Cave v Efron & Associates (a firm)

[2000] VSC 38

SUPREME COURT OF VICTORIA
PRACTICE COURT	Do not Send for Reporting
Not Restricted

No. 4107 of 2000

PAUL CAVE AND ANOTHER	Plaintiffs
v.
EFRON & ASSOCIATES (A FIRM)	Defendant

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JUDGE:	BEACH, J.
WHERE HELD:	MELBOURNE
DATE OF HEARING:	1 FEBRUARY 2000
DATE OF JUDGMENT:	1 FEBRUARY 2000
CASE MAY BE CITED AS:	CAVE v. EFRON & ASSOCIATES
MEDIUM NEUTRAL CITATION:	[2000] VSC 38

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CATCHWORDS:      Costs – Application by client for assessment by Taxing Master – Matters to be considered in determining application – Legal Practice Act 1996, ss.86, 87, 91, 108, 116 – Interpretation of Legislation Act 1984, s.45(1).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr. C. Devries	Sholl Nicholson Pty.
For the Defendant	Mr. D. Dealear	Efron & Associates

HIS HONOUR:

1. This is the return of an application by the plaintiffs, Paul Cave and Cave (Australia) Pty Ltd for an order that the legal costs of $28,690 claimed from them by their former solicitors Efron & Associates be assessed by the Taxing Master pursuant to the provisions of s.116 of the Legal Practice Act 1996 (the Act) and for an order that the legal proceedings brought by Efron & Associates against the plaintiffs in the Magistrates' Court at Melbourne to recover the said amount be stayed until the assessment is completed.

1. The application has a degree of urgency about it in that the final hearing of the Magistrates' Court proceeding is fixed for tomorrow.  I shall refer to that aspect again a little later in my reasons.

1. The relevant sub-section of s.116 of the Act reads:

"(1)The Supreme Court, on the application of a person referred to in section 115(1) or the legal practitioner or firm, may order -

(a)       that the bill of costs be assessed by the Taxing Master;

(b)that the legal practitioner or firm not commence or continue any proceedings to recover the legal costs the subject of the bill until the assessment is completed;

(c)unless the applicant was the person to whom the bill was given, that the legal practitioner or firm give a copy of the bill to the applicant on payment of the costs of the copy."

The time factors spelled out in the later sub-sections of the section have no relevance in the present case and the application falls to be determined therefore in accordance with the provisions of sub-s.(1).

1. It is clear from the provisions of s.45(1) of the Interpretation of Legislation Act 1984 that this court has a discretion as to whether it will accede to the application.

1. That sub-section reads:

"(1)Where in this Act or any Act passed or subordinate instrument made on or after the commencement of this Act the word 'may' is used in conferring a power, that word shall be construed as meaning that the power so conferred may be exercised, or not, at discretion."

And sub-s.(3) of the section reads:

"(3)The provisions of this section shall have effect notwithstanding any rule of construction to the contrary and any such rule is hereby abrogated with respect to this Act and any Act passed or subordinate instrument made on or after the commencement of this Act."

1. What then are the factors which the court should take into consideration in exercising that discretion?

1. In my opinion the court should have regard to the following matters in determining whether to exercise its discretion in favour of making such an order.  I should add that that the list is by no means exhaustive, nor is it intended to be. 

1. Did the practitioner comply with the provisions of ss.86 and 87 of the Act? Those sections read:

"86.     What information must be given to a client?

(1)Before being retained by a client to provide legal services or as soon as practicable after being retained, a legal practitioner or firm must give the prospective client or client a concise written statement setting out –

(a)details of the method of costing the legal services, billing intervals and arrangements; and

(b)the client's right to –

(i)negotiate a costs agreement with the  legal practitioner or firm;

(ii)receive a bill of costs from the practitioner or firm; and

(iii)request an itemised bill within 30 days after receipt of a lump sum bill.

*       *       *       *       *       *

(3)Before being retained by a client to provide legal services or as soon as practicable after being retained, a legal practitioner or firm must give the prospective client or client a concise written statement setting out -

(a)the name of the legal practitioner who will primarily provide the legal services (except in the case of a sole practitioner who is to provide the legal services personally) and whether that person practises as a principal or an employee; 

(b)an estimate of the total legal costs, if reasonably practicable; 

(c)if it is not reasonably practicable to estimate the total legal costs, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs; 

(d)if the legal services involve or are likely to involve litigation, an estimate of - 

(i)the range of costs that may be recovered if the client is successful in that litigation; and

(ii)the range of costs the client may be ordered to pay if they are unsuccessful; 

(e)the client's right to progress reports in accordance with section 92; 

(f)the avenues that are open to the client in the event of a dispute or complaint in relation to legal costs or the provision of the legal services;

(g)the name and address of the RPA of which the practitioner or firm is a regulated practitioner (or the address of the Board, if they are regulated practitioners of the Board).

(4)The statements required by section 86(1) and (3) may be combined into a single statement."

"87.     Information if another legal practitioner is to be retained

(1)If a legal practitioner or firm intends to retain another legal practitioner or firm on behalf of a client the first legal practitioner or firm must give the client a statement setting out the details specified in section 86(1)(a) and (3)(b) and (c) in relation to the other legal practitioner or firm, in addition to any information required to be given to the client under section 86.

(2)A legal practitioner or firm retained or to be retained on behalf of a client by another legal practitioner or firm is not required to give a statement to the client under section 86, but must disclose to the first legal practitioner or firm on request the information necessary for the first legal practitioner or firm to comply with this section.

(3)A statement under this section must be given in writing before the other practitioner or firm is retained except in urgent circumstances, in which case it may be given orally before they are retained and confirmed in writing as soon as practicable afterwards."

2.        Have the costs claimed been assessed in accordance with the provisions of a costs agreement entered into by the parties pursuant to the provisions of s.96 of the Act?

3.        Has the practitioner provided the client with an itemised bill?

4. If the practitioner has not provided the client with an itemised bill, has the client requested that he be provided with an itemised bill within the 30-day period stipulated in s.108 of the Act or at any other time?

5.        Having regard to the nature of the work performed by the practitioner, does the amount of the bill seem on its face to be excessive?

6. What period of time elapsed between the time at which the client first knew of his or her entitlement to seek an order pursuant to s.116 of the Act and the time at which the client made his application to the court?

7.        Has the practitioner taken legal proceedings against the client to recover the amount of the bill, and if so, what delay has occurred on the part of the client in making an application to the court since those proceedings were instituted?  In considering this aspect the court would have regard, of course, to the reason for any delay.

8.        Would any injustice caused to the client by a refusal of the application be outweighed by any injustice caused to the practitioner if the application was granted?

1. In the affidavit sworn by the first plaintiff on 21 January 2000 in support of the plaintiffs' application the first plaintiff has sworn that the defendant breached the provisions of ss.86 and 87 of the Act in the following manner:

1.        It did not provide the plaintiffs with either a written statement or oral statement setting out –

(a)details of the method of costing the legal services, billing intervals and arrangements (s.86(1)(a));

(b)the plaintiffs' rights to negotiate a costs agreement with the defendant (s.86(1)(b)(i));

(c)the plaintiffs' rights to receive a bill of costs from the defendant (s.86(1)(b)(ii));

(d)the plaintiffs' rights to request an itemised bill within 30 days after receipt of a lump sum bill (s.86(1)(b)(iii));

(e)the name of the practitioner who would primarily provide the legal services (s.86(3)(a));

(f)an estimate of the total costs to be incurred or a range of estimates together with an explanation of the major variables affecting the range (s.86(3)(b) and (c));

(g)(as the services to be provided to the plaintiffs involved litigation) an estimate of the range of costs which might be recovered if the plaintiffs were successful and the range of costs that the plaintiffs could be ordered to pay if they were unsuccessful (s.86(3)(d));

(h)      the plaintiffs' rights to progress reports (s.86(3)(e));

(i)the avenues open to the plaintiffs in the event of a dispute or complaint in relation to costs or the provision of the legal services by the defendant; and

(j)the name and address of the defendant's recognised professional association.

2. It did not provide the plaintiffs with a written or oral statement as required by s.87 of the Act.

1. It is convenient at the outset that I deal with the allegations made by the plaintiffs that the defendant did not comply with the provisions of ss.86 and 87 of the Act.

1. It is conceded by the defendant that no written statement was ever given to the plaintiffs in compliance with the provisions of ss.86 and 87.

1. What is sworn to on its behalf, however, is that, so far as s.86 is concerned, the various matters specified in that section were discussed with the first plaintiff prior to, at the time of and subsequent to the defendant's engagement by the plaintiffs and that they were agreed upon by the first plaintiff.

1. In so far as the allegation that the defendant failed to comply with the provisions of s.87 of the Act is concerned, it is said that the counsel who was engaged to appear on behalf of the second-named plaintiff in the proceeding before the Magistrates' Court the subject of the legal costs, was appointed on the specific instructions of the first plaintiff who had retained that member of counsel to act for him on a previous occasion; that counsel advised the first plaintiff of his fee structure, which was the same as the fee structure he had used on the previous occasion; and that the first plaintiff made no objection to it.

1. That it was at the specific request of the first plaintiff that the counsel in question was selected by the first plaintiff is clear from the letter of the plaintiffs to the defendant dated 30 November 1998, which reads:

"Efron & Associates

Level 1, 318 King St,
MELBOURNE 3000

Dear Graeme,

Re:  Cave (Australia) Pty Ltd - Glenn Shears

I acknowledge that the Hearing has been listed for 15th December 98 (for four days?)

It is essential to properly brief a good barrister.  I recommend Anthony Mazzone.  He is very thorough and I believe experienced in property law.

In my opinion the plaintiff has "no case" (he has been unable to prove 'increase liability' or alleged defective Section 32.

The plaintiff's solicitor has been negligent in failing to make the necessary searches and enquiries despite answer No 4 of the Requisitions on Title. 'The purchaser should make his own searches and enquiries.'

Several letters confirmed our acceptance of 4b 'All such notices must be fully satisfied by the vendor'.

The purchaser is in breach of contract mainly because he did not pay the balance of deposit money by 1st September 97 as per special contract condition No.5.

The building at 271 William Street contains fourteen properties all registered on separate titles.

BN 96/160 is specifically addressed to all floors with exception of floor 12 under this contract.

All work which was indirection related to the 12th floor has been or would have been carried out free of charge to the purchaser inclusive of sprinkler installation (refer several letters on file).

When the purchaser bought the 'shell' on the 12th floor he obtained a Town Planning permit for a residential development. 

Condition 6 of the permit was to obtain a building permit and full compliance with BN 96/160. 

In addition to recover financial losses I would like to prove that we acted honestly and if an omission has been committed we should be excused under Section 32(7). 

We list items to be counterclaimed –

1)Balance of deposit payable 1st September 97 - $15,750 (spec. cond. 5).

2)     Outgoings from 1st Sept 97 - $5,700 per annum.

3)     Agent's commission - $7,975 (letter enclosed).

4)Cost of sprinkler alteration from residential to commercial - $14,000.

5)     Water and Council rates.

6)     Penalty interest and damages as per Seventh Schedule of Table A.

7)Legal costs and any claim that you think are justified.  For any further enquiries please contact the undersigned. 

Yours faithfully,
[Signed] Paul Cave.

PAUL CAVE"

1. It was argued by counsel for the plaintiffs that having regard to the clear breaches of ss.86 and 87 of the Act that was reason enough to order that the bill of costs be assessed by the Taxing Master.

1. I am not disposed to accept that proposition.  If it was clear in a given case that the information required to be given by a solicitor to his or her client was given orally rather than in writing as required by the sections, a court may well take the view that without more that was no justification for requiring an assessment of the costs by the Taxing Master. 

1. I say that for the reason that it is the failure to provide the information which may attract the penalty prescribed by s.91 of the Act, not the failure to provide the written statement.

1. Section 91 of the Act reads:

"91.     Effect of failure to give information

If a legal practitioner or firm does not give a client any information required to be given by this Division -

(a)on an assessment of a bill of costs, the assessed amount of the bill may be reduced by an amount considered by the person conducting the assessment to be proportionate to the seriousness of the failure to give the information;

(b)in determining a dispute in relation to legal costs, the Tribunal may reduce the amount of the legal costs by an amount considered by it to be proportionate to the seriousness of the failure to give the information."

1. I turn then to the other matters which I consider the court should have regard to.

2.        There was no costs agreement between the parties within the meaning of the Act.

3.        The defendant rendered its account to the plaintiffs on or about 17 March 1999.  The first plaintiff maintains that shortly after that date he wrote to the defendant seeking an itemised bill - see the undated letter which is Exhibit PC7 to the affidavit of the first plaintiff sworn 21 January 2000.  The first plaintiff has sworn that he received no response to the letter and followed it up with another letter on 4 May 1999 - see Exhibit PC8 to his affidavit.

1. On 14 May 1999 the first plaintiff received a letter from the defendant which contained the following statement: 

"We shall, of course, provide an itemised account in due course."

- see Exhibit PC13 to his affidavit.

1. On 19 May and 27 May the first plaintiff wrote two further letters to the defendant concerning the bill of costs - see Exhibits PC9 and PC10 to his affidavit.

1. On 27 May 1999 the plaintiffs received a letter from the defendant which contained the following statement:

"As previously advised in our correspondence of 17th inst, we are not able to oblige your request for an itemised account as this request was made out of time."

That is obviously a reference to the provisions of s.108(1) of the Act, which read:

"(1)Within 30 days after receipt of a lump sum bill, a person may request the legal practitioner or firm to give them an itemised bill."

1. The defendant never provided the plaintiffs with an itemised bill.

4.        It is difficult to say whether the plaintiffs requested an itemised bill within the 30-day period.  Their first letter requesting such a bill is undated and although the plaintiffs' copy of the letter bears a stamp on it to the effect that it was faxed, no transmission sheet has been produced to the court. 

1. As against that, however, the defendant has not sworn that it did not receive the letter.  In that situation I am prepared to accept that the plaintiffs made a request for an itemised bill within the 30-day period and that the defendant did not comply with the request.  On any view of the matter a request was received by the defendant on 4 May 1999.

5.        The bill of costs does not appear to me to be excessive.  The hearing of the case in the Magistrates' Court between the second plaintiff and Shears commenced on 22 February 1999 and ran for a total of eight days.  The fees charged by counsel would not be unreasonable for such a lengthy hearing and in any event I accept that the first plaintiff agreed to pay such fees when counsel was engaged to act for the plaintiffs. 

1. The defendant's own legal costs were assessed by an independent consultant.  Having regard again to the length of the hearing in the Magistrates' Court, they do not strike me as being excessive.

6. The first plaintiff has sworn that he first became entitled to make an application pursuant to s.116 shortly after he engaged his present solicitors to act for him in respect of the Magistrates' Court proceeding now brought against the plaintiffs by the defendant. That would appear to have occurred in August 1999. On that view the plaintiffs have waited some five months or more before making this application to the court.

1. If the defendant's account is correct, however, the first plaintiff has known of his right since he first engaged it and knew of it, therefore, at the time he received the bill of costs in March 1999.

7.        In May 1999 the defendant instituted a proceeding in the Magistrates' Court to recover the outstanding balance of its costs.  It is clear that by August 1999 the plaintiffs had their present solicitors acting for them in relation to their defence of that proceeding.

1. It is clear from the material before me that since that time the plaintiffs have left no stone unturned in their endeavours to frustrate the defendant bringing that proceeding on for trial. 

1. When the matter was last before the Magistrates' Court in January 2000 an application by the plaintiffs for an order that the defendant give further and better particulars of its claim in respect of those costs was refused and the final hearing date for the proceeding was set for tomorrow. 

1. On 21 January the plaintiffs filed their present originating motion and summons in the court.  And so, as the defendant's counsel put it in his submissions to me this morning, at one minute to midnight the plaintiffs are again attempting to frustrate the defendant and prevent its Magistrates' Court proceeding coming to trial.  When one has regard to the magnitude of the interlocutory steps which have been taken in relation to that proceeding to date, and the costs associated with that proceeding, that to my mind is a matter of the utmost significance.  One asks, why was the present application not made in August 1999 at the time the plaintiffs filed their original defence in the Magistrates' Court proceeding?  The plaintiffs have said that they did not do so because they hoped that the defendant might comply with their requests that it provide them with an itemised bill. 

1. In my opinion such an explanation is totally unacceptable.

8.        Finally, then, would any injustice caused to the plaintiffs if their application is refused outweigh any injustice caused to the defendant if the application is granted?  In my opinion the short answer to the question posed is No.  I fail to see how any injustice would be caused to the plaintiffs if their application is refused.

1. On the material before me I am satisfied that the plaintiffs agreed to pay the fees charged by their counsel.  The defendant's own costs have been assessed by an independent consultant. 

1. That consultant is to be called as a witness in the Magistrates' Court proceeding tomorrow and can be cross-examined concerning the matter.  If the magistrate finds that the costs or any of them are excessive, I have little doubt that that fact will be reflected in any award he makes to the defendant.

1. On the other hand, to grant the plaintiffs' application at this late stage would further frustrate the defendant in pursuing its claim and may well render nugatory much of the interlocutory work already carried out in the Magistrates' Court proceeding.

1. Having given consideration to the various factors I have adverted to, it is my opinion that, despite the failure of the defendant to comply with the provisions of ss.86 and 87 of the Act and to provide an itemised bill of costs to the plaintiffs, the behaviour of the plaintiffs has been such in relation to the matter that it would not be in the interests of justice to exercise my discretion in their favour.

1. The plaintiffs' proceeding is dismissed with costs including reserved costs to be taxed and paid by the plaintiffs.

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