Cameron v Thomson Geer
[2020] VSC 75
•2 March 2020
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COSTS COURT
S ECI 2019 00755
IN THE MATTER OF:
Section 198 (1)(a) of the Legal Profession Uniform Law Application Act 2014
BETWEEN
| CHARLES CAMERON & SANAM ALI | Applicants |
| v | |
| THOMSON GEER (ABN 21 442 367 363) | Respondent |
JUDGE: | Wood AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 10 February 2020 |
DATE OF DECISION & REASONS: | 2 March 2020 |
CASE MAY BE CITED AS: | Cameron & Anor v Thomson Geer |
MEDIUM NEUTRAL CITATION: | [2020] VSC 75 |
DECISION & REASONS
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LEGAL COSTS - Legal Profession Uniform Law 2014 – Alleged non compliance with disclosure – Section 174(1) – Validity of costs agreement – Section 178(1)(a) – Basis of assessment – Whether bills sufficiently itemised – Piper Alderman v Smoel & Anor (2017) VSCA 42, considered
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P Lovell | Davis & De La Rue |
| For the Respondent | Ms S Cherry | Mary Cloonan |
HIS HONOUR:
There was a hearing in this matter on 10 February 2020. At the conclusion I reserved my decision and I now publish my decision and reasons.
The applicants commenced this proceeding pursuant to the Legal Profession Uniform Law 2014 (‘Uniform Law’) to assess the respondent’s bills of costs totalling $190,470.15. The bills are dated between June 2017 and April 2018. The retainer was in relation to a prosecution proceeding initiated by the Australian Competition and Consumer Commission (‘ACCC’) in the Federal Court of Australia in Western Australia which included the applicants and corporate entities.[1] The ultimate result was findings of misrepresentation, significant fines and periods of disqualification.[2]
[1]ACCC v Geowash Pty Ltd & Ors – WAD230/2017.
[2]Order of Justice Colvin - 24 January 2020.
On 18 June 2019 an order was made by a Judicial Registrar for the provision of any Cost Agreements, costs disclosure material, a cash account and a Notice of Dispute prior to what turned out to be an unsuccessful mediation on 6 September 2019.
On 22 October 2019 an order was made by a Judicial Registrar which identified three preliminary issues to be determined. Namely, whether there has been compliance with disclosure obligations under the Uniform Law, the basis that costs are chargeable, and whether the bills were in itemised or lump sum form. The parties have since then produced written submissions which were filed on 23 and 30 January 2020.
The applicants’ Notice of Dispute (‘Notice’) (dated 6 August 2019) came into existence before the formal identification of the three preliminary issues and it addresses some issues which do not fall for consideration at this point, but would be matters for the substantive assessment of the quantum of costs (eg, costs of aborted mediation and duplication of work).[3] In broad terms, the issues that were identified in that document, which are relevant to the preliminary issues, relate to alleged non-compliance with disclosure obligations contained in the Uniform Law and the contention for costs to be assessed on the Federal Court scale for the work performed by one of the lawyers acting in the event that non-compliance is established.[4]
[3]Paragraphs B, C and D of the Notice.
[4]Paragraph A of the Notice.
The applicants allege that the disclosure was contradictory and inaccurate. The initial disclosure of total legal costs made by the respondent included a four day trial estimate with the total costs being $220,000.[5] This was revised to $232,000 excluding disbursements and a ten day trial. The applicants however contend that the component parts should have totalled $244,000.[6]
[5]Paragraph A(a) of the Notice.
[6]Paragraph A(b) of the Notice and Transcript – 10 February 2020 – page 2, line 28 to page 3, line 1.
The applicants further allege that requests for clarification were not adequately addressed[7] and the bill total of $190,470.15 did not include work that had previously been included in estimates. That is, the estimate was in reality $117,000 when the bill was $190,000.[8] This analysis was developed in argument at the hearing and was dependant on the identification of work that was included in the estimate that had not taken place and deducting that allowance from the estimate, thereby arriving at a ‘true’ estimate.[9] This failure is then the basis for arguing that the estimate is inaccurate. This methodology was challenged by the respondent but even accepting this was an appropriate approach, it was submitted by the respondent that by September 2017 the estimate was in the vicinity of $250,000 which was in excess of what was ultimately billed.[10]
[7]Paragraph E and A(c) of the Notice.
[8]Paragraph A(d) of the Notice.
[9]Transcript – 10 February 2020 – page 3, lines 14 to 28 and page 10, line 18 to page 11, line 8.
[10]Transcript – 10 February 2010 – page 23, lines 4 to 30.
The culmination of these alleged deficiencies is said to justify a result that the Cost Agreement is void. The Notice contends for the rates for Neil Hannan (Partner) be limited to Federal Court scale and that the work performed by Sofian Tay(the second lawyer) be assessed on the rate in the Costs Agreement.[11] Inconsistently with this position in the written submissions the applicants contend that all work in the bills of costs be drawn on the Federal Court scale.[12] This position was repeated at the hearing.[13] The rate for Ms Tay in the Costs Agreement was in fact lower than the Federal Court scale and this was acknowledged by the applicants’ counsel at the hearing.[14] Arguing for Ms Tay’s rate to be assessed at a higher rate than the rate the applicants were charged was against the applicants’ interests. Comment in relation to the rate for Mr Hannan is contained in paragraphs 10 and 22 below.
[11]Paragraph A of the Notice (commencing at the foot of page 2 and concluding at the top of page 3).
[12]Paragraph 16 of the applicants’ written submissions.
[13]Transcript – 10 February 2020 – page 13, line 31 to page 14, line 11.
[14]Transcript – 10 February 2020 – page 13, line 11.
In their written submissions the applicants refer to two Cost Agreements. Technically this is correct. The first involves the first applicant and is dated 29 May 2017. The second is dated the next day (30 May 2017) and involves the second applicant and one of the corporate entities. They are expressed in identical terms so for convenience I will refer to a singular Cost Agreement.
The Cost Agreement provides wide ranges of hourly rates for individuals holding particular positions. The stated range for Partner is $550 to $780 per hour, the range for Associate is $302.50 to $470 per hour and the range for a Solicitor is $220 to $450 per hour, all inclusive of GST. The Cost Agreement states that specific rates will be set out in a letter outlining the scope of the work.[15] The Cost Agreement makes it clear that the rate for Neil Hannan is $620 per hour exclusive of GST and that the rate for the other lawyer who ‘will mainly be involved’ is Sofian Tay at $380 per hour exclusive of GST. It should be noted at this point that the Federal Court rate in 2017/2018 for a solicitor was $580 exclusive of GST, which was marginally below the rate for Mr Hannan.
[15]Paragraph 19.1 of the letter.
The applicant’s written submissions essentially repeated the content of the Notice in relation to the first two preliminary issues. Some typographical errors in the Notice are corrected.[16] The written submissions make reference to three additional letters/emails in relation to disclosure not referred to in the Notice. They are dated 4 July 2017, 15 August 2017 and 18 September 2017.
[16]Paragraph 4 of the applicants’ written submissions.
The email of 4 July 2017 states that the initial estimate of $150,000 in the letter of 29 May 2017 would be reviewed once proceedings were issued and this occurred in the letter of 7 June 2017 when the total estimate was increased to $232,000. It is clear from the second applicant’s letter dated 3 July 2017 that billing to that point was $62,232.28.[17]
[17]Paragraph 14(b) of the respondent’s written submissions.
The email of 15 August 2017 updated the costs for counsel and solicitor to attend the mediation in Perth. The figure was $16,104. The applicants’ complaint is that the estimate did not include airfares and accommodation even though the letter stated these would be ‘economy airfares and accommodation at cost’. The complaint is also made that this did not explain the degree to which earlier estimates might have been varied or increased by this.[18] This could be characterised as nit-picking when the latest estimate at this point was a total of $232,000 and there was no significant change requiring any revision.
[18]Transcript – 10 February 2020 – page 4, lines 1 to 9.
The applicants also challenge the accuracy of disclosure in relation to counsel fees.[19] There was however compliance as the initial estimate was $55,000 and the counsel fees that were relevant were around $9,000.[20]
[19]Paragraph 10 of the applicants’ written submissions.
[20]Transcript – 10 February 2020 – page 12, lines 1 to 7. Fees of Mr Pirrie were not part of the estimates as there was a direct brief - paragraphs 11 to 13 of the respondent’s submission.
In relation to the letter of 18 September 2017 the applicants’ complaint is that a reference to additional costs of $7,000 is unexplained and it is not clear whether this was included in previous estimates.[21] When read as whole however, it is clear that the letter states that costs billed to that point were $100,058.13, unbilled work in progess to that date was $43,384 and future costs were estimated at $150,000 on a two day trial estimate. If the figure of $7,000 is included together with the sum of $8,184 for the Perth mediation, this is a total estimate of $308,000.[22] Without those two items it is still $293,442.13. This is well in excess of the costs of $190,470.15 rendered by the respondent when their retainer was terminated. The applicants engaged new lawyers after the termination of the respondent’s retainer. The applicant’s counsel advised the Court at the hearing that he was not instructed in relation to what further costs were incurred[23] and it is therefore not known whether the respondent’s total costs estimate was ultimately accurate and borne out by future events.
[21]Paragraph 7 of the applicants’ written submissions and Transcript – 10 February 2020 – page 4, lines 10 to 13.
[22]Paragraph 18 of the respondent’s written submissions.
[23]Transcript – 10 February 2020 – page 9, lines 11 to 17.
The focus of the applicants at the hearing was on the alleged inadequacies of the updated estimates in relation to stages and particular component parts of the total estimate. The inadequacies were said to create ambiguity and uncertainty.
The respondent’s position was that the disclosure requirements in 174(1)(a) were confined to total legal costs, and the obligation to update in compliance with section 174(1)(b) was where there was significant change to the estimate for total legal costs. It was only non-compliance with those provisions that could lead to the Costs Agreement being void as per section 178(1)(a).[24]
[24]Transcript – 10 February 2020 – page 17, line 20 to page 18, line 29.
The applicants attempted to utilise section 174(3) as a basis for arguing that there was non-compliance.[25] The effect of that section is that the respondent had to make reasonable attempts to satisfy itself that the applicants understood and consented to ‘the proposed course of action for the conduct of the matter and proposed costs.’ The respondent argued that this occurred.[26] In my view the material relied upon by the respondent was sufficient and adequately clarified any confusion when requested to do so. The applicants’ complaints do not take the respondent’s conduct into the unreasonable realm.
[25]Transcript – 10 February 2020 – page 7, lines 12 to 24.
[26]Transcript – 10 February 2020 – page 18, line 14 to page 20, line 24.
At the core of the applicants’ criticisms about disclosure is a mischaracterisation of the respondent’s obligations under the Uniform Law. In reality the respondent provided more information than they were obliged to do so. If overdisclosure above the minimum requirements facilitates and invites criticism about alleged confusion and clarity, this will discourage law firms from attempting to provide optimal information to clients. There is no requirement to give estimates for stages of proceedings, only total costs. If the running of these arguments by clients discourages law firms from providing information beyond their statutory obligations this would not be a positive development in the interests of giving clients more, rather than less, information.
Estimating total legal costs is an inexact science which involves a degree of informed guesswork. The respondent has made sufficient effort to update the estimate of total costs as soon as practicable in accordance with section 174(1)(b). It should be borne in mind that all these estimates occurred within a confined time frame of 6 months. The Uniform Law requires an intital total estimate and updated ones where there is a significant change to the total costs. I am satisfied that reasonable steps have been taken by the respondent to comply with section 174(3). There is no basis to find the Cost Agreement is void for non-compliance.
Even if that conclusion was wrong, the assessment of costs would still be undertaken on the hourly rate for Mr Hannan in the Cost Agreement given its close alignment to the raw figure in the Federal Court scale rate, and the additional option under that scale to add a percentage (commonly up to 15%) for discretionary factors.[27] Comments made in Johnston v Dimos Lawyers[28] and Bennett (a pseudonym) v Farrar Gesini Dunn[29] referred to in the respondent’s written submissions[30] would also be apposite in this regard and provide sufficient justification to assess costs on the rates in the Cost Agreement even if it was void.
[27]Item 11.1 in the scale and ‘Guide to Discretionary Items in Bills of Costs’ (1 October 2014).
[28](2019)VSC 462.
[29](2019) VSC 744.
[30]Paragraphs 22 and 23.
The applicants came to the hearing prepared to argue for the Federal Court scale to apply but did not come armed with the necessary information to address the question of whether this was a worthwhile argument or not in relation to Mr Hannan. In fact it is unlikely the applicants would be better off even if the Federal Court scale applied and the applicants’ counsel acknowledged at the hearing that there may not be a great disparity.[31] It is surprising that the argument was run without adequate consideration of the potential impact of the argument being successful. Counsel for the applicants also suggested at the hearing that the rates for Mr Hannan increased over time[32] but this is not correct.
[31]Transcript – 10 February 2020 – page 13, lines 2 to 4 and page 13, lines 13 to 22.
[32]Transcript – 10 February 2020 – page 13, lines 23 to 24.
In relation to the third preliminary issue, the applicants argued that the bills of costs were not itemised. The respondent argued that they were.
The Uniform Law requires disclosure of information about a client’s right ‘to receive a bill from the law practice and to request an itemised bill after receiving a bill that is not itemised or is only partially itemised.’[33] The Legal Profession Uniform General Rules 2015 (‘Uniform Rules’) state that a law practice is entitled to recover an amount in an itemised bill that is higher than the amount in the lump sum bill but only if the law practice gave an appropriately worded disclosure ‘to the client indicating that the total amount of the legal costs specified in any itemised bill may be higher than the amount specified in the lump sum bill’.[34]
[33]Section 174(2)((a)(iii).
[34]Rule 74(1)(a).
The respondent’s bills include the wording ‘However, if you request an itemised bill and the total amount specified in the itemised bill exceeds the amount previously specified in the lump sum bill for the same matter, then we may be able to recover the higher costs should the matter proceed to a costs assessment under section 198 or a binding determination under section 292 of the Uniform Law.’
Counsel for the applicants conceded at the hearing that they were running an argument that might potentially increase the amount that the respondent can claim from them in their bills.[35]
[35]Transcript - 10 February 2020 – page 14, lines 19 to 24.
The inclusion of the words (quoted in paragraph 25) above on a bill is not definitive of whether the bill is a lump sum one. Wording to similar effect was included in the bills considered by the Court of Appeal in Piper Alderman v Smoel & Anor[36] (‘Piper Alderman’). The law practice in that case reserved the right to provide a detailed bill and ‘if the detailed bill is for a greater amount than this bill you are liable for the greater amount.’[37] The judgment concluded that the bills were sufficiently itemised so as to not constitute a lump sum bill.
[36](2017)VSCA 42.
[37]Ibid at ]10].
The phrases ‘lump sum bill’ and ‘itemised bill’ are now defined in the Uniform Rules.[38] When the case of Piper Alderman was determined the applicable regime was contained in the LegalProfession Act 2004 (‘old Act’) and the definitions of those terms appeared in that Act.[39] The definitions themselves however remain unchanged between the old Act and Uniform Law. Similarly, the old Act contained the provision that enabled an itemised bill to claim, and on assessment be allowed, a sum that exceeds the sum in a lump sum bill.[40] The equivalent provision now appears in the Uniform Rules.[41]
[38]Rule 5.
[39]Section 3.4.2 of the old Act.
[40]Section 3.4.43(2) of the old Act.
[41]Rule 74.
Several principles emerge from Piper Alderman. The Court of Appeal stated that the legislative provisions ‘direct attention to the ability to use a bill for the purposes of a costs review.’[42] The Court stated that given the statutory language ‘….it is perhaps better to express as an overarching requirement for an itemised bill that it include sufficient detail so that, if the bill proceeded to review, the parties would have enough information to understand what work has been charged for, the amount charged for the work performed, whether any particular charge is sustainable and to make submissions to the judicial officer presiding in the Costs Court.’[43]
[42]Per Beach JA, Ferguson JA (as her Honour then was) and Cameron AJA at [37].
[43]Ibid.
The Court of Appeal also made reference to the provisions in the Supreme Court Act in relation to the lack of formality and technicality and expedition as to how the Costs Court should conduct these matters.[44] It was also made clear that ‘whether the bill has sufficient detail to enable it to be reviewed cannot be assessed in a vacuum. The knowledge of the recipient about the context in which the charges were made is relevant.’[45]
[44]Ibid at [39].
[45]Ibid at [41].
The judge at first instance in Smoel & Anor v Piper Alderman (No 2)[46] made reference to the judgment of Reid DCJ in Clayton Utz Lawyers v P & W Enterprises Pty Ltd[47] where the English case of Ralph Hume Garry v Gwillim (2002) EWCA Civ 1500 (Ward CJ) was quoted. Ward CJ stated :
‘The test, it seems to me, is...not whether the bill on its face is objectively sufficient, but whether the information in the bill supplemented by what is subjectively known to the client enables the client with advice to take an informed decision whether or not to exercise the only right then open to him, viz, to seek taxation reasonably free from the risk of having to pay the costs of that taxation.’
[46](2016) VSC 237 at [14].
[47](2011) QDC 5.
In Piper Alderman the recipients were new trustees seeking to review legal work performed at the instigation of the former trustees. Even then the Court of Appeal concluded that the bill was sufficiently itemised even though ‘they may not have detailed information about all the instructions given’.[48] Here the applicants were connected with, and gave instructions on behalf of, themselves and companies they were involved with in a litigious matter initiated by the ACCC in relation to misleading conduct. They were in a more advantagous position than the paying parties in the Piper Alderman matter.
[48]Ibid.
The bills in Piper Alderman also suffered from four significant problems identified by the appellant in that matter.[49] They did not prevent the Court of Appeal from still concluding that the bills were sufficiently itemised and none of those issues are present here.
[49]Ibid at [34], and [44] to [50].
The applicants’ written submission contends that the bills are not sufficiently itemised and highlight examples where perusing documents, telephone attendances, etc, lack sufficient details. The respondent’s submissions assert that the bills are sufficiently itemised and the examples relied upon by the applicants are not sufficiently numerous throughout the bills to require a re-drawing of the bills.[50] The respondent concedes however that without paragraph numbering the bills are not taxable in their present form.[51]
[50]Paragraph 39 of the respondent’s written submissions.
[51]Transcript – 10 February 2020 – page 25, lines 24 to 28.
The bills generally contain information about the identity of the lawyer performing the work, when it was peformed, how long it took, what rate was being charged and details of what task was being charged for (ie, drafting, attending, considering documents etc). Even itemised bills contain some items where more detail might have been helpful but that does not have the effect of recharacterising the whole bill as a lump sum bill. In practice a lump sum bill is just that, a lump sum with no real detail as to how the figure is calculated.
The bills contain sufficient detail to be classified as ‘itemised bills’. The applicants’ legal representatives would be inspecting the file in any event prior to formulating a Notice of Objection. A high percentage of any uncertainty should be dispelled in that process. Going forward it will be a simple matter to prepare a copy of the existing bills with numbering of the items for ease of reference.
The conclusions I have reached are that the Cost Agreements are not void, the assessment will take place on the hourly rates in those Cost Agreements and, subject to numbering the bills, they are sufficiently itemised.
The parties can now consider the question of costs of the preliminary questions, directions for filing and serving numbered bills, inspection, objections, hearing estimate and suitable dates. They may also wish to consider the option of a further mediation now the three preliminary issues have been determined.
Liberty to apply is granted in the event that consent in relation to these matters is not possible.
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