Keybridge Capital Ltd v Macpherson Kelley Pty Ltd

Case •

[2022] VSC 831

•

18 May 2022
IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COSTS COURT
COSTS COURT LIST

S ECI 2021 03405

BETWEEN:

KEYBRIDGE CAPITAL LTD
(ACN 088 267 190) 		Applicant
v 
MACPHERSON KELLEY PTY LTD
(ACN 122 450 337) 		Respondent

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JUDGE:

Efthim AsJ

WHERE HELD:

Melbourne

DATE OF HEARING:

2 March 2022

DATE OF JUDGMENT:

18 May 2022

CASE MAY BE CITED AS:

Keybridge Capital Ltd v Macpherson Kelley Pty Ltd

MEDIUM NEUTRAL CITATION:

[2022] VSC 831

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PRACTICE AND PROCEDURE – Costs – Taxation of costs – Jurisdiction of Costs Court – Woolf v Snipe (1933) 48 CLR 677 – Section 17D(1)(a) of the Supreme Court Act1986 – Whether the legal costs sought to be taxed incurred in the same matter – Whether retainer was terminated.

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APPEARANCES:

 Counsel Solicitors
For the Applicant Ms S F Cherry Gadens Lawyers
For the Respondent Mr S Warne Macpherson Kelley

HIS HONOUR:

  1. The applicant, Keybridge Capital Limited, seeks taxation of legal costs charged by the respondent law firm, Macpherson Kelley Pty Ltd, in invoices dated between 19 June 2014 and 30 April 2021 which total $793,906.23. The respondent has challenged the jurisdiction of the Court.

  1. The taxation of the legal costs was listed before Conidi JR, who referred the determination of the following six questions to an associate judge:

-Were all the legal costs sought to be taxed incurred in the same matter for the purposes of cl 18(1) of Sch 4 of the Legal Profession Uniform Law (‘LPUL’)?[1]

[1]Schedule 1 of the Legal Profession Uniform Law Application Act 2014.

-If not, were instructions in any matter first received on or after 1 July 2015 for the purposes of that clause?

-If so, which legal costs sought to be taxed were incurred in any such matter?

-Which legal costs sought to be taxed, if any, are ‘costs in… proceedings in the Court’ for the purposes of s 17D(1)(a) of the Supreme Court Act1986 (‘SCA’)?

-Did the parties make any agreement that permitted any of the legal costs to be taxed in the Court within the meaning of r 63.58 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’), such that the Costs Court has jurisdiction to tax those costs under s 17(1)(h) of the SCA?

-If the factual requirements described in subsections 17D(1)(a) and/or (h) are established, then:

-must the Costs Court accede to the applicant’s request to tax those costs under subsections 17D(1)(a) and/or (h)?

-if not, may the Costs Court accede to that request?

-if yes, should the Costs Court accede to that request?

  1. The applicant submits that jurisdiction vests in the Costs Court on the following bases:

-pursuant to s 17D(1)(f) of the SCA, because this is a costs review under Division 8 of Part 3.4 of Chapter 3 of the Legal Profession Act 2004 (‘LPA’);

-further or alternatively, pursuant to s 17D(1)(a) of the SCA, because all of the costs are costs in proceedings in the Supreme Court; and

-further or alternatively, pursuant to s 17D(1)(h)(ii) of the SCA, because the parties entered into an agreement within the meaning of r 63.58 of the Rules.

Background

  1. On or about 19 June 2014 the applicant engaged the respondent to advise and act in respect of breaches of duties and warranties claims in relation to:

-Australian Money Exchange Pty Ltd (in liq);

-AMX No. 1 Pty Ltd (in liq); and

-PR Finance Group Ltd,

including potential legal proceedings.

  1. The retainer was contained in a letter of engagement issued by the respondent to the applicant dated 19 June 2014 (‘the 2014 Letter’).  The 2014 Letter:

-was headed ‘Breaches of Director’s duties and warranties claims in respect of Australian Money Exchange Pty Ltd (in liq), AMX No. 1 Pty Ltd (in liq) and PR Finance Group Ltd’;

-defined the scope of services and identified expected tasks, including providing advice in respect of breaches of director’s duties and warranties claims, commencement of proceedings including all proceedings up to and including a mediation and counsel’s fees;

-included a wide range of estimates and rates for nominated senior and junior counsel;

-noted that the scope of fees ‘can always change’ and warned that ‘any estimate given often changes’; and

-annexed a document headed ‘Standard Terms of Engagement’, which included an express term that the applicant could seek a costs review by the Costs Court under Division 7 of Part 3.4 of the LPA.

  1. In July 2014 the respondent briefed senior and junior counsel to advise regarding the potential claims of the retainer.

  1. In 2015 the respondent briefed different senior and junior counsel to advise on the potential for insurance policies to respond to potential causes of action that had been identified. 

  1. In May 2016 the respondent sent an email to the applicant attaching a letter dated 18 May 2016 (‘the Update’), which was an update notifying the applicant of a substantive change within the meaning of s 3.4.16 of the LPA.  That letter referred to the 2014 Letter.  Nicholas Francis John Bolton, director of the applicant, deposes that he understood that the estimated fees in the Update were intended to replace those in the 2014 Letter.

  1. In 2017 proceedings contemplated in the 2014 Letter were commenced. Leave was granted by the Court pursuant to s 471B of the Corporations Act 2001 (Cth) to bring a proceeding against a company that was in liquidation. Senior counsel were briefed following the grant of leave and work was underway on the substantive proceedings.

  1. On 16 August 2017 the respondent sent an email to the applicant advising fees to date for certain aspects of the matter.  It stated that those fees were an estimate.  It also provided a purported estimate of fees to issue proceedings and progress the matter to a mediation. 

  1. According to the respondent, on 18 August 2018 the applicant ceased to instruct the respondent, and in around June 2019 the applicant sought to retain the respondent again to bring new proceedings.[2]

    [2]The applicant submits that the proceedings were not new proceedings but the same proceedings.

  1. On 4 July 2019 the respondent sent to the applicant what purports to be a further letter of engagement (‘the 2019 Letter’).  The 2019 Letter:

-is headed: ‘Advice on Keybridge Capital Ltd Claims Against PR Finance Group Limited and Former Directors of the Group’;

-under the heading ‘Scope of Services and Fees’, states: ‘to provide on the KBC claim against PRFG and former directors of the Group’; and

-identifies tasks, including the review, amendment and issue of writs and statements of claim.

  1. Three proceedings were issued and these proceedings are to be heard together, with evidence in each proceeding standing as evidence in the others pursuant to an order of Delany J made in each proceeding on 22 October 2021.

The Issues

  1. The applicant asserts that the Costs Court has jurisdiction:

-pursuant to s 17D(1)(f) of the SCA, because this is a costs review under Division 8 of Part 3.4 of Chapter 3 of the LPA;

-further or alternatively, pursuant to s 17D(1)(a) of the SCA, because all of the costs are costs in proceedings in the Supreme Court; and

-further or alternatively, pursuant to s 17D(1)(h)(ii) of the SCA, because the parties entered into an agreement within the meaning of r 63.58 of the Rules.

  1. The respondent asserts that there are two matters: the first the subject of the costs agreement in the 2014 Letter and the second the subject of the costs agreement in the 2019 Letter. It is clear that the 2014 Letter is governed by the LPA and, if there was a second matter, the 2019 Letter is governed by the LPUL, which came into operation on 1 July 2015.

  1. If there are two matters, the respondent contends that the applicant will not be able to have the bill taxed with regard to the retainer in the 2014 Letter because the final bill in those proceedings was given in 2017 and therefore the applicant would be out of time to seek taxation of the bill and previous interim bills. The applicant also has no entitlement as a sophisticated client under the LPA to seek an extension of time to seek taxation.

  1. The respondent also contends that the applicant, as a commercial or government client, has no entitlement under the LPUL in relation to the bills given in the matter the subject of the 2019 Letter to seek taxation at all.

  1. If there is only one matter, the final bill was given in April 2021, well within the 12-month period to seek the summons for taxation and the applicant has the entitlement under the LPA to have the bills taxed. The LPA continues to govern relations between the parties by virtue of the transitional provisions in the LPUL relating to provisions about costs where instructions were first taken prior to 1 July 2015, being the commencement of the LPUL.

The Relevant Legislation

  1. The Costs Court was established pursuant to s 15C of the SCA. It is a statutory court of limited jurisdiction.[3] The relevant parts of s 17D of the SCA, upon which the applicant relies to say the Court has jurisdiction, provides:

    [3]See Owerhall v Bolton & Swan Pty Ltd [2015] VSC 417, [7].

(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;

…

(f)must hear and determine costs reviews under Division 7 of Part 3.4 of Chapter 3 of the Legal Profession Act 2004;

…

(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.

Jurisdiction pursuant to s 17D(1)(f) of the SCA

  1. The Costs Court has jurisdiction under s 17D(1)(f) of the SCA if all costs relate to the same matter.

  1. Clause 18(1) of Schedule 4 to the LPUL is a savings and transition provision and provides:

Client information and legal costs

(1)       Subject to subclause (2)—

(a)Part 4.3 of this Law applies to a matter if the client first instructs the law practice on or after the commencement day; and

(b)the provisions of the old legislation relating to legal costs (other than provisions prescribed by the local regulations) continue to apply to a matter if the client first instructed the law practice in the matter before the commencement day.

  1. The meaning of what is a ‘matter’ has been considered in the context of a Costs Court application in Marriner v Meerkin & Apel[4] by Wood AsJ. His Honour said:

In reality the word ‘matter’ in the relevant Transitional Provision is broad as it covers non-litigious work, work that relates to potential litigation and work in relation to actual litigation.  In the circumstances of this case I take it to mean a reference to the underlying subject, controversy or situation under consideration.[5]

[4][2019] VSC 36.

[5]Ibid [49].

  1. In Mackie & Staff Pty Ltd v Khor & Burr,[6] McMillan J was of the view that for the purpose of working out whether a bill was the final bill issued in a matter, the Court must look to the subject matter of the retainer. Her Honour said:

In Challen v Golder Associates Pty Ltd (‘Challen’), the Court of Appeal in Queensland, comprising McMurdo P, Fraser JA and Mullins J, considered the Queensland equivalent of s 3.4.37 of the LPA. The appellant solicitor argued that, apart from the last three bills it had issued to the respondent client, the client was out of time to seek review of the solicitor’s bills. The solicitor argued that each of the bills leading up to the last three was itself a final bill, and not an interim bill. The Court of Appeal held that the Queensland equivalent of s 3.4.37(2) provides an additional time period for the assessment of an interim bill; within 12 months after the final bill is given. The final bill is the last bill rendered for the legal services the solicitor has been retained to provide. In determining what the final bill is, the relevance of the costs agreement is that it specifies the extent of the retainer. The final bill is not necessarily the last bill in time, as the last bill in time might relate to legal services not the subject of the retainer. In many cases, however, the final bill will be the last bill in time.[7]

[6][2013] VSC 696.

[7]Ibid [27].

  1. In DLA Piper Australia v Triclops Technologies Pty Ltd,[8] Wood AsJ stated:

The most pertinent provision in the Uniform Law that deals with the central issue at hand is the reference to interim and final bills in the context of ‘legal services the law practice was retained to provide.’ The scope of the retainer is therefore the critical issue in relation to whether the bill dated 31 July 2018 is the final one or an interim one in the retainer. The focus should be more on ‘retainer’ than ‘matter’ and this was the applicant’s position at the hearing. This position was maintained in the applicant’s Further Written Submissions dated 6 March 2020.[9]

[8][2020] VSC 93.

[9]Ibid [29].

  1. In Darkinjung Local Aboriginal Land Council v Darkinjung Pty Ltd & Ors,[10] Austin J was required to determine whether New South Welsh or Victorian law applied to various legal costs and considered the meaning of the word ‘matter’ in legal profession legislation. His Honour said:

It seems to me that in the legal profession legislation of 2004 in both States, the meaning of the words “a matter” and “the matter” is to be derived from a close consideration of the statutory context. In my opinion, those words refer to the subject matter of the solicitor's retainer, that is the client's cause or transaction on which the solicitor, for rewarded, is instructed to advise or act.[11]

[10][2010] NSWSC 132.

[11]Ibid at [57].

  1. Victoria Nomikos, a solicitor in the permanent employ of the respondent, deposes that:

The matters which Keybridge retained my firm in 2019 were not the same as those dealt with during the 2014 Retainer, though they were not un-related. In 2019 my firm was instructed to issue three new proceedings, which it was never instructed to bring in 2017. My firm commenced 2 proceedings (SCI 2019/2921 and SCI 2019/2922) on 28 June 2019 and the third proceeding SCI 2019/3619 was commenced on 12 August 2019. The 2014 Retainer was focussed on substantiating Keybridge’s causes of action in relation to the failed acquisition of AMX, and obtaining the leave to sue PR Finance, whereas in 2019 my firm was instructed to issue the following three new proceedings:

(a)Proceeding (SCI 2019/03619) against 4 directors of PR Finance (P Llewellyn, R James, R Tong and K James);

…

(b)       Proceeding (SCI 2019/02921) against PR Finance; and

…

(c)Proceeding (SCI 2019/02922) against 6 directors of AMX (J Llewellyn, C James, P Llewellyn, R James, K James and R Tong) and a Lloyds syndicate.

…

Only the claim against PR Finance was related to the 2017 proceeding in the sense that leave to bring it was given in the 2017 proceeding. Once it was issued, it was a dormant proceeding, as all the work was done in the other two proceedings, and in particular all of the unpaid bills given in 2019 (which are the subject of the creditor’s statutory demand) related to the other two proceedings.

  1. I do not agree with Ms Nomikos.  In my view, the substantive proceedings issued in 2021 all fall within the scope of the retainer in the 2014 Letter.  The 2019 Letter identified the scope of work to include providing advice on the applicant’s claim against PR Finance Group Ltd and former directors of that group.  The respondent was engaged to provide advice on the issues in the same matter in which the applicant instructed the respondent in 2014. 

  1. Three proceedings were issued. Proceeding S ECI 2019 02922 was issued against directors alleging breaches of directors duties as anticipated in the 2014 Letter. Proceeding S ECI 2019 02921 is a related proceeding against PR Finance Group Ltd for the purpose of establishing liability relied upon in S ECI 2019 02922 and is a necessary part of the retainer in the 2014 Letter.  This proceeding had been contemplated when an application for leave to proceed was made in 2017.  The third proceeding, S ECI 2019 03619, is a further related proceeding which is brought against various directors alleging misleading and deceptive representations. 

  1. More important is that these proceedings were ordered to be determined together, with evidence in each proceeding standing as evidence in the others.  They are intermingled and have been invoiced together.  They are, in my view, one matter relating to the retainer in the 2014 Letter. 

  1. The respondent submits that the retainer in the 2014 Letter was terminated. Ms Nomikos gives the following evidence:

The Supreme Court granted that leave later in 2017, but Keybridge ceased to instruct my firm on or around 18 August 2017. My firm’s last bill for this matter, for disbursements only, was dated 28 September 2017, and Keybridge paid all the bills between 2014 and 2017 without complaint.

At the time, it was my assumption that the proceeding against PR Finance was not pursued because it was a matter close to Nicholas Bolton who was disqualified from managing corporations, including Keybridge, between late 2015 and late 2018 following his involvement in the failure of 13 companies.

Following the return of Mr Bolton to Keybridge, in or around June 2019, he sought, on behalf of Keybridge, to retain my firm again to bring new proceedings.

  1. There is no evidence that any instructions were given by the applicant to the effect that the retainer in the 2014 Letter had ceased. All Ms Nomikos states is that the client ceased to provide instructions. 

  1. Rule 6 of the Professional Conduct and Practice Rules 2005 (Vic), which was in force at the time of the 2014 Letter, provides:

Termination of Engagement

6.1A practitioner must complete the legal services required by the practitioner's engagement, unless -

6.1.1the practitioner and the practitioner's client have otherwise agreed;

6.1.2the practitioner is discharged from the engagement by the client;

6.1.3the practitioner terminates the engagement for just cause, and on reasonable notice to the client; or

6.1.4in the case of a practitioner not being a firm, the practitioner’s engagement is terminated by the practitioner’s firm.

6.2 Despite rule 6.1, a practitioner, who is engaged to act for a client required to stand trial for a serious criminal offence, must not terminate the engagement and withdraw from the current proceedings on the ground that the client has failed to make arrangements satisfactory to the practitioner for payment of the practitioner's costs, unless the practitioner has, a reasonable time before the date appointed for the commencement of the trial, or the commencement of the sittings of the Court in which the trial is listed -

6.2.1served notice in writing on the client of the practitioner's intention to terminate the engagement and withdraw from the current proceedings at the expiration of seven (7) days if the client fails, within that time, to make satisfactory arrangements for payment of the practitioner's costs, and

6.2.2given appropriate notice to the Registrar of the Court in which the trial is listed to commence.

6.3Without limiting the general application of rule 6.1, a practitioner who is acting for a legally assisted client in any current proceeding may terminate the practitioner’s engagement, upon giving reasonable notice in writing to the client of the practitioner’s intention to do so, if –

(a)the client’s grant of legal aid is withdrawn or otherwise terminated; and

(b)the client is unable to make any other satisfactory arrangements for payment of the practitioner’s costs which would be incurred if the retainer continued.

  1. There is no evidence that the applicant and respondent have agreed that the retainer was terminated at any time.  The applicant has not discharged the respondent from the engagement.  The respondent has not terminated the agreement for just cause and on reasonable notice.  There is no evidence of any notice being sent to the applicant terminating the retainer.  All that has occurred here is that the applicant stopped giving instructions for a period of time.  What we have here are multiple contracts sent by the respondent to the applicant which are governed by the retainer in the 2014 Letter. 

  1. In my view there is only one matter on the evidence before the Court and jurisdiction vests in the Costs Court pursuant to s 17D(1)(f) of the SCA because this is a costs review under Division 8 of Part 3.4 of Ch 3 of the LPA.

Jurisdiction pursuant to s 17D(1)(a) of the SCA

  1. Pursuant to s 17D(1)(a) of the SCA, the Costs Court has jurisdiction to hear and determine the assessment, settling, taxation or review of costs in all proceedings in the Court. Here, the costs that are to be taxed are solicitor-own client costs. 

  1. The respondent submits that s 17D(1)(a) refers to party-party costs and is inapplicable to confer jurisdiction to tax the respondent’s bill of costs which is a solicitor-own client bill.

  1. Sections 17D(1)(ea) and (f) provide:

(1)The Costs Court—

…

(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;

…

  1. The respondent submits that ss 17D(1)(ea) and (f) refer to costs and disbursements between solicitor and client and therefore s 17D(1)(a) does not refer to costs as between solicitor and client.

  1. The respondent relies on Woolf v Snipe[12] in support of its submission that s 17D(1)(a) does not confer jurisdiction to the Costs Court to tax the bill of costs. In that case, Dixon J (as his Honour then was) held that a rule of the High Court did not authorise the Registrar of the High Court, on the application of a solicitor, to tax a solicitor-own client bill in respect of business transacted in the High Court.

    [12](1933) 48 CLR 677.

  1. In Woolf v Snipe Dixon J considered that a rule of the court did no more than identify the scale upon which a solicitor’s costs were to be taxed and allowed and the officer by whom the taxation was to be done. It also confirmed that State legislation would apply to the taxation before the Court. 

  1. Woolf v Snipe can be distinguished because the legislation before the Court is vastly different to what was before his Honour in Woolf v Snipe. In my view there is jurisdiction under this section for the bill of costs to be taxed. Section 17D(1)(a) does not limit costs to party-party costs only. Section 17D(1)(a) should be read broadly. There is nothing in the SCA or the Rules to support the respondent’s submissions.

  1. Both parties agree that if there is jurisdiction under this section, then the Court has a discretion whether or not to tax the bill.

Section 17D(1)(h)(ii) of the SCA

  1. Pursuant to s 17D(1)(h)(ii) of the SCA the Court has jurisdiction in relation to costs given to it by the Rules. The applicant submits that r 63.58 of the Rules allows taxation of solicitor-own client costs under Part 6 of Order 63 incurred pursuant to an agreement between a solicitor and his or her client.

  1. Rule 63.58 provides:

This Part applies—

(a)where costs are payable to a solicitor by the solicitor's client, whether or not in respect of a proceeding in the Court, and by or under any Act or these Rules or any order of the Court or any agreement between the solicitor and the client the costs are required or permitted to be taxed in the Court;

(b)where any person not the client of a solicitor is liable to pay or, having been so liable, has paid costs which are or were chargeable by the solicitor to the client, whether or not in respect of a proceeding in the Court, and by or under any Act or these Rules or any order of the Court or any agreement between that person and the client the costs are required or permitted to be taxed in the Court.

  1. Rule 63.58 does bestow jurisdiction on the Court to tax costs. In Woolf v Snipe Dixon J said:

Rules of Court ought not to be construed as enlarging or conferring jurisdiction or affecting substantive rights. Many difficulties would ensue if this general principle were neglected and the rule were read, not as operating only within the existing jurisdiction of the Court, but as conferring upon both solicitor and client a new right to taxation in this Court.[13] 

[13]Ibid 681.

  1. I do not accept that Woolf v Snipe can be distinguished here.  Rule 63.58 allows taxation of solicitor-own client costs under Part 6 of Order 63, pursuant to an agreement between the solicitor and client, with the costs to be taxed as provided by Part 5 of Order 63.  Part 5 applies to costs of any proceeding in the Court and is expressed to include taxation of costs payable to a solicitor by the solicitor’s client.

  1. Rule 63.63 of the Rules provides the procedure on taxation. It does not purport to confer jurisdiction.

Discretion

  1. In Lissenden v Dellios,[14] Englefield JR observed:

While this inherent jurisdiction to reduce solicitor-own client costs has been applied in reported decisions that involve exorbitant demands or serious professional misconduct, that does not mean that the Court’s inherent jurisdiction to deal with solicitor-own client costs is limited to such cases. The inherent power of a superior court cannot be restricted to defined and closed categories. The inherent jurisdiction of the Court to deal with a party’s solicitor-own client costs does not require a threshold determination of a certain qualifying level of misconduct by their solicitors, it applies when the need arises to ensure that legal costs are ‘fair and reasonable and no more.’[15]

[14][2021] VSC 520.

[15]

  1. The Court has an inherent jurisdiction as to whether tax the costs of a proceeding. Rule 63.35 of the Rules provides that on a taxation of costs, the Costs Court has the same powers which an associate judge has on the hearing of an application in a proceeding. The associate judge’s powers are found in r 77.01 of the Rules, which provides that an associate judge may, in any proceeding to which the Rules apply, give judgment or make any order including any judgment or order in the exercise of the inherent jurisdiction of the Court.

  1. The applicant submits that the discretion should be exercised because, in effect, the estimates put to the applicant by the respondent have been understated. 

  1. In the 2014 Letter the respondent provided a costs estimate of $250,000 plus GST for commencement of proceedings including all interlocutory processes, up to and including mediation.  The Update in 2016 by the respondent gave a total estimate of $390,000 plus GST. A further update in 2017 reduced that again to around $250,000 (made up of $145,000 ‘to date’, inclusive of GST, plus $100,000 plus GST for future costs).  An estimate was provided in 2019 for a number of identified tasks for a total of $55,754.  Following mediation in April 2021 the billed costs came to a total of $793,906.23.  The respondent submits if that is not justification for exercising a discretionary jurisdiction to look more closely, nothing is. 

  1. Mr Bolton deposes that:

From my review of the legal costs charged by Macpherson Kelley, I believe that Macpherson Kelley has charged legal costs in the total amount of $793,906.23. If Keybridge had known at the outset that the legal costs were likely to be that high, Keybridge would have sought to negotiate the terms of Macpherson Kelley’s retainer (noting that Macpherson Kelley’s 2014 LOE provided for the possibility of a fixed fee arrangement), or would have considered approaching a different law firm to advise and act. Keybridge may also have re-considered whether the anticipated proceedings should be issued at all.

  1. The respondent submits that this deposition is inherently implausible and has been deployed by the applicant to avoid the balance of the legal costs, even though, as the costs of the applicant’s various proceedings in which the respondent represented it rose higher and higher above the estimate of fees given, the applicant happily paid the bills up to 7 September 2020. 

  1. The respondent says that it was under no obligation to give any written estimate of its professional costs or disbursements to the applicant because the applicant, as a public company, was a sophisticated client for the purpose of the LPA.

  1. I do not agree with that submission. The applicants complained that the respondent failed to comply with its disclosure obligations, including the ongoing obligation to disclose contained within s 3.4.16 in Division 3 of the LPA. Section 3.4.16 provides:

Ongoing obligation to disclose

A law practice must notify the client of any substantial change to anything included in a disclosure under this Division as soon as practicable after the law practice becomes aware of that change.

  1. There are exceptions to the requirement for disclosure. Section 3.4.12(1)(c)(ii) provides:

Exceptions to requirement for disclosure

(1)Disclosure under section 3.4.9 or 3.4.10(1) is not required to be made in any of the following circumstances—

…

(c)       if the client is—

…

(ii)a public company, a subsidiary of a public company, a foreign company, a subsidiary of a foreign company or a registered Australian body (within the meaning of the Corporations Act);

…

  1. Pursuant to s 3.4.12 of the LPA disclosure is not required to be made to a public company. Even though the respondent was not required to make a disclosure to a public company – the applicant – it did. Once disclosure is made, then the respondent becomes subject to the ongoing disclosure obligations of s 3.4.16 of the LPA. Section 3.4.12 of the LPA simply refers to disclosure under ss 3.4.9 and 3.4.10. It does not refer to s 3.4.16, which provides that a law practice must disclose any substantial change to anything already included in a disclosure. This is a matter which will be addressed further when the taxation takes place.

  1. On the evidence before me, I am of the view that the discretion should be exercised. The applicant should have the right to have its costs taxed in these circumstances. 

Conclusion

  1. The following questions will be answered as follows:

-Were all the legal costs sought to be taxed incurred in the same matter for the purposes of cl 18(1) of Sch 4 of the LPUL? The answer is ‘yes’.

-If not, were instructions in any matter first received on or after 1 July 2015 for the purposes of that clause? I need not answer this question.

-If so, which legal costs sought to be taxed were incurred in any such matter? I need not answer this question.

-Which legal costs sought to be taxed, if any, are ‘costs in … proceedings in the Court’ for the purposes of s 17D(1)(a) of the SCA? The answer is ‘all of the costs incurred’.

-Did the parties make any agreement that permitted any of the legal costs to be taxed in the Court within the meaning of r 63.58 of the Rules, such that the Costs Court has jurisdiction to tax those costs under s 17(1)(h) of the SCA? The answer is ‘no’.

-If the factual requirements described in subsections 17D(1)(a) and/or (h) are established, then:

-must the Costs Court accede to the applicant’s request to tax those costs under subsections 17D(1)(a) and/or (h)?

-if not, may the Costs Court accede to that request?

-if yes, should the Costs Court accede to that request?

-To the above three questions, the answer to each is ‘yes’.

SCHEDULE OF PARTIES

S ECI 2021 03405
BETWEEN:

KEYBRIDGE CAPITAL LTD

(ACN 088 267 190)

 Applicant
- v -

MACPHERSON KELLEY PTY LTD

(ACN 122 450 337)

 Respondent

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Owerhall v Bolton & Swan [2015] VSC 417
Woolf v Snipe [1933] HCA 5