears the following:
Please note that you are entitled to obtain independent legal advice (from a lawyer other than us) in relation to the above terms before signing your acceptance below. We urge you to discuss any aspect of the above information which is not clear to you either with us or with another lawyer.

It is worthy of note this agreement is particular to the defendant. Mr Butler said in cross‑examination it had developed over a number of years. He also said he had obtained independent legal advice in relation to the agreement although he did not specify from whom the advice was obtained or when it was obtained.

Cross‑examination of the plaintiff

The plaintiff was examined on all aspects of his evidence. What I propose to do is highlight aspects of the cross‑examination which are important in the context of this application and about which there was controversy.
Counsel for the defendant began by dealing with the plaintiff's assertion there was a meeting between him and Mr Butler on 25 February 2010 and 9 March 2010. It was put to the plaintiff a meeting did not in fact take place on 25 February 2010 but was cancelled. The plaintiff denied that was the case. He was unable to specify what actually took place at each particular meeting but he maintained there were two meetings. He referred to a diary entry he had made which simply noted a meeting was set for 25 February 2010. He denied counsel's suggestion the meeting had been arranged but was subsequently cancelled by the plaintiff.
Counsel then spent some time exploring the plaintiff's business background. It is clear the plaintiff was a very successful businessman. Although the matter was not explored in detail it seems clear that the substantial asset pool which was in dispute between the plaintiff and his wife was accumulated as a consequence of the plaintiff's business acumen. The plaintiff had sold his business interests and received a substantial payment. He had handled the sale and liaised with lawyers who had facilitated the sale. The plaintiff was unable to recall whether he had entered into a costs agreement with these lawyers.
Counsel put it to the plaintiff that a copy of the Law Society's Explanatory Notes for Clients which the defendant says was included in the Butler's folder. The plaintiff denied ever receiving the document. He said he had read the documents provided to him and confirmed he did not contact the defendant about the omission. The plaintiff said the first time he had seen the Law Society's Explanatory Notes for Clients was when he read Mr Butler's affidavit.
Counsel then moved on to instructions the plaintiff had issued to the defendant in relation to a will. It would seem a meeting took place around about 28 March 2010. The plaintiff acknowledged he signed a costs agreement in relation to drawing the will. Counsel pointed out to the plaintiff the letter of engagement referred to a number of handouts and included in those were the Law Society's Explanatory Notes for Clients. The plaintiff said he did not recall receiving those notes with the Butler's folder. He again said he had read the letter of engagement carefully and he accepted he had not contacted Butlers about the omission of the Explanatory Notes. A copy of the letter of engagement for the will matter became exhibit 2.
Counsel put it to the plaintiff there was no reason why when he was advised of the defendant's increased charges on 15 March 2010 he could not have engaged alternative solicitors. The plaintiff conceded, despite the increased fees, he thought it was in his best interests to stay with the defendant. Moreover he said he had over his years in business remained loyal to suppliers and it was not his nature to 'chop and change'. Counsel established through cross‑examination the plaintiff had received from the defendant a copy of an appropriate costs disclosure when Mr Frank Castiglione QC was engaged to act on his behalf. Exhibit 5 establishes that as a fact. Nothing significant turned on this fact although it is worthy of comment the plaintiff did not appear to be able to remember having received an email from the defendant attaching a copy of Mr Castiglione QC's costs disclosure.
Counsel spent some time examining par 38 of the plaintiff's first affidavit. The thrust of this questioning was to raise doubt as to whether what was put in that paragraph could actually be maintained. By way of example in par 38(a) the plaintiff maintains he was not aware in the absence of a costs agreement the defendant would only have been entitled to charge costs pursuant to the relevant Family Court determinations. Questioned about this counsel pointed out cl 10 of the Costs Agreement referred to the scale and the fact the defendant's charges were higher than those provided for in the scale. The plaintiff said he had read the clause but maintained he did not fully understand what was being said. Cross‑examination in relation to other subparagraphs proceeded in the same vein.
Finally counsel turned to the settlement which was agreed between the plaintiff and his former wife. The plaintiff acknowledged it was he who initiated settlement negotiations. On the morning of the fourth day he had initially instructed counsel and his solicitors to settle on the basis of a 50/50 split. He had been advised throughout the litigation the end result would likely be his former wife would receive no more than 30% of the property. When he proposed the equal division he was strongly advised by counsel first not to settle and if he was to settle not to offer 50% of the property. Mr Butler was not present at the court when the settlement was negotiated. But he did participate in a number of telephone calls. The thrust of counsel's cross‑examination was that the plaintiff was determined to settle and the amount he thought was outstanding for costs was not an issue in his decision. Throughout the plaintiff maintained had he been aware of the outstanding amount of the fees he would not have settled.

Mr Butler's evidence

Mr Butler is a very experienced family law practitioner and the principal of the defendant. He says the plaintiff had originally arranged to see him on 25 February 2010 but to the best of his knowledge that meeting did not take place. He has no notes of any meeting prior to 9 March 2010. Further the defendant did not bill the plaintiff for a meeting on 25 February 2010. He did have a meeting with the plaintiff on 9 March 2010 and in large measure he confirms what the plaintiff says was discussed at that meeting. He says he gave the plaintiff a Costs Agreement and he maintains the plaintiff was given a Butler's folder containing the documents the plaintiff says he received plus the Law Society's Explanatory Notes for Clients.
As to the Costs Agreement Mr Butler says it was his usual practice to give agreements to clients and to allow them to take the agreement away and consider the contents. It was not his usual practice to have the Costs Agreement signed at the initial interview. This is what happened in this case. The Costs Agreement was returned by mail on 16 March 2010.
In relation to the increased charges Mr Butler confirmed a letter was sent to the plaintiff and would have been received on or about 15 March 2010. He confirmed he was never approached by the plaintiff complaining about these fees. Further he offered the view the plaintiff could at that stage have changed solicitors. No work had been done in relation to the plaintiff's affairs.
Mr Butler confirmed he was not present when settlement negotiations took place.
In his second affidavit Mr Butler says at the time final disclosure was given he was not aware senior counsel would be rendering a final account for $77,440. There is nothing in the affidavit to suggest before making the final disclosure Mr Butler actually checked with senior counsel as to what amount, if any, was outstanding.
Mr Butler's third affidavit attaches as annexure JWB3 a copy of Mr Castiglione QC's costs disclosure and costs agreement dated 31 May 2011. He also attaches a number of other documents none of which are relevant for present purposes.

Statutory framework

As at March 2010 the statutory framework relating to costs between solicitor and client was covered by the Legal Profession Act 2008. Part 10 of that Act deals with costs disclosures. Section 251 sets out the purposes of this part of the Act. It reads as follows:
The purposes of this Part are as follows -
(a)to provide for law practices to make disclosures to clients regarding legal costs;
(b)to regulate the making of costs agreements in respect of legal services, including conditional costs agreements;
(c)to regulate the billing of costs for legal services;
(d)to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.
Division 3 of pt 10 deals with 'Costs disclosure'. For present purposes s 260 is relevant. It is in the following terms:
260.Disclosure of costs to clients
(1)A law practice must disclose to a client in accordance with this Division -
(a)the basis on which legal costs will be calculated, including whether a costs determination applies to any of the legal costs; and
(b)the client's right to -
(i)negotiate a costs agreement with the law practice; and
(ii)receive a bill from the law practice; and
(iii)request an itemised bill after receipt of a lump sum bill; and
(iv)be notified under section 267 of any substantial change to the matters disclosed under this section;
and
(c)an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable -
(i)a range of estimates of the total legal costs; and
(ii)an explanation of the major variables that will affect the calculation of those costs;
and
(d)details of the intervals (if any) at which the client will be billed; and
(e)the rate of interest (if any) that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (2)); and
(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
(g)the client's right to progress reports in accordance with section 269; and
(h)details of the person whom the client may contact to discuss the legal costs; and
(i)the following avenues that are open to the client in the event of a dispute in relation to legal costs -
(i)costs assessment under Division 8;
(ii)the setting aside of a costs agreement under section 288;
(iii)making a complaint under Part 13;
and
(j)any time limits that apply to the taking of any action referred to in paragraph (i); and
(k)that the law of this jurisdiction applies to legal costs in relation to the matter; and
(l)information about the client's right -
(i)to accept under a corresponding law a written offer to enter into an agreement with the law practice that the corresponding provisions of the corresponding law apply to the matter; and
(ii)to notify under a corresponding law (and within the time allowed by the corresponding law) the law practice in writing that the client requires the corresponding provisions of the corresponding law to apply to the matter.
(2)For the purposes of subsection (1)(e), a benchmark rate of interest is a rate of interest for the time being equal to or calculated by reference to a rate of interest that is specified or determined from time to time by an ADI or another body or organisation, or by or under other legislation, and that is publicly available.
(3)The regulations may make provision for or with respect to the use of benchmark rates of interest, and in particular for or with respect to permitting, regulating or preventing the use of particular benchmark rates or particular kinds of benchmark rates.
(4)For the purposes of subsection (1)(f), the disclosure must include -
(a)a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client's legal costs; and
(b)if applicable, a statement that disbursements may be payable by the client even if the client enters into a conditional costs agreement.
(5)A law practice is taken to have complied with the requirement to disclose the details referred to in subsection (1)(b)(i), (ii) and (iii), (g), (i), (j) and (l) if it provides a written statement in or to the effect of a form prescribed by the regulations for the purposes of this subsection at the same time as the other details are disclosed as required by this section.
(6)A form prescribed for the purposes of subsection (5) may, instead of itself containing details of the kind referred to in that subsection, refer to publicly accessible sources of information (such as an internet website) from which those details can be obtained.
(7)The regulations may require the Board to develop a statement of the relevant details and to revise it as necessary to keep it up to date.
Pursuant to s 262(1) the disclosure required by s 260 must be made as soon as practical after the law practice is retained. Section 264 deals with additional disclosure in settlement of litigious matters. It is in the following form:
264.Additional disclosure - settlement of litigious matters
(1)If a law practice negotiates the settlement of a litigious matter on behalf of a client, the law practice must disclose to the client, before the settlement is executed -
(a)a reasonable estimate of the amount of legal costs payable by the client if the matter is settled (including any legal costs of another party that the client is to pay); and
(b)a reasonable estimate of any contributions towards those costs likely to be received from another party.
(2)A law practice retained on behalf of a client by another law practice is not required to make a disclosure to the client under subsection (1) if the other law practice makes the disclosure to the client before the settlement is executed.
Section 266 requires the disclosure to be in 'clear plain language'. Section 267 requires the law practice to disclose to a client any 'substantial change to anything included in a disclosure already made'. The consequences of a failure to disclose are set out in s 268 of the Act. It is in the following terms:
268.Effect of failure to disclose
(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 8.
(2)A law practice that does not disclose to a client or an associated third party payer anything required by this Division to be disclosed may not maintain proceedings against the client or associated third party payer (as the case may be) for the recovery of legal costs unless the costs have been assessed under Division 8.
(3)If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed and the client or associated third party payer has entered a costs agreement with the law practice, the client or associated third party payer may also apply under section 288 for the costs agreement to be set aside.
(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 taxing officer to be proportionate to the seriousness of the failure to disclose.
(5)If a law practice retains another law practice on behalf of a client and the first law practice fails to disclose something to a client solely because the retained practice failed to disclose the relevant information as required by section 261(2), then subsections (1) to (4) -
(a)do not apply to the legal costs owing to the first law practice on account of legal services provided by it, to the extent that the non disclosure by the first law practice was caused by the failure of the retained law practice to disclose the relevant information; and
(b)do apply to the legal costs owing to the retained law practice.
(6)In a matter involving both a client and an associated third party payer where disclosure has been made to one of them but not the other -
(a)subsection (1) does not affect the liability of the one to whom disclosure was made to pay the legal costs; and
(b)subsection (2) does not prevent proceedings from being maintained against the one to whom the disclosure was made for the recovery of those legal costs.
(7)Failure by a law practice to comply with this Division is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any Australian legal practitioner or Australian registered foreign lawyer involved in the failure.
Under s 271 a legal practice may recover costs pursuant to a costs agreement made in accordance with div 6. Otherwise costs are paid pursuant to the applicable cost determination. That then leads on to div 6 dealing with costs agreements.
Pursuant to s 282 a law practice and a client may enter into a costs agreement. Such an agreement must be in writing and there are a number of other conditions which must be met for the agreement to be effective. There are a number of limitations on what can be included in a costs agreement but they are not presently relevant.
Section 288 deals with setting aside of costs agreements. It is in the following terms:
288.Setting aside costs agreements
(1)In this section -
client means a person to whom or for whom legal services are or have been provided.
(2)On application by a client, the Supreme Court may order that a costs agreement be set aside if satisfied that the agreement is not fair or reasonable.
(3)In determining whether or not a costs agreement is fair or reasonable, and without limiting the matters to which the Supreme Court can have regard, the Supreme Court may have regard to any or all of the following matters -
(a)whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice;
(b)whether any Australian legal practitioner or Australian registered foreign lawyer acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates;
(c)whether the law practice has failed to make any of the disclosures required under Division 3;
(d)the circumstances and the conduct of the parties before and when the agreement was made;
(e)the circumstances and the conduct of the parties in the matters after the agreement was made;
(f)whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement;
(g)whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement.
(4)The Supreme Court may adjourn the hearing of an application under this section pending the completion of any investigation or determination of any charge in relation to the conduct of any Australian legal practitioner or Australian registered foreign lawyer.
(5)If the Supreme Court determines that a costs agreement be set aside, the Court may make an order in relation to the payment of legal costs the subject of the agreement.
(6)In making an order under subsection (5) -
(a)the Supreme Court must apply the applicable costs determination (if any); or
(b)if there is no applicable costs determination - the Court must determine the fair and reasonable legal costs in relation to the work to which the agreement related, taking into account -
(i)the seriousness of the conduct of the law practice or any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf; and
(ii)whether or not it was reasonable to carry out the work; and
(iii)whether or not the work was carried out in a reasonable manner.
(7)In making an order under subsection (5), the Supreme Court may not order the payment of an amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been set aside.
(8)For the purposes of subsection (6)(b), the Supreme Court may have regard to any or all of the following matters -
(a)whether the law practice and any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf complied with this Act;
(b)any disclosures made by the law practice under Division 3, or the failure to make any disclosures required under that Division;
(c)any relevant advertisement as to -
(i)the law practice’s costs; or
(ii)the skills of the law practice or of any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf;
(d)the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian registered foreign lawyer responsible for the matter;
(e)the retainer and whether the work done was within the scope of the retainer;
(f)the complexity, novelty or difficulty of the matter;
(g)the quality of the work done;
(h)the place where, and circumstances in which, the work was done;
(i)the time within which the work was required to be done;
(j)any other relevant matter.
(9)The Supreme Court may determine whether or not a costs agreement exists.
(10)The Supreme Court may order the payment of the costs of and incidental to a hearing under this section.

It is clear from the sections I have quoted above the teeth in this part is found in s 288(2). This is the subsection which gives the court the power to cancel a costs agreement. Two things may be said about that subsection. First the agreement can be cancelled if it is not 'fair or reasonable'. Presumably the 'or' is disjunctive - that is to say, the agreement can be cancelled if it is not fair but reasonable; or if it is reasonable but not fair. Second, assuming an agreement is either not fair or not reasonable, the court has a discretion as to whether the agreement should be cancelled. Section 288(3) lists matters to which the court 'may' have regard. The subsection is not mandatory. The matters to which the court may have regard and listed in that subsection go to the issue of whether the agreement is fair or reasonable. They may well overlap with matters to be considered in exercising the discretion. But the subsection makes it plain these matters can be considered when considering the fairness and reasonableness of the agreement.
Finally it is worth noting this section differs somewhat from s 222 of the Legal Practice Act 2003 (WA). That section was in the following form:
222.Review of costs agreement
(1)A costs agreement may be reviewed by the Supreme Court upon application by summons or on a reference under section 235(2).
(2)If, in the opinion of the Supreme Court, the costs agreement is unreasonable -
(a)the Supreme Court may reduce the amount payable or cancel the costs agreement; and
(b)the costs may be taxed in the ordinary way.
(3)The Supreme Court may make such order as to the costs of and relating to the review, and the proceedings on the review, as the Court thinks fit.
The reference in that section is to costs agreements which are 'unreasonable'. It would appear as yet there have been no cases which deal with the different formulations in the two Acts.

Evaluation of the plaintiff's evidence

It was the defendant's submission the plaintiff's evidence should not be accepted save insofar as it accorded with written documentation. I accept that submission. In doing so I am not suggesting the plaintiff was deliberately dishonest or set out to mislead the court. Rather his recollection of certain events appears to be faulty and he has to my mind exaggerated or enhanced his evidence. To be fair to the plaintiff I need to explain how I have reached that conclusion. There are a number of relevant matters.
First there is the question of when it was the plaintiff and Mr Butler held their initial meeting. The plaintiff said in his evidence it was 25 February 2010. Mr Butler said it was 9 March 2010. All of the evidence on this point is one way. The defendant's records show the first meeting was 9 March 2010. The plaintiff could not say what was discussed at the first meeting and what was discussed at the second meeting. He did however agree with what Mr Butler said was discussed at the meeting on 9 March 2010. Effectively the plaintiff was saying the meeting alleged to have occurred on 25 February 2010 was devoid of content.
Nothing whatever turned upon whether there was one meeting or two. But as was submitted by counsel for the defendant it did show the plaintiff's evidence was unreliable. I accept this is the irresistible inference drawn from this part of the plaintiff's evidence.
Second there is the Butler folder provided to the plaintiff. He says it did not contain the Law Society's Explanatory Notes for Clients. Further when he was handed a Butler's folder in relation to the will matter that too did not contain the Law Society's Explanatory Notes for Clients. The evidence from Mr Butler was to the effect the folders were prepared by reliable staff and always contained the documents they were said to contain. It is true no one was called by the defendant to confirm what was put in the Butler folder. Mr Butler was simply able to confirm at the time he employed experienced and reliable staff. To that extent it is possible there was an omission of the Law Society's Explanatory Notes for Clients from both folders.
But if that is the case it does not accord with the rest of the plaintiff's evidence on this point. He is an experienced businessman and he said he read the letter of engagement and the Costs Agreement. The letter of engagement in particular refers to the Law Society's Explanatory Notes for Clients. If he read the letter and the notes were not there it is difficult to know why he did not contact the defendant to ask for a copy of the omitted document. So one way or another the plaintiff's evidence is unreliable. Either he read the letter of engagement and the notes were there so he had no need to contact the defendant or, contrary to his evidence, he did not read the letter, the Law Society's Explanatory Notes for Clients were not there and the plaintiff had no reason to contact the defendant. The only other alternative, in which he read the letter of engagement, the Law Society's Explanatory Notes for Clients were not there and he did not then contact the defendant, is inconsistent with both the plaintiff's evidence and Mr Butler's evidence. It is the least likely option. The conclusion the plaintiff's evidence is unreliable is inescapable.
The plaintiff's evidence that he felt committed to the defendant and that is the reason why he did not change solicitors when advised of the defendant's increase in hourly charge out rates on 15 March 2010 cannot be accepted. As at the date of receipt of the letter the defendant had only been acting for the plaintiff for a matter of days. The plaintiff had told his story to Mr Butler in broad outline but nothing further had happened. The plaintiff could easily have switched solicitors had he been minded to do so. The irresistible inference is the increase in rates was not such as to deter the plaintiff from using the defendant's services.
Finally there is the question of whether or not the plaintiff would have settled with his former wife if he had been aware of the full amount of costs then outstanding.
All of the evidence is to the effect the plaintiff decided on the morning of the fourth day of the trial he wished to settle. The advice he received from senior counsel and from his solicitors was that he should not settle. Moreover he was prepared to settle on the basis of an even split with his wife. He had to be talked into beginning negotiations at a much lower level. That advice eventually saved him 6% of the property pool. It is difficult to credit when the plaintiff was prepared to settle at an even split he would not have settled at a level of 44% if he had been aware of the full extent of the fees.
Counsel for the defendant raised a number of other matters which he submitted supported his submissions as to the unreliability of the plaintiff as a witness. I need not go through these other matters. The examples I have given illustrate the point, and I am satisfied, justify the conclusion I have reached.

Did the defendant make the required disclosure of costs to the plaintiff?

Section 260(1) of the Act has 12 subsections. The defendant was required to make disclosure in relation to each and every one of these subsections. It is appropriate to examine the evidence in relation to each separate subsection to see whether the defendant has complied with its obligations.
The first question is whether the defendant disclosed the basis on which legal costs would be calculated including whether a cost determination applied to any of the legal costs. The Costs Agreement under the subheading 'Fees' advised the plaintiff the defendant would employ a time costing method and specified hourly rates for individuals. Subsection 2 under the heading 'Disbursements' showed what further costs would be incurred for incidentals. It is clear then the Costs Agreement showed the basis upon which the costs rendered by the defendant would be based. Item 10, as I have indicated, is misleading. It does however refer to 'statutory scales' and that must be acknowledged. In the Law Society's Explanatory Notes for Clients under the heading 'Estimate of costs scales' there appears the following:
The law practice should explain to you that it is not obligatory for you to accept the offer and enter into the Agreement. If you do not enter into the Agreement, the law practice may not wish to act for you. However, if the law practice does agree to act for you even though you have refused to accept the offer, the costs which the law practice may charge you will be determined according to the relevant costs scale.
...
Costs determined under a costs scale are not necessarily calculated by reference to the amount of time spent. They are also calculated by reference to the nature of the work carried out.
The defendant's disclosure did state the basis on which the legal costs would be calculated and did advise the plaintiff there was a Costs Determination. The correct determination was not specified. Rather, what was made clear was that the Costs Determination did not apply to any of the legal costs: s 260(1)(a).
Moving to s 260(1)(b) the Costs Agreement pursuant to cl 9 did advise the plaintiff he had the right to negotiate a costs agreement with the defendant, he had the right to receive a bill from the law practice and the right to request an itemised bill after receipt of a lump sum bill. By cl 9.1(c) the right to request the itemised bill was limited to 30 days after receiving the lump sum bill. That would not appear to be objectionable under s 260(1)(b)(iii). Under s 267 the defendant had an obligation to disclose any 'substantial change to anything included in a disclosure already made'. Clause 9.1(d) limits the obligation of the defendant to notify the plaintiff 'of any substantial change to the costs incurred' and 'the manner in which those costs are calculated'. The obligation in s 260(1)(b)(iv) appears to be slightly wider than what is provided for in cl 9.1(d) of the Costs Agreement. The Law Society's Explanatory Notes for Clients under the heading 'Hourly rate for legal services' does include the following:
As the matter progresses, the circumstances can change. The law practice must provide you with details of the changed circumstances and their effect on the estimate of costs at Part 2, Item 5 of the Agreement.
That is a reference to the Law Society's standard agreement. It is meaningless so far as it relates to the defendant's Costs Agreement: s 260(1)(b).
The defendant was required to provide an estimate of the total legal costs if reasonably practical or otherwise a range of estimates and an explanation of the major variables. In the letter of engagement under the heading 'Estimate of Costs and Disbursements' there appears the following:
We are required to provide you with an estimate of your costs and disbursements. Based on the instructions you have provided us to date, we estimate our fees and disbursements are likely to be between $2,000.00 and $3,500.00 for the initial stage of proceedings.
However, please note that each case is unique in its preparation and presentation. That is why it is not possible for us to furnish you with a fixed estimate of how must it will cost for us to represent you. The overall costs will be directly related to the complexity of your case, the time spent in preparing and presenting it, the work carried out on your behalf whether at your direct request or where necessary to advance your case, and the out‑of‑pocket expenses and disbursements incurred. Further, these matters are also likely to be affected by the behaviour of your former spouse and the manner in which the case is conducted by your former spouse and her lawyer.
Clearly the defendant has met the requirements of the subsection: s 260(1)(c).
Item 6 of the Costs Agreement says accounts will be rendered monthly. The required disclosure has been made: s 260(1)(d).
By cl 8.1(a) the defendant's Costs Agreement specifies a rate of the 'cash target rate published by the Reserve Bank of Australia plus 2%' as being the interest rate charged on outstanding accounts. The required disclosure has been made on this issue: s 260(1)(e).
Item 10 of the Costs Agreement is headed 'Recovery of Costs'. The defendant refers to 'statutory scales which set out the amount of solicitor's fees which can be recovered from the other side': see cl 10.1. Clause 10.3 says the plaintiff may recover some costs from the other side if the plaintiff is successful. No dollar figure is specified either for the costs that may be recovered in the event of success in the action or the costs the plaintiff might be ordered to pay.
The Law Society's Explanatory Notes for Clients includes a section entitled 'Recovering Legal Costs from the Other Party/Paying Legal Costs to the Other Party'. There is then a subheading 'If you win'. The notes advise the law practice will explain to the client the factors which will effect the recovery of legal costs. Reference is made to an estimate of costs the client may be entitled to recover to be found in pt 3 of item 7. There is no such part or item in the defendant's Costs Agreement. Under the subheading 'If you lose' the basis upon which the client might have to pay costs is explained and once again provision is made for an estimate.
Again the reference is to a part and item in the agreement which has no equivalent in the defendant's Costs Agreement: s 260(1)(f).
By item 9.2 in the Costs Agreement the plaintiff was entitled to request a written report on the progress of the action. As is mandated by s 269(1) the defendant says it will charge for a written report on the progress of the matter but not charge for a written report on the legal costs incurred by the client up to the date of the report: s 260(1)(g).
By item 9.6 of the Costs Agreement the plaintiff is advised if he wished to discuss legal costs he could contact the defendant's named financial controller. That was sufficient disclosure: s 260(1)(h).
Under item 7 of the Costs Agreement the defendant advised the plaintiff if there was a dispute or query regarding legal costs 'a cost determination may be sought pursuant to Division 5 of the Act'. The Act is broken into 19 parts and nine of those parts contain a div 5. The only division which could be remotely relevant is div 5 of pt 10 which deals with legal costs determinations. That is the mechanism by which scales are periodically reviewed. It has nothing to do with a client's rights to an assessment. That is covered by pt 10 div 8.
There is nothing in the Law Society's Explanatory Notes for Clients which is of relevance.
Pursuant to s 295(6) of the Act an application for assessment must be made within 12 months of a bill being delivered. Nowhere in the Costs Agreement or the letter of engagement is that time limit specified. It is not covered in the Law Society's Explanatory Notes for Clients. There has clearly been no compliance with this disclosure obligation: s 260(1)(i).
There is no direct statement in either the letter of engagement, the Costs Agreement itself or the Law Society's Explanatory Notes for Clients which says the law of this jurisdiction applies to costs. There is a reference in the Law Society's Explanatory Notes for Clients to the right of the client to have the agreement reviewed by a single judge of the Supreme Court. Perhaps by implication it may be said the law of Western Australia applies. It is certainly not clearly stated: s 260(1)(k).
The question then is whether the defendant has complied with its disclosure obligations. The answer is three fold - in some respects it has complied, in some respects it has complied in part and in other respects it has not complied at all. In my view the defendant has complied with s 260(1)(b), (c), (d), (e), (g), (h) and given there are no relevant time limits (j). It has complied in part with s 260(1)(a) and (k), although in the case of (k) my assessment is generous to the defendant. I am not satisfied the defendant has complied with s 260(1)(f) and (i).
Given I have determined the defendant was required to comply with all of the provisions of s 260(1) it is clear there has been a failure on the part of the defendant in relation to its disclosure obligations.
Further, I am not satisfied that there has been compliance by the defendant with s 264. Under s 264(1)(a), the defendant was required to provide the plaintiff with 'a reasonable estimate of the amount of legal costs payable by the client if the matter is settled'. An estimate was provided by the defendant to the plaintiff, but it was significantly below the costs ultimately claimed. I accept the defendant made an error and that it was an honest mistake. I am not satisfied the estimate provided was, in all the circumstances, 'reasonable'. In this case, the defendant could have been expected to check its records and to check with senior counsel as to the amount of his final account. It would appear it was this latter step which was not taken by the defendant. That led to the estimate not being reasonable and the requirement of additional disclosure not being satisfied.
Section 268 of the Act deals with the effect of failure to disclose. There are a range of consequences set out in the various subsections to that section but presently none are relevant. What the plaintiff wants to do is set aside the Costs Agreement. Section 288 of the Act deals with such applications.
It was the plaintiff's case the Costs Agreement ought be set aside because it was not fair and reasonable under s 288(2). This argument had to it two elements. First a reading of the Costs Agreement without more demonstrated it was not fair and reasonable. Second there had not been disclosures required under div 3 of the Act. Reliance was placed on s 288(3)(c) but none of the other subsections were relied upon. The defendant maintained the Costs Agreement was fair and reasonable and that in the overall the required disclosure had been made. Further the defendant maintained this was a case where the discretion available to the court in s 288(2) ought be exercised in the defendant's favour and the application ought be dismissed.
It is first necessary to give some content as to what is meant by 'fair or reasonable'. Under the Legal Practice Act 2003 a costs agreement could be set aside because it was 'unreasonable'. A good deal of law had grown up around that expression. For present purposes it is enough if I quote what was said by Murphy J in Computer Accounting & Tax Pty Ltd v Bowen BuchbinderVilensky [2009] WASC 171 [83]:
For the purposes of s 222, an agreement may be unreasonable because of the circumstances under which it came into being, or because its terms are unreasonable, or because the effect on the client is unreasonable. Consideration of whether an agreement is unreasonable or not is not confined to those three categories. Also, it may be in a given case, that, if each of the three categories is looked at in isolation, none independently leads to a conclusion of unreasonableness, however when looked at as a whole, or in combination with other circumstances, the agreement might be regarded as unreasonable. Similarly, even if in one of those three categories, the agreement appeared unreasonable, it may nevertheless be regarded as not unreasonable when all the circumstances are considered as a whole. See Jovetic v Stoddart & Co (1992) 7 WAR 208; Stoddart & Co v Jovetic (1993) 8 WAR 420; Brown v Talbot & Olivier (1993) 9 WAR 70, 75; and Duckworth v Chopra [2001] WASC 146 [29] - [30].
In my view the test of 'fair or reasonable' must differ from the test applied by his Honour. One of the aspects of potential unreasonableness mentioned in the decided cases is the duty of a solicitor to make full and frank disclosure. What that duty involves in a particular case is dependent upon the nature of the case, the sophistication of the client and a range of other matters. Now, given the disclosure requirements of s 260 what disclosure is proper in a particular case is not to the point. That section applies across the board. So, although earlier case law is of some assistance, the present legislation appears to go further in the demands placed upon a law practice than its predecessors.

Two points can be made about this section. First a costs agreement will be set aside if it is fair but not reasonable; and the reverse is the case. That may seem an odd position but it is the inevitable conclusion if the 'or' is disjunctive; as I think it is.
Lawyers are familiar with the concept of 'reasonable'. In many ways it is the cornerstone of commercial law. It involves looking at all of the surrounding circumstances and the facts of a particular case and weighing everything in the balance.
But the use of the expression 'fair' is far less common. It is a slippery concept. The Macquarie Dictionary has 30 different definitions for the word. Three will suffice: free from bias, dishonesty or injustice; proper under the rules; and not undesirable but not excellent. These definitions provide a useful guide to what is intended.
The second point is that any decision must take into account the background of the client. That was the view taken by Pullin J in Cerini v McLeods (a firm) [2004] WASC 45. In the Computer Accounting & Tax decision Murphy J supported that approach. Moreover it seems consistent with the way in which the Act is structured. There is no expanded definition of client in s 288(1). However in s 295(7) which is dealing with application for an extension of time in which to have costs assessed there is reference to a sophisticated client. Really it is a matter of logic. A person who has never dealt with lawyers and is injured in a motor vehicle accident is in a vastly different position to a large corporation which is forever negotiating contracts and litigating. It makes sense to apply different standards to each.
Turning then to this particular case the starting point has to be the purposes of the legislation found in s 251. The whole aim of pt 10 is to ensure disclosures are made by practitioners to clients and to regulate costs agreements. The legislature thought it important a client understand the ramifications of entering into an agreement with a law practice. In one sense this seems like an extension of the 'nanny State'. Conversely, it may be a recognition that many individuals consult a lawyer when events have made them vulnerable and where they do not fully appreciate the significant costs involved. But the motives for the legislature acting as they have are irrelevant; what the legislature insists upon is a law practice disclosing matters to clients and making costs agreements which are fair or reasonable.
In this case, the plaintiff was a sophisticated businessman. He had made a substantial amount of money from his business interests and he had dealt with lawyers in the past. There was no question of him not understanding the provisions of a contract such as the Costs Agreement provided to him by the defendant. In one sense at least it was up to him to look out for his own interests - to read the contract carefully, to ensure the documents provided to him made sense and to satisfy himself what services were to be rendered and how much they would cost.
On the other hand there is no evidence he had ever had any contact with lawyers in relation to matrimonial affairs or that he was familiar with the provisions of the Act dealing with costs agreements and the legal requirements falling upon legal practices. He could not have been expected to be familiar with the scales and the fact there was a determination of hourly rates for family lawyers.
As I indicated when I examined the plaintiff's evidence and his cross‑examination it seems clear he did not carefully examine what was offered to him and when he found there were gaps and inconsistencies in the material provided to him failed to contact the defendant. In the exercise of discretion the sophistication of the plaintiff and his wilful neglect of his own welfare are factors against setting the Costs Agreement aside.
But when the matter is looked at overall the Costs Agreement was not fair or reasonable. It did not take enough trouble to ensure the documents provided to the plaintiff were internally consistent. Perhaps the most obvious example of that is the failure of the defendant to disclose to the plaintiff the statutory entitlement of the plaintiff to a review of the costs. There is no reason why there should have been a reference to 'Division 5' under item 7. That is the most egregious failure of the Costs Agreement. I have outlined the others when considering whether disclosure was made. It was careless of the defendant to include the Law Society's Explanatory Notes for Clients in the Butler's folder when it could not be related to the Costs Agreement. That sort of behaviour is not reasonable and not fair.
It is not difficult to see how a costs agreement can be done properly. The Law Society's Costs Agreement Kit was tendered by the plaintiff as exhibit C. Counsel for the defendant was at pains to point out this document had no particular status - it was a kit produced by a professional body and nothing more. Its use is not mandatory. All that is true. But it provides an example of how a costs agreement and an explanatory memorandum can link up in a way that is internally consistent. In no sense am I endorsing the Law Society kit as a model that satisfies the requirements of the Act. But as an indication of an approach that fully informs a client and makes disclosure it stands in stark contrast with the Costs Agreement used by the defendant.
It is not difficult to imagine Mr Butler, as he leaves court after this decision is handed down, turning to his barrister and asking with some exasperation - 'What more could I have done? I gave to a sophisticated client a costs agreement and told him to read it. He signed it and returned it to me and we undertook extensive work. We did all that was asked of us in a competent and professional manner and we achieved the best possible result in the circumstances - despite the client's best efforts on the last day of trial. All along our fees were paid in conformity with the agreement. Now, months after the whole matter is concluded, the contract we entered into is thrown out the window, and our fees are to be assessed on a basis neither we nor the client ever intended.'
It is not difficult to understand such sentiments. But as I have indicated above, what the legislature has done is focus on the need for disclosure. What it has not done, and it could never do, is ensure a client actually reads a costs agreement. So, the position every law practice finds itself in is this. It must make full disclosure in conformity with the Act, irrespective of whether the client actually reads the costs agreement or not. If full disclosure is made, if all the requirements of the Act are complied with, then the costs agreement will hold. Otherwise, a law practice runs the real risk of having the agreement set aside.
Mr Butler may also feel as a lawyer he is being victimised - why should lawyers be singled out as having special requirements of disclosure? The obvious answer to that is to say it is what the legislature has determined should happen. But there are other areas where disclosure is required. Perhaps the most common example is in the finance industry. Lenders concerned about allegations of unconscionable conduct have long required the effective transactions to be explained to clients by an independent solicitor. They have found simply to rely on loan documentation which is signed by a borrower can lead to problems. So, while the requirements placed on lawyers by the statute seem onerous, they may, in reality, be no more burdensome than those placed on other businesses by operation of the law or equity.
For these reasons I am satisfied the Costs Agreement entered into between the plaintiff and the defendant ought be set aside under the provisions of s 288 of the Act.
Having reached that conclusion there are then a number of other orders which can be made under s 288. Neither party made any submissions in relation to what the final orders ought be. Accordingly, on publication of these reasons I will hear the parties as to whether or not any further orders are required and if so what those orders should be.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: BGM -v- AUSTRALASIAN LAWYERS GROUP PTY LTD t/as BUTLERS BARRISTERS & SOLICITORS [2014] WASC 290 (S)

CORAM: MASTER SANDERSON

HEARD: 11 SEPTEMBER 2014

DELIVERED : 2 OCTOBER 2014