Harrison v Hocking
[2000] WASC 188
•28 JULY 2000
HARRISON -v- HOCKING [2000] WASC 188
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 188 | |
| Case No: | CIV:1313/2000 | 19 & 20 JUNE, 19 JULY 2000 | |
| Coram: | HASLUCK J | 28/07/00 | |
| 41 | Judgment Part: | 1 of 1 | |
| Result: | Application for review allowed | ||
| PDF Version |
| Parties: | JOANNE HARRISON GREGORY NORMAN HOCKING |
Catchwords: | Legal Practitioners Act 1893 Review of costs agreement Issue concerning enlargement of time Criteria applicable upon review of costs agreement |
Legislation: | Attorneys and Solicitors Act 1729 (2 GEO II C23) Attorneys and Solicitors Act 1870 Inheritance Act Legal Practitioners Act 1893, s 59, s 65(3)(a) Rules of the Supreme Court 1971 Solicitors Act 1843 (6 and 7 Vict C73) Supreme Court Act 1935 |
Case References: | B W Duckham & Co v The Beneficiaries of the K Stammers Family Trust, unreported; SCt of WA (Templeman J); LPA 8 of 1998; 14 May 1998 Brown & Ors v Talbot & Olivier (1993) 9 WAR 70 Clare v Joseph [1907] 2 KB 369 Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 Dala Transport v Corrs Chambers Westgarth, unreported; SCt of WA (Registrar Watt); LPA 89 of 1999; 25 February 2000 Giampiccolo & Anor v Valenti (1983) FLC 91-344 Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983 Harris v Caladine (1990) 172 CLR 84 Harrison v Tew [1990] 2 WLR 210 Hay v Butler & Crooks (A Firm) (1992) 7 WAR 333 In re Stuart, Ex parte Cathcart [1893] 2 QB 201 Jovetic v Stoddart & Co (1992) 7 WAR 208 L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 Larmont v Bruce Duncan Russell & Associates, unreported; SCt of WA (Bredmeyer M); Library No 940419; 12 August 1994 Lawecki v Marcel Kalfus & Co (1985) FLC 91-644 Martin-Smith v Woodhead [1990] WAR 62 Portch v Franconi, unreported; SCt of WA; Library No 940174; 31 March 1994 Posgold (Big Bell) Pty Ltd & Ors v Placer (Western Australia) Pty Ltd & Ors [1999] WASCA 217 Pryles & Defteros v Green [1999] WASC 34 Reid v Howard (1995) 184 CLR 1 Retail Equity Pty Ltd & Ors v Murie & Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994 Stoddart & Co v Jovetic (1993) 8 WAR 420 Webb v Malcolm J Bateman & Co, unreported; SCt of WA (Franklyn J); Library No 6305; 27 May 1986 Ilic v Michael Radin & Associates, unreported; SCt of NSW (Finlay J); BC9102656; 18 December 1991 In re A Solicitor [1956] 1 QB 155 In re Rudolph and a Solicitor (1978) FLC 90-420 McInnes v Twigg (1993) FLC 92-345 O'Brien v Trustees of Western Australian Ltd as Executor of the Estate of Ronald John O'Brien (Dec) & Anor [2000] WASC 33 Ray v Newton [1913] 1 KB 249 Re Central Queensland Developments Pty Ltd [1988] 2 Qd R 476 Re Henderson, Re Cooper, Re Gilshenan & Luton, unreported; SCt of Qld (White J); BC9202379; 16 October 1992 Re Maher and Messrs Stedman, Cameron, Meares and Hall (198) FLC 90-889 Re Simmons and Politzer [1954] 2 QB 296 Re Thompson, Ex parte Baylis [1894] 1 QB 462 Sadd v Griffin [1908] 2 KB 510 Vilensky (Previously Castiglione Bowen & Co) v Banning & Anor, unreported; FCt SCt of WA; Library No 960325; 20 June 1996 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
GREGORY NORMAN HOCKING
Defendant
Catchwords:
Legal Practitioners Act 1893 - Review of costs agreement - Issue concerning enlargement of time - Criteria applicable upon review of costs agreement
Legislation:
Attorneys and Solicitors Act 1729 (2 GEO II C23)
Attorneys and Solicitors Act 1870
Inheritance Act
Legal Practitioners Act1893, s 59, s 65(3)(a)
Rules of the Supreme Court 1971
Solicitors Act 1843 (6 and 7 Vict C73)
Supreme Court Act 1935
Result:
Application for review allowed
(Page 2)
Representation:
Counsel:
Plaintiff : Ms P M Edward
Defendant : Mr D J Garnsworthy
Solicitors:
Plaintiff : Murie & Edward
Defendant : Friedman Lurie Singh
Case(s) referred to in judgment(s):
B W Duckham & Co v The Beneficiaries of the K Stammers Family Trust, unreported; SCt of WA (Templeman J); LPA 8 of 1998; 14 May 1998
Brown & Ors v Talbot & Olivier (1993) 9 WAR 70
Clare v Joseph [1907] 2 KB 369
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Dala Transport v Corrs Chambers Westgarth, unreported; SCt of WA (Registrar Watt); LPA 89 of 1999; 25 February 2000
Giampiccolo & Anor v Valenti (1983) FLC 91-344
Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983
Harris v Caladine (1991) 172 CLR 84
Harrison v Tew [1990] 2 WLR 210
Hay v Butler & Crooks (A Firm) (1991) 7 WAR 333
In re Stuart, Ex parte Cathcart [1893] 2 QB 201
Jovetic v Stoddart & Co (1992) 7 WAR 208
L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235
Larmont v Bruce Duncan Russell & Associates, unreported; SCt of WA (Bredmeyer M); Library No 940419; 12 August 1994
Lawecki v Marcel Kalfus & Co (1985) FLC 91-644
Martin-Smith v Woodhead [1990] WAR 62
Portch v Franconi, unreported; SCt of WA; (Seaman J) Library No 940174; 31 March 1994
Posgold (Big Bell) Pty Ltd & Ors v Placer (Western Australia) Pty Ltd & Ors [1999] WASCA 217
Pryles & Defteros v Green [1999] WASC 34
Reid v Howard (1995) 184 CLR 1
(Page 3)
Retail Equity Pty Ltd & Ors v Murie & Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994
Stoddart & Co v Jovetic (1993) 8 WAR 420
Webb v Malcolm J Bateman & Co, unreported; SCt of WA (Franklyn J); Library No 6305; 27 May 1986
Case(s) also cited:
Ilic v Michael Radin & Associates, unreported; SCt of NSW (Finlay J); BC9102656; 18 December 1991
In re A Solicitor [1956] 1 QB 155
In re Rudolph and a Solicitor (1978) FLC 90-420
McInnes v Twigg (1993) FLC 92-345
O'Brien v Trustees of Western Australian Ltd as Executor of the Estate of Ronald John O'Brien (Dec) & Anor [2000] WASC 33
Ray v Newton [1913] 1 KB 249
Re Central Queensland Developments Pty Ltd [1988] 2 Qd R 476
Re Henderson, Re Cooper, Re Gilshenan & Luton, unreported; SCt of Qld (White J); BC9202379; 16 October 1992
Re Maher and Messrs Stedman, Cameron, Meares and Hall (198) FLC 90-889
Re Simmons and Politzer [1954] 2 QB 296
Re Thompson, Ex parte Baylis [1894] 1 QB 462
Sadd v Griffin [1908] 2 KB 510
Vilensky (Previously Castiglione Bowen & Co) v Banning & Anor, unreported; FCt SCt of WA; Library No 960325; 20 June 1996
(Page 4)
1 HASLUCK J: The plaintiff, Joanne Harrison, has applied for relief under the Legal Practitioners Act1893 against the defendant, Gregory Norman Hocking, who is a legal practitioner. She seeks an order that the time for giving a written notice to the defendant requiring him to submit certain accounts to the taxing officer of the Supreme Court be enlarged. Further, the plaintiff seeks an order that a costs agreement entered into between the plaintiff and the defendant on or about 3 February 1997 be reviewed pursuant to s 59 of the Legal Practitioners Act.
2 These issues were brought before the court by way of originating summons. The plaintiff filed and served two affidavits sworn by herself in support of her application, being a first affidavit sworn 16 March 2000 and an affidavit in reply sworn 25 May 2000. The defendant relied upon an affidavit sworn by himself on 11 May 2000. The parties did not apply for or obtain orders for cross-examination of the deponents, notwithstanding various differences between them as to the facts of the matter.
The Costs Agreement
3 In January 1997 the defendant was carrying on business as a solicitor at Midland in the metropolitan area of Perth. On 3 January 1997, David Middleton of Parkerville died. The deceased's Will conferred benefits upon certain members of his family, but not upon the children of his second marriage, namely, John Middleton, Karen Whittred and the plaintiff, Joanne Harrison. Two weeks later, on 23 January, Karen obtained some preliminary advice from the defendant about the matter and was charged $20 for the consultation. On 28 January, John, Karen and the plaintiff attended on the defendant at his office with a view to obtaining more detailed advice. According to the plaintiff's first affidavit, they were advised that they could apply to the Supreme Court for an order under the Inheritance Act. They were also told that, for the time being, they should merely instruct him to lodge a caveat in the probate registry to prevent the deceased's third wife from obtaining a grant of probate. This would oblige the widow to negotiate a settlement, rather than incur all the costs of a Supreme Court action.
4 According to the plaintiff, the defendant said that his costs would not be of any great significance and could be split three ways between them. He said that a costs agreement would have to be signed. The plaintiff could not recollect any discussion concerning the scales of the Supreme Court or that the costs might be less in the absence of a costs agreement. The defendant did not explain that they had the right to seek itemisation
(Page 5)
- and taxation of his bills or what these terms meant. The plaintiff says that the defendant "was not instructed in respect of any Supreme Court proceedings but merely to lodge a caveat and to attempt to negotiate a settlement."
5 The plaintiff said in her affidavit that at the time of instructing the defendant she told him that she was a sole parent with two small children and that she was solely reliant upon Social Security. She could not afford legal costs. She received an assurance that his legal costs for lodging a caveat and negotiating a settlement would be minimal.
6 The defendant presented a slightly different picture of the initial consultation. He advised the clients that the merits of their respective cases differed, but was told that the clients would share the costs involved in pursuing the claims equally. He was instructed to lodge a caveat to prevent probate being granted, as the clients queried the validity of the Will, and to attempt to negotiate a settlement under the Inheritance Act before commencing any litigation. The clients were told that, as litigation was quite likely, arrangements had to be made concerning legal costs because Greg Hocking & Associates would have to "carry" the costs of the litigation until the claims were resolved.
7 The defendant said in his affidavit that it was his invariable practice (which he followed on this occasion) to say why he was asking that a costs agreement be signed and to tell the clients that, unless they signed a costs agreement, he was required to charge them in accordance with the appropriate costs scale. He explained that his costs were based on the amount of time he took in doing their work and he specified the hourly rate, which at that time was at $175 per hour or part thereof. He did not tell the clients that the costs which he could legally seek from them might be less in the absence of a costs agreement because this was explained in a "costs letter" which accompanied the costs agreement sent to the clients.
8 The defendant said further that at the first consultation he did not go into detail about the practice of charging clients in units of six minutes, or go into the full details of the costs arrangements. These matters were set out in the costs letter and the costs agreement itself, which were posted to each of the three clients separately. This was done to allow them time to read, consider and take advice about the costs arrangements away from his office, and to seek independent advice if they wished to do so. He did not discuss matters as to itemisation and taxation of his bills at the first consultation. He said, further, that it was his usual practice to issue a "letter of engagement" to clients.
(Page 6)
9 It remained a live issue at the hearing before me as to whether the plaintiff received a costs letter from the plaintiff explaining the costs arrangements. It was common ground that the plaintiff received a letter of engagement from the defendant dated 3 February 1997, referring to the discussion at the initial consultation and including some reference to the costs agreement. This letter was accompanied by a costs agreement. The plaintiff returned the costs agreement to the defendant, having signed the same in the presence of her brother. She did not contact the Law Society or seek independent advice or seek any further information from the defendant as to the effect of these documents. She said in her first affidavit that "at the time of signing and returning the costs agreement to the defendant I believed that it related only to the work he would have to do in lodging a caveat and negotiating a settlement as this was all he had been instructed to do."
10 The letter of engagement dated 3 February 1997 was addressed to the plaintiff at 2 Wilcox Street, Chidlow and the contents of the letter are set out beneath the heading "Inheritance Act Claim". The defendant confirmed that a caveat had been lodged and confirmed that he would represent the plaintiff generally in pursuing a claim in respect of her late father's estate. The defendant said, further, "This may include commencement of an action in the Supreme Court if an agreement with the beneficiaries cannot be negotiated." The letter went on to say that the firm's costs would be charged at $175 per hour or part thereof and reference was made to the firm's standard costs agreement being enclosed "for your perusal and, if acceptable, your signature." He anticipated that the claim would be successful as a result of either court action or negotiations and that legal costs would be recovered from the estate. The letter concludes by saying:
"Your satisfaction with the services we have provided is important to us and you can be assured we will seek to resolve any complaint you may have quickly and fairly.
If, however, you are still not satisfied with our handling of your matter or in resolving any complaint you have certain rights under the Legal Practitioners Act.
To obtain further information as to your rights you can contact the Law Society of Western Australia on (09) 221 3222.
If you have any questions concerning the arrangements made for the firm to act for you please contact the writer."
(Page 7)
11 The costs agreement commences by saying that the client retains the firm to act on the client's behalf as the client's solicitor in relation to the client's legal matter or matters. The agreement relates to work done on or after the date mentioned in the schedule being, in this case, 28 January 1997. The exact nature of the client's legal matter or matters is not described. The client - who is named as Joanne Harrison - agrees to pay to the firm professional fees calculated in accordance with the scale and the terms and conditions contained in the agreement. The scale includes reference to time spent by Greg Hocking doing work requiring the skill of a solicitor at the rate of $175 per hour ($17.50 per six-minute unit) and time spent by non-professional employees doing work not requiring the skill of a solicitor at the actual cost charged to the firm for such services. Reference is also made to the basis upon which photocopying and disbursements will be charged. The agreement includes authority for the law firm to deduct from any moneys received on the client's behalf such amounts as are necessary to pay the firm's costs and disbursements.
12 Clause 12 of the costs agreement is in these terms:
"12. The client acknowledges and confirms by signing this agreement that:
(a) the client has been advised that independent legal advice (as to the legal and practical nature and effect of this agreement and as to whether or not it is in the interests of the client to enter into it) is available from other solicitors, and that it is in the interests of the client to obtain such advice before entering in to this agreement;
(b) each account rendered shall be regarded as a final account for work done as described in the account and any information included in the account setting out the details of amounts owing in respect of previous accounts shall not form part of the later account;
(c)the client has read and understood this agreement and the letter which accompanies it before signing this agreement."
(Page 8)
- engagement, a "costs letter" dated 3 February 1997 was also posted to each of the clients at their residential addresses in accordance with his usual practice. He had located an office copy of the costs letter addressed to Karen, but was unable to locate an office copy of the same letter directed to the plaintiff.
14 The defendant said that shortly after he commenced acting for the clients they instructed him not to send copies of the same correspondence to each of them, but that Karen would act as the recipient of correspondence and other documents and she would communicate it to the plaintiff and John. Apart from this general observation, however, the defendant did not provide any specific explanation as to how it might have come about that no copy of a standard form costs letter to the plaintiff is to be found on his file. I note in passing that when one compares the letter of engagement received by the plaintiff (mentioned above) with the costs letter received by Karen Whittred (mentioned below), there is a considerable degree of overlap. Both letters include reference to a costs agreement and to the inheritance claim, and it is thus immediately apparent that if a costs letter was sent to the plaintiff in addition to the letter of engagement, substantial amendments would have had to be made to the former, otherwise the recipient would have been left in a state of confusion. On the other hand, if the only letter received by the plaintiff was the letter of engagement, as the defendant's file copies suggest, then the position would be quite clear to the recipient, although, on that scenario, the advice given to the plaintiff concerning the costs agreement would have been less extensive than the advice received by her sister per the costs letter.
15 The costs letter dated 3 February 1997 to Karen Whittred at 1 Jane Street, Darlington is lengthy and states that the enclosed costs agreement confirms the basis upon which the firm, if retained, will charge for work done on behalf of the client. The letter says that each case is unique and costs will be affected by the complexity of the case. It says that as the basis of the firm's charges is different to and may exceed those provided by scales of costs, the costs agreement is enclosed for consideration. The client is invited to telephone the defendant and discuss any queries at no cost. The letter says that "in the case of your Inheritance Act claim we do not require any prepayment and you will be billed at the conclusion of the matter or if you cease instructing this firm in the matter." I have already noted that this letter seems to echo some of the matters addressed in the concluding passages of the letter of engagement dated 3 February 1997 sent to the plaintiff, although, admittedly, in the letter to Karen Whittred,
(Page 9)
- there is a greater emphasis upon obtaining independent advice if such a step is thought necessary.
The Progress of the Claim
16 The defendant in his affidavit then described the progress of the claim. On 16 April 1997, the plaintiff and Karen attended upon him at his office concerning the conduct of the matter. On 5 May, he received a call from David Ross, one of the beneficiaries under the Will, who had engaged Dwyer Durack to act for him in a Supreme Court action, claiming that the deceased had made a prior mutual Will which favoured David Ross, his sister Maureen and the defendant's three clients. The defendant obtained instructions from his clients that they join as plaintiffs in the proposed mutual Wills action.
17 By letter dated 25 July, Dwyer Durack recommended that the Inheritance Act application be commenced, notwithstanding the mutual Wills action. The defendant met with his clients and took further instructions, this being confirmed by a letter to the plaintiff dated 8 August 1997. This later led to the plaintiff attending status conferences concerning the mutual Wills action and the inheritance action and to correspondence and telephone conversations about such matters and about mediation. The defendant relies upon these events in saying that the plaintiff was an active participant in the conduct of the litigation and was kept fully informed as to the progress of all matters. It is apparent from the affidavits on both sides that there was no further discussion concerning costs or an entry into any further costs agreement.
18 The defendant eventually negotiated a settlement of the mutual Wills action and the inheritance action. By letter dated 21 May 1998, the defendant wrote to the plaintiff confirming that the matter had been settled "on terms which are acceptable to you." The letter went on to say that as the defendant's instructions to date were complete, his firm was taking this opportunity to enclose an account for work done.
19 The account accompanying the letter bore the heading "Middleton - Whittred - Harrison" with the details of professional costs being set out in a detailed form, commencing with the conference on 28 January 1997 and concluding with a letter to the defendant's three clients on 21 May 1998. Reference is made to a standard charge rate at $175 per hour ($17.50 per unit). The amount shown as due and payable in respect of both professional costs and disbursements is $16,860.30. A final entry on the bill anticipates that this liability will be shared equally between the three
(Page 10)
- clients, with the result that the amount to be paid by the plaintiff was $5,620.10.
20 The 21 May letter contains no passage suggesting that the client has a right to have the bill either itemised or taxed. There is nothing to this effect on the 21 May account. The plaintiff said in her affidavit that, to the best of her recollection, she never, at any time, received anything from the defendant advising her of her right to have his bill either itemised or taxed.
21 The defendant disputed this by raising for consideration a number of related matters. He said that the 21 May account is a true copy of the account, except that the first page of the account has been omitted. He said that it was his practice, without exception, to issue accounts to clients with a "notice letter" addressed to the client stating the date of the account and containing the wording which in his belief complied with s 65(3)(a) of the Legal Practitioners Act.
22 The defendant went on to say that his office file contained a copy of a notice letter dated 21 May 1998 accompanying the account. He said that this was posted to each of his three clients at their residential address. He said that only an office copy of the notice letter addressed to Karen Whittred was retained on the file, as the notice letter was, in all other respects, identical to the copy sent to her brother and to the plaintiff. He said, further, that he was not aware of any occasion during the years he used this system that an account was issued to a client without a notice letter containing the prescribed wording. To the best of his knowledge, information and belief, the standard notice and the 21 May account was addressed and posted to the plaintiff.
23 The notice directed to Karen Whittred, being the defendant's file copy of the document in question, is on the letterhead of Greg Hocking & Associates and is in respect of a statement of account as at 21 May 1998. It is material to note that the document is headed "Middleton - Whittred - Harrison". The notice reads as follows:
"Within 30 days of receipt of this account you may require us by notice in writing to provide to you an itemised account of the costs the subject of this account.
Within 30 days of receiving an itemised account, you may require us by notice in writing to submit the account to the taxing officer of the Supreme Court of Western Australia for
(Page 11)
- review of the account of costs charged to you, the subject of this account.
If you have any questions about the account please do not hesitate to contact the writer during business hours on 250 2225.
Thank you for instructing this firm in the matter."
24 Negotiations between the solicitors acting for the parties continued during the latter half of 1998 without the proposed deed of settlement being executed by the parties. By letter dated 22 September 1998, the defendant informed his clients, via Karen, that the firm of Greg Hocking & Associates had merged with the firm Friedman Lurie Singh with effect from 7 September 1998 and that henceforth the defendant would be employed as an employee of Friedman Lurie Singh.
25 The defendant said in his affidavit that on the weekend of Saturday, 5 September 1998 and Sunday, 6 September 1998, he prepared final accounts for clients of Greg Hocking & Associates immediately prior to his commencement of employment with Friedman Lurie Singh on 7 September 1998. He prepared an account dated 4 September 1998 for his three clients in respect of the mutual Wills action and the inheritance action which was in identical terms except for the names and addresses of the three addressees. He said that he prepared the 4 September account on his personal computer at home and retained only one office copy, which happened to be John Middleton's account. Middleton's address was the last address typed in, as the defendant had already printed the accounts for Karen and the plaintiff. This was done to save time and paper. He noted in handwriting on the first page of the office copy that copies had been sent to Karen and the plaintiff. Copies of the 4 September account personally addressed to each of the clients at their residential address were posted by him shortly after preparing the September account.
26 The office copy of the notice letter just mentioned is, again, on the letterhead of Greg Hocking & Associates and is in the format mentioned earlier, including the heading "Middleton - Whittred - Harrison". It is addressed to Mr J Middleton and purports to be a statement of account as at 4 September 1998. The body of the document is in the same terms as the 21 May notice sent to Karen Whittred and allows for the client to request an itemised account within 30 days. The account itself resembles the earlier account of 21 May as to layout, but on this occasion the entries commence with a telephone call from the plaintiff on 27 May 1998 and conclude with a letter sent to Karen Whittred on 7 August 1998. The total
(Page 12)
- amount said to be now due and payable is $18,989.33, which is inclusive of the sum of $16,860.30, being the outstanding account dated 21 May 1998. The amount said to be due and payable by the plaintiff, on the basis that the costs were to be shared equally, was the sum of $6,329.78.
27 The plaintiff said in her affidavit that, to the best of her recollection, she never received the 4 September account. She only became aware of it by reason of her brother, John Middleton, telephoning her and telling her he had received it from the defendant. The first occasion on which she actually sighted the 4 September account was in mid-February 2000, when a copy of it was provided to her present solicitor. She said that she had made a careful search of all correspondence forwarded to her by the defendant, but could not locate any copy of the notice letter dated 4 September 1998. She denies that she was ever forwarded a copy, notwithstanding the handwritten notation to a contrary effect which appears on the defendant's file copy of the 4 September notice letter to John Middleton.
28 The defendant said in his affidavit that, having regard to the circumstances in which the account was prepared and despatched, he could offer no explanation as to why the plaintiff does not have in her possession the notice letter of the May account or why she did not receive her copy of the September account. He drew attention to the fact that she was informed of the existence of the 4 September account by her brother, John, but did not ask for a copy of the same, notwithstanding that she had many telephone conversations with the defendant after September 1998.
29 The defendant went on to say in his affidavit that as the plaintiff was not willing to enter into a costs agreement with Friedman Lurie Singh, he continued to carry out her instructions after 7 September 1998 on the basis that the bill for work undertaken after that date would be calculated according to the relevant cost scales for that work. It seems that in due course a deed of settlement was executed by the parties. This provided for the legal costs of the three defendants in respect of the Wills action and the Inheritance action to be paid from the estate. In mid-1999 an auction of chattels belonging to the estate was completed. This meant that the defendant was now in a position to deduct the greater part of the costs due to him from the proceeds of the auction in the manner contemplated by the deed of settlement.
30 By letter dated 22 November 1999, the defendant wrote to the plaintiff, who was now at Lot 520 Dibble Street, Mount Helena, saying that the balance of the costs and disbursements due to Greg Hocking &
(Page 13)
- Associates was the sum of $2,416.13. This meant that the plaintiff's share of the debt was the sum of $805.38. When a request for payment of that amount was not attended to, the defendant commenced proceedings against the plaintiff in the Local Court for recovery of the amount due.
31 The defendant said that, in the latter part of January 2000, he received a telephone call from the plaintiff in which she told him that she would agree to pay her share of the costs at the rate of $50 per month, but that she would not agree to pay the legal costs incurred in commencing Local Court proceedings against her. She hung up while the defendant was attempting to explain to her that he had personally incurred legal costs with Friedman Lurie Singh in commencing the Local Court proceedings and that those costs would need to be paid.
32 The defendant said that the plaintiff ceased instructing him on or about 14 October 1999, when she engaged Ivan Carija, attorney at law, of Herne Hill. The plaintiff did not dispute this in her answering affidavit. It seems that the plaintiff found her way to her present solicitors, Murie & Edward, in early 2000 following commencement of the Local Court proceedings against her. By letter dated 22 February 2000, Murie & Edward wrote to the defendant criticising the costs agreement and the circumstances in which it was entered into and foreshadowed an application to the Supreme Court for an order setting aside the costs agreement, as well as a stay of the Local Court proceedings. The defendant responded, drawing attention to the history of the matter and contending that the amount outstanding was properly recoverable. It is against this background that the matter was brought before me by way of an originating summons. It follows that the application for an enlargement of the time for giving notice was not made until 20 March 2000, being 533 days after the expiry of the statutory time limit in respect of the second account dated 4 September 1998.
Statutory Provisions
33 Various provisions of the Legal Practitioners Act 1893 provide a framework within which the matters in issue between the parties must be considered. Section 59(1) provides that a legal practitioner may make a legal agreement with any client of that practitioner respecting the amount and manner of payment of any fees. By s 59(5), such an agreement may be reviewed by the Supreme Court upon application by petition or summons, and if in the opinion of the court the same is unreasonable the amount payable may be reduced or the agreement cancelled and the costs taxed in the ordinary way.
(Page 14)
34 Section 65(1) provides that no practitioner shall sue for the recovery of any fee until a bill for the same, being either a bill containing detailed items or for a lump sum, has been served upon the party charged therewith. By s 65(2), at any time within 30 days of a lump sum bill the party charged may require the practitioner to serve upon him in lieu of the lump sum bill a bill containing detailed items. By s 65(3)(a), a practitioner shall include in each bill of costs, where the bill of costs is for a lump sum, a notice to the person charged that within 30 days of receipt of the account such a person can require the practitioner to provide an itemised account. The practitioner can be required to submit the account to the taxing officer of the Supreme Court for review of the amount of costs charged within 30 days from receipt.
35 Section 66(2) provides that where a person has requested a practitioner to serve an itemised bill of costs in lieu of a lump sum bill, if the itemised bill is not served upon that person within 30 days from the service of the request upon the practitioner, the person charged may apply to have the lump sum bill taxed by the taxing officer of the Supreme Court by lodging the same with the taxing officer. By s 66A(1), when taxing an itemised bill of costs, the taxing officer of the Supreme Court shall give effect to any written agreement made under s 59 as to the costs specified in the bill.
36 Section 68A deals with matters of interpretation. Importantly, by s 68A(d), the taxing officer has a discretionary power to enlarge the time prescribed for the taking of any step therein provided for.
37 Section 72 provides that where a bills of costs is taxed and as a result of that taxation the amount which has been paid or deducted in respect of that bill is more than the amount authorised by the taxation, to the extent of the excess the person charged has a claim for repayment. I digress briefly to note that it follows from this latter provision that if, in the circumstances of the present case, the subject agreement is cancelled or otherwise reviewed in a manner which allows for the defendant's costs to be taxed, then moneys previously deducted by the defendant from the proceeds of the chattels auction could be recovered by the plaintiff, provided the plaintiff was able to establish, upon taxation, that the costs charged by the defendant were excessive.
Issues
38 Various issues emerge from a preliminary consideration of these provisions. I will have to make a determination as to the scope of the
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- work covered by the costs agreement of 3 February 1997 that is brought before me for review. It is apparent from the narrative that the plaintiff did not within 30 days of receiving the accounts dated 21 May 1998 and 4 September 1998 request that she be supplied with itemised accounts. Accordingly, a threshold issue arises as to whether a Judge of the Supreme Court can enlarge the time in the manner contemplated by the present application.
39 If I am at liberty to exercise the power to enlarge time, further issues arise as to the manner in which the relevant discretion should be exercised. A key factor in that regard is whether the plaintiff did, in fact, receive the notice letters of 21 May and 4 September 1998, for these letters contain specific information about the need to take certain steps within 30 days. If the plaintiff did not receive these notice letters, then this may go some way to explaining her failure to challenge the bills in a timely manner and provide a basis for enlarging the prescribed time limit. I pause to note, however, that I am not required to determine whether notice letters of the kind prescribed by the Legal Practitioners Act were actually delivered to the plaintiff so as to provide a basis for recovery of the costs in question. I must keep steadily in mind that such an issue is not before me. The dispute as to whether notice letters were received by the plaintiff is relevant only to the exercise of the discretionary power.
40 A further discrete issue is whether the costs agreement in the present case should be reviewed in the manner allowed for by s 59(5) of the Legal Practitioners Act. This brings with it a need to examine closely the circumstances in which the agreement was signed. I am conscious that if the agreement is not cancelled or otherwise reviewed in the manner contended for by the plaintiff, and is found to be enforceable in accordance with its terms, this may have a bearing upon the plaintiff's prospects of obtaining relief by way of taxation. It is clear from the statutory provisions that a bill of costs can be taxed, notwithstanding the presence of a costs agreement between the parties of the kind allowed for by s 59 of the Legal Practitioners Act. If, however, the agreement in the present case can be enforced according to its terms, then the outcome of any taxation process is likely to confer less benefits upon the plaintiff than if the agreement is reviewed and set aside.
41 I will deal with these issues in turn, taking into account previously decided cases where it will be useful to do so.
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The Scope of the Costs Agreement
42 I must begin by making a determination as to whether the work the subject of the 21 May and 4 September accounts is covered by the terms of the costs agreement. The plaintiff said in her first affidavit that, at the time of signing and returning the costs agreement to the defendant, she believed that it related only to the work he would have to do in lodging a caveat and negotiating a settlement, as this was all he had been instructed to do. If, while undertaking a review of the costs agreement in the manner allowed for by s 59, I formed a view that the scope of the agreement should be interpreted narrowly in the manner contended for by the plaintiff, such a conclusion might have a bearing upon the question of whether the agreement was unreasonable. Further, if the agreement did not extend to legal services undertaken in connection with the Inheritance action and the mutual Wills date at the hourly rate prescribed by the costs agreement, then the two accounts rendered by the defendant could arguably be said to have had an unreasonable impact upon the plaintiff and would be open to review upon taxation.
43 The plaintiff placed considerable reliance upon the decision of Templeman J in B W Duckham & Co v The Beneficiaries of the K Stammers Family Trust, unreported; SCt of WA (Templeman J); LPA 8 of 1998; 14 May 1998. In that case, the engagement was documented by a letter from the practitioner and a related document entitled "Retainer Agreement Charges" evidencing arrangements whereby the client "will pay for all work carried out by us." Templeman J held that the agreement did not fall within s 59(1) of the Legal Practitioners Act because that provision envisages the making of an agreement between a practitioner and a client in respect of business done or to be done by the practitioner. He referred to s 59(2) which speaks of fees in relation to the conduct and completion of "the business in reference to which the agreement is made." This indicated that, unless a person had instructed a solicitor to undertake specific business, or was about to do so, he or she could not be regarded as a "client" for the purposes of s 59(1), with the result that an agreement purporting to regulate costs incurred in relation to future but unspecified work could not fall within the provision. Such an agreement could only be characterised as a general retainer agreement. The practitioner in that case was therefore required to submit proper bills in accordance with the appropriate statutory scale.
44 Before leaving that case, I digress briefly to note in passing that Templeman J went on to say that, in any event, having regard to the circumstances of the case, the agreement in question should be cancelled
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- on the grounds that it was unreasonable. It gave no indication as to the work which might be carried out. It did not refer to the fact that there were statutory cost regimes applicable to different kinds of legal work. Nor was there any evidence that this was drawn to the attention of the parties charged.
45 In the present case, I have already noted that the costs agreement in the present case described the client specifically as "Joanne Harrison". It was said to relate to work done or after 28 January 1997. By the agreement, the client retained the firm to act on the client's behalf as the client's solicitor in relation to the client's "legal matter or matters". There is no specific mention of prospective claims concerning the deceased's estate, but the features of the agreement I have just mentioned give the arrangements a degree of specificity which was not present in the Duckham case. Further, and in any event, if there is thought to be a degree of ambiguity as to what constitutes "the client's legal matter", then it seems to me that, in the circumstances of this case, the parol evidence rule enables the court to determine that the client's legal matter concerned prospective claims for relief against the executors of the estate or other parties having an interest in the administration of the estate.
46 The law in that regard is stated by Mason J (as he then was) in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337at 352 as follows:
"The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking, facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed."
47 This formulation of the rule was recently approved by the Full Court in this State. In Posgold (Big Bell) Pty Ltd & Ors v Placer (Western Australia) Pty Ltd & Ors [1999] WASCA 217, Malcolm CJ observed that evidence of the subsequent actions or statements of the parties was inadmissible unless it evidenced a new agreement or on the basis of an estoppel or unless it fell within one of the exceptions to the rule, such as evidence to explain technical expressions, evidence to identify the
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- subject-matter of the agreement or evidence to resolve a latent ambiguity. Ambiguity in this context was not to be equated with difficulty of construction, even difficulty where judicial opinion as to meaning has differed. The Full Court followed L Schuler AG v Wickman Machine Tool Sales Ltd [1974] AC 235 at 261.
48 In my view, having regard to these principles, I am entitled to have regard to those circumstances leading up to the execution of the written costs agreement which will enable me to understand what constitutes the subject-matter of the agreement. It is clear from the affidavits filed on both sides that in January 1997 the plaintiff and her siblings attended on the defendant at his office with a view to obtaining legal advice about the effect of the deceased's Will and as to whether they were in a position to advance claims against the estate. There is a degree of difference on the affidavits as to the scope of the instructions given to the defendant, but it is important to recall that the defendant summarised what he understood to be his instructions in a letter of engagement to the plaintiff dated 3 February 1997. This letter was received by the plaintiff before the agreement was signed and can be regarded for present purposes as an important contemporaneous indication of what was thought to comprise the client's legal matter at that time. The letter states quite clearly that the defendant was to represent the plaintiff "generally" in pursuing a claim in respect of her late father's estate. The defendant's letter recognised that this representation could include commencement of an action in the Supreme Court. In my view, the defendant's instructions, as confirmed by receipt of the letter and execution of the costs agreement, extended to all the steps subsequently taken by the defendant on behalf of the plaintiff as reflected in the particulars set out in the two accounts subsequently rendered, including his involvement on behalf of the plaintiff and her siblings in the mutual Wills action. This latter action formed part of the strategy of pursuing a claim in respect of the deceased's estate.
Jurisdiction to Enlarge Time
49 Section 68A(d) of the Legal Practitioners Act provides that the "taxing officer" has a discretionary power to enlarge the time prescribed for the taking of any step concerning the taxation of bills rendered by legal practitioners and the recovery of costs.
50 The provision lies within Part VI of the Legal Practitioners Act concerning solicitors' costs. Divisions 1 and 2 of that Part deal with the constitution of and determinations of remuneration by the Legal Costs Committee. Division 3 deals with entitlement to remuneration and
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- includes s 59 concerning the making of agreement as to costs and the power of a Judge of the Supreme Court to review such an agreement. Division 4 concerns taxation and recovery of costs. It is within this latter division that one finds s 65 requiring that signed bills of costs in a certain form are to be served before suit and provisions concerning the taxation of costs.
51 Section 68A(d) concerning the taxing officer's discretionary power to enlarge the time for the taking of any step falls within Div 4 also. The structure of the Act suggests that the taxing officer has a jurisdiction of his own and is required to exercise various specific powers. It is against this background that counsel for the defendant submitted that the question of whether the time for giving a notice to the practitioner should be enlarged is a question for the taxing officer exclusively, with the result that the first of the two applications presently before me is incompetent and should be struck out. On the other hand, counsel for the plaintiff contended that, if a Judge of the Supreme Court has power to review a costs agreement, then this must bring with it power to enlarge the time for taking any step preceding the taxing of a bill based on the costs agreement.
52 Section 7 of the Supreme Court Act1935 provides that the Supreme Court shall be a superior court of record and shall consist of such Judges and Masters as are appointed from time to time. Section 155(1) provides for the appointment of such Registrars and other officers as may be necessary for the administration of justice and the execution of all powers and authorities of the court. Section 155(2) provides that the Registrars shall be the taxing officers of the court, and shall perform such other duties as may be conferred upon them by or under this or any other Act.
53 Section 16 of the Supreme Court Act deals with the general jurisdiction of the Supreme Court, including its appellate jurisdiction. Section 16(3) provides that the jurisdiction vested in the court and the Judges thereof shall include all ministerial powers, duties, and authorities incident to any and every part of such jurisdiction. Importantly, s 21(1) provides that, except as otherwise provided by the Act, all jurisdiction shall be exercised, so far as regards procedure and practice, in the manner provided by the Act and by the rules of court.
54 It is apparent from the discussion in Seaman: Civil Procedure at par 1.0.1 to par 1.0.12 that a Judge of the Supreme Court is entitled to exercise certain inherent powers for the purpose of facilitating procedure and preventing abuse of process, but such powers are not at large and do not authorise the making of orders excusing compliance with obligations
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- or preventing the exercise of authority derived from statute: Reid v Howard (1995) 184 CLR 1. The jurisdiction and powers of the court can be exercised by a Registrar or officer as a delegate, but one has to keep in mind that the exercise of delegated power is generally controlled by provisions in the relevant statute or rules allowing for review or appeal on questions of both fact and law: Harris v Caladine (1991) 172 CLR 84. Accordingly, in Harrison v Tew [1990] 2 WLR 210, where a Taxing Master, purporting to exercise the court's inherent jurisdiction, made an order for taxation of costs notwithstanding the expiry of a limitation period (such order being subsequently affirmed by a Judge), the House of Lords held that a statutory provision prescribing the steps to be taken in order to obtain a taxation had displaced the court's inherent jurisdiction. It follows that care must be exercised in attempting to construe s 68A(d) in a manner that might be thought to erode the specific jurisdiction to enlarge time apparently vested in the taxing officer.
55 One finds support for such a view when one turns to the Rules of the Supreme Court 1971. By O 1 r 4, the definition of "taxing officer" includes a Registrar and any other officer of the court having power to tax costs. Order 66 deals with costs generally and makes provision for the taxation of costs. Order 66 r 11 provides that, subject to the provisions of the Legal Practitioners Act, permitting a solicitor to make a written agreement as to costs with his client, and to the provisions of these rules, the fees allowed under any relevant scale shall apply both as between party and party, and solicitor and client. Order 66 r 33 provides that bills of costs shall be taxed, allowed and certified by the taxing officer. By O 66 r 43, the decision of the taxing officer on all questions of fact shall be final.
56 The rules which follow, deal with the powers of the taxing officer to summon and examine witnesses and exercise all the powers of the court in relation to the admission of evidence. The taxing officer may refer any question arising in the course of a taxation for the direction of the court. By O 66 r 53, a party dissatisfied with taxation may object and apply to the taxing officer to review the taxation. By O 66 r 55, if a party is dissatisfied with the certificate of the taxing officer, he may apply to a Judge in chambers for an order to review the taxation. By O 66 r 57, the costs allowed by the taxing officer on any interim or final certificate of taxation shall be deemed to be a judgment of the court, and shall be recoverable accordingly. All these provisions indicate that the taxing officer is to perform a specific function and specific avenues of redress are allowed where errors on the part of the taxing officer are alleged. These provisions strongly suggest that, in the absence of any specific
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- provision in the Supreme Court Act1935 or in the Supreme Court Rules entitling a Judge to exercise a discretionary power specifically conferred upon the taxing officer, no such entitlement exists.
57 Counsel for the defendant was unable to single out any decided case supporting this view of the matter expressly, but two decisions of the Supreme Court of Western Australia are undoubtedly consistent with this line of reasoning.
58 In Webb v Malcolm J Bateman & Co, unreported; SCt of WA (Franklyn J); Library No 6305; 27 May 1986, a legal practitioner's client lodged notice of appeal against the decision of a Registrar of the Supreme Court refusing an enlargement of time. Under s 68A(d) of the Legal Practitioners Act, Franklyn J, dealing with the matter on appeal, was prepared to enlarge the time for service of a written notice requiring taxation of the practitioner's bill of costs. In doing so, he set out certain criteria which should govern the proper exercise of the discretionary power. I will return to these criteria later. For present purposes, however, it is useful to note that Franklyn J, in dealing with a threshold issue as to whether the client had a right to appeal, made certain observations which are pertinent to the point presently before me. He said, at 2:
"In my view, provision for such appeals having been made by the Rules of the Supreme Court, the court has thereby prescribed the conditions upon which it will entertain such appeals, to the exclusion of what might otherwise be its inherent jurisdiction to control the activities of its officers in the area in question, and that if this appeal is to succeed, the power to set aside the order of the Registrar must be found in O 67 of the Rules of the Supreme Court."
59 He then went on to note that O 67 r 21(1) makes provision for an appeal to a Judge in chambers by a person affected by an order or decision of a Registrar. Order 67 r 21(7)(c) provides, however, that the primary rule does not apply to an order or decision of a Registrar when acting as a taxing officer. Franklyn J was of the view that the embargo contained in O 67 r 21(7) was limited to decisions and orders made by the Registrar when acting as a Taxing Master in the sense of examining bills closely with a view to determining what was a fair and proper remuneration to the legal practitioner in question. It was necessary to distinguish that task under the Rules of the Supreme Court from the discrete task assigned to the taxing officer under s 68A(d) of the Legal Practitioners Act because, in exercising his discretion as to whether time should be enlarged,
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- although he was properly described as the taxing officer, he was not "acting as a taxing officer" at that moment within the meaning of O 67 r 21(7) of the Rules of the Supreme Court. This meant that there was a right of appeal against the Registrar's decision concerning enlargement under the primary rule set out in O 67 r 21 (1).
60 The decision of Franklyn J, although not directly on point for present purposes, clearly recognises, as the House of Lords recognised in Harrison v Tew (supra), that the inherent jurisdiction of the court can be displaced by specific provisions assigning a particular task to an officer of the court with the result that the only way in which a Judge of the Supreme Court will become involved in the matter is upon a properly constituted appeal. If it were otherwise, then this could complicate the workings of the court. The taxing officer will obviously develop skills in this area of the law, and it is for that reason that various powers and functions are assigned to the taxing officer. If it proves possible to bypass the jurisdiction vested in him by obtaining an order for enlargement from a Judge in chambers, then the special procedure established by the Legal Practitioners Act and the Supreme Court Rules will be eroded.
61 In Pryles & Defteros v Green [1999] WASC 34, Parker J was principally concerned with the taxation of a bill of costs arising out of work in the criminal jurisdiction of the court and the question of whether there was a determination in force regulating the remuneration of practitioners of the kind contemplated by s 58W and s 58ZB of the Legal Practitioners Act. He did not deal directly with the enlargement of time issue, but, he did observe in passing, at par 25 of his judgment, that the statutory empowerment of taxing officers of the court to undertake the taxation of practitioner and client bills necessarily carries with it the empowerment of the taxing officers of the court to exercise this inherent jurisdiction of the court for the purpose of conducting the taxation. Any such exercise of jurisdiction by a taxing officer of the court is, of course, subject to review by a Judge, as will be seen both by virtue of s 71 of the Legal Practitioners Act and pursuant to the inherent power of the court itself. This line of reasoning clearly contemplates that a Judge is not at liberty to exercise the powers vested in the taxing officer, although it may transpire that a Judge ultimately has occasion to review a decision made by a taxing officer.
62 Counsel for the plaintiff set up in opposition to reasoning of this kind the decision of the Master in Larmont v Bruce Duncan Russell & Associates, unreported; SCt of WA (Bredmeyer M); Library No 940419; 12 August 1994. In that case, as in this case, a client applied for an order
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- pursuant to s 59 of the Legal Practitioners Act that a costs agreement be reviewed and included in the originating summons an application that the time prescribed for giving notice be enlarged. The Master of the court was prepared to enlarge the time on the basis that it was not unreasonable to tack on such an application to a claim for review. The matter went on appeal, principally on other grounds, without this aspect of the matter being disapproved of during the course of the appeal. It is apparent from this case, however, that the jurisdictional issue presently before me was not fully argued and, in any event, in Larmont v Bruce Duncan Russell (supra) the claim for a review of the costs agreement was abandoned. Accordingly, I cannot regard this decision as a decisive ruling upon the jurisdictional issue.
63 Having regard to the structure of the Legal Practitioners Act, and the reasoning reflected in the previously decided cases, especially Webb v Malcolm J Bateman & Co (supra), I consider that the discretionary power to enlarge time is a power specifically vested in the taxing officer and that any inherent jurisdiction of the court in that regard has been displaced. This view of the matter is consistent with the circular to practitioners dated 25 November 1999 concerning taxations under the Legal Practitioners Act issued by the Principal Registrar. The circular deals with the preconditions for the exercise of powers concerning bills lodged for taxation under the Legal Practitioners Act. Clause 4 provides that if the relevant documents show that the request for taxation was out of time, no appointment for taxation will be given. In such circumstances, the party charged must apply for an enlargement of time within which to require the practitioner's bill to be taxed. It is apparent that the application for enlargement will be dealt with by the taxing officer.
Enlargement of Time Issue
64 For the sake of completeness, and as a matter relevant to issues that arise later, I pause to make some further observations about the enlargement of time issue. If I be wrong in my conclusion that the effect of the statutory provisions and Supreme Court Rules is to vest the jurisdiction to enlargement of time in the taxing officer exclusively, then a question arises as to whether on that view of the matter, on the assumption that I am entitled to exercise the discretionary power conferred by s 68A of the Legal Practitioners Act, I should provide for an enlargement of time in the circumstances of the present case.
65 Franklyn J observed in Webb v Bateman (supra) that the discretionary power of the taxing officer under s 68A to enlarge time for
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- the taking of any step provided for by the Act leading to such a taxation is not a matter provided for by the Rules of the Supreme Court and is a power conferred upon the taxing officer to regulate the rights of the parties to the bill in a proper case by enlarging time so as to ensure that justice is done, or that no injustice results, as between the parties. He went on to say that, in his opinion, a proper exercise of the discretion includes a consideration of the various factors mentioned in his judgment commencing with the apparent purposes of s 65 to s 71 of the Legal Practitioners Act. He described those purposes as a provision of machinery 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 (which in a proper case may be extended) to prevent a client unfairly taking advantage of the provisions to delay the obligation to pay proper costs, and to avoid frivolous objections. Other factors to be taken into account were the reasons for the delay in question, whether they were valid reasons for believing that a refusal to enlarge time might result in injustice to the client, whether there was evidence suggesting that the bill might be excessive, the nature and degree of prejudice to the practitioner, the practitioner's reasons for opposing the enlargement (if he does so), 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 that he not be acting merely to prevent taxation of the bill taking place.
66 In Retail Equity Pty Ltd & Ors v Murie & Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994, the learned Judge observed that, although the client may be thought to be seeking an indulgence by requesting extra time, in the absence of prejudice, a practitioner should be seen to be willing to subject his accounts to taxation when a request is made out of time. I note in passing that the enlargement of time issue came before his Honour by way of an appeal from orders made by the Registrar and the case therefore does not assist in a resolution of the jurisdictional issue I have dealt with earlier. It is significant, however, that in the Retail Equity case his Honour was prepared to approve an enlargement because the delay in question was explicable on the grounds that the solicitor, by his conduct, could be said to have entered into a tacit agreement with the client to arrange taxation of the bills after the proceedings were over when such a step was no longer prejudicial to the client.
67 In Hay v Butler & Crooks (A Firm) (1991) 7 WAR 333, in considering an application for an enlargement of time, Owen J held that the Legal Practitioners Act envisages the prescribed times may be
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- extended, but the onus is on the client to convince the taxing officer that an extension should be granted. In the course of his judgment, Owen J said that if the request is made outside the 30-day period, the practitioner is not obliged to comply unless the taxing officer extends time. On the other hand, common sense, good commercial practice and a logical extension of the nature of the relationship between solicitor and client would dictate that, except in most unusual circumstances, a practitioner ought always to provide an itemised account when requested to do so.
68 In Dala Transport v Corrs Chambers Westgarth, unreported; SCt of WA (Registrar Watt); LPA 89 of 1999; 25 February 2000, the discretion was exercised in favour of the practitioners. In that case, the practitioners represented a family business in long-running, complex and vigorously contested Federal Court proceedings involving two applicants, five respondents and inter-respondent cross-claims. Throughout the action, the practitioners rendered accounts to the client pursuant to a litigation retainer agreement. However, to assist the client's cash flow, the practitioner agreed to set aside part of the costs incurred and not to bill the portion set aside until completion or settlement of the proceedings. Following settlement, a final account was issued, which included the amount set aside. The client then requested, within the prescribed time, taxation of this last account. However, the client, contending that the last account could not be taxed in isolation, sought taxation of all previous accounts, including accounts which had already been paid. All these accounts included notice of the kind prescribed by the Legal Practitioners Act.
69 The Registrar held in the Dala case that the client's lack of understanding as to what "taxing" meant was not of itself sufficient to excuse a failure to observe the time limits. He also noted that the original accounts were four years old and in that time a number of practitioners who had worked on the matter had left the practitioner's employ. Therefore, it would be a considerable task to prepare bills for taxation in a matter lasting four years and an even greater task given many of those who performed the work had left the firm. He also took account of the fact that the clients had been allowed ample time in which to indicate their dissatisfaction with the accounts, but had failed to do so. He concluded that the degree of prejudice to the practitioner outweighed the need to scrutinise the bills and held that time should not be enlarged.
70 Giampiccolo & Anor v Valenti (1983) FLC 91-344 suggests that a solicitor is presumed to know the requirements of the law in respect of the relevant time limits for disputing a solicitor's bill of costs, with the result
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- that regulations as to time limits should be strictly enforced where a party is represented. It is apparent from the reasoning in that case that this means representation by a legal adviser other than the solicitor whose bill is being challenged.
71 In Lawecki v Marcel Kalfus & Co (1985) FLC 91-644, the Full Court of the Family Court held that the fact that the wife in question was ignorant of the remedies available to her at the time when she paid the first account in full did not amount to special circumstances justifying an extension of time. The court noted that ignorance by a litigant of his or her remedies in relation to the taxation of a solicitor's account is more the rule than the exception, and it was therefore difficult to conceive of this as a special circumstance. The delay of six months in the circumstances of that case before making the application was thought to be unreasonable.
72 When I apply the reasoning in these cases to the circumstances of the present case, I must begin by turning to the plaintiff's explanation for the delay. It is true that an 18-month period elapsed between the rendering of the second account in September 1998 and the application for an extension of time in March 2000. It is important to remember, however, that both parties to the present dispute contemplated from the outset that costs would be paid from the estate. The defendant did not press his three clients for payment of the amounts due and the deduction of the costs did not take place until after the sale of the deceased's chattels in mid-1999. The defendant was acting as the plaintiff's legal adviser throughout this period and this fact obviously stood in the way of the plaintiff obtaining independent legal advice as to whether the amounts due by way of legal costs were reasonable or as to whether she had any entitlement to have the defendant's costs reviewed.
73 The defendant, by counsel, placed some reliance upon the fact that the plaintiff engaged another solicitor in October 1999, prior to finding her way to her present solicitors in early 2000. I am conscious, however, that there is a lack of detail as to the nature of the engagement and, in any event, the passage of time between the plaintiff severing her connection with the defendant and engaging her present solicitors does not appear to be inordinate, bearing in mind that the latter solicitors raised the matters in issue with the defendant promptly in February 2000.
74 That is the context in which explanations of the delay must be viewed. When one descends to the particularity of the matter, a crucial question is whether the plaintiff was actually sent and received notice letters accompanying the relevant accounts of the kind described by the
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- defendant. The presence of disputed factual issues of this kind, to my mind, reinforces the views I have previously expressed that issues of this kind are best dealt with by the taxing officer in the exercise of the special jurisdiction concerning enlargement of time allowed to him by s 68A(d) of the Legal Practitioners Act. However, on the basis of the materials presently before me, I note that the plaintiff has been prepared to say on oath that she did not receive notice letters of the kind contended for by the defendant. She was not cross-examined as to this aspect of the matter. The defendant is unable to point to any file copy of a notice letter specifically directed to the plaintiff on either occasion and is obliged to rest upon a description of his usual practice, and an assertion that on the second occasion in September 1998 such a notice letter was prepared and posted by him.
75 Counsel for the defendant also drew attention to the fact that such a letter was sent to the plaintiff's brother, and as a result of communications between the plaintiff and her brother, she must have been aware that the 4 September account and accompanying notice letter had been received. There is also evidence before me on the defendant's side that the hourly charge rate relied upon is not excessive and, on the assumption that the costs agreement properly relates to all work undertaken by the defendant - which on the basis of my earlier finding concerning the scope of the agreement can be regarded as a correct assumption - the costs sought to be recovered against the plaintiff are not excessive.
76 I should also note in passing, as I review factors of the kind identified as relevant by Franklyn J in Webb (supra), that I can see no signs that the defendant has acted otherwise than with patience and integrity. He believes he struck a reasonable bargain with his clients, the steps he took on their behalf were successful, recovery of his costs was deferred for a considerable period, and subject to an ambiguity as to whether the plaintiff, as one of three clients, in fact received the prescribed notice letters, his file evidences an intention to comply with procedures allowed for by the Legal Practitioners Act. Balanced against these factors, however, is the fact that in this case, unlike the Dala case (supra), the defendant was a sole practitioner and there does not appear to be any real prejudice to his position in being required to tax his bill, notwithstanding the long delay.
77 In the circumstances of the present case, I incline to the view that time should be enlarged. I am satisfied on the balance of probabilities that the plaintiff did not receive the notice letters, an important element in that conclusion being that the defendant was unable to produce file copies of
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- such letters directed to the plaintiff. Further, and in any event, it seems to me that this case bears a resemblance to the Retail Equity case (supra) in which the circumstances, including the likelihood that the costs would be deducted from the estate, are likely to have diverted the plaintiff's attention from the need to take prompt action, even if she did receive the notice letters. There was a tacit agreement, of sorts, that the question of costs would be sorted out at the end of the day and thus, to itself, tends to explain the failure to give notice and the delay in bringing this application.
78 The combination of these factors convinces me that there is a sufficient explanation for the delay. When I add to this the absence of any discernible prejudice to the defendant and the fact that the plaintiff did not receive any independent advice for 18 months after the rendering of the last account, it seems to me that the discretionary power to enlarge time should be exercised in her favour. This conclusion is consistent with the reasoning in the decided cases, especially Webb (supra), that the taxing procedure is designed to provide a machinery to enable a client to be satisfied that bills of costs are not excessive, whilst imposing time limits to prevent a client unfairly taking advantage of the provisions to delay the obligation to pay proper costs. I note in passing that, in the circumstances of the present case, the greater part of the costs have been paid to the defendant by deduction and it therefore cannot be said persuasively that the plaintiff is simply trying to delay the obligation to pay. In the absence of prejudice, a practitioner should be seen as willing to subject his accounts to taxation when a request is made out of time.
Review of the Costs Agreement
79 Section 59(5) of the Legal Practitioners Act provides that a costs agreement may be reviewed by the Supreme Court or a Judge thereof upon application by a petition or summons, and if in the opinion of the court or Judge the same is unreasonable, the amount payable may be reduced or the agreement cancelled and the costs taxed in the ordinary way. This provision for review is not conditioned by any prescribed time limit, but when one takes account of the court's power to cancel the agreement or to reduce the amount payable, then this might be thought to give rise to considerations of whether the review has been requested in a timely manner and whether, in circumstances of delay, a degree of prejudice to the practitioner might be thought to weigh against the provision of relief to the applicant.
80 Let me explore this point further. In the absence of any prescribed time limit for reviewing an agreement, it would seem, at a first glance,
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- that a costs agreement could be reviewed many years after the services had been provided. One notices, however, that the relief available is discretionary. If a review is undertaken and the agreement is found to be unreasonable, the amount payable "may" be reduced or the agreement cancelled, and the costs taxed in the ordinary way. If the agreement is cancelled, then the foundation for recovery of costs by the practitioner pursuant to the account previously rendered has been removed, and the account must then be examined not by reference to any scale created by the agreement, but by reference to the prescribed scale or determination. It would be an odd result if a party challenging a bill based upon an agreement was thought to be entirely immunised against any question of delay, while as a client challenging a bill independently of an agreement was at risk of being defeated by time restraints when in both categories the legislation envisages that bills can be subjected to taxation by essentially the same process.
81 These considerations lead me to believe that in determining what relief is appropriate in the circumstances of a particular case, the Judge who has undertaken the review may have to determine whether there has been any inordinate delay on the part of the applicant for relief. I am prepared to assume that in this context the criteria for assessing any question of delay will resemble those enunciated by Franklyn J in Webb(supra) when discussing the enlargement of time issue. Thus, in practical terms, perhaps it can be said, as the Master acknowledged in Larmont (supra), that an explanation for delay can or should accompany an application for review. If the review favours the client, and the agreement is cancelled, so that an opportunity is provided for the costs to be taxed in the ordinary way, this form of relief requires that any delay prior to the review should be investigated and dealt with as part of the review, otherwise, if the taxing officer was entitled to and did take a different view of the delay, the relief granted under s 59(5) could be futile.
82 Put shortly, then, although the power to enlarge time is vested in the taxing officer, with the result that the application to enlarge time presently before me must be dismissed for the reasons I have given earlier, it is appropriate nonetheless that the evidentiary materials accompanying the application for review pursuant to s 59(5) on the ground of unreasonableness should cover any question of delay or other issues of the kind usually dealt with on an application to enlarge time. This will assist the Judge to determine whether orders should be made under s 59(5) which, in addition to cancelling the costs agreement if it is found to be unreasonable, will provide an opportunity for the bill of costs to be taxed in the ordinary way.
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83 I will have more to say later about the exact consequences of granting relief by way of cancellation of a costs agreement. For the time being, it is unnecessary for me to dwell upon these issues at greater length. I have already indicated that, in my view, there is a sufficient explanation for the delay in bringing the present application for review. The considerations relevant to an enlargement of time apply with equal force to this aspect of the application for a review of the costs agreement.
84 Another preliminary issue concerned the form of these proceedings. Counsel for the defendant submitted that in the circumstances of the present case the proper way to proceed was by writ seeking a declaration as there were various disputes of fact to be resolved: Hamersley Iron Pty Ltd v Hancock, unreported; SCt of WA (Olney J); Library No 5195; 23 December 1983; Martin-Smith v Woodhead [1990] WAR 62at 65. The disputed issues of fact were said to include an evidentiary issue as to the subject-matter of the costs agreement and differences as to the nature of the discussions that took place between the parties before the agreement was signed. There was also a difference between the parties as to whether the defendant's letter dated 3 February 1997 to Karen Whittred, containing various observations about the contents and implications of the costs agreement to be signed by the defendant's three clients, was actually received by the plaintiff. Counsel submitted that the present application should be discontinued and recommenced by way of writ of summons to allow the court to make a proper and fully informed decision.
85 I am not persuaded by this view of the matter. When questions of construction arise under a deed, Will, or other written instrument, a person claiming to be interested therein will normally proceed by way of originating summons for a declaration of the rights of the persons interested unless the court is of the opinion that the question ought not to be determined on originating summons. Section 59(5) clearly contemplates that a party seeking a review will bring the issue before the court by way of an originating summons. If necessary, orders can be made for discovery or for cross-examination in respect of the supporting affidavits. In some exceptional cases, it may be that the matters in issue should be tried as an action, but I am not persuaded that the circumstances of this case are of that order. It follows from my earlier finding concerning the scope of the agreement, that the agreement upon its proper interpretation covered all work actually performed by the defendant. As to the other matters, it was open to the defendant to obtain orders for cross-examination if the issue concerning receipt of the costs letter was thought to be crucial. I am of the view that I must deal with the matter upon the basis of the evidentiary materials presently before me.
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86 The nature of the argument advanced by counsel for the defendant in the present case, in which he invited me to revisit a number of previous decisions of this Court, requires me to look closely at the history of review provisions.
87 In Pryles & Defteros (supra), Parker J noted that the provision for review reflected in the Legal Practitioners Act did not introduce novelty. The taxation of solicitor and client bills of costs, whether or not in respect of business performed in a field of practice which was the subject of a prescribed scale of costs, had long been a feature of legal practice in England; see, for example, The Attorneys and Solicitors Act 1729 (2 GEO II C23) s 23, and The Solicitors Act 1843 (6 and 7 Vict C73), s 37, and the quite distinct practice under the inherent jurisdiction from before 1729 considered by Dillon LJ in Harrison v Tew (supra).
88 Clare v Joseph [1907] 2 KB 369 is another useful point of reference. In that case, the Court of Appeal held against a solicitor who tried to avoid an oral agreement to charge less than would be usual on the basis that s 4 of the 1870 Act should be read as requiring all agreements as to costs to be made in writing. In rejecting that basis of argument, the Court of Appeal made observations which are illuminating for present purposes.
89 Buckley LJ said, at 378:
"The law in existence when the Act of 1870 was passed is clear; the solicitor could not charge his client more than the amount of his bill of costs when taxed, and it was his duty to advise his client that it was contrary to his interest to pay more. Further, if there were an agreement between them by which the client was to pay less, the solicitor, being in a fiduciary relationship to him, owed the duty of advising him that he ought not to enter into such an agreement if other provisions in it were contrary to the client's interest. The solicitor was under these disabilities when bargaining with his own client, because it was his duty to guard him from acting in a way prejudicial to his interest. Then came the Act of 1870. Its effect is as if it recited that the solicitor was under these disabilities, and then enacted that, notwithstanding such disabilities, he might make an agreement in writing with his client as to his remuneration, provided he complied with the requirements of the Act. The Act, when complied with, relieved the solicitor of his disability."
- Lord Alverstone CJ said at 372:
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- "Agreements as to costs were often made before 1870, and, upon the application of the client, they were considered and examined by the courts, and they were not infrequently held to be binding both on the solicitor and the client. The inquiry was always directed to the question whether the agreement was fair and reasonable, and an agreement by the solicitor to take less than the usual remuneration was not looked upon as unfair or unreasonable, but was held binding upon him."
- Fletcher Moulton LJ said at 376:
"Let us now consider the state of the law on this subject at the date of the coming into operation of the Act of 1870. At that date agreements between a solicitor and his client as to the terms on which the solicitor's business was to be done were not necessarily unenforceable. They were, however, viewed with great jealousy by the courts, because they were agreements between a man and his legal adviser as to the terms of the latter's remuneration, and there was so great an opportunity for the exercise of undue influence, that the Courts were very slow to enforce such agreements where they were favourable to the solicitor unless they were satisfied that they were made under circumstances that precluded any suspicion of an improper attempt on the solicitor's part to benefit himself at his client's expense. But when it appeared that the agreement was favourable to the client, the courts often held the solicitor to his bargain, for there was no ground in equity why they should be suspicious of a bargain of that kind. Sect 4, therefore, was not required for the purpose of enabling persons to enter into these agreements, nor was it required in order to strengthen the hand of the courts in their examination of them. Before 1870 the court had full power to investigate their propriety, and in my opinion the specific provisions of s 4 did no more than provide and regulate a procedure for the control of such agreements; they did not in substance alter the law affecting them."
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- disabilities otherwise confronting the solicitor, subject to the introduction of additional safeguards.
91 These safeguards have been progressively refined and are now reflected in those provisions of the Legal Practitioners Act which allow for the client to call for an itemised bill and to have the bill taxed before the taxing officer. A question therefore arises as to whether in regard to provisions such as s 59, in the absence of any express rule, the burden of proof should be thought to lie upon the client to satisfy the court that the costs agreement is unreasonable; or whether it lies upon the solicitor to satisfy the court that a costs agreement is reasonable and should not be set aside.
92 It seems to me that although legislation of this kind may have a bearing upon the incidents of the fiduciary relationship between solicitor and client, it does not purport to displace or override the fiduciary relationship which is normally thought to exist between solicitor and client. Nonetheless, when a client applies to the court for relief, it is clear that it will never be enough to point simply to a fiduciary relationship arising out of the solicitor and client relationship and the presence of a signed agreement allowing for charges exceeding the prescribed scale or current determination. The client will have to bring forward evidence showing that the circumstances in which the agreement was entered into, and perhaps the contents of the agreement, are arguably inconsistent with the normal course of a fiduciary relationship and, in the circumstances, can be regarded as unreasonable. This suggests to me that, in the final analysis, the burden of proof lies upon the applicant for relief to establish such a claim.
93 The previously decided cases are not entirely consistent on this question of where the burden of proof lies. In In re Stuart, Ex parte Cathcart [1893] 2 QB 201, the Court of Appeal was concerned with an application under the Attorneys and Solicitors Act 1870 to set aside a costs agreement as unfair and unreasonable. The effect of s 9 of the Act was that if it shall appear to the court or Judge that such agreement is in all respects fair and reasonable, the same may be enforced. According to Lord Esher MR (at 205) this meant that when an agreement was challenged, the solicitor must not only satisfy the court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the court that the terms of that agreement are reasonable. This seems to suggest that a burden of proof lies upon the solicitor. It is important to note, however, that the statutory provision in question was concerned with the enforceability of the agreement and, unlike s 59(5) of
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- the Legal Practitioners Act, did not require the court to undertake an inquiry as to whether the agreement was unreasonable.
94 In Jovetic v Stoddart & Co (1992) 7 WAR 208 Seaman J looked at this issue and concluded that the plaintiff carries the burden of generating the opinion required by s 59(5) that the agreement in respect of which relief is sought is unreasonable. He went on to hold that an agreement is unreasonable in this context if the client can show objectively that it came into being in circumstances which were unreasonable to him, or that its terms are unreasonable to him, or that its effect upon him is unreasonable. It is implicit in my earlier observations that I am inclined to agree with the view expressed by Seaman J. I therefore proceed from the premise that in the circumstances of the present case the plaintiff bears the onus of persuading the court that the costs agreement in question is unreasonable. Also see Stoddart & Co v Jovetic (1993) 8 WAR 420.
95 The test of reasonableness was explored further in the subsequently decided case of Brown & Ors v Talbot & Olivier (1993) 9 WAR 70. Ipp J approved the notion of three categories of reasonableness which may be considered separately, as a whole, or linked by reference, one to another, such categories being unreasonableness as to the circumstances of the creation of the costs agreement; unreasonableness in its terms; or unreasonableness in its effect upon the client. He held that any costs agreement which does not fully disclose the limits and benefits of the statutory scale, and the effect and consequences of the proposed agreement, will be regarded as unreasonable.
96 Ipp J said also that it is a lawyer's fiduciary duty to make a full disclosure to the client of various matters, including the existence of statutory scales that limit costs, the principles underlying the statutory scales, particulars of the contemplated agreement, and estimates, if reasonably possible, of amounts recoverable on taxation and from the opposition under statutory scales. If estimates are not reasonably possible, information should be provided as to whether there was a real risk of costs being more under the proposed agreement than under the appropriate scale. This approach was subsequently approved by Seaman J in Portch v Franconi, unreported; SCt of WA; (Seaman J) Library No 940174; 31 March 1994.
97 Before applying these principles to the circumstances of the present case, I must digress briefly to address a submission made by counsel for the defendant that these previous decisions of the Supreme Court of
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- Western Australia should be reviewed and, in any event, given little weight.
98 This submission proceeded from the premise that Jovetic (supra), Brown (supra) and Portch (supra) were all decided at a time when litigation costs were determined by reference to scales supervised by the court. The solicitor, as the more knowledgeable party in the fiduciary relationship, by his knowledge of the scales, was thought to have an ascendancy over the client. The previously decided cases suggested that in those circumstances a costs agreement was likely to be set aside as unreasonable because the client was not fully informed about the existence of the scales or their likely effect in financial terms.
99 Counsel submitted further that the Legal Practitioners Act and its precursors should be regarded as enabling legislation aimed at removing certain disabilities which had previously represented a barrier to solicitors enforcing costs agreements. Enabling legislation of this kind could be regarded as having effected a profound change to the nature of the fiduciary relationship. In other words, one should not assume too readily that the solicitor was in default if the client was left with an incomplete understanding as to the effect of the costs agreement. The remedial legislation was intended to replace the old and rather narrow habits of mind concerning fiduciary relationship with a new outlook in which freedom of contract was the prevailing rule. Counsel contended that this view of the legislation had not been fully argued before Ipp J and Seaman J and I should therefore not regard myself as bound by the reasoning reflected in these earlier decisions.
100 Counsel for the defendant reinforced his submission by drawing attention to the fact that the scales under consideration in the earlier decisions have now been superseded by the Legal Costs Committee determination 1996 made by the Legal Costs Committee under s 58W of the Act. It was common ground at the hearing before me that this determination came into operation on 1 February 1997 and would therefore have governed the relationship between the parties, but for the making of the costs agreement in the present case dated 3 February 1997.
101 Counsel drew attention to cl 6 of the determination which states explicitly that the Legal Costs Committee has decided to alter the basis used for fixing the scale of costs. The underlying basis for the previous scales of costs was adopted in 1953 and provided, broadly speaking, that the remuneration allowable to the profession in litigious works is to be based not on work done but on the value of the subject-matter of the
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- litigation. It was the view of the committee that it was no longer possible to support a scale based on an ad valorem charged for the main item of getting up case for trial. The new scale of costs set out in the schedule to the determination is said to reflect the fact that the costs of legal services provided in relation to Supreme Court and District Court actions are in the main calculated by reference to the time reasonably spent in the provision of those services, and by applying to that time a reasonable hourly rate - the rate varying according to the seniority and experience of the practitioner and the complexity of the work.
102 Counsel for the defendant went on to submit that, conceptually, the scale of fees contained in the costs agreement in the present case (unlike the costs agreements in the previously decided cases) was comparable to the scale based on time set out in the determination. For example, the hourly rate prescribed by the subject costs agreement for the defendant was $175 per hour, as compared to the maximum rate of $270 allowed to a senior practitioner under and by virtue of the scale forming part of the determination. It followed from this, counsel argued, that the practitioner did not have quite the same obligation in inviting a client to enter into a costs agreement as had applied in the past, because the costs agreement was essentially proceeding from the same premise as the determination. The parties could be regarded as contracting freely in a realm in which charges for legal services based on time costing was the prevailing rule. Unlike the plaintiffs in earlier cases, the plaintiff was not labouring under a disadvantage because the information about time costing in the costs agreement submitted to her was similar to the formula for time costing allowed by the determination.
103 I am not persuaded to this point of view. The Legal Practitioners Act in this State (and earlier legislation in England) can be regarded as enabling legislation that allowed greater flexibility in the making of a contract between solicitor and client. Nonetheless, as I noted earlier, the provision of various safeguards to the client, including provision for review of the agreement and machinery for taxing costs, strongly suggests that the legislation was not intended to displace or fundamentally alter the long-established conclusion that the relationship between solicitor and client should be regarded as a fiduciary relationship. It follows that the solicitor, as the more knowledgeable party, remained subject to various duties, including a duty of disclosure. Any adjustment to the relationship by agreement could only be effected in circumstances where there was a fully informed consent by the client. This view of the matter is implicit in the previously decided cases. I accept that the 1996 determination by the Legal Costs Committee has significantly changed the basis upon which
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- costs are calculated. Even so, under that determination, scales are brought into existence. The details of these scales are known to the practitioner, but may not necessarily be known to the client, even though the scales in question may be easier to understand than the scales in force previously. Certainly, the notion that a machinery exists under the Legal Practitioners Act which will allow a client to test the fairness and validity of a bill rendered by the practitioner is a concept that runs on and is not affected by the determination. Accordingly, on balance, I am of the opinion that the reasoning reflected in the three previously decided cases has not been overtaken by events and that I should draw upon these cases in resolving the matters in issue in the present case.
104 It follows from these observations that I must give careful attention as to whether there was any unreasonableness in the circumstances of the creation of the present costs agreement, whether the agreement is unreasonable in its terms, and whether it is unreasonable in its effect upon the client.
105 Counsel for the plaintiff pointed to various matters which were said to show, when viewed objectively, a lack of reasonableness in regard to the creation of the agreement. The defendant at the initial consultation had failed to educate the client as to the nature and effect of scales and as to the basis of the proposed charging under the contemplated agreement. Estimates of fees were not provided and the relationship between fees likely to be charged under the proposed costs agreement and fees provided for by the scales was not explained. She contended that when a lay person with no previous experience of dealing with solicitors is asked to sign an agreement which commits her to pay an hourly rate for the time spent by the solicitor in handling her case when, but for that agreement, the solicitor would be limited by the scales in the appropriate court to the amount which he could charge no matter how much time he spent on the case, then the agreement should be viewed as unreasonable if its execution was obtained without the solicitor first giving the client comprehensive advice of the kind referred to by Ipp J in Brown (supra). The plaintiff's argument proceeded from the premise that the plaintiff did not receive a costs letter of the kind sent to her sister, Karen Whittred, or of the kind usually sent by the defendant to his clients when a costs agreement was in contemplation.
106 It follows from earlier discussion that the defendant sought to persuade the court that the previously decided cases could not be strictly applied to the present circumstances. Those cases were made on the basis of the 1991 Supreme Court costs scale, rather than the 1996 scale as
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- applies in this matter. The effect of the enabling legislation was to relieve a solicitor of certain disabilities and allowed an agreement in writing to be made in relation to remuneration of the solicitor provided he complied with the requirements of the Act. The general scheme of the legislation was to allow a practitioner to make an agreement for less or more than he would otherwise receive and a costs agreement of the kind entered into should not be viewed with suspicion, as might have been the case prior to the enabling legislation, and should only be set aside as unreasonable in circumstances of substantial unfairness to the client. These submissions were underpinned by reference to those portions of the defendant's affidavit in which it was said that, consistently with his usual practice, he explained the costs arrangements at the initial consultation and subsequently sent to the plaintiff and his other clients a costs letter corresponding to the costs letter sent to Karen Whittred.
107 Having carefully reviewed the evidentiary materials before me, and bearing in mind that the burden of proof lies upon the plaintiff, I find that the plaintiff did not receive a costs letter of the kind contended for by the defendant. She says in her affidavit that she did not receive such a letter. The defendant cannot locate a file copy of such a letter. Further, as I have already noted, a costs letter of the kind contended for by the defendant would seem to be inconsistent with the terms of the letter of engagement which both parties agree was actually received by the plaintiff. I find it difficult to accept that the defendant would send a letter of engagement containing some observations about the steps to be taken on behalf of the plaintiff, enclosing a costs agreement, and making some passing observations about costs, and simultaneously send another letter saying much the same thing, albeit with a greater degree of elaboration as to the costs arrangements and also purporting to enclose a costs agreement.
108 The tenor of the defendant's affidavit was that the costs agreement would generally accompany the costs letter (and this was so in regard to the letter dated 3 February 1997 to Karen Whittred) and yet, it is quite clear that in the case of the plaintiff the costs agreement was enclosed with what the defendant called the letter of engagement dated 3 February 1997. My conclusion is that the defendant's usual practice was disrupted by the fact that he was acting for three clients. The consequence was that the only letter received by the plaintiff was the letter of engagement dated 3 February 1997 which contained far less detail concerning the costs arrangements than the costs letter dated 3 February 1997 received by her sister, Karen Whittred.
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109 When the matter is viewed against the background of this finding, it becomes apparent that the plaintiff was not fully informed as to the costs arrangements along the lines contemplated by Ipp J in Brown (supra). Even if one accepts that the defendant gave some explanation at the initial consultation as to why a costs agreement was thought to be necessary, and the basis upon which his costs would be calculated, he himself concedes in his affidavit that he did not tell the clients that the costs which he could legally seek from them might be less in the absence of a costs agreement. He did not provide this explanation because, as he saw it, that was to be explained in the costs letter which was to be sent out to the clients. He concedes also that he did not go into detail about the practice of charging clients in units of six minutes, or otherwise go into the full details of the costs arrangements. These matters were to be explained in the costs agreement. It follows, that if the plaintiff did not receive the costs letter, as I have found, then she was not fully informed as to the nature and effect of the costs arrangements.
110 It is true that cl 12 of the agreement purports to contain an acknowledgment that the client has been advised that independent legal advice can and should be taken. The fact remains, however, that although the plaintiff's letter of engagement contained a passing reference to the possibility of obtaining further information from the Law Society of Western Australia, the notion of obtaining independent legal advice is not given any particular emphasis. Nor does that portion of the letter of engagement set out in any detail the implications of the costs agreement or refer to scales or foreshadow that costs can be taxed. I must also bear in mind that both the initial consultation and the letter of engagement contemplated that legal costs would be recoverable from the deceased's estate and this representation, although soundly based as it turned out, is likely to have had the effect of diverting the lay clients' attention away from the costs issue and the need to consider the question of costs carefully.
111 When one turns to the other categories of inquiry, it is apparent that the terms of the agreement have the effect of imposing a considerable financial burden upon the plaintiff for many items of routine work, some of which were not performed by a qualified legal practitioner. The scope of the work was not precisely defined. It is apparent from the evidentiary materials that the plaintiff is a person of limited means and thus the impact of the bill is significant. It is true that the greater part of the costs in question were deducted from the proceeds of sale realised by the executors of the estate, but these are funds that could otherwise have been available to the plaintiff and her fellow claimants upon the estate.
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- Accordingly, when these considerations are linked to the matters I have mentioned concerning unreasonableness as to the circumstances of the creation of the costs agreement, I am of the opinion that the costs agreement is unreasonable within the meaning of s 59(5) of the Legal Practitioners Act. The costs agreement should be cancelled to the intent that the costs will be taxed in the ordinary way and without reliance upon the agreement. It follows from my earlier observations that the matters of alleged delay raised by the defendant do not stand in the way of relief being afforded to the plaintiff in the circumstances of the present case.
Relief
112 I must now turn to the consequences of these findings and the question of what relief is available to the plaintiff. My understanding is, after hearing from counsel on both sides in regard to this issue, that if the costs agreement was not cancelled then, in circumstances where a ruling has been made (as indeed I have ruled) that the jurisdiction to enlarge time is vested exclusively in the taxing officer, it would remain open to the plaintiff in such circumstances to approach the taxing officer for an enlargement of time and, if the enlargement is granted, to have the existing bill taxed by reference to the rates established by the agreement. On the other hand, if the costs agreement is cancelled, being the ruling I have in fact made in the present case, no question of enlargement of time is likely to arise. In those circumstances, the practitioner will be obliged to prepare an entirely new account, referring not to the rates established by the costs agreement, but to the prescribed scales. The practitioner will then be obliged to submit the new account to the client with a notice to the client in the prescribed form, thus allowing to the client the opportunity either to accept the claim for costs reflected in the new bill or within 30 days to set in motion the procedure whereby the bill can be taxed by the taxing officer. Cancellation of the costs agreement precludes recovery of costs at the rates proposed by the agreement, but does not preclude recovery of costs by the practitioner at the rates and in accordance with the procedure prescribed by the statutory provisions.
113 I digress briefly to make some further observations. This analysis reveals, as I have already foreshadowed, that the application for an enlargement of time in the circumstances of the present case raised a false issue. If the review under s 59(5) does not lead to cancellation of the costs agreement, the taxing officer must deal with any application for an enlargement of time as the judicial officer with the exclusive jurisdiction to do so, for the reasons I have previously given. On the other hand, if the
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- costs agreement is cancelled, there is no question of enlargement of time to be considered. On this scenario, it is not until a fresh account has been submitted to the client that time begins to run against the client. A question of enlargement of time will only arise in this latter case if the 30-day time limit is not complied with in respect of the fresh bill. This analysis reinforces the conclusion I arrived at earlier that the jurisdiction to enlarge time under s 68A(d) is vested in the taxing officer exclusively.
114 What is the position in a case such as the present case where costs have been deducted from a fund under the purported authority of a costs agreement that is later cancelled? Both counsel seemed to agree that in such a case the amount the subject of the deduction could be recovered by the client because the substratum of fact and law which justified the deduction has been removed. The condition precedent to an effective deduction was the presence of an enforceable bill of costs. In the present case, it follows from earlier discussion that the consequence of cancellation of the costs agreement is that it is not until a fresh account has been prepared and submitted to the client in a manner allowing for taxation that a valid and enforceable bill can be said to exist.
115 There is nothing in s 59(5) of the Act to suggest that the cancellation should operate retrospectively or that an agreement subject to an order for cancellation is to be regarded as void ab initio. If that is so, then one is probably obliged to assume that the original deduction should be regarded as a deduction made lawfully, although questions may arise as to whether there is any entitlement to interest if funds previously deducted are recovered as a consequence of cancellation.
116 Against the background of my various findings, I consider that for the reasons I have given earlier I must dismiss the plaintiff's application for an enlargement of time. I must also make an order for cancellation of the costs agreement. I will hear the parties as to whether there is any need for, or entitlement to, further or consequential orders.
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