Harvey v Goodman Law Pty Ltd

[2011] NSWSC 340

Supreme Court

New South Wales

Medium Neutral Citation:	Harvey v Goodman Law Pty Ltd [2011] NSWSC 340
Hearing dates:	18 March 2011
Decision date:	29 April 2011
Jurisdiction:	Common Law
Before:	Harrison J
Decision:	The amended summons is dismissed with costs
Catchwords:	COSTS - application for assessment of legal costs after 12 months - Legal Profession Act 2004 s 350(5) - whether "just and fair" for the plaintiff's application for assessment of the defendant's legal costs to be dealt with after the 12 month period - application refused
Legislation Cited:	Legal Profession Act 2004
Cases Cited:	Barecall Pty Limited v Hoban [2009] NSWSC 1104 Barecall Pty Limited v David Hoban [2010] NSWCA 269 Dye v Fisher Cartwright Berriman Pty Ltd [2010] NSWSC 895 The Estate of Rosalind Allwood v Peter Vivian Benjafield [2009] NSWSC 1383
Category:	Principal judgment
Parties:	Deon Russell Harvey (Plaintiff) Goodman Law Pty Ltd (Defendant)
Representation:	Counsel: M B Evans (Plaintiff) M Heath (Defendant) Solicitors: Lathams Lawyers (Plaintiff) Goodman Law (Defendant)
File Number(s):	2010/388924

Judgment

1. HIS HONOUR : Mr Harvey is a former client of Goodman Law. That firm performed legal work for him and rendered a bill. Mr Harvey failed to apply within 12 months of receiving the bill for an assessment of those costs. He now seeks an order pursuant to s 350(5) of the Legal Profession Act 2004 that it is just and fair that he be able to proceed with an application for assessment of Goodman Law's costs. For the reasons that follow, I consider that it is not just and fair that he be able to do so.

Background

1. Between about November 2001 and 2004 Mr Harvey was the manager of the Aqualounge Bar at Manly. That was a nightclub business carried on by Aqualounge Manly Pty Ltd at premises leased from Barecall Pty Ltd. Acqualounge was placed into voluntary liquidation on 20 June 2005 and defaulted on its obligations as Barecall's tenant. Barecall subsequently alleged that Mr Harvey, together with David Hoban, Toni Rossi, Radislav Spedina and Jason Lussick, were liable to it as guarantors of the obligations of Acqualounge. On 16 June 2006 Barecall commenced proceedings in this Court against Mr Harvey and the others for recovery of approximately $1.0M. Mr Harvey and the others successfully defended Barecall's allegations in the proceedings before Ward J at first instance (see Barecall Pty Limited v Hoban [2009] NSWSC 1104) and in the Court of Appeal (see Barecall Pty Limited v David Hoban [2010] NSWCA 269 ) .

1. Mr Harvey was for a time represented in the proceedings by Steven Gavagna of Goodman Law. Mr Gavagna commenced acting for Mr Harvey sometime in 2006, although he was at that time employed by a different firm of solicitors. Goodman Law took over but ultimately ceased to act for Mr Harvey on 14 October 2008. It rendered accounts to Mr Harvey from time to time for the work it performed over the period and Mr Harvey paid them. The last account rendered for work done would appear to have been dated 28 February 2009. The 12-month period expired on 27 February 2010. Lathams Lawyers filed Mr Harvey's application for assessment of the costs seven weeks later on 19 April 2010. By letter dated 17 September 2010, the costs assessor Mr Bartos advised that the application was out of time and that he could only proceed to complete the assessment if an application for extension of time was made to the Supreme Court. Mr Harvey commenced the present proceedings by summons filed on 23 November 2010, almost nine months after the 12-month period expired and almost 21 months after receiving the final account.

The evidence

1. Mr Harvey explained his failure to apply for an assessment of Goodman Law's costs in a timely way as required by the Act in an affidavit sworn on 2 February 2011. He was not cross-examined. The following portions of the affidavit are relevant:

"34. In early 2008 I commenced employment as an international sales manager with Health Masters, a Hong Kong based enterprise with offices in Hong Kong, Bangkok and San Francisco, and from early 2008 until December 2010 I have been living between Bangkok and San Francisco, and I have now returned to live at a property owned by me and my parents at ... Beacon Hill...

35. From March 2006 until about June 2009 I continued to receive invoices and account statements from Goodman Law and I continued to pay as much as I could whenever I could to clear my debt to Goodman Law and in about September 2009 I finished paying Goodman Law a total sum of $52,508.29.

36. In about January 2010 my solicitors, Lathams Lawyers, conducted a reconciliation of invoices issued to me by Goodman Law and receipts issued to me, as a result of which Goodman law refunded the sum of $1,250 to me for over-payments.

37. In the period from September 2006 to December 2010:

(a) I have been living overseas on a full-time basis;

(b) I have been regularly taking anti-depressants and anti-anxiety medication, largely as a result of the stress caused to me by the proceedings;

(c) In the whole of the period from September 2008 until February 2009 I held the belief that Goodman Law continued to act for me and that Goodman Law would appear for me at the final hearing of the proceedings;

(d) In the period from February 2009 until October 2009 I was preoccupied with the proceedings, including the appeal and I could not deal with the stress of any further argument with Goodman Law concerning the monies paid to them."

1. On 27 October 2009 Goodman Law filed a solicitor/client application for the assessment of the costs rendered to Toni Rossi in relation to the whole of the proceedings for the period from about March 2006 until about October 2008. Between October 2009 and October 2010, Lathams Lawyers, who also acted for Mr Rossi, provided detailed objections to the costs assessor Mr Bartos. Goodman Law responded to those objections. On 8 October 2010 Mr Bartos issued a Certificate of Determination following his assessment. Mr Bartos assessed the total costs payable by Mr Rossi to Goodman Law for representing him in the proceedings at $26,015.

1. In the events that occurred, Mr Harvey, Mr Rossi and Mr Lussick also filed applications for the assessment of the costs of the proceedings payable by Barecall and these assessments were referred to Mr Bartos as well. They included the work performed for these men by Goodman Law. Mr Bartos assessed those costs simultaneously with Goodman Law's assessment application relating to Mr Rossi's costs.

1. Mr Gavagna swore an affidavit on 4 March 2011 that was read in the proceedings. He was not cross-examined. Part of his affidavit is as follows:

"26. ... Goodman Law had provided regular requests for sums incurred during the conduct of the matter and each and every invoice issued to [Mr Harvey] was itemised. Exhibited hereto at pages 133 to 254 are most of the Goodman Law invoices rendered to Mr Harvey. The invoices clearly indicated [his] rights to have the costs assessed along with the statement that any application for assessment must be made within 12 months of the date of the invoice or payment of the costs.

27. ... I agree that Mr Harvey paid all outstanding monies to Goodman Law.

28. ...

29. In relation to paragraph 31, the application by [Mr Harvey] for the assessment of his costs was not made contemporaneously with the applications of Messrs Lussick and Rossi. [Mr Harvey's] application for the assessment of his costs was made well outside of the 12 month period allowed by s 350(4) of the Legal profession Act 2004, and in circumstances where [he] had been consistently informed of his rights in relation to the timing of any assessment of his legal costs."

1. Lathams Lawyers wrote on behalf of Mr Harvey to Goodman Law on 30 November 2009. For reasons that will become apparent, the letter was significant. Its terms are relevantly as follows:

"We refer to your letter dated 13 November 2009, a copy of which we have forward[ed] to Mr Harvey today and we await his instructions in respect of same. We will contact you when we have those instructions such that the issue of payments made by Mr Harvey to you may be settled.

In the meantime, we are instructed to file an application for assessment of your costs charged to Mr Harvey herein. In this respect we will seek leave to bring the application in respect of the amounts charged to Mr Harvey for the whole of the proceedings, notwithstanding the time that has passed since accounts were issued and paid, on the basis of your failure to provide a costs agreement and your failure to include the required statement on his accounts notifying Mr Harvey of his rights pursuant to section 333 of the Legal Profession Act 2004.

In making the application, Mr Harvey will be required to make a statement that thee is no prospect of settlement of the matter by mediation. If you are mindful to resolve this matter by mediation or otherwise rather than proceed to assessment (the costs of which we would think will be payable by you in any case in the absence of a costs agreement and proper disclosure) please let us know.

If we have not heard from you by close of business this Thursday, 3 December 2009 to the foregoing effect, we will assume that there is no prospect of settlement by mediation or otherwise, and we will lodge Mr Harvey's application for assessment of his costs of the whole proceedings."

1. It is true that s 333 of the Act is not mentioned on Goodman Law accounts sent to Mr Harvey. However, the tax invoices rendered by Goodman Law to Mr Harvey invariably contained the following statement to like effect:

"If you wish to dispute our invoice, you may apply to the ACT Supreme Court: 1. for an assessment of the whole or part of the legal costs, subject to Division 3.2.7 of Part 3.2 of the Legal Profession Act 2006 (ACT) ('the Act'). An application under this division must be made not later than 12 months after a) the day the invoice was given or the request for payment was made, or b) the day the costs were paid if neither an invoice was given nor a request was made..."

1. Lathams Lawyers sent a further letter to Goodman Law on 21 January 2010. It is as follows:

"We refer to your fax dated 13 November 2009.

We are instructed that Mr Harvey's queries regarding various payments and payment allocations have now been resolved to his satisfaction.

Please forward a cheque payable to D Harvey in the sum of $1,250.00."

1. These letters are referred to later in these reasons.

Consideration

1. Section 350 of the Act is in the following relevant terms:

" 350 Application by client or third party payers for costs assessment

(1) A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs.

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(4) An application by a client or third party payer for a costs assessment under this section must be made within 12 months after:

(a) the bill was given or the request for payment was made to the client or third party payer, or

(b) the costs were paid if neither a bill was given nor a request was made.

(5) However, an application that is made out of time, otherwise than by:

(a) a sophisticated client, or

(b) a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned,

may be dealt with by the costs assessor if the Supreme Court, on application by the costs assessor or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period."

1. The onus is on Mr Harvey to establish that it is just and fair for the application to be dealt with: Dye v Fisher Cartwright Berriman Pty Ltd [2010] NSWSC 895 at [14]. The relevant test is whether "it is just and fair" for the application to be dealt with "having regard to the delay and the reasons for the delay": Dye at [8]. It is appropriate to have regard to any prejudice occasioned to the practitioner if the extension of time is granted. There is presumed prejudice to a practitioner if there is delay in, or postponement of, the payment of anything which the practitioner may become or remain entitled to be paid as costs by a client in accordance with the bill of costs: Dye at [18]. No such prejudice applies in this case as Goodman Law has been paid all that they have claimed from Mr Harvey to date. No actual prejudice is suggested beyond the proposition that a practitioner ought to be entitled to act upon the basis that there is no dispute about his or her costs after the time has expired.

1. Goodman Law submitted that the tax invoice dated 28 February 2009 should have prompted an application for assessment by Mr Harvey by no later than 28 February 2010. It also submitted that none of the factors apparently relied upon by Mr Harvey was a sufficient reason for the delay. It submitted that, unlike Dye , the delay in the present case was substantial. From at least January 2010, and probably for some months before this, Lathams Lawyers were acting for Mr Harvey specifically concerning the question of costs and were advising him on a reconciliation of the tax invoices that he had been given. A reimbursement of $1,250 was made following that reconciliation. An application for assessment was at that time still possible without the need for an extension of time. Mr Harvey is silent upon the question of whether or not he sought or was given advice about applying then for an assessment of his costs or whether there was some reason why he did not take, or was otherwise unable to act upon, such advice. The 30 November 2009 letter appears to tell a quite different story. Lathams Lawyers continue to represent Mr Harvey. No member or employee of that firm gave evidence in this application.

1. Nor was Mr Harvey unfamiliar with the costs assessment process. He acknowledges in his evidence that he was aware that Goodman Law had filed a costs assessment on behalf of Mr Rossi in the Barecall proceedings. This suggests at least an awareness of the process, even if the statements about costs assessment and time limits for applying inscribed on the invoices that he was sent by Goodman Law were themselves somehow inadequate or ineffective for that purpose.

1. Goodman Law also submitted that Mr Harvey does not say what is the anticipated shortfall between the costs that he has paid to Goodman Law and the party/party costs that have been assessed and presumably recovered in the Barecall proceedings. For present purposes that difference is irrelevant to the issues that I have to determine. There may be a relationship between the assessment of each bill but not one that informs the discretion I am asked to exercise. For example, Mr Harvey's failure to recover party/party costs from Barecall might influence the question of whether it was just and fair to grant an extension of time in this application, although that influence would necessarily be limited. However, Mr Harvey does not advance any facts that suggest that the recovery of party/party costs from Barecall is in doubt or that his financial position is for that reason compromised. His application would appear to be restricted to a consideration of his personal circumstances outlined earlier.

1. I have already referred to the fact that the bill of costs that is the subject of the present application had been assessed in Mr Rossi's case on the application of Goodman Law. As co-defendants in the original proceedings, Mr Harvey and Mr Rossi jointly instructed Goodman Law together with the other defendants. The five defendants were severally liable for Goodman Law's costs. It is common ground that Goodman Law ceased to act for Mr Harvey and Mr Rossi at the same time. In those circumstances, in the events that occurred, the bill of costs assessed by Mr Bartos was the complete bill covering the period during which Goodman Law was instructed and retained by Mr Harvey and Mr Rossi. The arrangement between the defendants was that each of them would be liable to Goodman Law for the same proportion of the costs. The costs payable by Mr Harvey and Mr Rossi were likely to be roughly the same, even if the costs payable by the others were potentially different as they retained or instructed Goodman Law for a different period in total. The liability of Mr Harvey and Mr Rossi for the costs following an assessment was therefore also potentially the same.

1. Mr Bartos assessed the costs payable by Mr Rossi at $26,015. The original bill was for a total sum of slightly in excess of $183,000. Mr Harvey contended, on the assumption that Mr Harvey and Mr Rossi were liable for one fifth of the bill in general terms, that each would be liable for approximately $45,000 before assessment. Mr Harvey's affidavit reveals, and it is not in contest, that he paid Goodman Law a total of $51,258. He contended that it was just and fair in these circumstances that his costs liability should be reviewed because there was a strong possibility, if not a probability, that his liability for costs would be reduced to a sum similar to that for which Mr Rossi was assessed to be liable or in the alternative no more than $45,000 approximately.

1. I raised these issues with counsel with a view to characterising the relationship, if any, between Mr Rossi's liability to Goodman Law following Mr Bartos' assessment of costs payable by him, and Mr Harvey's hypothetical or postulated liability for costs, calculated on the assumption that Mr Bartos' assessment of Mr Harvey's share of the costs were to proceed. Mr Harvey submitted that in all of the circumstances Goodman Law ought at least notionally on this application to be estopped from denying that Mr Harvey's liability is anything other than $26,015 as assessed by Mr Bartos for Mr Rossi. In that sense Mr Harvey contended that he has demonstrated that it is just and fair for his application to be dealt with after the 12-month period. He contended that there was clear and obvious prejudice to him and none to Goodman Law.

1. Goodman Law contended on the contrary that there was in fact no conclusive or even persuasive effect that flowed from Mr Bartos' assessment of Mr Rossi's liability to them. This was because a practitioner could make an application for assessment of the whole or any part of the legal costs to which the bill relates. A law practice can make an application to have an individual client's portion of a bill of costs assessed even though the bill itself may include work done for more than one client in the same matter. Support for this submission was said to be found in s 352(1) of the Act that provides as follows:

"352 Application for costs assessment by law practice giving bill

(1) A law practice that has given a bill may apply to the Manager, Costs Assessment for an assessment of the whole or any part of the legal costs to which the bill relates."

1. If there were a persuasive effect that flowed from the outcome of the assessment of the bill relating to Mr Rossi, Goodman Law submitted that it was outweighed by considerations touching the reasons advanced for the extension in the first place and the prejudice to Goodman Law in the second place. I am required to have regard to the reasons for the delay. Goodman Law submitted that those reasons were wholly inadequate and that the application failed at the threshold. It did not in effect become necessary to consider the difference in potential cost liabilities because there was no good reason shown by Mr Harvey for having delayed for so long.

1. In my opinion, the Rossi assessment does no more than give an insight into the reasons why Mr Harvey might want to have the bill of costs assessed. It goes without saying that most if not all applicants for assessment are motivated by the prospect that their ultimate liability for costs will be reduced. Mr Harvey might have good grounds for expecting that his liability for costs following an assessment would be similar to Mr Rossi's. That, however, is as may be. This is not a case where Mr Harvey suggests, as one of the reasons why it would be just and fair to extend the time, that the amount of the bill he has been given is unreasonably high, or that Goodman Law has otherwise charged inappropriately or excessively. Evidence indicating, for example, that Mr Harvey had a legitimate complaint about the fees charged, or some cognate complaint, would tend to support the exercise of discretion in his favour. I am not satisfied that any such evidence is available.

1. I consider that the reasons for the delay that Mr Harvey advances are not convincing. The fact that he was living overseas does not amount to a reason why he did not attend, or could not have attended, to an application for assessment of the costs. He does not specify in any meaningful or particular way what is said to be the relationship between his "stress" or anxiety, or his medication, and the delay in issue. Mr Harvey in any event retained other lawyers before the 12-month period expired and they dealt with at least one aspect of the costs he had paid. He was not unable by reason of geography or stress or anxiety or medication to instruct them. It is difficult to see why he could not also have managed to deal with an application to have the Goodman Law bill assessed in the circumstances.

1. Moreover, in my opinion, the letter written by Lathams Lawyers to Goodman Law on 30 November 2009 is wholly inimical to Mr Harvey's application. He retained Lathams Lawyers within the 12-month period to do the very thing he now seeks to do, albeit out of time. He offers no explanation for why that firm did not do what the terms of the letter make clear he had instructed them to do. Instead there is different action taken by that firm thereafter, culminating in the letter of 21 January 2010 when a reconciliation is negotiated. Still the application could have been made within time. I do not consider that this letter sits at all comfortably with Mr Harvey's evidence that he was so stressed or sick or medicated as to prevent him doing what he should have done. Nor was the fact that he resided overseas apparently something that prevented him from giving instructions to write it.

1. The letter of 21 January 2010 is on one view even more significant and persuasive. Mr Harvey's lawyers write on his behalf finalising an amount due to him upon a reconciliation of accounts rendered by Goodman Law. This also occurs within 12 months from the receipt of their last tax invoice. It follows the threat to apply for an assessment in the 30 November 2009 letter. Mr Harvey also gave instructions for this letter apparently notwithstanding the matters that he relies upon as a basis for the present application to explain the reasons for delay. The letter and the reasons are irreconcilable in my view.

1. I have already indicated that Goodman Law has not demonstrated to my satisfaction that they have suffered, or are likely to suffer, any prejudice. The prospect that they might be required to refund some part of the costs already paid does not in this case qualify as prejudice. Goodman Law does not suggest that it has suffered prejudice in other than hypothetical terms.

1. Finally, Goodman Law submitted that I had no jurisdiction to consider any application to the extent that it was concerned with their tax invoices for costs rendered to Mr Harvey before 1 July 2007. This was said to be because of the form of the relevant section before that date and the decision of Matthews AJ in The Estate of Rosalind Allwood v Peter Vivian Benjafield [2009] NSWSC 1383 at [15]. Because of the decision that I have come to on the application, it is unnecessary for me to consider this argument.

Decision and orders

1. In my opinion, having regard to the delay and the reasons for the delay, it is not just and fair for Mr Harvey's application for assessment to be dealt with after the 12-month period.

1. In the circumstances the amended summons should be dismissed with costs.

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Decision last updated: 29 April 2011