Eventus Lawyers Pty Ltd v Richens
[2021] VSC 370
•24 June 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COSTS COURT
PRACTICE COURT
S ECI 2020 03454
| EVENTUS LAWYERS PTY LTD (ACN 167 146 965) | Applicant |
| v | |
| KATHRYN LEE RICHENS | Respondent |
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JUDGE: | Ginnane J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 15 February 2021 |
DATE OF JUDGMENT: | 24 June 2021 |
CASE MAY BE CITED AS: | Eventus Lawyers Pty Ltd v Richens |
MEDIUM NEUTRAL CITATION: | [2021] VSC 370 |
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LEGAL COSTS – Application for assessment of costs – Application made out of time - Law practice seeking assessment of legal costs beyond 12-month period – Referral by costs assessor – Whether just and fair for application for assessment to be dealt with – Relevant considerations – Legal Profession Uniform Law Application Act 2014 ss 169, 178 194, 198(4).
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Ms SF Cherry | SLF Lawyers |
| For the Respondent | In person |
HIS HONOUR:
Introduction
By summons for taxation of costs dated 31 August 2020, the applicant law practice, Eventus Lawyers Pty Ltd (‘Eventus’) seeks an order under s 198 of the Legal Profession Uniform Law (‘LPUL’)[1] for a costs assessment of disbursements that it claims to have paid for its former client, the respondent, Ms Kathryn Richens. Eventus does not seek assessment of its professional fees, only the disbursements. Because the application was made out of time, the Judicial Registrar in the Costs Court referred this proceeding to me, sitting in the Practice Court, to determine whether it should be dealt with after the 12-month period prescribed by the LPUL. For the reasons that follow, I determine that it is just and fair for the application for the assessment to be dealt with after the 12-month period.
[1]See Legal Procession Uniform Law Application Act 2014 sch 1 (‘LPUL’).
The facts
Eventus acted for Ms Richens, including by engaging counsel on her behalf, in proceedings against the Commonwealth (as represented by the Commissioner for the Australian Federal Police) for adverse action (‘Federal Court proceeding’).[2] Ms Richens’ costs were initially funded by the Australian Federal Police who paid her invoices for legal fees. However, it ceased that funding, following which, Ms Richens and Eventus entered into a conditional costs agreement on 26 October 2018 (‘Agreement’).
[2]See Richens v Commonwealth [2019] FCA 1224 (‘Federal Court Proceeding’).
The Agreement stipulated that Ms Richens was required to pay disbursements irrespective of the outcome of the proceeding. It stated:[3]
[3]Affidavit of J E Gdanski dated 16 November 2020, Eventus Lawyers Pty Ltd v Richens (Supreme Court of Victoria, S ECI 2020 03454) [10]-[12] (‘Gdandki November Affidavit’).
4. Your liabilities for our charges
You will be liable to pay our charges in this matter ONLY if there is a successful outcome in this matter. This is provided that you retain us to the conclusion of the matter.
…
5. Your liabilities for disbursements
Disbursements are separate from our charges and you are liable to pay these fees, including GST (Goods and Services Tax), incurred by this practice on your behalf regardless of whether there is a successful outcome in this matter.
Immediately on request you shall pay such amounts as are required for anticipated disbursements plus any GST (Goods and Services Tax) that may be payable. These monies will be held in our trust account until payment of the disbursements is required.
14. Acknowledgement
I, ACKNOWLEDGE that I have … agreed that I may sign and return this conditional Costs Agreement in any of the following ways: …
(a)sign the Conditional Costs Agreement and return it to the law practice by hand, post, electronically or otherwise.[4]
[4]Ibid ‘JEG-4’.
Eventus says that between 15 October 2018 and 1 April 2019, it issued eight invoices to Ms Richens about the disbursements. Despite these eight invoices being titled tax invoices, providing a 14-day payment period, containing a notification of legal rights and providing methods of payment, Eventus submits that the invoices were in fact nothing more than a summary of disbursements accrued to date.[5]
[5]Ibid [14]; ‘JEG-2’.
On 11 February 2019, Ms Richens, instructed Eventus to withdraw the brief to counsel and engage new counsel to prepare written submissions which were required following the trial.[6] By this time, counsel’s fees and other disbursements claimed by Eventus totalled $188,559.42.
[6]Ibid [17].
The Federal Court dismissed Ms Richens’ proceeding on 8 August 2019.[7]
[7]Federal Court Proceeding (n 2) [492].
On 8 April 2019, the counsel, who was initially retained and who appeared for Ms Richens at the trial in the Federal Court proceeding, issued a creditor’s statutory demand against Eventus for fees and on 21 May 2019, issued winding up proceedings against it. On 30 May 2019, Eventus paid $169,204.30 to the counsel to avoid it being wound up.[8]
[8]Gdandki November Affidavit (n 3) [18]-[20].
The relationship between the parties deteriorated, and between 22 and 24 May 2019 they exchanged emails about payment of the disbursements. It appears that on 24 May 2019, Eventus provided copies of the invoices to Ms Richens and she replied that she had never seen them before. Eventus replied seeking payment of the invoices.[9]
[9]Ibid ‘JEG-3’.
By Writ and Statement of Claim dated 21 May 2019, Eventus issued proceedings against Ms Richens in the County Court of Victoria seeking recovery of the unpaid disbursements. Ms Richens’ defence raised issues about whether the costs disclosures required by law were contained in the Agreement. If those defences were established, Eventus would have been unable to maintain the County Court proceeding until the Costs Court assessed the legal costs charged under the Agreement. This is because s 178 of the LPUL states:
(1) If a law practice contravenes the disclosure obligations of this Part--
(a) the costs agreement concerned (if any) is void; and
(b) the client or an associated third party payer is not required to pay the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority; and
(c) the law practice must not commence or maintain proceedings for the recovery of any or all of the legal costs until they have been assessed or any costs dispute has been determined by the designated local regulatory authority or under jurisdictional legislation; and
(d) the contravention is capable of constituting unsatisfactory professional conduct or professional misconduct on the part of any principal of the law practice or any legal practitioner associate or foreign lawyer associate involved in the contravention.
On 29 July 2019, Eventus wrote to Ms Richens’ solicitors purporting to terminate the Agreement. It gave as its reasons Ms Richens’ refusal to answer calls or correspond by telephone from April 2019, her refusal to ‘take on board strong advice’, and her failure to pay disbursements and pay the fees of the second barrister retained following her request for urgent advice.[10] On 30 July, Ms Richens’ solicitors responded rejecting the termination of the Agreement.[11]
[10]Ibid ‘JEG-4’.
[11]Affidavit of K L Richens dated 25 November 2020, Eventus Lawyers Pty Ltd v Richens (Supreme Court of Victoria, S ECI 2020 03454) ‘KLR-5’ (‘Richens November Affidavit’).
By summons dated 20 August 2020, Eventus sought to stay the County Court proceeding, citing the potential disclosure defects raised by Ms Richens. The affidavit in support noted that it would be efficient to have the costs assessed in the event the Agreement was found defective because this would reduce the number of issues to be determined at trial.[12] The County Court proceeding was stayed by Burchell JR to allow Eventus to apply to the Costs Court for an assessment. In the course of her reasons the Judicial Registrar stated:
The plaintiff’s conduct is in breach of the overarching purposes and obligations under the Civil Procedure Act 2010 (Vic). The delay in making the application hampers the just, efficient, timely, and cost-effective resolution of the real issues in dispute. The plaintiff’s affidavit in support of the vacation of the trial date did not address the issue of the delay of the application. Such matters are relevant to the application of case management principles.[13]
[12]Affidavit of J E Gdanski dated 19 August 2020, Eventus Lawyers Pty Ltd v Richens (County Court of Victoria, CI-19-02311) [10]-[12] (‘Gdandki August Affidavit’).
[13]Order of Burchell JR in Eventus Lawyers Pty Ltd v Richens (County Court of Victoria, CI-19-02311, 24 August 2020) [3].
Eventus seeks assessment by the Costs Court of disbursements totalling $188,559.42, which it has paid, the bulk of which were counsel’s fees. It seeks reimbursement from Ms Richens of those disbursements in the amount that the Costs Court determines to be fair and reasonable.
This application is based on s 198 of the LPUL, which is titled ‘Application for costs assessment’ and states:
(1)Applications for an assessment of the whole or any part of legal costs payable to a law practice may be made by any of the following—
(a) a client who has paid or is liable to pay them to the law practice;
(b) a third party payer who has paid or is liable to pay them to the law practice or the client;
(c) the law practice;
(d) another law practice, where the other law practice retained the law practice to act on behalf of a client and the law practice has given the other law practice a bill for doing so.
(2) An application under this section is to be made in accordance with applicable jurisdictional legislation.
(3) An application under this section must be made within 12 months after—
(a) the bill was given to, or the request for payment was made to, the client, third party payer or other law practice; or
(b) the legal costs were paid if neither a bill nor a request was made.
(4) However, an application that is made out of time may be dealt with by the costs assessor if the designated tribunal, on application by the costs assessor or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period.
Section 198 is contained in Part 4.3 of the LPUL which deals with legal costs. Its objectives contained in s 169 are:
(a) to ensure that clients of law practices are able to make informed choices about their legal options and the costs associated with pursuing those options; and
(b)to provide that law practices must not charge more than fair and reasonable amounts for legal costs; and
(c) to provide a framework for assessment of legal costs.
The crux of the issue before me arises from the time limit contained in s 198(3) of the LPUL which provides that a costs assessment application must be made within 12 months of a bill being provided to the client.
The evidence suggests that the relevant final invoice was received on 24 May 2019, although it was dated sometime in April.[14] Accordingly, the 12-month period within which Eventus was required to file its summons ended on 23 May 2020. It filed its summons on 31 August 2020 and so was approximately 13 weeks out of time.
[14]Transcript of Proceedings, Eventus Lawyers Pty Ltd v Richens (Supreme Court of Victoria, S ECI 2020 03454, Ginnane J, 15 February 2021) 5 (‘T’); See also Gdanski November Affidavit ‘JEG-3’.
The fact that the summons was filed late does not impose an absolute bar to the Costs Court hearing the costs assessment because s 198(4) provides that a costs assessment can be dealt with after the 12-month period imposed by s 198(3) if, after having regard to the delay and the reasons for it, the Court determines that it is just and fair to do so.
The relevant costs assessor the Costs Court comprising the Judicial Registrar. A Judge of the Court is the designated tribunal required to determine whether it is just and fair to deal with the assessment after the 12-month period has expired.
On 20 October 2020, Gourlay JR, as the costs assessor, determined that the application had been made out of time and referred the application to the Court to determine whether it should be heard out of time. The Costs Court notified the parties that:
[This] dispute must be referred to the Court (being the practice court). The Costs Court is unable to proceed with the matter until leave to proceed has been granted.[15]
[15]Email correspondence dated 7 Dec 2020 at 2:18pm.
Following that referral, I heard the application.
The parties’ submissions
I will next summarise the parties’ submissions on whether it is just and fair to permit the Costs Court to determine the legal costs assessment despite Eventus making its application after the 12-month period.
Eventus’ submissions
Eventus submitted that it is just and fair to allow the assessment to be dealt with after the 12-month period. First, because the costs are disbursements and the law practice is directly out of pocket. The respondent has received the benefit of the services paid for by the disbursements to the financial detriment of the law practice. Eventus would suffer considerable prejudice if the application for an extension of time was refused.
Secondly, Eventus submitted that the delay of 13 weeks was a small delay and that it did not generally fail to act promptly. Ongoing communication occurred between the parties about the costs dispute: the final disbursement invoice was rendered on 1 April 2019; the County Court proceeding was commenced on 22 May 2019; Ms Richens made two applications in that proceeding, one on 15 April 2020 and one in July 2020 and filed an amended defence on 17 August 2020.
Thirdly, the delay was caused by Eventus acting on the basis that it was unnecessary to bring a Costs Court proceeding because a County Court proceeding was on foot for recovery of legal costs.[16]
[16]T 32.
Fourthly, Eventus submitted that an assessment of the legal costs by the Costs Court would not be futile. Ms Richens would be able to argue that the disclosures were deficient and the Costs Court could take that issue into account in determining reasonable costs.
Fifthly, Eventus said that because it was open to Ms Richens to seek taxation to determine the fair and reasonable amount payable by her and that she had been notified of that right both in the original costs agreement and in the statement of rights attached to the documents sent to her. It would therefore be unjust for her to be allowed to take advantage of the time limits imposed by the LPUL.
Respondent’s submissions
Mr Richens submitted that the circumstances of the case make it unreasonable, unfair and unjust for the application to be dealt with now the 12-month period has passed.
First, Ms Richens submitted that contrary to the requirements of the LPUL, the application has been made by a law practice, not a costs assessor.
Secondly, Eventus has given no reasons for its significant delay. Its conduct in failing to comply with the requirements of s 178(1) of the LPUL following the filing of Ms Richens’ defence on 22 July 2019, or following her lawyer’s correspondence of 19 and 30 July 2019, amounted to significant and unreasonable delay. It would not be just and fair to grant the application now when the need for Eventus to seek an assessment of legal costs was apparent more than 19 months ago. Eventus’ delay extended far beyond the technical period of 13 weeks after the expiration of the 12 months. The Court must consider the actual delay and consider whether Eventus acted promptly to apply for a costs assessment. It had not done so.
On 20 September 2019, Eventus sought summary judgment in the County Court proceeding. On 21 January 2020, it withdrew that application and requested that the matter proceed to trial and it was given a hearing date of 31 August 2020. Then on 20 August, Eventus filed an urgent application to vacate that trial date.[17]
[17]Richens November Affidavit (n 11) [12].
Eventus was well informed of the requirement to have the costs assessed, but it failed to act promptly to do so.[18] Ms Richens submitted that she was prejudiced by the delay which led to Eventus’ late application to vacate the County Court trial due to commence on 31 August 2020 being granted so that it could apply to the Costs Court for an assessment of legal costs. She contended that if that stay had not been sought and granted, the trial would have already ended in her favour. She has incurred significant legal costs of over $50,000 defending the County Court claim and the delay has had harmful impacts on her personal and professional life.
[18]T 50.
Thirdly, Burchell JR found Eventus to be in contravention of the overarching purposes and obligations contained in the Civil Procedure Act 2010. Eventus took no action to make an application to the Costs Court for assessment before the 12-month period had elapsed. It did not minimise delay as required by s 25 of the Civil Procedure Act 2010 but maintained proceedings throughout and beyond the 12-month time limit. Contrary to its overarching obligations Eventus caused significant and unreasonable delay, maintained proceedings in the County Court without a proper basis, and failed to cooperate in the conduct of the proceeding to ensure costs incurred were reasonable and proportionate and to minimise delay. In addition, in contravention of the objectives of the LPUL to enhance the protection of clients of law practices, Eventus had consciously neglected its legal obligations and should not be entitled to the benefit of an extension of time.
Fourthly, Eventus has attempted to minimise the significance of its delay by disregarding the date of the last invoice sued upon and selecting a date of 24 May 2019, being the date upon which Ms Richens first acknowledged seeing the tax invoices sued upon. This was two days after the applicant sued the respondent for alleged unpaid legal costs.[19]
[19]T 70.
Fifthly, Eventus’ County Court proceeding contravenes s 194 of the LPUL because it was commenced before the lapse of 30 days from the date when Ms Richens was given a copy of the bill. The present application is therefore futile. The Court should reject the suggestion that that the original tax invoices were not validly issued. They were replaced with the 31 August 2020 bill of costs to reset the 12-month time limit. Eventus is seeking to change the case that it put to the County Court, but should be held to its pleaded case in the County Court with respect to the Agreement.
Sixthly, the County Court proceeding was commenced without a proper basis. Eventus has abandoned the basis of its County Court proceeding and now argued that its application for an extension of time to obtain a costs assessment should be granted because otherwise it will be out of pocket. But, Eventus’ claim was unlikely to succeed as it was commenced in contravention of s 194. Any loss Eventus suffers will be due to its failure to respond competently to the barrister’s action to recover fees, by seeking their taxation or seeking to have the barrister’s statutory demand set aside.
Seventhly, Eventus terminated the Agreement days prior to delivery of the Federal Court judgment to negate its conditionality.
Analysis
First, I consider that there is a valid application for such an order before the Court. I apply the analysis of Wood AsJ in DLA Piper Australia v Triclops Technologies Pty Ltd[20] that s 198(4) applies because the Supreme Court is the ‘designated tribunal’ and the Costs Court, comprising the Judicial Registrar, is the ‘costs assessor’ for the purposes of that section. The application to extend time can be made on an application by the costs assessor, and granted by the Supreme Court if it is satisfied that it is just and fair to do so. The costs assessor, being the Judicial Registrar, referred the issue to a Judge.[21] While Eventus issued the summons for taxation, it was the Judicial Registrar, as costs assessor, who referred to a Judge for determination the issue of whether the application for an assessment of legal costs should be dealt with after the 12-month period.
[20]DLA Piper Australia v Triclops Technologies Pty Ltd [2020] VSC 93 [41]-[43].
[21]Supreme Court (General Civil Procedure) Rules 2015 r 63.51.
The need to determine whether it is just and fair to deal with an application for a costs assessment after the 12-month period arises from s 198(4). In Rohowskyjv S Tomyn & Co,[22] John Dixon J suggested considerations relevant in the proper application of that provision. They were: the period of the delay; the reasons for the delay; whether the costs assessment would be futile; the extent of any prejudice to the respondent; and consideration of the right of one party to seek an assessment against the right of the other party to have that assessment conducted in the statutory period.[23]
[22][2015] VSC 511.
[23]Ibid [3].
I accept that the respondent has suffered prejudice because of Eventus’ delay in seeking a costs assessment. She lost the County Court trial date and faces an application to allow the assessment to occur out of time. The delay has had a personal effect on her and she has incurred considerable costs in the County Court proceeding.
However, I accept that s 198(3) gives a law practice 12-months to seek a costs assessment after the bill was given or a request for payment was made to the client. The fact that the law practice knew, or should have known, of the need to obtain an assessment of the legal costs does not remove its right to apply for an assessment until the end of the 12-month period and, beyond, if it makes a successful application under s 198(4). However, Eventus’ delay, considered in total, is relevant to whether it is just and fair to deal with the application for an assessment after the
12-month period.
Eventus’ application was made about 13 weeks from the expiration of the 12-month period fixed by s 198(3) but its application could have been made in the 12-month period. Once the application to vacate the County Court trial date was made and the affidavit referring potential defects in the Agreement was filed, 11 days passed before Eventus commenced the application.
Ms Richens was aware once the County Court proceeding was commenced that Eventus was pursuing payment by her of the disbursements it paid in connection with her Federal Court proceeding.
The fact that the costs to be assessed are disbursements is a significant factor in deciding this matter. The disbursements are mostly costs incurred by the legal practice in engaging a third party, a barrister, on behalf of the client. Eventus has paid those disbursements. They are unrelated to services rendered by the firm to the client and provided no direct benefit to the firm. Ms Richens’ case required the briefing of counsel and, in that sense, she has obtained the benefit as a result of the disbursements, even though her case did not succeed. The assessment will decide whether a valid costs agreement exists, whether the disbursements are fair and reasonable and, if not, will determine what legal costs should be paid.[24]
[24]LPUL (n 1) s 199(2).
I do not consider that I should refuse the application for an extension of time for the assessment because there are issues that will fall for the County Court to decide and which, if decided in Ms Richens’ favour, may result in the proceeding being dismissed. These include the consequence of the proceeding being continued after the non-disclosure issues were brought to Eventus’ attention in circumstances in which its solicitors’ explanation for that delay is unclear. The delay led to the trial date being vacated with resulting prejudice to Ms Richens. It is unclear why no application for an assessment was made at an earlier date, but both sides actively contested the County Court proceeding and Ms Richens did seek, although unsuccessfully, to bring a counterclaim for professional negligence.
I do not consider that the Judicial Registrar’s findings that Eventus, in its County Court proceeding, was in breach of the overarching obligations contained in the Civil Procedure Act prevents the application for an extension of time to seek the costs assessment. The usual sanction for a breach of the overarching obligations is an appropriate costs order,[25] and that is a matter for the County Court to decide.
[25]Yara Australia Pty Ltd v Oswal (2013) 41 VR 302, 311-12 [27].
Similarly, I do not consider that I should treat the application as futile because Ms Richens contends that Eventus’ County Court proceeding was commenced before the reissued invoices were given to her and therefore before the elapse of the 30 days after the date on which she was given the new bill or an itemised bill as required by s 194(2). Eventus does not concede that the County Court proceeding was commenced before the elapse of the 30-day period. It is appropriate for that issue to be determined in the County Court proceeding. So are disputes arising from the formation of the Agreement and, accordingly, whether clauses concerning payment of disbursements were incorporated into the Agreement.
Ms Richens submitted that the Costs Agreement sued on was void under s 178 because of contraventions of the disclosure obligations and that therefore Eventus is not entitled to sue to recover legal costs. But s 178 does not prevent legal costs being assessed and therefore is not an answer to this application.
I cannot determine in this application whether or not following an assessment of legal costs, Eventus’ County Court proceeding will succeed or fail. I therefore do not consider that I can decide that Eventus’ claim is futile.
On balance, whilst recognising the impact of delay, I am not persuaded that the prejudice suffered by Ms Richens is the decisive factor in determining this application. The ongoing nature of the dispute between parties about the Costs Agreement means that Ms Richens was aware that Eventus was seeking from her the disbursements that it had paid on her behalf. They were paid to enable her Federal Court case to be conducted. This is not a case where an application for an assessment is made a considerable time after a proceeding is completed and costs have been paid. I note that the presumption is that the law practice will have to pay any costs to which Ms Richens is entitled which are associated with the costs assessment.[26]
[26]LPUL (n 1) 204(2)(a).
Conclusion
For those reasons, I determine that it is just and fair for Eventus’ application for an assessment of legal costs to be dealt with after the 12-month period fixed by s 198(3) of the LPUL. I will refer the proceeding to the Judicial Registrar in the Costs Court for that assessment to be conducted.
The usual order as to costs would be that Eventus would be ordered to pay the costs, including a respondent’s costs, associated with it seeking an extension of time. Ms Richens represented herself so could only seek ‘out of pocket expenses’ or disbursements associated with opposing Eventus’ application. I will give the parties an opportunity to make submissions about costs if they so wish and will provide for that in the order I make.
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