Gallin v SC Lawyers Pty Ltd
[2020] VSC 80
•26 February 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PRACTICE COURT
S ECI 2019 3760
| LEAH TOMIA GALLIN | Applicant |
| v | |
| SC LAWYERS PTY LTD | Respondent |
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JUDGE: | Macaulay J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 26 February 2020 |
DATE OF RULING: | 26 February 2020 |
CASE MAY BE CITED AS: | Gallin v SC Lawyers Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2020] VSC 80 |
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LEGAL COSTS – Application for summons for taxation to be dealt with out of time - Section 198(4) of the Legal Profession Uniform Law 2014 – Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | No appearance | Self-Represented Litigant |
| For the Respondent | Mr P Kistler | Schetzer Constantinou |
HIS HONOUR:
SC Lawyers Pty Ltd, a legal practice, acted for the plaintiff, Ms Gallin, in family law proceedings for a period of about 12 months between April 2015 and 31 March 2016. By a summons for taxation filed 20 August 2019, Ms Gallin has applied to have the legal costs rendered by SC Lawyers taxed.
The last bill rendered by SC Lawyers was dated 31 March 2016. Section 198 of the Legal Profession Uniform Law 2014 (‘the Law’) provides that an application for taxation must be made within 12 months after the bill was given which, in this case, meant that an application needed to be made by 31 March 2017. Accordingly, Ms Gallin’s summons is nearly 29 months outside of the 12 month period within which it must have been brought.
Section 198 (4) provides that an application made out of time may be dealt with by the ‘costs assessor’ (in this jurisdiction, the Costs Court) if the ‘designated Tribunal’ (in this jurisdiction, the Court) determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application to be dealt with after the 12 month period. The question whether the application should be allowed out of time has been referred to me by the Costs Court pursuant to r 63.51 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘the Rules’).[1]
[1]Whether or not that was necessary need not be decided. Arguably, the application could be determined by an Associate Judge, preferably one who is not also the ‘cost assessor’. See: s 75(2) Constitution Act1975, s 111(1)(b) Supreme Court Act 1986 and the definition of ‘designated tribunal’ in s 6 Legal Profession Uniform Law.
For the reasons set out below, I am not persuaded that it is just and fair for the application to be dealt with after the 12 month period. Accordingly, Ms Gallin’s application for taxation will not be entertained.[2]
[2]Ms Gallin did not appear to prosecute her application under s 198(4). For reasons stated on transcript her emailed request for an adjournment was refused after the matter was stood down until 2:15pm on the day of hearing.
I will first consider the delay.
Between June 2015 and March 2016 a total of six invoices were sent by email to Ms Gallin. Payments against those invoices were made by her or on her behalf up until October 2015 at which time $18,710 was left outstanding. A further four invoices were rendered, leaving a final balance of $32,534 owing on 31 March 2016. It is that sum that is sought to be taxed.
SC Lawyers ceased to act for Ms Gallin in April 2016 after she informed them she could no longer afford their representation. About a month later SC Lawyers received a request for Ms Gallin’s file from another firm of solicitors, which they agreed to provide upon payment of the outstanding costs. The costs were not paid and the file was not provided. No complaint was made at that stage about SC Lawyers’ fees nor was any taxation sought.
The 12 month period for taxation came and went on 31 March 2017 without any taxation having been sought.
In March 2018, nearly 12 months later and 12 months beyond the time for Ms Gallin to apply to tax SC Lawyers’ costs, SC Lawyers issued a Magistrates Court proceeding against Ms Gallin claiming $34,668 (the final balance with interest). It took a number of attempts to serve Ms Gallin with the proceeding but she was ultimately served on 27 April 2018. This did not prompt her to seek taxation of the claimed fees. At that time a summons for taxation would have been 13 months out of time.
Not only did Ms Gallin not seek a taxation of the costs, neither did she enter any defence to the claim. On 24 May 2018 judgment was entered against her in default of defence. The following day (but before being sent the order) she asked SC Lawyers to send her a copy of the invoices and they were provided to her by email the same day. SC Lawyers sent her a copy of the Magistrates’ Court order on 29 May together with an invitation to try and resolve the matter. The parties then entered into some negotiations but they broke down on 28 June 2018.
Neither the entry of judgment against her nor the breakdown of negotiations with the solicitors prompted Ms Gallin to seek taxation of the costs, albeit out of time. Had she done so at the end of June 2018 she would have been 15 months out of time.
Instead, Ms Gallin applied for a rehearing of the Magistrates’ Court complaint. On 26 November 2018 the default judgment was set aside and a rehearing ordered. On 13 March 2019 the dispute did not resolve at a prehearing conference and a final hearing was scheduled for 22 August 2019. Ms Gallin was not prompted at that stage to seek a taxation of her costs. Had she done so she would have been 24 months out of time.
Two days before the scheduled final hearing of the Magistrates’ Court proceeding Ms Gallin filed a summons for taxation in this Court. She says she only learned of her right to do so when she “attempted to file a counterclaim”, although she does not say when that was. The following day -- that is the day before the scheduled Magistrates’ Court final hearing -- she served the summons for taxation on SC Lawyers. Her summons was by then 29 months out of time.
As a result, the Magistrates’ Court proceeding was adjourned to 4 February 2020. I was informed it has been further adjourned (to August 2020) pending the outcome of this application. Ms Gallin filed an affidavit in support of her application to have her summons heard out of time, SC Lawyers filed an affidavit in reply and Associate Justice Wood referred the question to the Practice Court. The chronology set out above is derived from the affidavits filed.
I now turn to the reasons for delay.
Ms Gallin puts forward a number of matters in her affidavit by way of explanation for her delay in issuing a summons to challenge the costs by means of a taxation. They are that:
(a) She did not know there were any outstanding costs until she received the Magistrates’ Court summons in March 2018 which, she added, was “nearly two years after a final notice I received in June 2016”. It is not clear what Ms Gallin meant by “final notice”. If by that she meant she received notice of the final amount outstanding then it amounted to an admission that she was aware there was money outstanding within 3 months of the final invoice. In any event, Ms Gallin did not explain why she was unaware that money was outstanding given that all invoices were emailed to her personally at the email account where all other communications seem to have been successfully received by her throughout the retainer of the legal practitioners. If it was true that she ceased her retainer of the firm because she could no longer afford their representation, it would be unlikely in my view that she did so while unaware of the costs she had incurred to that point and the amount she had paid.
(b) The Magistrates’ Court summons was “served in confusion” and she was not given enough time to respond. If “confusion” is advanced as the explanation for Ms Gallin not seeking a taxation or for allowing default judgment to be entered after being served with the Magistrates’ Court complaint, according to SC Lawyers’ evidence she nevertheless asked for and received the invoices about the time she found out about the default judgment (in May 2018) and thereafter, over the next month, engaged in negotiations about the outstanding costs. If that is an accurate account, I would infer that, through that process, she became well aware of the amount being claimed and the basis for the claim. Ms Gallin agrees that she did engage in negotiations on several occasions to resolve the dispute.
(c) As an unrepresented person she was not aware of her entitlement to apply for taxation of her costs, a matter she only learnt of when attempting to lodge a counterclaim in the Magistrates’ Court. It is of course possible that a lay person might remain unaware of their legal rights and, if that is so, that is a matter to take into account in favour of explaining some delay. But even if that was so, in this case Ms Gallin is not entirely absolved of responsibility for her state of ignorance. The evidence discloses that she was provided with a costs disclosure statement at the outset of her engagement of the firm. Assuming that it was a compliant disclosure statement, that statement would have set out her entitlement to obtain the assistance of the local regulatory authority in the event of a dispute about legal costs: s 174(2)(a)(iv) of the Law. In any event, whenever it was that she discovered the amount of costs that was outstanding (whether that be in 2016, 2017 or 2018) she was entitled to get legal advice about her rights to have the bill taxed. Even if she could not afford paid advice, free community legal services, or the Law Institute of Victoria, would freely give that type advice had she sought it. Consumers of legal services are expected to take some responsibility for themselves in balancing rights and obligations between themselves and the providers of legal services who are waiting for their bill to be paid. The 12 month period that is allowed for consumers to commence a taxation reflects Parliament’s general view of that balance. If a client fails to get advice within that time, and continues failing to seek or obtain advice thereafter, as a general proposition their state of ignorance about their rights must, over time, progressively diminish in strength as a reasonable explanation for them delaying in initiating a taxation of the costs.
In summation, on the factors of delay and the reasons for it, there has been a delay of about 29 months beyond the 12 month period allowed for bringing a summons for taxation. That is nearly 2 ½ times the time Parliament decided was generally to apply. It is a very long delay. The reasons advanced for that delay have some significant gaps and inconsistencies, and overall are not particularly persuasive.
The question is whether it is ‘just and fair’ to allow the summons to be dealt with after that period of delay, in the context of the explanation for it. In making that assessment I also take into account other matters that constitute the relevant circumstances in which my discretion is to be exercised.
Ms Gallin says (and I summarise): the firm ignored her pleas and led her into unnecessarily lengthy, costly and excessively drawn out proceedings; the firm should have ceased acting when they held no money in trust to cover her fees; she was “excluded” from discussions about fees because the firm held them with her father who was paying them; she disputes the quality of the legal service that was provided; the fees were in excess of what was estimated; she is facing extreme financial hardship, worsened since her father’s music school business (in which she worked) has gone into liquidation; and she has suffered extreme stress as a result of her arduous family law custody battle which took up “years of her life”.
Apparently, Ms Gallin has filed a defence, and possibly a counterclaim, in the Magistrates’ Court proceeding. Excepting the question of the ‘reasonableness’ of the fees charged for work actually performed, which is a matter properly the subject of taxation, some of the arguments which she raises are matters she is likely to be able put forward in defence of SC Lawyers’ proceeding and is not shut out from doing so by not being able to pursue a taxation of the bill. Other matters have some bearing on my discretion, such as the distractedness she might have suffered due to her years of family law battle (and her underlying family problems), and her apparent parlous financial predicament. That said, financial hardship is not in itself a justification to seek or be granted a more lenient taxation of costs.
But these considerations only stretch so far and are to be counterbalanced against the firm’s commercial entitlement to be paid fees for performing a professional service in a reasonably timely way. It has now been waiting just under four years.
In my view it is not just and fair that Ms Gallin be permitted to pursue a taxation of SC Lawyers’ costs 29 months outside of the time allowed for her to do so.
The application under s 198(4) of the Law is dismissed. It follows that the proceeding commenced by summons for taxation should also be dismissed.
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