James (a pseudonym) v Taussig Cherrie Fildes

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COSTS COURT

S ECI 2020 02789

IN THE MATTER of section 3.4.38 of the Legal Profession Act 2004 (Vic)

BETWEEN:

BOYD JAMES (a pseudonym)	Applicant
v
TAUSSIG CHERRIE FILDES	Respondent

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	7 October 2021
DATE OF JUDGMENT:	21 September 2022
CASE MAY BE CITED AS:	James (a pseudonym) v Taussig Cherrie Fildes
MEDIUM NEUTRAL CITATION:	[2022] VSC 559

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COSTS — Summons by applicant seeking review of bills of costs pursuant to s 3.4.38 of the Legal Profession Act2004 (Vic) of bills of costs rendered by the respondent in respect of professional services performed in the Family Court of Australia extending back to 1 July 2008 — Respondent objects to jurisdiction by reason that the Family Law Amendment Rules 2008 provided that the provisions relating to review of costs in chapter 19 of the Family Law Rules 2004 (Cth) continued to apply in respect of matters that commenced prior to 1 July 2008 and that the Costs Court had no jurisdiction to consider the application for review —Consideration of question whether respondent going off the record in Court proceedings while still continuing to provide legal advice had the effect of ending the applicant’s retainer of the respondent — Finding that retainer which commenced in August 2007 not terminated by respondent going off the court record — Finding that Costs Court was without jurisdiction to hear the application.

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NOTE: Publication of these reasons employs a pseudonym for the name of the applicant as the respondent acted for the applicant in Family Court Proceeding. This was ordered on 18 September 2020 having regard to the provisions and intention of s 121 of the Family Law Act (Cth) in order that there could not be identification of a party to a proceeding in the Family Court of Australia by reason of the publishing of these reasons.

APPEARANCES:	Counsel	Solicitors
For the Applicant	Ms N Lenga of counsel	Coulter Roache Lawyers
For the Respondent	Ms S F Cherry of counsel	Taussig Cherrie Fildes

HIS HONOUR:

On 30 June 2020, the applicant commenced this proceeding by summons in the Costs Court pursuant to s 3.4.38 of the Legal Profession Act 2004 (Vic) (‘LPA’). The summons seeks to review the respondent’s costs contained in a bill of costs dated 10 July 2019 and all other bills of costs delivered between 1 July 2008 and December 2014. The bills of costs all arise by reason that respondent acted for the applicant in family law proceedings conducted in the Family Court of Australia (as that Court was then named and constituted) (‘Family Court Proceeding’).

In addition to the summons, a bill of costs dated 10 July 2019, which claimed a total of $166,669.78 for work performed on behalf of the applicant between 7 April 2014 and 22 June 2016, and a costs agreement between the parties dated 6 August 2007 were filed.

A preliminary issue arises by reason that the respondent disputes that the Costs Court has jurisdiction to conduct the review the subject of this proceeding. Resolution of that issue ultimately involved determination of the question whether, by the applicant directing the respondent to go off the record in the Family Court Proceeding on 15 December 2014, the retainer of the respondent by the applicant by an agreement entered into on 6 August 2007 thereby came to an end.

For the reasons that follow, I uphold the respondent’s submissions that the Costs Court is without jurisdiction to review the bills of costs the subject of this application. The applicant’s application must be dismissed.

Procedural History

On 28 July 2020, Gourlay JR made orders on the papers that the matter be listed for hearing on 18 September 2020 for determination of the preliminary issue as to jurisdiction. The orders provided that the respondent file and serve written submissions and any affidavit material on which it sought to rely by 18 August 2020, that the applicant file and serve any submissions and affidavit material in response by 1 September 2020, and that the respondent file and serve any submissions in reply by 8 September 2020.

On 14 September 2020, Wood AsJ made orders on the papers that the proceeding be referred to as Boyd James (a pseudonym) v Taussig Cherrie Fildes. The orders required that the applicant be identified via a pseudonym and access to documents filed in the proceeding disclosing the applicant’s name or otherwise enabling the applicant to be identified be restricted pursuant to rr 28.05(2)(a) and 28A.06 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) (‘Supreme Court Rules’). Due to the lockdowns in place in Victoria by reason of the COVID-19 pandemic, those orders also extended the time when the applicant was to file and serve any submissions and affidavits in response to three weeks after the date on which the Victorian Registry of the Family Court of Australia (as that Court was then named and constituted) at Melbourne reopened to permit the inspection of the files relating to the proceedings in which the respondent acted for the applicant. The orders also vacated the hearing of the determination of the preliminary matter as to jurisdiction from 18 September 2020 for a period of not less than eight weeks.

On 17 June 2021, this Court made orders granting a further extension as to when the applicant was required to file and serve submissions in response and for the provision of any affidavit materials until 2 July 2021 and allowing the respondent to file and serve any submissions in reply by 16 July 2021.

On 11 August 2021, because of a complaint raised by the respondent as to non‑compliance by the applicant with the previous orders, this Court made orders granting a further extension of time by which the applicant was to file and serve affidavit materials and submissions in response. Orders were also made that the applicant pay the respondent’s costs caused by the applicant’s non-compliance with paragraph 3 of the orders made 28 July 2020, paragraph 6 of the orders made on 14 September 2020, and paragraph 2 of the orders made on 17 June 2021, such costs to be fixed in the sum of $880. On 10 August 2021, the applicant filed his submissions.

The matter was then listed for hearing on 1 October 2021, when orders were made by this Court re‑listing the application for determination of the preliminary issue as to jurisdiction on 7 October 2021. The hearing proceeded on that day and was adjourned part-heard to 13 October 2021.

The evidence

As the moving party in respect of the jurisdictional issue, the respondent relied on the affidavit of Debra Marie Cherrie (‘DMC’)[1] sworn on 18 August 2020 (‘DMC affidavit’), submissions filed on 18 August 2020, and submissions in reply filed on 24 August 2021.
[1]To avoid confusion, Ms Debra Cherrie, the solicitor at the respondent who had carriage of the Family Court Proceeding, will be referred to in these reasons as ‘DMC’. No disrespect is intended. Ms Sarah F Cherry, counsel for the respondent, will be referred to as Ms Cherry.

The applicant relies on the affidavits of Boyd James sworn 6 October 2021, 7 October 2021, 11 October 2021, and written submissions filed on 10 August 2021.[2]
[2]The 6 October 2021 affidavit was filed the day before the hearing of the preliminary issue as to jurisdiction, namely 7 October 2021. On the morning of the hearing, the 7 October 2021 affidavit was filed by the applicant. Comparing the affidavits of 6 October 2021 and 7 October 2021, both appear to be identical save for the removal and addition of some exhibits attached to each affidavit. The affidavit of Boyd James sworn 7 October 2021 was ultimately relied on by the applicant during oral submissions. Subsequently, on 11 October 2021, a further affidavit of Boyd James was filed and this is, in substance, identical to the 7 October 2021 affidavit, except for the redaction of the applicant’s name so as to comply with s 121 of the Family Law Act 1975 (Cth).

Affidavit of DMC sworn 18 August 2021

The DMC affidavit focuses on matters pertinent to the preliminary issue only. DMC deposes that together with Ms Larissa Goldberg, she had the carriage of the Family Court Proceeding the subject of this application throughout the course of the applicant’s retainer with the respondent. She states that by reason of her conduct of the file, she has personal knowledge of the applicant, the nature and complexity of the proceeding, the work that was performed, and the costs that were charged. In making her affidavit, DMC states that she reviewed relevant parts of the file for the purpose of confirming dates on which certain steps were undertaken and to confirm her recollection that there were no “fresh applications” within the meaning of the Family Law Rules 2004 (Cth) (‘Family Law Rules’) made in the Family Court Proceeding. She states that there was an application for divorce filed in the Federal Circuit Court and that application (‘Application for Divorce’) will be the subject of further discussion below.

DMC states that the respondent acted for the applicant from August 2007 until 2015 in respect of a family law dispute between the applicant and his former wife. The applicant signed a legal services agreement (‘Legal Services Agreement’) with the respondent on 6 August 2007, which was expressed to be a “costs agreement” for the purpose of the Family Law Act 1975 (Cth) (‘Family Law Act’) and the Family Law Rules. She exhibits a copy of that agreement signed by the applicant.

The definition section of the Legal Services Agreement provides that if the applicant was a “litigant in the Family Court of Australia or Family Court of Western Australia, this Legal Services Agreement is a ‘costs agreement’ for the purposes of the Family Law Act 1975 and the Family Law Rules 2004”.

Under the heading “Retainer”, cl 2 provides:

2.1The client retains the firm to act on the client’s behalf in relation to the client’s legal matters upon the terms and conditions set out below.

2.2. This agreement relates to work done on or after 3 August 2007.

Clause 3 provides under the heading “Professional Fees and Charges”:

3.1The client agrees to pay professional fees for legal services on a time‑costed basis calculated in accordance with the charge out rates set out in the attached schedule based upon a unit of time comprising 6 minutes.

…
3.2 [sic] The client acknowledges that the client shall be charged for time spent on or incidental to work requiring the skill of a solicitor, for example (but not limited to) conferring, negotiating, receiving instructions, advising … attending court, appearing in court, telephone calls, drafting and settling documents and letters, reading documents and research.

Clause 12 provides, under the heading “Obligations”:

12.1The firm shall carry out the work required in dealing with the client’s legal matters and bringing same to a conclusion whether through litigation or alternative dispute resolution with professional skill and diligence.

…
12.4The client agrees to pay all professional fees properly incurred in relation to the conduct of the legal matters, notwithstanding that the firm has carried out those instructions after warning the client that such instructions are unreasonable and such costs may not be recoverable from the other party on an assessment of costs; …

Clause 14 makes provision for circumstances of an entitlement on the firm’s part to cease to act for the client. The circumstances described have no application in the present context.

Clause 19 provides, relevantly:

19.1Even though interim accounts may be rendered from time to time, this agreement will continue in force unless and until terminated in accordance with its provisions.

DMC deposes that the Family Court Proceeding commenced on 3 September 2007 with the filing of an application for final orders on behalf of the applicant’s wife.

DMC deposes that from her personal knowledge and her review of the file, after the application for final orders was filed, there were 27 interim applications filed in the Family Court Proceeding during the time the respondent was retained. She exhibits a spreadsheet setting out a chronology detailing the 27 interim applications by date, filing party, and description of the nature of the orders sought.

An Application for Divorce was filed on 16 January 2009 in a separate proceeding in the Federal Magistrates Court (as that Court was then named and constituted).[3] DMC states that that application was a discrete application filed in a different jurisdiction that required relatively limited work from the respondent. The professional costs associated with that application can be identified in invoices from the respondent to the applicant dated in or about December 2008 to March 2009. DMC was not able to review the paper file for the Application for Divorce but she believes, by reference to information contained in the respondent’s accounting records, the total of the professional costs associated with that application was approximately $764.50. The court filing fee was $432. The entries associated with the Application for Divorce in the Federal Circuit Court in the respondent’s records are as follows:
(a)   11 December 2008, drafting application and letter to client, $264;
(b) 11 December 2008, settling application (divorce), $44;
(c)   16 December 2008, email from client (x 2) amending application, $33;
(d) 16 December 2008, letter from solicitor and settling application (divorce), $132;
(e)   19 January 2009, letter to solicitor, $44;
(f)    3 March 2009, preparation for hearing, $82.50; and
(g) 3 March 2009, attending divorce hearing, $165.
[3]The Federal Magistrates Court became the Federal Circuit Court on 12 April 2013.
DMC makes reference to the Taxation Information Form filed on behalf of the applicant in this proceeding in the Costs Court, in which the applicant asserts that the respondent “was not engaged by [the applicant] to act on his behalf during the period 15 December 2014 to 16 March 2015”.

DMC states that on 15 December 2014, the applicant instructed the respondent that he wished to represent himself in the Family Court and instructed the respondent to remove itself as lawyers on the record in the Family Court Proceeding. A notice of ceasing to act was filed by the respondent on 15 December 2014. The applicant filed a notice of address for service as a self‑represented litigant the following day, on 16 December 2014.

DMC deposes that although the respondent was no longer the solicitor on record in the Family Court Proceeding, the applicant continued to provide instructions to the respondent and the respondent continued to provide ongoing legal services to the applicant during this period, including advice regarding the Family Court Proceeding. She states that the nature of the applicant’s ongoing instructions in that period and the legal services provided to him are described in the narration contained in the itemised bill of costs annexed to the applicant’s Summons for Taxation filed in this proceeding. These items include numerous telephone attendances and correspondence with the applicant, preparing memoranda, amending various documents on the applicant’s instructions, conferring with the applicant and counsel,[4] and other work.
[4]See pp 17 and following of the itemised bill. Particular examples include the following: “18/12/14 Conference with client and email from solicitor [4 units] … 19/12/14 Telephone to Mr Glick QC [4 units] … 06/01/15 Reviewing child support agreement [2 units] … 06/01/15 Email to client and reviewing agreement [5 units] … 12/01/15 Amending Financial Agreement and Binding Child Support Agreement [12 units] … 12/01/15 Amending Financial Agreement and Binding Child Support Agreement [10 units] … 12/01/15 Letter from solicitor (Nicholes Family Lawyers) and reviewing affidavit [10 units] … 13/01/15 Reviewing affidavit of Mr Kitchin [5 units] … 14/01/15 Perusing affidavit – S Kitchen [5 units] … 16/01/15 Perusing affidavit of S. Nicholes [10 units] … 19/01/15 Settling letter to client (advice) [15 units] … 20/01/15 Reviewing affidavits [19 units] … 09/02/15 Conference with Mr Glick QC [9 units] … 09/02/15 Conference with counsel and teleconference with client [8 units] … 13/03/15 Telephone from Mr Glick QC [6 units] … 13/03/15 Drafting Memoranda to counsel (x2), email from client (x5), email to client (x2), email to solicitor, perusing correspondence between NFL and ANZ [12 units] … 13/03/15 Email from client (x8), perusing documents from client, drafting Memoranda to counsel (x2), preparing briefs (x2), email from solicitor, email to solicitor and email to client (x2) [9 units].”

At the hearing of this matter, Ms Lenga indicated[5] that it was accepted that during the period the respondent went off the record for the applicant until it went back on the record, the respondent provided the applicant with legal advice in connection with the Family Court Proceeding. Further, it was accepted that the respondent was not “fired” by the applicant but directed to go off the record.
[5]Transcript of Proceedings, James v Taussig Cherrie Fildes (Supreme Court of Victoria, S ECI 2020 02789, Gardiner AsJ, 7 October 2021) 49 (‘Transcript’).

As well as the itemised bill of costs to which reference has been made, DMC exhibits correspondence passing between the applicant and the respondent between 12 December 2014 and 6 March 2015 as providing examples of the applicant’s continued engagement of the respondent during the three months that the respondent was not on the court record as acting for the applicant. The correspondence in the form of emails responds to the applicant’s requests for assistance and advice in the conduct of the Family Court Proceeding. In general terms, the respondent’s emails, from either DMC or Ms Goldberg, contain brief, but apparently considered, advice to the applicant on substantive, tactical or procedural matters, and practical issues arising in the Family Court Proceeding.

On 16 March 2015, on the applicant’s instructions, the respondent again went on to the record for the applicant and filed a notice of address for service on that date. On that day, DMC attended the Family Court in the morning and afternoon for a total of 40 units of time. DMC’s associate, Ms Goldberg, also attended the hearing and attended a conference with the applicant and attended to other matters on the applicant’s behalf.

On a review of the narration in the bill of costs, my clear impression is that, save that the respondent did not attend court on behalf of the applicant, the work performed before and after the respondent went off the record was otherwise of the same nature and character. The respondent, while not being on the record, still provided legal services to the applicant of the type described in cl 3.2 of the Legal Services Agreement in connection with the Family Court Proceeding. In the period the respondent was off the record, the applicant regularly approached the respondent for advice, which the respondent provided. In addition, the narration reveals that the respondent engaged with senior counsel on the applicant’s behalf, perused affidavits, and attended to the amendment of a financial agreement and a binding child support agreement.

DMC deposes that on 23 April 2015, the respondent filed a notice of ceasing to act. The reason for this was that the wife’s former lawyers, Nicholes Family Lawyers, sought to join the respondent as a party to the Family Court Proceeding and the respondent considered that this gave rise to a conflict of interest. DMC states that she is aware from subsequent communications with the applicant and his new lawyers that the applicant subsequently engaged two other law firms to represent him in the matter, the first being Stephen Farmer & Associates and then, Coote Family Lawyers.

DMC deposes that around the time that the respondent ceased acting, the firm agreed to a partial release of its lien over the applicant’s file to assist him in providing full instructions to his new lawyers. The documents released to the applicant’s lawyers included a complete set of Family Court documents and transcripts. Hard copies were initially provided to Farmer and Associates and subsequently an electronic record was provided to Coote Family Lawyers.

DMC states that whilst, initially, the applicant had agreed to pay the respondent in instalments for which the respondent would render monthly invoices, he did not do so. In addition to providing court documents and transcripts, as a gesture of goodwill, the respondent agreed to the applicant’s request that the respondent delay the rendering of its final account to the applicant on the expectation that a final account would be rendered when the applicant, or any companies associated with him, sold real property. DMC states the applicant was aware of this arrangement because she had informed him that the respondent had accrued in excess of $150,000 of unbilled work. The respondent held caveats over the relevant real properties that had been lodged with the applicant’s consent and in accordance with a charge signed by him in 2012.

DMC states that in 2019, she was informed by the firm of Rennick & Gaynor Solicitors that the registered proprietors of the affected real properties, which were companies associated with the applicant, intended to sell the properties and sought removal of the caveats. The respondent therefore rendered its final account, which is the itemised account dated 10 July 2019 the subject of this summons for taxation. After some negotiation, the respondent ultimately agreed to lift the caveats to allow the sales to proceed on the basis that the respondent would hold $176,000 in trust, on account of its costs pending taxation, or if there was no taxation, until 12 July 2020. The sum agreed to be held in trust included interest accruing to 12 July 2020, in accordance with r 17.03 and cl 6.02 of Schedule 6 to the Family Law Rules and cl 10 of the Legal Services Agreement. That sum remains in trust pending determination of this proceeding.

DMC concludes her affidavit by stating that from her personal knowledge as a principal of the respondent, she can confirm that:
(a) no “Notice Disputing Itemised Costs Account” under Schedule 6, r 6.21 of the Family Law Rules has been served on the respondent within 28 days of the itemised account or at all; and
(b) the firm has not received notice of any application for an extension (noting that more than a year has now passed since the time expired for service of a notice under the Family Law Rules).
The applicant’s affidavit in opposition to the respondent’s position on the preliminary question

The applicant states that on 6 August 2007, he received a letter from the respondent which, among other things, enclosed three notices for his information and a legal services agreement for execution by him. The covering letter from the respondent, under the hand of DMC, enclosed three pamphlets. The first, apparently prepared by the respondent, was headed “Our fees in Family Law - Legal Profession Act”, which was said to apply if no court proceedings were issued, or if proceedings are issued in the Federal Magistrates Court, a state court such as the Supreme Court, County Court and Victorian Magistrates’ Court, or federal and state tribunals. The second pamphlet, also prepared by the respondent and headed “Our fees in Family Law – Family Law Act”, was said to apply if proceedings were issued in the Family Court of Australia. The third pamphlet, headed “Notice of Rights”, was published by the Family Court of Australia and provided information in respect of certain matters if proceedings were issued in the Family Court of Australia.

The letter informed the applicant that legal services agreements are specifically authorised by the Family Law Rules and the LPA, which, among other things, deals with solicitors’ charges and disbursements. An estimate of fees was provided based on what the respondent had been informed by the applicant to that point, which estimated fees to range between $20,000 and $120,000 and disbursements ranging between $500 and $25,000. The applicant was asked to sign the Legal Services Agreement and return it to the respondent, together with a prepayment of $2,500.

The applicant says that on 25 May 2012, he signed a charge on behalf of himself and a company with which he was associated in favour of the partners of the respondent. The charge, over identified real property together with any other freehold land in which the applicant had any beneficial interest, secured payment of all moneys payable from time to time by the applicant and the associated entities who executed the charge.[6]
[6]The charge was also executed by a second corporate entity associated with the applicant.

The applicant states that on 16 December 2014, he filed a notice of address for service in the Family Court of Australia on his own behalf, as a self‑represented litigant. On 23 April 2015, the applicant states that he received a letter from the respondent in which it advised, among other things, that because of a conflict of interest it was unable to continue to act for him in relation to the Family Court Proceeding. The respondent filed a notice of ceasing to act on that day.

The applicant states that on 1 May 2015, a notice of address for service was filed by Stephen Farmer, a solicitor, on his behalf.

The applicant deposes that on 19 December 2019, representatives of the respondent signed an undertaking that provided how the $176,000 received from the applicant, and paid into its trust account, was to be held.

Respondent’s submissions on the preliminary issue

The respondent is the moving party on the preliminary issue. After briefly reviewing the factual background to the matter, which is essentially not contentious, Ms Cherry, counsel engaged by the respondent, then described the applicable rules and jurisdiction of the Family Court for the purposes of the current context. She observed that the Family Law Rules are made by the judges of the Family Court pursuant to s 123 of the Family Law Act. Subsection 123(1)(g) confers the power upon the judges to make rules prescribing matters relating to the costs of proceedings, including solicitor and client costs and the assessment or taxation of those costs.

Ms Cherry submitted that at the time the subject retainer commenced in August 2007, solicitor/client costs disputes arising in connection with work done for a family law case were governed exclusively by Chapter 19, Part 19.6 of the Family Law Rules as in operation at 17 July 2007. The Family Law Amendment Rules 2008 (‘Family Law Amendment Rules’),[7] which commenced operation on 1 July 2008, expressly preserved those rules in relation to costs of a Family Court matter that had commenced prior to that date. The preserved rules are now contained in Schedule 6 of the Family Law Rules.
[7](No 1) SLI 2008 No. 62.

Ms Cherry states that prior to the introduction of the amending act in 2008, the authorities established that the Family Law Rules were intended to cover the field as the exclusive law (i.e. a “code”) regulating disputes regarding solicitor/client costs for any work done “in or incidental to proceedings under the Family Law Act 1975 or in the Family Court”.[8] She states that while the Family Law Rules in force prior to 1 July 2008 had similarities to legislation dealing with disputes regarding solicitor/client costs in various States and Territories, there were many differences in detail.[9] In that regard, she referred to the fundamental principle of constitutional law that where a State law is inconsistent with a law of the Commonwealth, the Commonwealth law will prevail.[10]
[8]Silver v Consumer Claims Tribunal [1978] 2 NSWLR 313 (‘Silver’).
[9]Reference was made to the decision of the Victorian Legal Practice Tribunal in Ms B v Jeffrey John & Associates [1999] 9 VLPT 27 (12 March 1999), which noted the differences between the Family Law Rules 2004 (Cth) (‘Family Law Rules’) and the relevant provisions of the Legal Practice Act1996 (Vic) then in force.
[10]Australian Constitution s 109.

Ms Cherry referred to the decision of Silver v Consumer Claims Tribunal (‘Silver’),[11] where Rath J of the Family Court of Australia considered the application of the precursor to Part 19.6 in the Family Law Rules and found:

I think that the “topic” of regs. 174 and 175 may be described as disputed accounts for solicitor and client costs for any business done by the solicitor in or incidental to proceedings under the Family Law Act, 1975 (Cth.), or in the Family Court. Those regulations are, in my opinion, intended to be the exclusive law on that topic … There is here I think a clear indication of a legislative intention to define the proper procedure for the resolution of a dispute. The intention is that the Family Court is the proper and only forum for the resolution of this class of dispute.
Accordingly, I am of the opinion that the Family Court has exclusive jurisdiction in disputes relating to such solicitor and client accounts as are referred to in reg. 174. To the extent that the Consumer Claims Tribunal Act, 1974 [NSW] purports to confer jurisdiction on consumer claims tribunals in regard to such accounts it is invalid.[12]

[11]Silver (n 8).The decision of Silver has been applied in this State in B v Home Wilkinson Lowry [1999] VLPT 1, in which the Victorian Legal Profession Tribunal found: “[t]here is clear and persuasive authority to the effect that order 38 of the Family Law Rules provides an exclusive code upon the matter of charging and disputing of legal costs incurred in Family Court proceedings.”

[12]Silver (n 8) 321–2.

Ms Cherry observed that Silver has been affirmed by the Full Court of the Family Court on numerous occasions. In Re P’s Bill of Costs,[13] the Full Court of the Family Court observed:

… the Act and Regulations provide an exclusive code relating to disputed accounts between a solicitor and client for any business done by the solicitor for the client in or incidental to proceedings under the Family Law Act (see Silver v Consumer Claims Tribunal (1978) Fam LN No 55; [1978] FLC 90-514; Re Molan and Messrs Stedman Cameron and Meares (1980) 6 Fam LR 502; [1979] FLC 90-646 and Re Butler and Glendowan (1980) 6 Fam LR 502; [1980] FLC 90-855). In so far as there are observations in Hall and Hall v Barrett (1982) 8 Fam LR 000; [1982] FLC 91-216 to the contrary, we are unable to agree with them. As part of that jurisdiction, the court has both the power and the duty to determine any issue between the solicitor and client which may so arise. Where there is no dispute about the amount of the bill of costs which has been rendered to the client then, after the period of one month prescribed by Reg 198(1) the solicitor may sue upon the account in the appropriate court of competent jurisdiction ... If there is a dispute within that time or as extended under the Regulations it falls to be determined by the Family Court within the framework of the Act and Regulations. The Family Court is not a court for recovery of debts between solicitor and client arising out of family law proceedings but it is the court to finally determine disputes between the solicitor and client upon that topic.[14]

[13](1982) 8 Fam LR 489.

[14]Ibid 494–5 (emphasis added).

Ms Cherry observed that from 1 July 2008, the position in this regard changed. On that day, the Family Law Amendment Rules commenced, which included a specific delegation to the States and Territories of disputes between law firms and clients about costs charged by the lawyer for, inter alia, a fresh application commenced after 30 June 2008. However, as previously mentioned, the Family Law Amendment Rules specifically preserved the application of the rules that applied before 1 July 2008 to costs that were not covered by Chapter 19 of the Family Law Amendment Rules and are now to be found in Schedule 6 to the Family Law Rules, under the heading “Schedule 6 – Costs – rules before 1 July 2008”.

In Johnston v Dimos Lawyers,[15] sitting as the Costs Court Judge, Wood AsJ recognised the change in position in this regard. His Honour observed that prior to 30 June 2008, the Family Court dealt with costs disputes until the Commonwealth relinquished that jurisdiction on 1 July 2008 with the amendments to Chapter 19.
[15](2019) 59 VR 16, [30].

Ms Cherry’s submissions then turned to a consideration of the question of which costs are governed by Schedule 6 of the Family Law Rules.

Ms Cherry contended that subject to three limited exceptions, Schedule 6 of the Family Law Rules still governs costs for work done on a case or the pre‑action procedures associated with a case that commenced before July 2008.[16]
[16]Family Law Rules (n 9) sch 6 cl 6.01(1).

In the dictionary forming part of the Family Law Rules, “case” is a defined term and relevantly means a proceeding under the Family Law Act, the Family Law Regulations, the Family Law Rules, or any other law that vests jurisdiction in the Family Court. “Work done for a case” is also defined and includes “work done in relation to the case (including in relation to the pre‑action procedure) and work done in anticipation of starting the case”. Ms Cherry contended that it therefore includes the preparatory work performed between August 2007 (when instructions were first given in the matter and the retainer commenced) and September 2007 (when the Family Court Proceeding was initiated).

Clause 6.12 of the Family Law Rules prescribes the three limited exceptions. Costs captured by those exceptions are costs to which Part 6 does not apply, notwithstanding that the case commenced prior to 1 July 2008. It provides:

6.12 When this Part does not apply
This Part does not apply to costs for work done for a case, paid or payable by a client to a lawyer:
(a) for a fresh application commenced after 30 June 2008;
(b)by a lawyer who is first retained by a client after 30 June 2008, even if the case in which the lawyer is retained to act is pending on 30 June 2008; or
(c)if the lawyer and client agree in writing, and free from undue influence, that these Rules do not apply to the regulation of the costs to be charged.

In this regard, Ms Cherry contended that in respect of exception (b), the evidence before the Court[17] in this proceeding demonstrates that the respondent was first retained prior to 30 June 2008, so the exception in cl 6.12(b) has no application. There is also no suggestion that the parties have agreed in writing that the Supreme Court Rules do not apply, so the exception in cl 6.12(c) has no application.
[17]DMC affidavit [5], which also accords with the Taxation Information Form filed by the applicant.

Ms Cherry contended that the only potentially relevant exception therefore is the costs for a “fresh application” commenced after 30 June 2008 within the terms of cl 6.12(a).

The dictionary in the Family Law Rules defines “fresh application” exhaustively as meaning “any of the following applications, including compliance with pre‑action procedures associated with them, made after 30 June 2008:
(a)   an Application for Final Orders;
(b) an application that includes an application an Application for Final Orders;
(c)   an Application in a Case filed in connection with a fresh application;
(d) an Application for Divorce;
(e)   an application for consent orders;
(f)    a contempt, contravention or enforcement application, unless an allegation of the contempt, contravention or breach relates to an interim or interlocutory order made in a pending or ongoing Application for Final Orders filed before 1 July 2008;
(g) an application relating to contempt in the face of the court arising from an event occurring after 30 June 2008;
(h) an appeal, and a re‑hearing following an appeal;
(i)     an application for review of final orders made by a Registrar or Judicial Registrar.”
In her affidavit, DMC identifies the 27 interim applications that have been filed in the Family Court Proceeding, identified by date, filing party, and by reference to the nature of the order sought. DMC contends that none of these items fall within the description of “fresh application”. In particular, there is no application for final orders (or any application that includes an application for final orders) filed after 30 June 2008. There is no application in a case filed in connection with a fresh application. There is no “application for consent orders,” which she describes as a particular category of application made inter alia by the filing of a written agreement in the form of a draft consent order for approval by the Court. There is no contempt, contravention or enforcement application, no application relating to “contempt in the face of the Court”, no appeal or re‑hearing following an appeal, and no application for a review of final orders. Although there was an application for leave to appeal, that was filed on behalf of the applicant after the end of the retainer on 22 May 2015 and has no relevance to the issue under consideration here.

Ms Cherry accepts that the only possible “fresh application” is the Application for Divorce which was filed as a discrete proceeding in the Federal Circuit Court on 16 January 2009. In her submissions, she appears to accept that it is likely that this Court has jurisdiction under Part 3.4 of the LPA to assess the costs of that application for divorce. They are readily identifiable and are claimed in the amount of $764.50 for professional costs together with a filing fee of $432, a total of $1,196.50. Ms Cherry contends that if this Court determines it has jurisdiction and is minded to assess those limited costs then the provisions of the Civil Procedure Act obligations are required to be applied, and particularly the obligation to ensure the costs are reasonable and proportionate so that assessment should be done on the papers pursuant to Part 8 of the Supreme Court Rules. Under the terms of s 3.4.19(a) of the LPA they are required to be assessed in accordance with the Costs Agreement.

Ms Cherry submits that as for the balance of the costs charged, the LPA has no application for the reasons she has submitted. Under the applicable Family Law Rules, if the applicant wished to dispute his solicitor’s account he was required to serve the respondent with a notice disputing itemised costs account within 28 days of the itemised account being served on him and he has not done so.[18]
[18]Family Law Rules (n 9) sch 6 r 6.24.

In this regard, a costs assessment under the Family Law Rules requires that a party asks the Court (defined as a court that has jurisdiction under the Family Law Act and is presided over by a judicial officer who has, or has been delegated, the power to exercise the jurisdiction) to determine the dispute by filing certain documents in the Registry of the court where the case was conducted.[19] This is required to be done within 42 days after the notice disputing itemised costs account was served. The procedure for assessment is the subject of Division 6.6.2 of Schedule 6.
[19]Ibid r 6.25(3).

Ms Cherry observes that the final account to the applicant was rendered by the respondent on 10 July 2019. No notice has been served under r 6.24 of the Family Law Rules, nor has an application been made seeking an extension of time and the applicant is now well out of time.

Ms Cherry summarises her submission with the observation that Part 3.4 of the LPA has no application to the Legal Services Agreement to the extent that it relates to costs of and incidental to the Family Court Proceeding. As mentioned, in the definition section of the Legal Services Agreement, it was defined as a costs agreement for the purposes of the Family Law Act and the Family Law Rules. The requirements for a “costs agreement” are prescribed in the Family Law Rules in r 6.15 as follows:

6.15 Costs agreements
(1)A lawyer may make a written agreement (the costs agreement) with a client about the costs to be charged by the lawyer for work done for a case for the client.
(2)The costs agreement must:
(a)specify the type and amount of work to be done by the lawyer;
(b) set out:
(i) the costs payable by the client for the work as a lump sum; or
(ii) the basis on which the costs will be calculated;

(c) state whether a partner, employed lawyer or clerk will work on the case and, if so, that person’s charge out rate;
(d) be fair and reasonable; and
(e) be signed by the lawyer and the client.

(3)       The costs agreement may:
(a)       relate to part only of a case; and
(b)       be amended by written agreement.

(4) The costs agreement must not include a provision:
(a)preventing the client from taking civil action (including liability for negligence) against the lawyer;
(b)by which all or part of the costs payable for work done are calculated by reference to:
(i) an amount ordered by the court;
(ii)the amount of an agreed settlement or consent order; or
(iii)the value of the property or money that may be recovered in a case to which the work relates; or

(c)that makes the costs payable only if the outcome of the case is in the client’s favour.

Ms Cherry submitted that it is only where an agreement is entered into after 30 June 2008 that the law of a State or Territory (i.e. in this instance the Costs Court of this Court) has any application to it. Prior to 1 July 2008, a costs agreement was limited to a written agreement about costs to be charged by the lawyer for work done for a case for the party in accordance with r 6.15 of Schedule 6. By way of summary, Ms Cherry observes that the evidence before this Court demonstrates that instructions were first given in the matter and the retainer commenced in August 2007, the Family Court Proceeding commenced in September 2007, an application for divorce was filed in the Federal Circuit Court on 16 January 2009, and no “fresh application” within the meaning of Schedule 6 was otherwise filed. The costs of the application for divorce are the only costs over which this Court has jurisdiction and they are readily identifiable in the claimed amount of $1,196.50 including the filing fee. The respondent invites the Court to assess those under Part 8 of Order 63 of the Supreme Court Rules.

In conclusion, Ms Cherry submitted that the applicant’s request for the file is no more than a fishing expedition, and a complete set of court documents and transcripts has already been provided to the applicant in hard copy in April 2015 and again in electronic format in July 2015. Those documents are also readily available via the Family Court portal.

The applicant’s submissions in opposition to the preliminary issue

In her submissions, in opposition to the position put by the respondent as to the preliminary issue, Ms Lenga of counsel contended there are ‘four periods’ that are of interest but the respondent was only retained by the applicant three times, under ‘three separate and distinct retainers’:
(a) first period — 3 August 2007 to 15 December 2014;
(b) second period — 16 December 2014 to 15 March 2015;
(c) third period — 16 March 2015 to 23 April 2015; and
(d) fourth period — 23 April 2015 to 22 June 2016.
Ms Lenga contended that the applicant first retained the respondent to represent him in the Family Court Proceeding during the first period, on 3 August 2007, upon signing the Legal Services Agreement dated 6 August 2007, but which backdates by operation of cl 2.2 to cover ‘work done on and after 3 August 2007’.[20] It is contended the first retainer came to an end on 15 December 2014, when the applicant instructed the respondent that he wanted to represent himself and on that day the respondent filed and served on the parties to the proceeding a notice ceasing to act in which it was stated, among other things:

Take notice that:
…
2. I no longer act for you in this case.

[20]Exhibit “JBM-1” to Affidavit of Boyd James (a Pseudonym) sworn 7 October 2021.

Ms Lenga contended that it follows that any work undertaken by the respondent could not have been undertaken pursuant to the first retainer and could only have been undertaken pursuant to a new retainer or purported new retainer entered into some time after the notice of ceasing to act was filed on 15 December 2014. She contended that the portion of the final bill covering the period from 16 December 2014 to 22 June 2016 is within this Court’s jurisdiction as it relates to work undertaken pursuant to a new retainer or purported new retainer between the applicant and the respondent entered into after the notice of ceasing to act was filed on 15 December 2014. She contends any such retainer would also be governed by the LPA. The retainer or purported retainer was not in writing nor evidenced in writing.

In oral submissions, the applicant raised a further submission that, with reference to the phrase “first retained”, an entity can only be first retained once and so, the applicant’s reference to a “second retainer” has no application.[21]
[21]See Transcript (n 5) 46–7.

The applicant contends that on 15 December 2014, when he instructed the respondent that he wanted to represent himself, the First Retainer came to an end and the respondent filed and served a notice of ceasing to act. The next day, the applicant filed a notice of address for service and from 16 December 2014 to 15 March 2015, the applicant was self‑represented. During this second period, Ms Lenga submitted that the respondent provided advice ‘as and when required by the applicant in order [for the applicant] to assist him represent himself’.[22]
[22]Ibid 60.

The applicant contends that in the alternative, and at the very least, there was a new retainer entered into between the applicant and the respondent on 16 March 2015, coinciding with the third period, when the applicant instructed the respondent to represent him and the respondent filed a notice of address for service. This constituted a second retainer (‘Second Retainer’). On 23 April 2015, the end of the third period, the respondent informed the applicant that by reason of a conflict of interest, it was no longer able to represent the applicant and the respondent filed a notice of ceasing to act on the same day.

The fourth period is from 23 April 2015 to 22 June 2016 and Ms Lenga contends that although the respondent was not retained by the applicant, that is not being on the record, ‘the respondent continued to charge the applicant [fees] in excess of $5,000 … and that those charges were incurred up to 14 months after the respondent went off the record’.[23]
[23]Ibid 64.

The summons in this proceeding was subsequently filed on 1 July 2020, within 12 months of the applicant receiving the final bill. Ms Lenga contended that this was within the required time for making an application for costs review pursuant to s 3.4.38(5) of the LPA. As to the bill of costs, the final bill of costs provided by the respondent to the applicant for work undertaken in the family law proceeding is dated 10 July 2019. The final bill was filed on 30 June 2020 and the notice on the bill to clients on the last page of the final bill directs the applicant to, among other things, seek to have the bill assessed by the Costs Court of this court within 12 months of receiving the bill.

It was then contended that further and alternatively there was a “fresh application” for the purpose of cl 6.12(a) of Schedule 6 in respect of the following matters:
(a) the Application for Divorce filed 16 January 2009 (as acknowledged by the respondent in the affidavit of DMC (paragraph 9));
(b) the application in the case brought by Nicholes Family Law on 15 April 2015 seeking costs; and
(c) the appeal brought by the applicant on 22 May 2015.
Ms Lenga’s submissions then consider the applicable rules with reference being made to the Summary of Schedule 6 to Chapter 19 of the Family Law Rules, which, among other things, regulates:

...
(b)the charges of lawyers in family law cases that commenced before 1 July 2008 as provided in subclause 6.01.(1) except:
(i) for a fresh application commenced after 30 June 2008;
(ii)under a new agreement between the lawyer and the client entered into after 30 June 2008;
(iii)under a new retainer entered into by a client in the client’s case after 30 June 2008, if the client instructs a new lawyer in a new firm; or
(iv)for any part of a case in which a Family Court is exercising its bankruptcy jurisdiction.

Ms Lenga submits that it is clear that Schedule 6 does not apply to retainers entered into after 30 June 2008, from which time the state legislation applies to any application, retainer, or agreement occurring after that date.

Reference was made by her to the definition in the dictionary that forms part of the Family Law Rules in respect of the meaning of “fresh application”, which are extracted at para 54 above.

In her submissions, Ms Lenga appears to accept that the question of whether the portion of the Final Bill covering the period between 7 April 2014 to 15 December 2014 is within this Court’s jurisdiction is likely to be resolved in the respondent’s favour. This is because it appears to relate to work done for a case or in complying with pre‑action procedures associated with a case that commenced before 1 July 2008 and would therefore be within the jurisdiction of the Family Court.

As to the work undertaken during the period between 16 December 2014 to 22 June 2016, reference was made to the evidence of DMC in her affidavit,[24] where it was stated that the respondent “... continued to provide legal services including advice to him on the matter throughout that period, save that we were no longer the solicitor on record in the Family Court Proceeding.”
[24]DMC affidavit [10].

The applicant contends that the Notice of Ceasing to Act of 15 December 2014 clearly indicated that the respondent no longer acted for the applicant in the case. It is said that it follows that any work undertaken by the respondent could not have been undertaken pursuant to the First Retainer and could only have been undertaken pursuant to a new retainer or purported new retainer entered into some time after the Notice of Ceasing to Act was filed on 15 December 2014.

The applicant therefore contends that the portion of the Final Bill covering the period from 16 December 2014 to 22 June 2016 is within this Court’s jurisdiction as it relates to work undertaken pursuant to a new retainer between the applicant and the respondent entered into after 15 December 2014. It is said that the retainer or purported retainer was not in writing or evidenced in writing. It is also said that any such retainer would also be governed by the LPA. It is submitted that as the summons in this proceeding was filed on 1 July 2020, which is within 12 months of the applicant receiving the Final Bill, it is therefore within the time limit for making an application for costs review pursuant to s 3.4.38(5) of the LPA.

A further argument was made at the hearing that, by reference the terms of the original retainer, and in particular cl 12.1, a new retainer must have commenced as the work subsequently conducted by the respondent could not be referable to the first retainer. It was said, for example, that the work conducted from that date was not in reference to “legal matters” and could not fall within the scope of the first retainer. Reference was also made to cl 3.2 and it was said the terms contained in that clause “are consistent with the rights and obligations of a solicitor on the record, as representing the client, and they’re not consistent with the rights and obligations of the solicitor not being on the record, and not representing the client in the proceeding”.

Reference was also made to a letter dated 6 August 2007 exhibited to an affidavit of the applicant, in addition to the charge over the relevant assets, which was signed five years after the Legal Services Agreement, but which the applicant contends is still relevant to the interpretation of the scope of the first retainer.

The applicant states that in the alternative, there was at least a new retainer entered into between the applicant and the respondent on 16 March 2015, when the applicant instructed the respondent to represent him and the respondent filed the second notice of address for service. It is also said that further or in the alternative there was a “fresh application” for the purpose of cl 6.12(a) of Schedule 6 of the Family Law Rules in respect of the following:
(a) the application for divorce filed 16 January 2009 (so much is accepted by the respondent);
(b) an application in a case brought by Nicholes Family Law on 15 April 2015 seeking costs; and
(c) the appeal brought by the applicant on 22 May 2015.
The applicant also submitted that, consistent with s 3.4.37 of the LPA, the notice on the last page of the invoice of 10 July 2019 issued by the respondent headed “Notice on bills to clients”, advised the applicant of avenues in the event of a dispute in relation to legal costs. It stated that the applicant may seek to have a bill of costs assessed by the Costs Court either at the time of the interim bill or the time of the Final Bill. It is said by the applicant that the entire Final Bill and all previous bills in the proceeding should therefore fall within the Court’s jurisdiction pursuant to s 3.4.37 and the direction on the notice. In the exercise of reviewing previous bills, the applicant submits that the Court would be assisted with context by reviewing the entire Final Bill.

Ms Lenga referred to the decision of Twigg v Rutherford (‘Twigg’),[25] a matter involving a solicitor who commenced work for the client pursuant to a costs agreement, including appearing for the client in a hearing. After the hearing was completed, the solicitor filed a notice of ceasing to act on the basis that the client failed to pay the solicitor’s fees. Subsequently, the client paid the solicitor’s fees and the solicitor endorsed the costs agreement in conference with the client to note the re‑engagement, and the client signed the agreement. Hannon J held that the solicitor and client had entered into two separate costs agreements, a finding that was upheld by the Full Federal Court.
[25](1996) 133 FLR 46 (‘Twigg’).

Finally, the applicant contends that all the interim bills as well the entirety of the Final Bill should be reviewed in the Costs Court pursuant to the Court’s inherent jurisdiction. Ms Lenga contended that upon being admitted to the legal profession under the LPA, a person becomes an officer of the Supreme Court and the Court’s inherent jurisdiction over its officers continues to exist as a supplement to statutory regulation. In support of that proposition, references were made to the decision of Kowalski v Bourne,[26] in which the Full Court of the Supreme Court of South Australia held that “the Court has inherent jurisdiction, predating and independently of statute, to determine by taxation the amount payable by a client to a solicitor”.[27] The Full Court then referred to the statement of Dixon J in Woolf v Snipe (‘Woolf’),[28] where his Honour stated:

The superior Courts of law and equity possess a jurisdiction to ascertain, by taxation, moderation or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client, and that jurisdiction is derived from three sources and falls under three corresponding heads.
First, a jurisdiction exists founded upon the relation to the Court of attorneys and solicitors considered as its officers. This jurisdiction, commonly called the general jurisdiction of the Court, enables it to regulate the charges made for work done by attorneys and solicitors of the Court in that capacity, and to prevent exorbitant demands. That such a jurisdiction was exercised by the Court of Chancery was never doubted … The Courts of law appear to have exercised a like jurisdiction, … but the existence of the authority was disputed by the Court of King’s Bench in Dagley v. Kentish, and for a few years it fell into disuse ... After the Judicature Act the existence of the Court’s general jurisdiction was completely established.[29]

[26][2017] SASCFC 24.

[27]Ibid [27].

[28](1933) 48 CLR 677 (‘Woolf’).

[29]Ibid 678–9.

Ms Lenga also referred to passages of Professor Dal Pont’s work on costs, where he observed:

… the inherent jurisdiction is chiefly a residual jurisdiction invoked in circumstances where, although an order for assessment cannot be made under the statute, justice requires that it be made. As such, the court’s inherent power to order the taxation of a bill rests upon the exercise of judicial discretion.[30]

[30]Gino Dal Pont, Law of Costs (LexisNexis, 4^th ed, 2018) [5.54] (emphasis in original) (citation omitted).

Dal Pont observes further:

Judges have remarked that inherent jurisdiction may be exercised ‘in the way it might think fit,’ if circumstances make it right to do so, ‘in a proper case… taking care to impose such terms as will prevent any injustice being done,’ and where it is ‘just and equitable’ so as to do justice between the parties by ensuring ‘that the solicitor, as an officer of the court, is remunerated properly and no more, for the work he does as a solicitor’.[31]

[31]Ibid [5.55] (citations omitted).

The applicant submits that the Court should exercise its inherent jurisdiction to review the interim bills from the commencement of the First Retainer on 6 August 2007 as well as the entirety of the Final Bill for the following reasons:
(a) the Family Law Rules do not exclude the inherent jurisdiction of this Court;
(b) the applicant may be unable to have the interim bills reviewed in the Family Court owing to what is described by Ms Lenga as “a timing issue” relating to those interim bills;
(c) the applicant, subject to the Court’s discretion, may be unable to have the majority of the Final Bill (being costs for work done for a case or in complying with pre‑action procedures associated with a case that commenced before 1 July 2008) reviewed in this Court pursuant to the LPA because it is within the Family Court’s jurisdiction. The applicant submits that the Family Court has jurisdiction to assess the portion of the Final Bill covering charges incurred between the period 7 April 2014 to 15 December 2014 as a result of the respondent’s failure to comply with cl 6.03(2) of Schedule 6;
(d) the remuneration charged by the respondent is clearly not fair and reasonable, and examples are provided in this regard; and
(e) it is just and equitable so as to do justice between the applicant and the respondent by ensuring that the respondent is remunerated properly and no more for the work it did as a solicitor.
In conclusion, Ms Lenga submitted that the evidence before the Court demonstrates that:
(a)   the respondent directed the applicant to seek to have the Final Bill assessed by the Costs Court;
(b) this Court has jurisdiction to assess at least the portion of the bill covering charges incurred during the period 16 December 2014 to 22 June 2016;
(c)   further or alternatively, the Court has jurisdiction to review work the subject of the fresh applications;
(d) pursuant to s 3.4.37 of the LPA, this Court may review all interim bills as well as the entire Final Bill; and
(e)   further and alternatively, pursuant to the Court’s inherent jurisdiction, the Court may review all interim bills as well as the entire Final Bill.
The respondent’s submissions in reply

Ms Cherry’s submissions in reply began with a response to the applicant’s submission that this Court enjoys inherent jurisdiction to assess each of the bills of costs the subject of the applicant’s summons. She submitted that it is not in dispute that this Court is a superior court vested with inherent jurisdiction. So much is clear from s 85 of the Constitution Act 1975 (Vic), which establishes the Supreme Court as the “superior Court of Victoria with unlimited jurisdiction”.

However, Ms Cherry submitted, the Costs Court does not enjoy the same unlimited powers, notwithstanding that it is established within the Trial Division. A number of authorities were referred to in this regard, including the decision of Bell J in Owerhall v Bolton & Swan Pty Ltd (‘Owerhall’)[32] and McMillan J in Smoel & Wooster v Piper Alderman (No 3).[33] Both authorities make similar observations about the limited jurisdiction of the Costs Court. In Owerhall, Bell J stated:

Although the Costs Court is established within the Trial Division of this court, it is a statutory court of limited jurisdiction. Under s 17D, that jurisdiction [to the extent it was relevant in Owerhall] is ‘to hear and determine the assessment, settling, taxation or review of costs’ in the courts and tribunals specified in sub-s(1)(a)-(d). In relation to matters within its jurisdiction, s 17D(2) gives the Costs Court such powers of ‘the Court’, ie the Supreme Court, as are necessary to enable the exercise of that jurisdiction. But, if a matter does not relate to [the jurisdiction identified under s 17D], the Costs Court does not have jurisdiction, and therefore may not exercise any powers, in relation to it.
[And in relation to a referral to a Judge for a direction under r 63.51] … the direction must relate to ‘any question arising on a taxation’. That phrase in the rule recalls the limited jurisdiction of the Costs Court under the Supreme Court Act. As we have seen, s 17D confines that jurisdiction … On a reference, the judge only has powers of direction in relation to such questions. A river does not rise higher than its source.[34]

[32][2015] VSC 417 (‘Owerhall’).

[33][2020] VSC 176.

[34]Owerhall (n 32) [7], [9] (emphasis added) (citations omitted). Reference was also made to a number of other authorities in this regard. In Love v Thwaites & Anor (No. 5) [2012] VSC 636, Dixon J at [18] formed a preliminary view that the Costs Court had jurisdiction under s17D to hear a particular matter, but in case there was any doubt, also made a referral to the Costs Court to ensure that it had jurisdiction, implicitly accepting that if the Costs Court did not otherwise have jurisdiction under s17D then it did not have jurisdiction without such a referral; in Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd [2017] VSC 220, Wood AsJ at [15] described the Costs Court’s jurisdiction as “prescribed by section 17D”; in Gadens Lawyers v Beba Enterprises Pty Ltd [2012] VSC 519, Emerton J said “the Costs Court’s powers are conferred by s17D”; in AJH Lawyers v Mathieson Nominees Pty Ltd & Anor [2015] VSC 37, the Court of Appeal (Hansen and McLeish JJA and Robson AJA) said at [12], “The powers and functions of the Costs Court are set out in s17D”; and in Waybecca Pty Ltd v Vella & Anor [2018] VSC 492, Wood AsJ at [18] stated “The jurisdiction of the Costs Court is contained in the Supreme Court Act 1986. Section 17D prescribes the parameters.”

Ms Cherry contended therefore that the Costs Court of this Court is a creature of statute, established pursuant to s 17C(1) of the Supreme Court Act 1986 (Vic) (‘Supreme Court Act’), which was introduced by s 5 of the Courts Legislation Amendment (Costs Court and Other Matters) Act 2008 (Vic). She stated that the nature and scope of the Costs Court’s jurisdiction is prescribed exhaustively in s 17D, which provides:

Powers and functions of Costs Court
(1)       The Costs Court—
(a)has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in all proceedings in the Court;
(b)has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in proceedings in—
(i)        the County Court;
(ii)       the Magistrates’ Court;
(iii)      VCAT—
if, by or under any Act, the Rules or the Rules of those courts or VCAT, costs are to be assessed, settled, taxed or reviewed by the Costs Court;
(c)has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in proceedings in—
(i)        the County Court;
(ii)       the Magistrates’ Court;
(iii)      VCAT—
if, by any order of a court or VCAT, costs are to be assessed, settled, taxed or reviewed by the Costs Court;
(d)has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in proceedings in the County Court, the Magistrates’ Court or VCAT, as the case requires, in which—
(i)there is an entitlement to costs by or under any Act, the Rules of the County Court, the Magistrates’ Court or VCAT or arising from an order of the County Court, the Magistrates’ Court or VCAT; and
(ii)the amount of those costs has not been fixed by the court or by VCAT;

(e)has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in an arbitration, subject to the Commercial Arbitration Act 2011;
(ea)must conduct costs assessments under Division 7 of Part 4.3 of the Legal Profession Uniform Law (Victoria);
(f)must hear and determine costs reviews under Division 7 of Part 3.4 of Chapter 3 of the Legal Profession Act 2004;
(g)must hear and determine any reviews under Division 5 of Part 4 of the Legal Practice Act 1996;
(h)has any other jurisdiction in relation to costs given to it—
(i)        by or under this Act or any other Act; or
(ii)       by the Rules; or
(iii)      by the Rules of another court or of a tribunal.

(2)The Costs Court has such powers of the Court as are necessary to enable it to exercise its jurisdiction.
(3)The Costs Court must exercise its jurisdiction with as little formality and technicality, and with as much expedition, as the requirements of this Act, the Rules and the proper consideration of the matters before the Court permit.
(4)Subject to this Act and the Rules, the Costs Court may regulate its own procedure.

The summons in this proceeding was filed pursuant to s 3.4.38 of the LPA, presumably in reliance of the jurisdiction described by s 17D(1)(f). However, the respondent contends that the costs the subject of this proceeding fall outside the scope of s 17D as those costs are subject to the code preserved in the Family Law Rules in Schedule 6 by the Family Law Amendment Rules. As has been mentioned, the only exception in this regard is the costs associated with the Application for Divorce, which the respondent accepts may be assessed pursuant to Part 8 of Order 63 of the Supreme Court Rules.

Ms Cherry then addressed the position being taken by the applicant by his assertion that to the extent costs were incurred after 15 December 2014, they were costs incurred under a new retainer and therefore subject to the LPA and not the code contained in the Family Law Rules. Ms Cherry contended that it is not the case that the respondent’s retainer “came to an end” in December 2014. In this regard, she referred to the evidence in the DMC affidavit,[35] demonstrating the continued provision of services to the applicant during the period 15 December 2014 to 16 March 2015. On 15 December 2014, the applicant instructed the respondent to withdraw as his lawyers on the record in the Family Court Proceeding to allow him to act as a self‑represented litigant with ongoing assistance from the respondent.[36] That ongoing assistance and provision of legal services is itemised in the narrative in the account of 11 July 2018. This evidence was unchallenged and there has been no evidence filed in response.[37]
[35]See DMC affidavit [10]–[11].
[36]Exhibit ‘DC-6’ to DMC affidavit.
[37]See Transcript (n 5) 49.

Ms Cherry submitted that the uncontradicted evidence is that the applicant never terminated his retainer with the respondent. Withdrawal from the Court record did not terminate that retainer; the applicant continued to provide instructions and the respondent continued to provide legal services to him.

Ms Cherry referred to the decision of Sloss J in Lee v MK Trading Co Aust Pty Ltd (‘Lee’).[38]That case involved an application for an injunction to restrain a solicitor, not only from being a solicitor on the record but from acting for the client ‘in the background’. Ms Cherry referred to the authority as relevant to the issue of there being a distinction between a solicitor who was on the record and a solicitor who may not be on the record but is nevertheless acting or assisting. In Lee, the defendants had sought an injunction that a solicitor who had gone off the record for the plaintiff by the time of the application be nonetheless also restrained from any involvement by way of providing advice or assistance to the plaintiff. It was said that the plaintiffs in the application had made clear that the plaintiffs wished to have the solicitor concerned continue to assist them giving legal advice, notwithstanding there had been a change of solicitor on the Court record. Sloss J considered that the solicitor should be restrained from acting as a solicitor and providing professional services of the kind ordinarily performed by a solicitor for a client in a proceeding, notwithstanding that that solicitor was not the solicitor acting on the record[39] and ordered that there be an injunction to restrain the solicitor from providing advice and assistance notwithstanding that solicitor had gone off the record. Ms Cherry submitted that Lee provided support for the proposition that there was a distinction to be drawn between a solicitor being on the record in a legal proceeding and a solicitor who is not on the record but may nevertheless be providing advice or assisting in litigation.
[38][2021] VSC 343 (‘Lee’).
[39]Ibid [63]–[64].

Further, Ms Cherry submitted that there is no merit in the submission by the applicant that there was a new retainer entered into on 16 March 2015, when he instructed the respondent to represent him again in the Family Court Proceeding and pursuant to which the respondent filed a second notice of address for service. The applicant submits that this is illustrated by the fact that in any litigious matter, it is inevitable that a solicitor will be instructed for some period, whether it be for a day, a month, a year or more, before becoming a solicitor on record in any court proceeding, assuming they go on to the record at all; it cannot be suggested that this gives rise to an implication that there are two separate retainers, one before and one after a solicitor goes on the record.

Ms Cherry then addressed the applicability of certain authorities relied upon by Ms Lenga on this issue. The first of these was the decision of Twigg, which Ms Lenga had submitted was authority for the proposition that when a solicitor came off the record that necessarily meant the end of the retainer. Ms Cherry states that the authority does not stand for that proposition; in Twigg, the circumstances were almost entirely different. A solicitor had gone off the record in circumstances where there was a breakdown of the relationship between the solicitor and the client by reason of non-payment of fees. The solicitor went off the record and ceased acting for the client entirely and, Ms Cherry contended, there was a crystal‑clear termination of the retainer. She submitted that in those circumstances it is not surprising that when the client re-instructed that solicitor sometime later, it was found to constitute a new retainer.

Ms Cherry then addressed the relevance of the decision in Toyota Motor Corp Australia Ltd v Ken Morgan Motors Pty Ltd (‘Ken Morgan’).[40] Ms Cherry submitted that that case was authority for the proposition that the Court and an opposing party are entitled to rely on service of documents upon solicitors as good service on the client where that solicitor is the solicitor on the record. In Ken Morgan, it arose in circumstances where the counterclaim brought by the client had been discontinued, yet the solicitor stayed on the record. The question under consideration in that case was simply whether in that context, service on the solicitors constituted good service and the Court of Appeal found that it did. Ken Morgan is authority for the proposition that when a solicitor is on the record, the solicitor must accept service for the client because that is one of the purposes of being on the record; it says nothing about the solicitor who is off the record but continuing to advise in the background. Ms Cherry made reference to Exhibit ‘DC-6’ of the DMC affidavit, which provided illustration that the applicant was continuing to request assistance and the respondent was continuing to provide such assistance while the respondent was off the record. By way of example, in January of 2015, there were references to amended drafts of a financial agreement and a binding child support agreement.
[40](1994) 2 VR 106.

Ms Cherry then responded to the reference by Ms Lenga of the decision of Re A Solicitor,[41] a UK Chancery Division decision examining the powers of a court with undisputed unfettered jurisdiction. Ms Cherry submitted that the statutory regime in force in the jurisdiction under consideration expressly allowed a suit for taxation, the equivalent in the High Court of Justice of the United Kingdom of a summons for taxation in the Costs Court. She submitted that the case is an example of a suit for taxation being heard before a court that had undisputed, unfettered inherent jurisdiction, unlike the position that applies in respect of the Costs Court.
[41][1961] Ch 491.

100Ms Cherry then referred to the decision of Woolf. Ms Cherry submitted that the statutory regime under consideration was completely different to that under consideration here. In Woolf, a solicitor had filed a motion for an order directing the principal registrar to tax his bill and the principal registrar upheld an objection by the client in that case that there was no authority for him under the statutory regime that applied without either an order of the court or some other referral.[42] While Dixon J made some observations about the general jurisdiction of the Court to regulate a solicitor’s costs and to prevent exorbitant demands, his Honour dismissed the motion on the basis of a lack of power under the relevant legislation and upheld the registrar’s decision to refuse the right to tax. Ms Cherry contended that Woolf has no relevance on the question of the jurisdiction of a court such as the Costs Court, which is established by legislation and clearly of limited jurisdiction.
[42]Woolf (n 28) 678.

101Ms Cherry then moved to address the applicant’s submission that there were three “fresh applications”, such as to take parts of the costs outside the scope of the codified Family Law Rules and within the scope of the LPA and therefore within the jurisdiction of the Costs Court. Those fresh applications are said to be first, the Application for Divorce; secondly, a costs application brought by Nicholes Family Law, who is a third party to the Family Court proceeding; and thirdly, an application which the applicant describes as an appeal but which the respondent understands to be an application for leave to appeal.

102Ms Cherry noted that it was conceded from the outset that the costs associated with the Application for Divorce are amenable to review in the Costs Court. They total $1,196.50 and it is said that they would be apt for summary determination. As to the second, the “Nicholes application” was an application for costs. The respondent contends that a costs application is not a “fresh application” within the meaning of the dictionary definition in the Family Law Rules and the associated costs with that are outside the jurisdiction of the Costs Court. The applicant has not filed any evidence nor identified any part of the exhaustive definition of “fresh application” within the Family Law Rules which would form the basis for a contention that the Nicholes application would be characterised as a fresh application.

103As to the costs of the application for leave to appeal, the applicant has not filed any evidence, nor identified that part of the exhaustive definition of “fresh application” within the Family Law Rules which it alleges could cover those costs. Ms Cherry submitted that an application for leave to appeal is not an appeal (see the non-exhaustive definition of “appeal” at r 1.16). These costs are in any event only $1,827.50 and they are at best appropriate for assessment in chambers pursuant to Part 8 of Order 63 of the Supreme Court Rules.

104Ms Cherry contended that that the submission by the applicant that a pro forma “notice” appended to the bill, stating that the applicant had a right to approach the Costs Court in the event of there being a dispute as to costs on an invoice had the effect of attracting the jurisdiction of the Costs Court where jurisdiction does not otherwise exist, was subject to adverse judicial authority. Reference was made in this regard to Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd,[43] where Wood AsJ rejected a submission that the law firm in question had submitted to the jurisdiction of the Costs Court by including a statement of the client’s review rights in its costs agreement and invoices. His Honour rejected the submission that the law firm was estopped from objecting to jurisdiction. He dismissed the proceeding for want of jurisdiction and observed that “[t]he inclusion of [a statement of] rights in the respondent’s Costs Agreement and invoices cannot confer jurisdiction on the Costs Court if legislation prohibits the application from initiating this proceeding.”[44]

105Ms Cherry turned to the submission made in respect of the inclusion of a proforma statement of rights on the last page of the bill of costs that identifies a client’s rights in respect of a dispute in relation to legal costs. The statement identifies the avenues of redress available to a client in the event of a dispute in relation to legal costs being either a complaint to the Legal Services Commissioner or, in other circumstances, the right to have the bill of costs assessed by the Costs Court of this Court. Ms Cherry observes that this notice appeared in a bill of costs issued years after the end of the retainer, the delay having been occasioned by reason of the agreement to postpone payment for the benefit of the applicant. Ms Cherry contended that the mere appearance of such a statement at the conclusion of the bill cannot vest jurisdiction in this Court where it would otherwise not exist. She cited several authorities in support of her submission in that regard.[45]

[43]Jasmin Solar Pty Ltd v Fitzpatrick Legal Pty Ltd [2017] VSC 220 (‘Jasmin Solar’).

[44]Ibid [20].

[45]Ibid; Bilson v Esposito [2019] VSC 801.

Consideration

106In my opinion, the respondent’s contention that the Costs Court is without jurisdiction should be upheld. The applicant’s summons filed 30 June 2020 seeking review of the costs claimed by the respondent in its bill of costs dated 10 July 2019 and all other bills of costs delivered between 1 July 2008 and December 2014 should be dismissed.

107The terms of engagement of the respondent by the applicant are contained in the Legal Services Agreement entered into on 6 August 2007. The relevant terms of the Legal Services Agreement for the purpose of this application appear at paragraphs 13 to 19 of these reasons. The Legal Services Agreement was expressed to be a “costs agreement” for the purpose of the Family Law Act and the Family Law Rules.[46] The respondent’s retainer was defined in cl 2 in terms of the applicant retaining the respondent “to act on the client’s behalf in relation to the client’s legal matters”. It was said to relate to work done on or after 3 August 2007. The applicant agreed to pay the respondent professional fees for “legal services on a time-costed basis” calculated by reference to a schedule to the agreement. Clause 3.2 contained an acknowledgement that the applicant would be charged for “time spent on or incidental to work requiring the skill of a solicitor, for example (but not limited to) conferring, negotiating, receiving instructions, advising … attending court, appearing in court, telephone calls, drafts and settling documents and letters, reading documents and research”. Clause 12 contemplated that the respondent would “carry out the work required in dealing with the [applicant’s] legal matters and bringing same to a conclusion whether or not through litigation or alternative dispute resolution with professional skill and diligence”.

[46]See [13] above.

108A good deal of the submissions and evidence in this application concerned the issue of whether the applicant, by directing the respondent that he wished to represent himself in the Family Court and for the respondent to remove itself as lawyers on the record in the Family Court Proceeding amounted to the termination of the respondent’s retainer in mid-December 2014. As has been seen, the significance of this is that this event gave rise to the termination of the retainer under the Legal Services Agreement of 6 August 2007 meant that for legal work performed after that date, the jurisdiction of this Court would be attracted because of the introduction of the Family Law Amendment Rules, which included a specific delegation to the States and Territories of disputes between law firms and clients about costs charged by the lawyer. As has been discussed, Schedule 6 of the Family Law Rules continued to operate because the Family Law Amendment Rules specifically preserve the application of the rules that applied before 1 July 2008.

109 Clause 6.12 of the Family Law Rules provided for three exceptions in which the application of the rules that applied before 1 July 2008 were not preserved. The only conceivable exception which may have application in these circumstances is cl 6.12(a). As to cl 6.12(b), the respondent was clearly retained before 30 June 2008. As to cl 6.12(c), it has not been suggested that the applicant and respondent have made an agreement in the terms described in that subparagraph. As to what constitutes a “fresh application”, this is defined exhaustively in the Family Law Rules. The relevant provision is set out at paragraph 54 above. Aside from the Application for Divorce that has been mentioned, in my view, on a review of the evidence, there was no “fresh application” brought on behalf of the applicant by the respondent. None of the applications described in paragraph 54, other than the Application for Divorce (which the respondent concedes is the subject of this Court’s jurisdiction) has been identified by the applicant.

110As to the effect of the direction by the applicant to the respondent to go off the court record in the Family Court Proceeding, the evidence reveals[47] that during the period that the respondent was off the record for the applicant, from mid-December 2014 until 6 March 2015, the respondent was in regular communication in respect of the applicant’s “legal matters” and was clearly providing “legal services” to the applicant.[48] It was not suggested by the applicant that he dismissed the respondent as his solicitors; to the contrary, the emails passing between the applicant and the respondent, which are exhibited to the DMC affidavit, clearly indicate he looked to the respondent as his solicitors for assistance in his conduct of the Family Court Proceeding. Indeed, the applicant’s counsel accepted that during the period that the respondent went off the record, it provided the applicant with legal advice in connection with the Family Court Proceeding and that the respondent was not dismissed by the applicant. On 16 March 2015, the respondent went back on the record and attended the Family Court on his behalf. The respondent continued to represent the applicant until 23 April 2015, when the respondent filed a notice of ceasing to act. This was occasioned by reason that the wife’s former lawyers, Nicholes Family Law, sought to join the respondent as a party to the Family Court Proceeding and it was considered that this gave rise to conflict of interest. The retainer clearly came to an end at that point.

111I accept the submission of Ms Cherry that the retainer continued after the respondent went off the record for the applicant in December 2014; no new retainer came into existence. As Ms Cherry contended, in any litigious matter, a solicitor will be instructed for a period before becoming the solicitor on the record for that party in a court proceeding if that step becomes necessary. That does not give rise to a fresh retainer upon the solicitor going on the record if the original retainer involved provision of general legal advice, as the Legal Practice Agreement does in this instance.

[47]See [26]–[28] above.

[48]See examples summarised at n 4.

I also accept Ms Cherry’s submission in response to Ms Lenga’s contention that there were three “fresh applications” so as to bring those matters within the scope of the LPA and the jurisdiction of the Costs Court. The first, the Application for Divorce, was accepted from the outset as being susceptible to the jurisdiction of the Costs Court. The second, involving the costs application brought by Nicholes Family Law in respect of the issue that subsequently gave rise to the respondent going off the record does not come within any of the grounds of a “fresh application” within the meaning of the Family Law Rules. In my view, the applicant’s submission in that regard does not rise above assertion and is not supported by any evidence that would support a contention that that application was a “fresh application” within the meaning of the Family Law Rules. The third matter, that relating to the application for leave to appeal, is also not, in my view, a “fresh application” within the definition of “appeal” at r 1.16. The costs of that application for leave are only claimed to be $1,827.50 and together with the costs of the divorce of $1,196.50, would be more appropriate for assessment in chambers by a Costs Registrar pursuant to Part 8 of Order 63.

113I also reject the applicant’s submission that the Costs Court is vested with inherent jurisdiction. The authorities to which reference has been made confirm that the jurisdiction of the Costs Court is strictly confined to the matters mentioned in s 17D of the Supreme Court Act. The summons issued by the applicant appears to seek recourse to the jurisdiction provided by s 17D(1)(f) for the hearing and determination of a cost review but such jurisdiction is only available if it is demonstrated that Family Law Rules do not prevail and I consider that they do. In my view, s 109 of the Australian Constitution operates so that the Federal legislation prevails over state or territory legislation dealing with the same subject matter, as here.

114 I would also reject the contention made on behalf of the applicant that the appearance of a proforma notice on the respondent’s invoice informing the applicant of rights to, inter alia, have bills reviewed by the Costs Court in some way vests jurisdiction in the Costs Court when it otherwise does not exist. It is trite to say that parties cannot vest a court with jurisdiction by consent, estoppel, or otherwise where that jurisdiction does not exist.

115The parties should consult and agree on a form of order that conforms with these reasons. My preliminary view is that the costs should follow the event and that the applicant should pay the respondent’s costs of the preliminary question, including any reserved costs.

[2022] VSC 559

21 September 2022