BGM v Australasian Lawyers Group Pty Ltd t/as Butlers Barristers & Solicitors

[2014] WASC 290 (S)

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
FILE NO/S	:  CIV 2710 of 2013
BETWEEN	: BGM

Plaintiff

AND

AUSTRALASIAN LAWYERS GROUP PTY LTD
t/as BUTLERS BARRISTERS & SOLICITORS

Defendant

Catchwords:

Practice and procedure - Form of orders after costs agreement set aside -

Whether repayment of fees can be ordered

Legislation:

Legal Profession Act 2008 (WA), s 288(5), s 288(6)(a)

Result:

Orders made

[2014] WASC 290 (S)

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):

BGM v Australasian Lawyers Group Pty Ltd t/as Butlers Barristers & Solicitors

[2014] WASC 290

[2014] WASC 290 (S)

MASTER SANDERSON

1. MASTER SANDERSON: On 14 August 2014 I published reasons for setting aside a costs agreement between the plaintiff and the defendant: see BGM v Australasian Lawyers Group Pty Ltd t/as Butlers Barristers & Solicitors [2014] WASC 290. I invited counsel to make submissions as to the form of orders consistent with the reasons. Each party put forward a minute of proposed orders. The plaintiff's minute was in the following terms:

   1.          The costs agreement made between the parties dated 12 March 2010 be set aside.

   2.          It be declared that the bills issued by the Defendant pursuant to the costs agreement and listed in the schedule, annexed hereto as annexure A, are not valid and enforceable bills.

   3.          The Defendant is to render fresh bills to the Plaintiff in accordance with the relevant Determination within 30 days.

   4.          The Defendant do within 7 days pay into its trust account the sum of $351,987.42, the said sum to be retained in trust by the Defendant pending further order of this Court or of the Taxing Officer.

   Alternatively

   The Defendant do within 7 days file and serve an affidavit setting out particulars of all funds transferred from its trust account (pursuant to paragraph 12 of the costs agreement) in payment of bills listed in annexure A and simultaneously pay into its trust account the total of the sum so transferred, the said total sum to be retained in trust by the Defendant pending further order of this court or of the taxing officer.

   5.          The Defendant pay the Plaintiff's costs of these proceedings including reserved costs to be taxed if not agreed.

2. The defendant's minute was in the following terms:

1.	The costs agreement made between the parties dated 12 March 2010 is set aside.
2.	The Plaintiff do pay the Defendant's legal costs the subject of the costs agreement to be taxed in accordance with the applicable Legal Practitioners' (Family Court of Western Australia) Determinations.
3.	There be liberty to the parties to apply on 7 days notice.
4.	The costs of these proceedings be reserved.

[2014] WASC 290 (S)

MASTER SANDERSON

1. Order 1 in both minutes is the same. It is consistent with s 288(2) of the Legal Profession Act 2008 (WA).

4              It is not immediately clear why the plaintiff seeks the declaration

found in par 2 of the plaintiff's minute. Once a costs agreement is set aside then s 288(5) and, in this case, s 288(6)(a) are applicable. These two subsections are in the following term:

288.      Setting aside costs agreements

...
(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);

5              It must of necessity follow once a costs agreement is set aside any

bills rendered pursuant to that costs agreement and which purport to rely upon the terms of the costs agreement are of no force and effect. There is no need to make a declaration in terms which does nothing more than reflect the clear wording of the statute.

6              But it is necessary to make an order the defendant's costs be taxed in

accordance with the Legal Practitioners' (Family Court of Western Australia) Determination. That is the clear requirement of s 288(6)(a) and the wording sought in par 2 of the defendant's minute is appropriate.

7              In my view there is no warrant for making order 3 as proposed by the

plaintiff. That is in effect a mandatory injunction. It is possible a law practice may for one reason or another decide it will not issue fresh bills. Given the law practice is not entitled to payment until those bills are assessed it may not necessarily be in the plaintiff's interest to require the bills to be prepared. In this case the defendant maintains it is not necessary for it to prepare fresh bills. Counsel for the defendant pointed out the relevant costs determination does no more than set hourly rates for designated persons. For instance under the Legal Practitioners' (Family Court of Western Australia) Determination 2012 the hourly rate for a senior practitioner is $451. This stands in contrast to the scale applicable to matters in the Supreme Court. That scale refers to particular items - drawing pleadings, giving discovery and so on. Counsel for the defendant indicated it was not the defendant's intention to render fresh bills. Rather

[2014] WASC 290 (S)

MASTER SANDERSON

because the bills already rendered were time based it was simply a matter of the taxing officer applying the applicable scales rather than the costs as specified in the costs agreement.

8              Counsel for the plaintiff would not accept that was the case. He

maintained fresh bills would be necessary because a taxing officer would be unlikely to allow a senior solicitor who was travelling to court to charge at the maximum hourly rate. Furthermore, pursuant to the costs agreement the defendant had rounded up its charges into six minute units. Counsel maintained it would be necessary for the defendant to break a bill down to a far greater extent than had been done with the bill presently before the taxing officer. In the end this is a matter which must be resolved by the taxing officer. If the defendant wishes to have its costs assessed based on the bill as it stands then so be it. The taxing officer will determine whether that is appropriate. But it will not in my view justify making an order in terms proposed by the plaintiff.

9              Order 4 proposed by the plaintiff has about it a difficulty. There is

nothing in s 288 of the Legal Profession Act, or indeed in any other section, which deals with the consequences of the setting aside of a costs agreement - that is to say how money paid pursuant to the agreement is to be treated. Presumably a party in the plaintiff's position has some form of restitutionary claim which would justify the making of an order for repayment to the client of costs paid pursuant to the costs agreement. If that is the case why any amount should be paid into a trust account retained by the defendant is unclear. The plaintiff would have an entitlement to be repaid the money it has been paid pursuant to an agreement which has now been set aside.

10            The position may be different with funds that have been deducted

from the defendant's trust account pursuant to an authority found in the costs agreement. Whether or not some additional equitable remedies may be available to the plaintiff is perhaps an open question. The fact that there is an alternative order 4 suggests the plaintiff's counsel takes the view different considerations may apply when accounts are paid from the defendant's trust account as against the situation where the plaintiff paid an account direct. Any difference was not developed during the course of the argument about the orders.

11            Perhaps oddly none of the cases dealing with the setting aside of

costs agreements seem to address this issue of what the consequences of an order may be. It does seem to me however that if some form of restitutionary relief is to be claimed as a consequence of the setting aside

[2014] WASC 290 (S)

MASTER SANDERSON

of a costs agreement then that relief ought be detailed in the originating summons. That was not done in this case. It was not the subject of argument between the parties and it seems to me that order 4 as proposed by the plaintiff goes well beyond the relief foreshadowed in the originating summons. Assuming without deciding there is power to make some restitutionary order consequent upon setting a costs agreement aside the precise form of such relief needs to be specified and fully argued. In this case that has not been done.

12            The defendant proposes liberty to apply. The plaintiff had no

objection with such an order. For the sake of convenience of the parties it
ought be included in the orders made.

13            That then leaves the question of costs. On the face of it at least the

plaintiff should be entitled to his costs of the action. Counsel for the defendant indicated there had been a Calderbank offer sometime prior to the hearing. It was inappropriate to provide any details of that offer at this stage of proceedings and counsel did not do so. However, it would seem it was an offer to settle for a certain sum. Until taxation of the defendant's bills was complete it would not be clear whether or not the plaintiff had actually achieved a better result through continuing the litigation or whether he would have been better off accepting the offer. Counsel for the plaintiff maintained the action was about whether or not the costs agreement should be set aside. Such an offer was not made prior to the hearing and therefore the usual rules should apply.

14            It seems to me it is appropriate to reserve the costs. Whether or not a

Calderbank offer in the context of a case such as this can have costs consequences is unclear. It will require full argument. But the argument can only take place once it is known what the actual costs will be. After all the costs when assessed may be much lower than the offer put by the defendant and the substratum of the argument would fall away. This issue is best put over to another date.

1. In my view I ought make orders in terms of the defendant's minute. The costs of the hearing in relation to the minute will also be reserved.