Johnston v Dimos Lawyers
[2019] VSC 462
•19 July 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COSTS COURT
COSTS COURT LIST
S ECI 2018 02451
IN THE MATTER of Section 198(1) of the Legal Profession Uniform Law (Victoria)
BETWEEN
| LUKE JOHNSTON | Applicant |
| v | |
| LDA LEGAL PTY LTD (ABN 52 614 167 994) TRADING AS DIMOS LAWYERS | Respondent |
---
JUDGE: | Wood AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 27 June 2019 |
DATE OF DECISION & REASONS: | 19 July 2019 |
CASE MAY BE CITED AS: | Johnston v Dimos Lawyers |
MEDIUM NEUTRAL CITATION: | [2019] VSC 462 |
---
COSTS COURT – Legal Profession Uniform Law 2014 – Costs agreement void for non compliance with disclosure – Sections 174 and 178 – Basis of assessment – Sections 6 and 172 – Fixed costs legislative provision.
---
APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr P Lovell | Davis & De La Rue |
| For the Respondent | Ms S Cherry | Dimos Lawyers |
HIS HONOUR:
This proceeding was filed on 21 November 2018. The respondent acted for the applicant in two proceedings. The main proceeding was in relation to his Family Law issues which culminated in proceedings in the Federal Circuit Court, and the minor proceeding was in relation to an intervention order. The applicant is seeking to review the respondent’s bills of costs totalling $253,691.29.[1]
[1]Quantified at only $236,609.66 by the Respondent in a letter dated 29 January 2019.
The parties identified a preliminary issue to be determined, namely the basis on which the respondent’s costs are to be assessed.[2] The hearing was held on 27 June 2019 at which time the decision was reserved. I now publish the decision and reasons.
[2]Order made 13 March 2019 in ‘Other matters’.
The applicant relied upon a Notice of Dispute dated 15 February 2019, an affidavit of Raymond John De La Rue sworn 18 April 2019, and two written submissions dated 18 April 2019 and 11 June 2019.
The respondent relied upon Cost Agreements, cost disclosure material, and a cash account filed on 29 January 2019, a Notice of Dispute dated 26 February 2019, an affidavit of Trifon Dimos sworn 17 May 2019 and written submissions dated 17 May 2019.
There was no dispute that there were two Cost Agreements entered into between the parties. The one relating to the Family Law dispute was dated 18 February 2016 (‘Family Law Cost Agreement’) and it contained an initial written total costs estimate of $20,000. This therefore required updating pursuant to s 174(1)(b) of the Uniform Legal Profession Law 2014 (‘the Act’). The one in relation to the intervention order was dated 26 March 2018 (‘IVO Cost Agreement’). From the applicant’s Notice of Dispute filed, a charge of $4,150 is attributed to this second matter which rendered the initial written estimate of $5,500 accurate.[3] The estimate therefore did not require updating.
[3]Paragraph 4 of the Dimos affidavit sworn 17 May 2019 and paragraphs 13 and 14 of the Applicant’s Notice of Dispute dated 15 February 2019.
The applicant relied on s 178(1)(a) of the Act to contend that the Family Law Cost Agreement is void for non-compliance with disclosure obligations in relation to estimates and updating of estimates as provided for in the Act. The affidavit filed on behalf of the applicant has not been sworn by the applicant . It was sworn by Mr De La Rue as a ‘Legal Costs Consultant’ who deposed that it was prepared on the ‘basis of ‘information provided to me, I believe that information to be true.’[4]
[4]Paragraph 3 of the De La Rue affidavit sworn 18 April 2019.
The respondent took issue with the entire affidavit on numerous bases,[5] the most significant of which was his ‘unqualified opinion and speculation’. The applicant’s response was to submit that ‘most of the content of the De La Rue affidavit is self-evident’ and can be ‘repeated as submissions.’[6]
[5]Paragraph 2 of the Respondent’s written submissions dated 17 May 2019.
[6]Paragraph 13 of the Applicant’s written submissions dated 11 June 2019 and transcript – 27 June 2019 – page 7, lines 10 to 12.
The applicant contended in the Notice of Dispute that the initial costs estimate of $20,000 was not updated prior to the receipt of eight lump sum bills totalling $70,020.12.[7] An update of the respondent’s costs of around $75,000 was then said to be followed by invoices of $110,461.14.[8] The final analysis overall was said to be estimates of $158,000 and bills of $232,453.[9]
[7]Paragraph 1 of the Applicant’s Notice of Dispute dated 15 February 2019.
[8]Paragraphs 2 & 3 of the Applicant’s Notice of Dispute dated 15 February 2019.
[9]Paragraph 8 of the Applicant’s Notice of Dispute dated 15 February 2019.
The respondent contends that estimates were provided in accordance with the Act and initially took the position that some of the bills were inflated with costs relating to the intervention order.[10] This latter position was resiled from in the affidavit of Mr Dimos,[11] in written submissions filed on 17 May 2019[12] and at the hearing.[13]
[10]Paragraph 3(c) of the Respondent’s Notice of Dispute dated 26 February 2019.
[11]Paragraph 4 of the Dimos affidavit sworn 17 May 2019.
[12]Paragraph 3 of the Respondent’s written submissions dated 17 May 2019.
[13]Transcript – 27 June 2019 – page 27, lines 21 to 30.
The objections to the affidavit of Mr De La Rue were well founded. There was no reference to his qualifications or experience, he expressed opinions in his capacity as an advocate, without reference to the Expert Witness Code of Conduct,[14] and did not depose to the source of information where he deposed to matters on the basis of ‘information’. I see no issue with treating the contents as a submission, although the relevance and accuracy of some of the content is not assured. For example, he deposed that the solicitor who had conduct of the work on behalf of the respondent had her employment terminated on 5 June 2018.[15] This irrelevant assertion made its way into the applicant’s written submissions.[16] In fact Mr Dimos, on behalf of the respondent, deposed that this was not correct.[17]
[14]Rule 44.01 and Form 44A of the Supreme Court (General Civil Procedure) Rules 2015.
[15]Paragraph 9 of the De La Rue affidavit sworn 18 April 2019.
[16]Paragraph 9(f) of Applicant’s submissions dated 18 April 2019.
[17]Paragraph 20 of the Dimos affidavit sworn 17 May 2019.
The applicant objected to six paragraphs of the affidavit of Mr Dimos on the basis of hearsay.[18] The respondent countered those submissions on the basis that hearsay was permitted in an interlocutory hearing (which this is) relying on the Evidence Act 2008,[19] and that two of the paragraphs deemed objectionable by the applicant did not contain hearsay as the deponent referred to matters he was privy to.[20] Again, the respondent’s submissions are correct.
[18]Paragraph 14 and parts of paragraphs 2, 5, 8, 13, & 15 of the Dimos affidavit sworn 17 May 2019 (see paragraph 14 of the Applicant’s submission dated 11 June 2019).
[19]Section 75 of the Evidence Act 2004.
[20]Paragraph 14 and part of paragraph 15 of the Dimos affidavit sworn 17 May 2019.
At the hearing the applicant analysed all the examples contained in the affidavit of Mr Dimos which were relied upon to establish compliance with the disclosure obligations contained in the Act in relation to estimated costs. There were 55 examples in total.[21] With the exception of three examples they were characterised by the applicant as either not being estimates as contemplated by the Act, or not being in writing as required by s 174(6) of the Act. The Act requires an initial estimate (that is of future costs)[22] and an update of significant change to that initial estimate or any updated estimate.[23] The three occasions where compliant disclosure occurred were said to be in the original disclosure on 18 February 2016, in a letter on 26 April 2017[24] and in an email of 9 May 2018.[25]
[21]Paragraph 11 of the Dimos affidavit sworn 17 May 2019.
[22]Section 174(1)(a) of the Act.
[23]Section 174(1)(b) of the Act.
[24]Paragraph 11.21 of the Dimos affidavit sworn 17 May 2019.
[25]Paragraph 11.45 of the Dimos affidavit sworn 17 May 2019.
At the hearing the respondent relied upon six updates[26] which were submitted to be sufficient to not render the Family Law Cost Agreement void. However, the applicant’s analysis was accurate. Section 178(3) and a provision in the Legal Profession Uniform General Rules 2015[27] can constitute a basis to ameliorate the draconian effect of s 178(1)(a), but those provisions offer no assistance in this matter.
[26]Paragraphs 11.9, 11.11, 11.21, 11.25, 11.29 and 11.45 of the Dimos affidavit sworn 17 May 2019.
[27]Rule 72A.
The Family Law retainer was the more significant of the two and in a different category as the initial written estimate needed updating. The best evidence is that of Mr Dimos who attended the initial meeting with the applicant on 12 February 2016 and he deposed that he told the applicant that it was not uncommon for fees to escalate to ‘anywhere between $150,000 to $250,000’.[28] His hand written contemporaneous file notes were exhibited[29] and they confirmed that he told the applicant that ‘full trial could be $100k to $200k or more depending on parenting issues….’. The retainer did in fact involve parenting issues.
[28]Paragraph 5.5 of the Dimos affidavit sworn 17 May 2019.
[29]Exhibit ‘TD-1’ to the Dimos affidavit sworn 17 May 2019.
That same affidavit of Mr Dimos also deposed that in a subsequent meeting on 21 June 2017 he stated to the applicant that total costs could be between ‘$230,000 to $240,000 if the matter went to trial’.[30] Again this was corroborated by a hand written contemporaneous file note.[31] As matters transpired this was accurate as the overall costs charged were in fact up to the start of the trial scheduled to run four days.[32]
[30]Paragraph 11.29 of the Dimos affidavit sworn 17 May 2019.
[31]Page 117 of Exhibit ‘TD-3’ to the Dimos affidavit sworn 17 May 2019.
[32]Respondent’s Notice of Dispute at sub-paragraphs 4(d) and (g).
There was no evidence from the applicant about these matters. At best the applicant merely attempted to rely on an affidavit by the Costs Consultant acting for him. At the hearing the respondent relied upon Jones v Dunkel[33] given the absence of an affidavit from the applicant.[34] The applicant submitted there was nothing for the applicant to depose to.[35] On the basis of the current state of the evidence I conclude that, as at the first meeting, the applicant was given very accurate oral information about the overall potential costs. It is also clear from the affidavit of Mr Dimos that there were many conversations about future costs.
[33](1959) 101 CLR 298.
[34]Transcript – 27 June 2019 - page 36, lines 5 to 9.
[35]Transcript – 27 June 2019 – page 48, lines 25 to 27.
However, the Act requires the initial estimate and updated estimates to be given in writing.[36] There is no doubt the applicant was given updated information about costs from time to time in the form of invoices and requests for money. The Act requires updated estimates of total legal costs in writing as soon as practicable after there is significant change to information previously disclosed, that is estimates of total future costs. That did not occur until much later in the retainer.[37]
[36]Section 174(6) of the Act.
[37]26 April 2017 and 9 May 2018.
In the circumstances of this case a casual observer might conclude that an argument to avoid the provisions of the Family Law Cost Agreement was opportunistic given that an accurate total estimate was given at the first meeting and there would have been no reason to provide any update at all if it had been given in writing. At the hearing the respondent submitted ‘This case, from start to finish, smacks of a client after the event with an eye on a potential windfall’.[38] In the context of the numerous complimentary emails in relation to the respondent’s professionalism and the applicant’s gratitude sent in the course of the retainer[39] this comment is not devoid of merit.
[38]Transcript – 27 June 2019 – page 36, lines 10 to 13.
[39]Emails - 20 July 2016, 30 November 2016, 2 June 2017 & 9 June 2017 (reproduced at pages 49, 79, 112 & 114 in Exhibit ‘TD – 3’ to the Dimos affidavit sworn 17 May 2019).
There is a prevalent misconception in the profession about the estimate provisions in the Act. Demands for progress payments or the delivery of regular invoices for work already completed do not satisfy the Act. Section 174(1) requires an initial estimate of total future legal costs and a regular updating of this figure when this has significantly changed and is out of date. Section 174(6) mandates these to be in writing.
Any failure to comply with any of the provisions in relation to disclosure in Part 4.3 of the Act renders the costs agreement void. Non-compliance therefore equals void. There is no discretion to be exercised around ‘substantial’ compliance. If there was, I would have exercised it given the accurate oral estimate given at the outset. Failure to comply is no longer a matter that merely amounts to a potential ground for a discount of costs at the conclusion of the taxation as was the case under the former regime in the Legal Profession Act 2004.[40] The limited future estimates that were provided in writing in this matter were insufficient to satisfy s 174(1)(b) of the Act. The Family Law Cost Agreement is therefore void.
[40]Section 3.4.17(4) of the Legal Profession Act 2004.
In the event that non-compliance with cost disclosure is established, the respondent contended that the rates in the Family Law Cost Agreement were reasonable. In particular, that a significant part of the work was performed at $440 per hour inclusive of GST in a complex and hard fought matter. In their Notice of Dispute the respondent relied on the factors outlined in s 172 of the Act.[41]
[41]Sub-paragraphs 4(d) to 4(g) of the Respondent’s Notice of Dispute dated 26 February 2019.
The Family Law Cost Agreement outlined hourly rates inclusive of GST at $440, $550 and $660 per hour for lawyers and $275 for paralegals. The rate for Principal was $660, Partner/Senior Associate/Consultant was $550 and Associate was $440. The Family Law Cost Agreement described the primary lawyer as Jessica Montgomery at $440 per hour. From the bills it is apparent there was some delegation of work and some supervision at the $660 rate.
What is unusual about the terms of the Family Law Costs Agreement is that there was no provision authorising an increase in the rates over the life of the agreement. Leaving aside the reference to Ms Montgomery, it is clear from the wording that someone at an Associate level was ‘primarily responsible’ for the matter and the charge would be $440 per hour. The agreement commenced in February 2016 but Ms Montgomery was promoted to Senior Associate eight months later in October 2016 and her rate increased to $550 per hour. The increase may have merely related to her newly elevated position, not to any change in the complexity of the work that would justify a Senior Associate being primarily responsible from October 2016, as opposed to an Associate. The extent to which work charged at $550 per hour after that date is justifiable and sustainable will be a matter for taxation.
The applicant does not appear to have been specifically informed of the increased rate. The respondent confirmed that Ms Montgomery was made Senior Associate in October 2016 and submitted this change was readily apparent from footers in emails and correspondence from that time.[42] The applicant also received a breakdown of costs a year later on 20 November 2017 displaying her increased six minute unit rate of $55.[43] That was also obviously her rate in the IVO Cost Agreement that the applicant received 18 months later on 26 March 2018.[44]
[42]Paragraph 18.2 of the affidavit of Dimos sworn 17 May 2019.
[43]Paragraph 18.1 of the affidavit of Dimos sworn 17 May 2019.
[44]Paragraph 18.3 of the affidavit of Dimos sworn 17 May 2019.
The appropriate remuneration level for work performed will usually be determined at the taxation having regard to the criteria and level of scrutiny of the actual work required by the Act.[45] The issue here is really on what basis should any itemised bill be drawn and subsequently assessed against at taxation. What is ultimately allowed is a matter for the taxation. Irrespective of whether there is or is not a costs agreement the Court still has an obligation to determine what is fair, reasonable and proportionate.[46]
[45]Section 172 of the Act.
[46]Section 172(1) of the Act.
In the applicant’s written submissions dated 18 April 2019 it was contended that costs be assessed on the Family Law scale if the Family Law Cost Agreement is void on the basis that this scale is set by a ‘fixed costs legislative provision’.[47] Section 172(3) of the Act states that in considering whether costs are fair and reasonable regard must also be had (in addition to the myriad criteria outlined in s 172(2)), to whether ‘the legal costs conform to any applicable requirements of this Part, the Uniform Rules and any fixed costs legislative provisions.’ Section 6 of the Act defines ‘fixed costs legislative provision’ to mean a ’determination, scale, arrangement or other provision fixing the costs or maximum costs of any legal services that is made by or under the Uniform Rules or any other legislation.’ The emphasis is on ‘fixed’. A scale in this context must be one that fixes costs.
[47]Paragraphs 4 to 6 of the Applicant’s submission dated 18 April 2019.
The Family Law scale is in Schedule 3 to Family Law Rules 2004 which are promulgated pursuant to s 123(1)(g) of the Family Law Act 1975.
Section 172(2) of the Act outlines a range of mandatory criteria that must be taken into account. They are the level of skill, experience, specialisation, seniority, complexity, novelty, difficulty, public interest, labour, responsibility, urgency, time spent, time occurred, place, number of documents, quality, retainer and instructions. The Family LawRules articulate similar, but not identical, factors that may be considered in a discretionary loading.[48]
[48]Family Law Rules 2004 at 19.35.
Significantly, s 172(3) of the Act states that ‘regard must also be had’, that is, the matters in any fixed costs legislative provision are additional to consideration of anything in sub-ss 174(1) and (2). The Family Law scale is therefore potentially a matter to be considered as well, it is not the basis of assessment, but even only then, if it can be classified as a fixed costs legislative provision.
It is arguable that the Family Law scale does not ‘fix’ an amount of costs. It is a scale against which costs can be ordered as between parties by the Family Court or Federal Circuit Court in a particular case. When considering the status of the Family Law scale, it is apparent from Rule 19.18 of the Family Law Rules 2004 (and the example that follows that particular Rule) that the scale does not ‘fix’ amounts of costs. That scale was also the solicitor/client scale up to 30 June 2008. Prior to then the Family Court itself dealt with these disputes and they were not dealt with under State legislation. However, since that date the Commonwealth has relinquished that jurisdiction and the Chapter 19 heading became ‘PARTY/PARTY COSTS.’ The ‘Summary’ that also appeared states that for disputes between a lawyer and a client about costs charged, the State legislation applies where the application, retainer or agreement occurred after 30 June 2008.
In any event, from the example that appears after Rule 19.18(1) the scale can be modified by an order to add a percentage for complexity. Rule 19.18(2)(c) also states that the Family Court can, inter alia, consider ‘the rates ordinarily payable to lawyers in comparable cases’. In other words, it can be argued that the scale does not ‘fix the costs’ in a way that the definition of ‘fixed legislative provision’ envisages.[49] The wording is ‘determination, scale, arrangement or other provision under …any other legislation’. There are numerous examples of these in other areas.
[49]Section 6 of the Act.
The Federal Court scale contains a fixed amount for the costs for an entire proceeding in Corporations Act[50] and Bankruptcy Act.[51] The Supreme Court scale contains a similar fixed amount under Corporations Law.[52] The ‘Workcover (Litigated Claims) Legal Costs Order 2016’[53] fixes amounts for legal costs in Serious Injury matters and the Transport Accident Commission fixes amounts for legal costs under Impairment, No Fault Disputes and Common Law Protocols. These all fall within the definition of ‘fixed legislative provision’.
[50]Federal Court Rules 2011 (Cth), Sch 3, item 13.1 at $4,230 for a winding up order.
[51]Ibid, item 14.1 at $2,718 for a sequestration order
[52]Item 18 at $5,672 for a winding up order.
[53]Under the auspices of the Accident Compensation Act 1985 and Workplace Injury Rehabilitation andCompensation Act 2013.
The applicant submitted that although the previously operative legislation (s 3.4.19(b) of the Legal Profession Act 2004) made it clear that the Family Law scale would apply by default in the absence of a costs agreement, the new Act, at s 172(3), mandates that regard must be had to the scale. However, that is only if the scale satisfies the definition of a ‘fixed legislative provision’. For the reasons above it is arguable that the Family Law scale does not have that character in a solicitor and own client scenario. However, that issue does not necessarily have to be finally determined in this matter.
In the second written submission the applicant submitted that under the previous Act the Family Law scale was the automatic default mode of assessment where a Costs Agreement was void and submitted that the situation is ‘no less fair and reasonable’ under the Act.[54] However, there is now a clear parliamentary intention not to make the Family Law scale the automatic default mode of assessment where a cost agreement is void. The expansion of the criteria to be taken into account when assessing what costs are ‘fair and reasonable’ under the Act is also evidence of that intention.
[54]Paragraphs 4 and 5 of the Applicant’s submissions dated 11 June 2019.
Under the Act the Court must consider whether or not a valid costs agreement exists.[55] In the Family Law context ‘fair’ has been taken to refer to the circumstances surrounding the contract’s genesis and ‘reasonable’ refers to the terms.[56] There was no challenge to the genesis here. It is the non-compliance with disclosure which the applicant relied upon to persuade the Court not to tax on the same terms as the void agreement. The reasonableness of its terms was relied upon by the respondent at the hearing as an argument to tax on its terms notwithstanding the fact it is void.[57] The respondent argued that the state of the applicant’s knowledge in relation to costs was relevant[58] and further, that it would be disproportionately punitive to tax on scale for a ‘technical’ breach.[59]
[55]Section 199(2)(a) of the Act.
[56]McInnes v Twigg (1993) FLC 92-245 and Weiss v Barker Gosling (1993) FLC 92-399.
[57]Transcript – 27 June 2019 – page 35, lines 17 to 19.
[58]Transcript – 27 June 2019 – page 36, lines 12 to 16.
[59]Transcript – 27 June 2019 – page 41, lines 16 to 20.
The wording in the Family Law Costs Agreement was clear and the respondent’s non-compliance could hardly be described as flagrant given the surprisingly accurate oral estimate that was provided to the applicant at the outset. It is clear from emails from the applicant in the course of the retainer that he was mindful of the escalation of costs and displayed good insights.[60]
[60]Eg emails dated 30 March 2016 and 5 July 2017 (reproduced at pages 22 and 118 in Exhibit ‘TD – 3’ to the Dimos affidavit sworn 17 May 2019.
The applicant submitted that the rates in the Family Law Costs Agreement are not fair and reasonable.[61] Reliance is placed on a passage from Professor Dal Pont[62] which states that costs that far exceed scale costs may be evidence of unreasonableness. The respondent submitted that time charging over scale does not mean costs are unreasonable otherwise all costs agreements drawn on that basis would be unreasonable.[63] The respondent relied on a different passage from the same text which highlights that evidence from ‘experienced lawyers, independent of the parties and their lawyers may assist’.[64] Unsurprisingly the author also states that consideration should also be given to ‘the seniority and expertise of the lawyer and the nature and extent of work involved, including its novelty, difficulty and complexity’.[65] These are the same factors to be considered by virtue of s 172 of the Act when determining fair and reasonable charging.
[61]Paragraph 3 of the Applicant’s submissions dated 18 April 2019.
[62]‘Law of Costs’ – 4th ed. at [3.35] and paragraph 11 of the Applicant’s submissions dated 18 April 2019 .
[63]Paragraph 9 of the Respondent’s submissions dated 17 May 2019.
[64]‘Law of Costs’ - 4th ed. at [3.35] and paragraph 13 of the Respondent’s submissions dated 17 May 2019.
[65]‘Law of Costs’ - 4th ed. at [3.35].
At the hearing the applicant was critical that evidence had not been adduced at this stage about those matters.[66] In the submissions it was put that the respondent cannot rely on any presumption of fair and reasonable in the Act if the agreement is void,[67] and that the Court should assess the costs on the Family Law scale unless the respondent has addressed the criteria contained in s 172 at this time.[68]
[66]Transcript – 27 June 2019 – page 23, lines 6 to 19 and paragraph 8 of the Applicant’s submissions dated 11 June 2019.
[67]Section 172(4) of the Act.
[68]Transcript – 27 June 2019 – page 24, line 26 to page 25, line 7 and page 49, lines 17 to 25.
The respondent submitted that the criteria in s 172 are also considered when assessing whether the total costs are fair and reasonable.[69] Logically, that must occur at the conclusion of the taxation. The applicant submitted that the Court should make the determination now as to what a fair and reasonable rate or basis is.[70] However, these matters can, and should, be addressed later and will emerge in the taxation when the work itself is examined, and the quantum for individual items, and for overall costs, are assessed against them. All that is being determined at this point is the basis under which the itemised bills should be drawn and then the costs charged are assessed against that at taxation.
[69]Paragraph 5 of the Respondent’s submissions dated 17 May 2019.
[70]Paragraph 6 of the Applicant’s submission dated 11 June 2019.
In relation to the IVO Cost Agreement the initial written estimate of $5,500 was prima facie accurate and provided at the outset. The actual costs were said to be only $4,150.[71] There is no basis for an itemised bill to be drawn on any basis other than the IVO Costs Agreement as the applicant agreed that it is valid.[72] That is in fact what the applicant contended for in the second written submissions,[73] and agreed to at the hearing.[74]
[71]Paragraph 4 of the Dimos affidavit sworn 17 May 2019.
[72]Transcript – 27 June 2019 – page 29, lines 14 to 15.
[73]Paragraph 18(b) of the Applicant’s submission dated 11 June 2019.
[74]Transcript – 27 June 2019 – page 26, line 8 to page 27, line 4 and page 32, lines 29 to 30.
The applicant initially contended for costs to be capped at $5,500 in the event that the actual costs ultimately exceeded that figure.[75] After discussion of the issue at the hearing on 27 June 2019 the applicant stepped back from that submission being dealt with as part of the preliminary questions.[76] This is a matter to be agitated if necessary at the taxation if the costs are taxed above that figure. If the respondent’s disclosure in relation to the estimate is proved to be in breach of the Act at that point an argument can be made by the applicant relying on s 172(3) of the Act. If the ultimate taxation figure is below the estimated figure then this becomes a dead issue.
[75]Paragraph 18(b) of the Applicant’s submissions dated 11 June 2019.
[76]Transcript – 27 June 2019 – page 33, lines 4 to 8 and page 34, lines 1 to 7 and 30 to 31.
Although the Family Law Cost Agreement is technically void, as a general principle the costs are to be assessed on the basis of the hourly rates specified in that agreement. The respondent’s written submission makes reference to a 15 year old case where evidence was given that market rates at that time for experienced Family Law specialists could exceed $450 per hour plus GST.[77] Mr De La Rue concedes in his inadmissible opinion that $440 to $550 per hour might not be unusual for solicitors specialising in family law. I will construe that as a submission.
[77]MG v WJG (2005) Fam CA 1381 at [58]
The applicant’s second written submission makes the point that ’neither Mr Dimos nor Ms Montgomery was an accredited specialist in family law’.[78] For what it is worth, in the absence of evidence, I take judicial notice at this early stage of the existence of practitioners in Family Law matters who charge at, and above, these rates. Where the respondent’s practitioners fall on the spectrum will be a matter for taxation given the necessity for the consideration of experience, specialisation and seniority required by s 172(2)(a) of the Act in due course.
[78]Paragraph 10 of the Applicant’s submissions dated 11 June 2019.
No doubt argument will be advanced about the rate charged for individual items or tranches of work at taxation. One of the reasons that the applicant contended for the Family Law scale was embodied in an analysis of an example of the charges made for the applicant’s final affidavit in the Family Law matter.[79] If accurate, the comparison of the final costs quantified on the Family Law Cost Agreement (hourly rate) was certainly more that on the Family Law scale (folio rate).
[79]Sub-paragraphs 13(e)(i) & (ii) of the Applicant’s submissions dated 11 June 2019.
However, in order to conclude at this time that charges for this work were unreasonable on the rates in the Family Law Costs Agreement there would need to be an analysis of the surrounding circumstances in existence at the time the work was performed. For example, the reason why the affidavit had to be amended, and if the hourly total was reasonable having regard to the actual content of the affidavit. The amendment could have been caused by the client not providing all the information at one time, or by the solicitor correcting their own errors. Those would be matters for taxation and not a matter that could be considered in isolation at this stage. If the number of hours claimed is unreasonable it would be modified on taxation.
In relation to the costs of the preliminary hearing the applicant achieved partial success because a finding has been made that the Family Law Cost Agreement was void. However, what flows from that ‘success’ is, subject to further argument, confined at this stage to obtaining a prima facie entitlement to costs of the proceedings having regard to the manner of disclosure.[80] The respondent achieved partial success as the costs are still to be assessed on the basis of the Family Law Costs Agreement notwithstanding that it is void.
[80]Section 204(2)(b) of the Act.
The parties now have an opportunity to consider these reasons and attempt to frame a consent order which incorporates the result of this preliminary hearing and the timetabling necessary to advance what remains to be addressed.
Matters to be considered include the provision of separate itemised bills for the IVO retainer and the Family Law retainer both drawn on the basis of the IVO Cost Agreement and the Family Law Cost Agreement respectively, the approach to be taken in relation to the costs of the preliminary hearing, inspection, formal Notices of Objection to the itemised bills, suitability for mediation and suitable dates for mediation or estimates for the length of a taxation and suitable dates if necessary.
6
2
0