Gray v Lavan Legal - [2010] WASC 144

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: GRAY -v- LAVAN LEGAL [2010] WASC 144

CORAM: MASTER SANDERSON

HEARD: 17 MAY 2010

DELIVERED : 17 MAY 2010

PUBLISHED : 17 JUNE 2010

FILE NO/S: CIV 3094 of 2009

BETWEEN: BRUCE NATHANIEL GRAY
Plaintiff
AND
LAVAN LEGAL
Defendant

Catchwords:

Taxation of costs - Application by client for an extension of time to tax practitioner's bills - Turns on own facts

Legislation:

Nil

Result:

Time extended

Category: B

Representation:

Counsel:

Plaintiff: Mr W A D Edwards
Defendant: Mr I R Freeman

Solicitors:

Plaintiff: Talbot Olivier
Defendant: Lavan Legal

Case(s) referred to in judgment(s):

Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112

MASTER SANDERSON: This was the plaintiff's application for an extension of time within which to have certain bills of costs taxed. After hearing argument I indicated I would grant the necessary extensions. I indicated I would publish reasons for doing so. These are those reasons.
The defendant acted for the plaintiff in proceedings brought against him in the Federal Court of Australia. The trial lasted for some 50 sitting days between March and July of 2007. On most of those days, the court sat extended hours. The transcript of the trial ran into 4,568 pages. There were more than 1,000 documentary exhibits. During the course of the action, 19 interlocutory judgments were published. French J (who was then a judge of the Federal Court) published his judgment on 17 April 2008. The judgment has 1,619 paragraphs. The trial involved claims over a number of inventions and patents. The subject matter of the dispute was the entitlement of the present plaintiff to retain in excess of 13 million shares in the issued capital of Sirtex Medical Ltd, a company listed on the Australian Stock Exchange.
The matters at issue were very complex. The University of Western Australia had a lot riding on the case. Under question was its model for funding research and participating in the results of that research. Dr Gray was spectacularly successful. The University's claims were dismissed. Inevitably, the University appealed. The appeal lasted five days. Once again, Dr Gray was successful. Doubtless, the sterling efforts of his solicitors played a big part in his success in the action and on appeal.
Between February 2007 and June 2009, the defendant rendered Dr Gray bills of just over $4.8 million. As I have said, this was a complex case and Dr Gray was completely successful. But even in this day and age, it has to be said, solicitors' fees which amount to more than $4.8 million are significant.
The application is brought pursuant to s 229(a) of the Legal Practice Act 2003 (WA) (the Act). There was no disagreement between the parties on that issue. The parties also agree the principles to be applied were those set out in Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112 [101]. Master Newnes (as his Honour then was) said at [101]:
[T]he proper exercise of the discretion includes consideration of the following factors:
1.the purpose of the relevant provisions of the Act is to protect a client against excessive charges by a practitioner and to enable a client to be satisfied that bills of costs are not excessive, whilst imposing time limits to prevent a client from unfairly taking advantage of the provisions to delay the obligation to pay proper costs, and to avoid frivolous objections;
2.the reasons for the delay;
3.whether there are valid reasons for believing that a refusal to enlarge time might result in injustice to the client;
4.whether there is evidence suggesting that the bill might be excessive;
5.the nature and degree of prejudice to the practitioner;
6.the practitioner's reasons for opposing the enlargement of time (if it is opposed), it being of importance that as an officer of the Court the practitioner be seen to be acting honestly, ethically and with proper motives and not acting merely to prevent taxation of the bill taking place.
The decision makes it plain that these factors are to be considered in the exercise of the discretion which is contained in the Act. That is not to say that other matters might not be considered - the Monopak decision does not, and never could, set out a code applicable to all cases. But the decision has been consistently followed and it does provide a good guide as to how applications of this nature are to be determined.
The first of the factors seems to require a general assessment of the merits or otherwise of the application. Given the amount of the bills, it is not perhaps surprising the plaintiff seeks to have them taxed. Equally, the time that has passed, the complexity of a taxation for the amount of these bills, and the demands preparing for taxation would place on the solicitors, suggest resisting the application is not unreasonable. The objections cannot be seen as frivolous. Consideration of this matter did not affect my judgment one way or the other.
It was the defendant's position there was no reason for the delay in the plaintiff seeking taxation of the various bills of costs. This was the prime ground upon which the defendant resisted this application. Each of the bills rendered had indorsed on it a note to the effect the plaintiff could seek taxation of the bill within 30 days of its receipt. The plaintiff is a sophisticated man, experienced in commerce and well used to dealing with solicitors. In these circumstances, it was submitted by the defendant there could be no valid explanation for the delay and this was sufficient reason to refuse the application.
The plaintiff's position was that he long harboured concerns about the amount he was being charged. His evidence was to the effect he did not question the bills or insist they be taxed because he was concerned the defendants would stop acting for him. He says in a matter as complex as the Federal Court litigation, he simply could not have afforded to have the defendant retire because it was impractical to have anyone else pick up the litigation. So he bided his time and waited until the matter was concluded, then he raised the issue of taxation.
The plaintiff was cross‑examined on his evidence. Based upon what is contained in his affidavit and on the way he answered questions in cross‑examination, I was satisfied the plaintiff harboured a real belief that to question the various bills as and when they were rendered, might have led to the defendant ceasing to act for him. I also accept he had a genuine belief if the defendant did stop acting, his position would be prejudiced. In making these findings of fact, I am in no way suggesting what the plaintiff feared would have come to pass. But I do accept the state of mind of the plaintiff explains why he did not act.
It should also be noted the plaintiff approached his present solicitors in April 2009. This application was not lodged until December of that year. So there was further delay which is really unexplained. It is not difficult to imagine that a solicitor confronted with a client who had been rendered bills of more than $4.8 million would have quickly turned his mind to the issue of taxation. Perhaps given the complexity of the situation, it took the solicitors a while to work out whether an application for an extension of time to allow taxation was justified. In any event, no explanation was provided.
On balance, the delay is a factor, and a significant factor, against an extension of time being granted. While I accept the plaintiff's explanation for the delay, it is hardly an explanation which does him much credit. The delay after he consulted new solicitors is unexplained and significant. Taken in the overall then, consideration of the length of the delay and the reasons for the delay, are factors which favour the defendant.
Factors three and four can be taken together. If there is evidence of overcharging, a refusal to enlarge time might result in an injustice to the plaintiff. Remarkably enough, this is a case where there appears not to be any costs agreement between the plaintiff and the defendant. There is evidence the plaintiff entered into a costs agreement with the firm of Bennett & Co. That firm either merged with, or was subsumed into Lavan Legal. Whether or not the costs agreement entered into between the plaintiff and Bennett & Co would cover the work undertaken by Lavan Legal is a moot point. It is also a point of huge significance in the context of a taxation. During the course of the hearing I suggested to the parties I should resolve the issue. Both parties agreed that would be inappropriate and they were probably right. Counsel for the defendant submitted I ought to approach the matter on the basis there was a real doubt as to whether or not there was any costs agreement between the plaintiff and the defendant. Once that concession was made - and it was properly made - there must be a real question as to whether or not there has been overcharging. If the defendant is confined to the scale, it is difficult to imagine bills anything like those rendered could be justified. Of course, I am not making any determination on that issue. That is for the taxing officer. Nor am I suggesting the defendant has in any way engaged in sharp practice. What they have done is charge the plaintiff what they would charge any client under their usual costs agreement. But the fact remains, there must be a real doubt as to whether or not on taxation the amount of the bills could be maintained.
During the course of argument and in his submissions, counsel for the plaintiff highlighted some particular charges which it was alleged were excessive. In my view, in any case, there is limited value in taking that approach. But in a case such as this, to pick out particular entries among thousands of entries in the time costing records, is inappropriate and unhelpful.
It must be said then, that a refusal to enlarge time might render an injustice to the plaintiff because there is evidence of overcharging. This is a factor which favours the exercise of discretion in the plaintiff's favour.
There is undoubtedly a degree of prejudice to the practitioner. This might be called general prejudice. Significant time has passed since these bills were rendered and persons involved in the action may have left the firm or their memories may have dimmed. The defendant will be forced to go back through voluminous records for the purposes of taxation. All of that can be accepted and is a factor in any case where an extension of time is granted. The prejudice is perhaps maximised with bills as large as these. But the defendant did not point to any particular prejudice it would suffer if time was extended. In other words, there was no suggestion one of the main persons involved in the case who would be essential if taxation was to proceed was either dead or had moved overseas. There was no suggestion records had been lost or there was any practical difficulty standing in the way of bills being produced. So while there was evidence of general prejudice, there was no evidence of particular prejudice.
Consideration of this question did not influence my decision one way or the other. The general prejudice which I accept would be visited on the defendant was not such as to warrant a refusal to extend time.
Finally, I accept the defendant had good reasons for opposing the extension. They acted for the plaintiff for many years against a well‑resourced opponent with great success. The defendant clearly took pride in the work it did and was entirely justified in doing so. It had rendered bills which were paid by a sophisticated client who was advised of his rights to seek taxation if he wished to do so. The defendant was now confronted with the daunting task of taxing its bills. In my view, it acted honestly, ethically and with proper motives in opposing this application. The defendant was not acting merely to prevent the taxation of the bill taking place.
Having said all of that, consideration of this question did not influence my decision one way or the other. The way the test is couched, it would only be if some improper motive was apparent from the evidence it could weigh in the plaintiff's favour. Having determined the defendant was acting reasonably, it could not be said consideration of the issue operated to the benefit of either party.
In the end, it came down to a consideration of the delay and the reasons for the delay on the one hand and the possible excess charging and the consequent injustice to the plaintiff on the other. Balancing these two factors, I was satisfied the extension ought be granted. The delay, although significant, was at least partly explained and I accept the explanation for that delay. Against that, there is the amount of the bills and the possibility the defendant could only charge under the scale. While the position was finely balanced, I am satisfied the proper course was to extend the time within which to have these bills taxed.
I will make orders accordingly and hear the parties as to costs.