Kirk and Mickelham (No. 2)
[2008] FamCA 604
•1 August 2008
FAMILY COURT OF AUSTRALIA
| KIRK & MICKELHAM (NO. 2) | [2008] FamCA 604 |
| FAMILY LAW – COSTS – Itemised account – Rules must be read in conjunction with costs agreement – application for an extension of time to seek itemized account – application for indulgence where notice not given within time prescribed the rules for the pursuit of an assessment by the registrar |
| Family Law Act 1975 (Cth) |
| Gallo v Dawson (1990) 93 ALR 479 NHC and YY [2006] FamCA 610 14 July 2006 (Full Court, Bryant CJ, Kay and Boland JJ) Strudwick and Johnson (1996) 20 Fam LR 789 |
| APPLICANT: | Mr Kirk |
| RESPONDENT: | Mickelham Solicitors (A Firm) |
| FILE NUMBER: | MLC | 9289 | of | 2007 |
| DATE DELIVERED: | 1 AUGUST 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 23 JUNE 2008 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | MR GRAY |
| SOLICITOR FOR THE APPLICANT: | JUST LAW |
| SOLICITOR FOR THE RESPONDENT: | MR DE YOUNG |
| SOLICITOR FOR THE RESPONDENT: | MICKELHAM SOLICITORS |
Orders
That the application in a case filed 31 March 2008 and the response thereto filed 2 April 2008 be dismissed.
That should any party desire to make any application for costs arising out of these orders, they do so by written submission including as to quantum of such costs filed with my Associate by email and served upon the other party by no later than 4 pm on 15 August 2008.
That the recipient of any such application for costs may file and serve any submission in reply by 4 pm on 22 August 2008, such submission being provided to my Associate at the email address shown in paragraph 2 hereof.
That any such application for costs be determined in Chambers.
That all proceedings be otherwise dismissed and all proceedings be removed from the list of cases awaiting a hearing.
I certify that it was appropriate in the circumstances to brief counsel.
IT IS NOTED that publication of this judgment under the pseudonym Kirk & Mickelham is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9289 of 2007
| MR KIRK |
Applicant
And
| MICKELHAM SOLICITORS (A FIRM) |
Respondent
REASONS FOR JUDGMENT
Mickelham Solicitors acted for Mr Kirk in a property dispute between he and his wife. He signed a costs agreement with them in relation to their professional charges. He fell out with them and a cost dispute developed.
Mr Kirk not only disputes the costs, he wants them examined in the assessment process set out in Chapter 19 of the Family Law Rules 2004. Time limits under the rules have hampered Mr Kirk’s endeavours to achieve that process.
Issues
Whilst there may have been a number of arguments and views put, this case was essentially about two questions.
The first question was whether the professional accounts or invoices sent to Mr Kirk were itemized within the meaning of this Court’s rules. The answer to that is that they were.
The second question is whether time under the rules should be extended to enable Mr Kirk to file a notice disputing the itemized invoices that he has received. The answer to that question is that he should not.
What follows are my reasons for those answers.
Sadly, this dispute has escalated to such an extent that it has ventured into the Melbourne Magistrates Court. In that court, there are pending proceedings all of which are connected to the professional relationship between Mr Kirk and Mickelham Solicitors.
The Senior Registrar’s Decision
Before turning to the facts, it is important to understand that I am dealing with this matter by way of an application to review the decision of Senior Registar FitzGibbon. He dismissed Mr Kirk’s application.
For my part, two things need to be said. The first, this is a de novo hearing so I am determining the matter afresh. I have not read the judgment of the Senior Registrar. Secondly, I am determining the matter on the evidence and how that is interpreted after hearing oral argument, reading the written submissions and considering the governing rules of court.
Each party to the dispute was represented. Counsel for each put persuasive, intelligent and thoughtful arguments.
I have had the benefit of comprehensive affidavits as to facts. Those affidavits were the evidence. The evidence was not the subject of challenge save as to one matter upon which I could not make a determination.
The reality is that these are matters involving the exercise of discretion. There is no guidance in the rules of court as to how that discretion is to be exercised. There is however some guidance in authorities.
The applications
The application in a case was filed by Mr Kirk on 9 November 2007 returnable initially on 10 December 2007 but later extended to 1 February 2007. It sought:
That Mickelham Solicitors provide Mr Kirk with an itemised costs account.
A response by Mickelham Solicitors to that application seems not to have been formally filed. On the court file, amongst loose papers, I found a response signed by Mr P dated 31 January 2008. I have presumed that that document was handed to the Senior Registrar on 1 February 2008. It was a response seeking orders as follows:
The application by Mr Kirk for an order that Mickelham Solicitors provide Mr Kirk with an itemised costs account filed on 15 November 2007, be dismissed.
The Notice Disputing Itemised Costs acount (sic) filed by Mr Kirk dated 27 November 2007, be dismissed.
Stopping there, the record would therefore show that as at 1 February 2008, Mr Kirk wanted itemised accounts and Mickelham Solicitors were resisting that.
I was told by the parties’ practitioners that that was not how the case proceeded before the Senior Registrar.
Mr Kirk sought leave to seek itemized accounts be provided to him out of time. If granted, he wanted then to serve notice disputing the accounts. Hence, the two questions to which I have referred.
The Senior Registrar’s orders
The Senior Registrar heard the parties on 1 February 2008, reserved his decision and on 28 March 2008, made the following orders:
1.That the application filed 9 November 2007 be dismissed.
2.That the costs of the respondent firm of and incidental to these proceedings be fixed in the sum of $3096.05 and paid by the applicant.
On the same day, Mr Kirk sought a stay of the order pending a review. The Senior Registrar then ordered that conditional upon Mr Kirk filing and serving his application by 31 March 2008, the operation of the orders be stayed.
The review application
On 31 March 2008, Mr Kirk filed his foreshadowed application. It is not an application to review in the true sense but rather seeks different orders to those he had sought in his application filed 9 November 2007. This time, he sought the following:
1.The Court extends time for the Applicant to dispute accounts dated 21/12/06, 30/1/07, 19/2/07 from Mickelham Solicitors.
2.The Court finds the Applicant has disputed the accounts dated 15/3/07 and 30/3/07 from Mickelham Solicitors.
3.The Court finds that Mickelham Solicitors has not provided itemised accounts to the Applicant within the terms as required by the Family Law Rules 2004.
4.Mickelham Solicitors is ordered to provide itemised accounts for all 5 accounts to the Applicant within 14 days.
5.Thereafter the Applicant’s application to dispute Mickelham Solicitors costs shall be dealt with in the ordinary course of assessment of costs as provided for in the Family Law Rules 2004.
6.Mickelham Solicitors pay the Applicant’s costs of the review application and the procedure below before Senior Registrar FitzGibbon.
On 2 April 2008, Mickelham Solicitors responded to Mr Kirk’s application seeking the following orders:
1.The Applicant’s Application in a Case dated 31 March 2008 is dismissed
2.The Judgement (sic) of Senior Registrar Fitzgibbons (sic) dalivered (sic) on 28 March 2008 is upheld.
3.Items 1 and 2 of the orders of Senior Registrar Fizgibons (sic) made on 28 March 2008 take effect as of the date of this order.
Mickelham Solicitors wanted the Senior Registrar’s decision upheld. No point was taken before me about the whole process that the parties had followed.
The anti-suit injunction proceedings
I digress here to refer to another application by Mr Kirk seeking restraining orders of anti-suit injunctions against Mickelham Solicitors.
Mickelham Solicitors had issued proceedings in the Melbourne Magistrates Court and because of the dispute upon which I am now embarking, Mr Kirk sought to preclude Mickelham Solicitors from proceeding with their debt claim. Dessau J dealt with that issue on 15 April 2008. Her Honour dismissed Mr Kirk’s application and ordered he paid Mickelham Solicitors’ costs.
Thus, the proceedings for recovery of professional costs instituted by Mickelham Solicitors in the Melbourne Magistrates Court were able to proceed. I was told they have been delayed again pending the determination of my reasons.
The Family Law Rules
Chapter 19 of the Family Law Rules 2004 governs the question of costs that lawyers can charge. The important and relevant provisions are as follows:
19.03 (1) When a lawyer receives instructions to act for a party (the "client") in a case, the lawyer must give the client:
(a) a costs notice; and
(b) written advice about:
(i) the basis on which costs will be calculated;
(ii)an estimate, if practicable, or a range of estimates of the total costs of conducting the case;
(iii)how party and party costs may apply in addition to the client’s own costs; and
(iv)whether any other lawyer or an expert witness will be retained and, if so, the estimated cost.
(2) The lawyer must, when sending an account or itemised costs account to a client, include in the account a notice referring to the costs notice.
19.04 (1) Immediately before each court event, the lawyer for a party must give the party a written notice of:
(a)the party’s actual costs, both paid and owing, up to and including the court event; and
(b)the estimated future costs of the party up to and including each future court event.
(2) If a notice under subrule (1) is given immediately before a trial, it must include the following details:
(a)the actual costs incurred by the party up to and including the first day of the trial;
(b)any expenses paid or payable to an expert witness or, if those expenses are not known, an estimate of any expenses;
(c)the costs payable for each day of the trial, excluding the first day;
(d) the estimated length of the trial.
…
19.14 (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.
19.15 At the time of making a costs agreement with a client, a lawyer must:
(a)give each other party to the costs agreement a costs notice; and
(b)advise those parties to obtain independent legal advice about the costs agreement.
It is to be noted that there is no challenge by Mr Kirk to the costs agreement in this case.
Before a lawyer may start to recover costs as Mickelham Solicitors did in the Melbourne Magistrates Court the following rules have to be considered:
19.13A lawyer may start or continue a case to recover costs from a client only if:
(a)the lawyer has served on the client an account and a costs notice, and no request for an itemised costs account has been made under rule 19.20; or
(b)an itemised costs account has been served on the client and:
(i)a Notice Disputing Itemised Costs Account has not been served under rule 19.23;
(ii)a Notice Disputing Itemised Costs Account has been served under rule 19.23 and the dispute has been resolved by agreement between the parties; or
(iii)a Notice Disputing Itemised Costs Account has been filed under subrule 19.24 (3) and the dispute has been determined or the Notice Disputing Itemised Costs Account has been withdrawn.
…
19.20 A person who has received an account (except an itemised costs account) and wants to dispute the account, or any part of it, must, within 28 days after receiving the account, request the lawyer who sent it to serve an itemised costs account for the whole or part of the account disputed.
…
19.23 A person served with an itemised costs account may dispute it by serving on the person entitled to the costs a Notice Disputing Itemised Costs Account within 28 days after the account was served.
19.24 (1) This rule applies if a Notice Disputing Itemised Costs Account has been served under rule 19.23.
(2) The parties to a dispute in relation to costs must make a reasonable and genuine attempt to resolve the dispute.
(3)If the parties are unable to resolve the dispute, either party may ask the court to determine the dispute by filing in the filing registry of the court where the case was conducted the itemised costs account and the Notice Disputing Itemised Costs Account no later than 42 days after the Notice Disputing Itemised Costs Account was served.
(4)The court may take into account a failure to comply with subrule (2) when considering any order for costs.
The pursuit of the costs by Mickelham Solicitors in the Melbourne Magistrates Court was dependent upon Mr Kirk being served with an account (as distinct from an itemised account) and a costs notice and Mr Kirk not requesting an itemised account within 28 days of receiving the account.
If an itemised account had been served (presumably at the client’s request) and a notice disputing the itemised account was not served within 28 days after the account (presumably the itemised account) was served or a client did not file with the Court a Form 15 Notice Disputing Costs, proceedings could be instituted.
The focus is on the act to be done and the time in which it is to be done. Here there is no dispute that Mickelham Solicitors did not receive a request for itemised accounts in respect of some of the accounts sent to Mr Kirk within the 28 day period after they were delivered.
Mickelham Solicitors sent invoices as follows:
(a)21 December 2006 $9635.03;
(b)30 January 2007 $7048.04;
(c)23 February 2008 $8343.99
(d)15 March 2007 $28,398.63; and
(e)30 March 2007 $328.29
The 10 April 2007 fax
On 10 April 2007, Mr Kirk sent a facsimile letter to Mickelham Solicitors requesting an itemized invoice of what he described as “Your Invoice”.
At best, Mr Kirk was entitled to seek an itemization of the last 2 of the 5 invoices because of the timing of his request. However, as I shall set out below, the invoices that he was given were in fact itemized.
Timing in this case is important. In respect of the first 3 invoices, Mr Kirk was out of time by 11 weeks in respect of the first, 6 weeks in respect of the second and 17 days in respect of the third.
I shall return to the fax transmission again.
Mr Kirk seeks new legal advice
According to his own affidavit, Mr Kirk went to a new solicitor to whom I shall refer as Mr S and gave him instructions in about mid March 2007. Mr S wrote to Mickelham Solicitors on 26 April 2007. By then 4 out of the 5 periods for seeking itemization of invoices had expired. Apparently like Mr Kirk, Mr S took the view that his client should have all 5 invoices itemized. That view was not justified.
Ms L who swore an affidavit on behalf of Mickelham Solicitors produced a letter dated 7 May 2007 to Mr S. In that letter, Mickelham Solicitors purported to send itemised invoices listing the time spent, and the dollar value of the work done.
Mr Kirk relies on an affidavit by Mr S. Mr S said he received a letter dated 7 May 2007 but it did no more than enclose that which Mr Kirk already had received.
There is a dispute here between two legal practitioners. Without the evidence being tested, I would not make a finding about it. There are two hypotheses. The first is that as Mr S did not swear his affidavit until six months after receiving the Mickelham Solicitors letter, he may have been mistaken about the attachment. The second is that Ms L incorrectly attached the original type of invoices to the letter. Either hypothesis is possible. I see nothing sinister in either. In any event, this evidence does not affect the decision I have to make.
The complaint to the legal services commissioner
During the period that Mr Kirk was represented by Mr S, he lodged a complaint against Mickelham Solicitors to the Legal services Commissioner. The complaint, signed personally on 22 May 2007, alleged, as I perceive it, that the original Mickelham Solicitors costs estimate had blown out, the advice was not sound and he had not been provided with itemized accounts. The matter seems to have been outside the Commissioner’s jurisdiction. Nothing happened.
The Mickelham Solicitors file
Surprisingly, I have no evidence about what attempts Mr Kirk has made to obtain the Mickelham Solicitors file or records. This becomes important when I examine the invoices and the original costs agreement because it is only upon reading file notes that Mr Kirk could possibly tell whether the amounts claimed in the invoices were appropriately incurred. That is because of the structure of the costs agreement and the way in which Mr Kirk and Mickelham Solicitors contracted.
Thus in my view, if the invoices were sufficiently itemized, any complaint about them would be pointless without examining the file. That is because of the costs agreement.
The costs agreement
It is helpful to examine the costs agreement. The covering letter seems to me to be in simple language. The costs agreement provided:
3.(a) The client agrees to pay professional fees for legal services calculated in accordance with the scale of charges based on time set out in the attached Schedule…
(b)The client acknowledges that units of time are charged for time spent on or incidental to work requiring the skill of a solicitor, for example (but not limited to) conferring, receiving instructions, advising, travelling to and from the office, negotiating, attending Court, waiting time at Court, appearing in Court, telephone calls, drafting and settling documents and letters, reading documents and research. Units of time are billed in multiples of one tenth of an hour (6 minutes) and the client agrees that the minimum of one tenth of an hour will be billed for each action carried out.
…
(f)At different stages during the conduct of the matter the firm will give the client information as to the costs both paid and owing at that time and an estimate of the client’s future costs. The client may ask for that information at any time. No precise forecast of the amount of work that will need to be done in the matter can be made at this stage. The amount of work involved will depend on the way the matter progresses.
…
10.Unless otherwise agreed:
(a)The firm will send the client interim accounts on a regular basis during the conduct of the matter and a final account upon completion of the matter.
(b)The client must pay accounts within 14 days of the date of the account (the due date) in accordance with the firm’s credit policy.
(c)the firm may ask the client to pay an amount to enable payment of expenses, or to provide security for them and the firm’s charges. In that case, the firm will assume, on receipt of the client’s payment, that authority is given to draw on the money paid for the firm’s charges and expenses as they become due.
…
13.(a) The client may terminate this Agreement and withdraw his/her instructions at any time and for any reason.
…
20.Please contact us if you wish to discuss the progress or any other aspect of this matter. Please also let us know if you have any specific reporting requirements. You have the right to receive, and we will provide you with, a written progress report at any time, on reasonable request. Our normal charge out rates will apply for this service.
Paragraph 26 of the costs agreement shows that Mr Kirk acknowledged and confirmed by signing it that he had received, read and understood the relevant notice which summarised Chapter 19 of the Family Law Rules 2004 as well as the notice from the firm as to the following matters:
·The basis upon which costs would be charged;
·An estimate of the total costs of conducting the case;
·How party-party costs may apply in addition to client’s own costs;
·Whether any lawyer or an expert witness would be retained and if so the estimated costs;
·The total amount of work to be done by the firm; and
·The basis upon which the firm’s costs would be calculated.
The acknowledgements by Mr Kirk included that he had been advised to obtain independent legal advice about the legal and practical nature and effect of the agreement and whether it was in his interests or not to enter into it.
Mr Kirk also acknowledged that each account rendered was to be regarded as a final account for work done as described in the account and
any information included in the account, setting out details of amounts owing in respect of previous accounts must not, for the purposes of the Family Law Rules or any subsequent determination, form part of the later account.
Finally, Mr Kirk acknowledged that he had been advised of his rights under the Legal Profession Act 2004 (Vic).
It has not been suggested to me by Mr Kirk that he did not understand the provisions of the costs agreement although his complaint to the Legal services Commissioner might suggest otherwise.
The rules as to itemized accounts
Rule 19.21(1)(a) imposes upon the lawyer the requirement to serve an itemised account if the request is made under Rule 19.20. Rule 19.21(1)(a) says;
A person entitled to costs must serve an itemised costs account on the person liable to pay the costs within 28 days after:
(a)for lawyer and client costs – receiving a request for an itemised costs account…
Rule 19.22 sets out a description of an itemised account. It says:
(1)An itemised costs account (the "account") must specify each item of costs and expense claimed.
(2)Each item specified in the account must be numbered and described in sufficient detail to enable the account to be assessed.
(3)The account must set out, in columns across the page, the following information:
(a)in relation to each item for which costs are payable:
(i)the date when the item occurred;
(ii)a description of the item, including whether the work was done by a lawyer or an employee or agent of a lawyer;
(iii)the amount payable for the item;
(b)at the end of the column setting out the amount payable — the total amount payable for the items.
(4)For each expense claimed, the account must include:
(a)the date when the expense was incurred;
(b)the name of the person to whom the expense was paid;
(c)the nature of the expense; and
(d)the amount paid.
It is a significant part of Mr Kirk’s case that if he can overcome the delay and lack of notice issue, there is then still a dispute about whether the accounts he was given were itemised. It is important to say also that it is the evidence presented that provides the basis for the relevant determinations. The evidence relied upon by the parties in relation to the application is as follows. Mr Kirk in an affidavit filed on 5 December 2007 said:
I first saw Mickelham Solicitors in about October 2006 and explained my dispute with my ex wife. They told me it would cost about $10,000 to $15,000 to earn (sic) my case up to the pre-trial conference stage, but ended up trying to charge $63,000.
In respect of the first part of that second sentence quoted, there is no dispute. The second part is not only illogical but also inconsistent with the evidence.
On 19 October 2006, Mickelham Solicitors wrote to Mr Kirk and said:
In your case, and based on what you have told us so far, we estimate the range of costs as follows:
1.Completion Pre-Trial Conference in Family Court approximately $10,000 to $15,000.
These costs will vary depending on the complexity of the case, the issues which arise, the approach of the other party and whether your matter settles quickly.
These are estimates only and not quotations and vary from case to case. In exceptional circumstances costs may be substantially more. With respect to Court based estimates, we will provide written estimates of costs as to future Court events as and when they arise.
To the extent that it is relevant, I find Mickelham Solicitors complied with their obligations under Rule 19.03.
The invoices
The documents tendered show that the pre-trial hearing occurred on 4 December 2006. To that date, Mickelham Solicitors had not rendered invoices. In their letter dated 17 November 2006, they referred to the forthcoming pre-trial conference. They referred to their previous estimate. They advised that their work in progress to that time was $9458.
On 21 December 2006, Mickelham Solicitors rendered an account for $9635.03. That was well short of the estimate given by Mickelham Solicitors on 19 October 2006 and referred to in paragraph 2 of Mr Kirk’s affidavit.
If Mr Kirk says that Mickelham Solicitors “tried to charge $63,000” for the period up to the pre-trial conference stage and, it is not at all clear what he intended those words to mean, that assertion could not be justified.
In their letter dated 17 November 2006, Mickelham Solicitors directed Mr Kirk’s attention to the following:
If your matter does not settle at the Pre-Trial Conference and proceeds to trial, it will be necessary to:
1.Inspect and review all relevant documents, including documents produced by your wife;
2.Prepare a brief to Counsel;
3.Confer with Counsel; and
4.Instruct Counsel
The abovementioned trial-costs will be no less than $7500.
Mickelham Solicitors then rendered the first account of $9635.03. They then carried out, presumably with Mr Kirk’s instructions, a number of actions. I note the invoice sheets show attendances on counsel. It is reasonable to therefore presume that what was anticipated after the pre-trial conference, did occur.
Mickelham Solicitors rendered an invoice on 30 January 2007. This was the second invoice. At that point in time, the conferences with counsel had all taken place. The total rendered at that time was just over $16,600 or $1600 over the original estimate relating to a phase of the proceedings that had passed by over seven weeks.
Nothing was done by Mr Kirk at that point in time to complain about either the amount he was being charged or the activities undertaken. It is hard to see how he could complain having regard to:
(a)the original estimate; and
(b)the letter dated 17 November 2006.
Mickelham Solicitors then rendered an invoice for $8343.99 on 23 February 2007. This was the third invoice. It showed that the work related to the period up to 15 February 2007. It had a covering letter which read:
Please find enclosed interim account for period ending 15 February 2007.
The schedule to the invoice details all work undertaken on your behalf including the operator’s prefix. The itemised costs are calculated in accordance with our Costs Agreement pursuant to the prescribed hourly rates for lawyers, based upon six minute units or parts thereof.
Please refer any substantive queries or concerns to the responsible lawyer or myself in a timely manner…
Importantly, the invoice showed the professional activities of Mickelham Solicitors. The activities identify the practitioner involved in a number of things including attendances on named doctors, Mr Kirk and a barrister. Whilst there may be some argument by Mr Kirk about the servicing of the file and what was done, I find it hard to accept that Mr Kirk did not know about the basic issues of what Mickelham Solicitors were pursuing on his behalf. That gives rise to a question of why, if Mr Kirk believed his case was somehow governed by a financial ceiling to a specific event and then other activities were identified in writing and going on thereafter, he did not query either the activities or what it was costing. The invitation was clearly set out in the letter dated 23 February 2007. That is particularly so where the third invoice had been rendered and the total outstanding to Mickelham Solicitors had reached around $25,000. He remained silent.
These matters convince me that in respect of the discretionary indulgence sought by Mr Kirk, he should not receive it because he knew exactly what he had contracted for and was integrally involved in what was going on.
On or about 15 March 2007, Mickelham Solicitors sent the fourth invoice. This was for $28,398.63. Looking at the invoice, the details indicate to me activities which could only be described as associated with a court hearing. They include the preparation of case summaries, court attendances, inspection of subpoenaed material, discussions with counsel and a question about a tax liability.
This invoice was large but it included fees for two barristers. Mr Kirk attended upon those barristers.
The activities included personal or telephone involvement by Mickelham Solicitors on Mr Kirk on 25 February, 26 February, 27 February, 28 February, 1 March, 2 March, 4 March, 5 March and 6 March.
One can but speculate how Mr Kirk thought that:
(a)with three invoices already to this point;
(b)invoices well over the $15,000; and
(c)involvement in the activities (albeit not particularly specified) mentioned.
he was not obliged to pay costs.
On 30 March 2007, Mickelham Solicitors sent the fifth invoice. This was for $328.29.
In his affidavit Mr Kirk said:
When Mickelham Solicitors sent me the bills I thought it was within the scope of the $10,000- $15,000 estimate. It was only in about the end of March 2007 I realized they wanted to charge me a lot more, when I received the amount dated 30/3/07…
Having regard to what I have said, even without cross-examination, that statement has no merit.
Mr Kirk seeks itemized accounts for the first time
On 10 April 2007, Mr Kirk faxed to Mickelham Solicitors a document which he has marked as Annexure FK2 to his affidavit. That fax transmission is a hand-written note addressed to Ms C. It says
I dispute the invoice and request you give it to me in an itemised form.
On any view of the facts in paragraphs 2 and 3 of Mr Kirk’s affidavit and the material attached to the affidavit of Ms L which also does not appear to have been formally noted on the court record, but which I have been told by all parties was relied upon, Mr Kirk was out of time in respect of Invoices 1, 2 and 3 when he sent the fax on 10 April 2007. I do not propose to consider those invoices further.
Were the Mickelham Solicitors invoices itemized?
Rule 19.22 requires each item of costs to be numbered. The Mickelham Solicitors’ accounts of 15 March and 30 March did not do that nor did the amended invoices referred to in the letter of 7 May 2007. For reasons that I shall turn to, that is not fatal.
The rule requires the amount payable for the item to be disclosed. The Mickelham Solicitors accounts of 15 March and 30 March did not do that. It was most likely done in the May 2007 copy. In my view, this rule has to be read in conjunction with the costs agreement. The calculation is simple and obvious having regard to the fact that the costs agreement sets out the methodology and each invoice sets out the dollar value based on the units charged. There is no merit in the argument that the invoices do not comply with the rules because of the amounts not being set out in a column.
Invoices with information necessry for an assessment
The rules require a description of an item. Rule 19.22(2) says the item must be described in sufficient detail “to enable the account to be assessed”.
The word “assess” is used rather than the well-known terminology “taxed”. I think there is a distinction between the two words although it is marginal.
Rule 19.34 and 19.35 give some guidance on the issue.
Even though parties sign a costs agreement, Rule 19.34 says that costs are not to be allowed which in the opinion of the registrar, “are not reasonably necessary for the attainment of justice” and “not proportionate to the issues in the case”.
The registrar has to have access to information necessary to enable the assessment to be made. There is nothing in the rules that requires a costing invoice to set out every attendance in a narrative. From a common sense point of view, that could not be the case. The invoice must give sufficient information so that the client can dispute the necessity of the action that was taken by the practitioner. The comprehensive detail about that action could only be ascertained after an examination of the file and more importantly, discussion between practitioner, client and finally the registrar as to whether or not the action was necessary, by which I mean proportionate to what was in dispute, and appropriate, by which I mean consistent with prudent practice to establish the outcome according to law.
The distinction between a taxation and an assessment of costs is a finite one. In the civil jurisdiction for example in Victoria, there is no definition of what is a taxation. However, the registrar on a taxation may disallow the costs for any work which is not necessary or is done without due care. For the purposes of the Family Law Rules, the disallowance on an assessment can occur if in the opinion of the registrar, the costs are not reasonably necessary for the attainment of justice and are not proportionate to the issues in the case. In the civil jurisdiction in Victoria, Rule 63A.69 of the County Court Rules provides that all costs shall be allowed as are necessary or proper for the attainment of justice or for enforcing or defending the rights of any party.
Accordingly, the assessment of family law costs looks at a much more general approach having regard to the subjective opinion of the registrar based upon his or her understanding of what was necessary for the conduct of a family law case. On a taxation in the civil jurisdiction however, costs can be justified on the basis of the pursuit of justice as well as enforcing or defending a party’s rights.
An assessment under the Family Law Rules is much broader and requires a practitioner to justify action taken in many cases where courts have to determine outcomes on very discretionary principles.
Important for my determination is Rule 19.34(2). That requires an itemised account for work subject to a costs agreement to be assessed in accordance with the costs agreement. That means that if the parties contract to set out the costing process in a particular way, the registrar must follow that. The Mickelham Solicitors’ cost agreement is entirely dependent upon the recording of units of time (see Clause 3(b)). Thus the argument about the absence of a column of dollar values in an invoice has no merit.
Looking at the Mickelham Solicitors’ costs agreement, do the descriptions of activities enable an assessment of the two requirements of Rule 19.34(1)? In my view, they do.
Mr Gray for Mr Kirk argued that the descriptors were insufficient. He said they needed to give detail for example about what the letters sent were addressing. I reject that for the reasons I have set out.
If there was ignorance on the part of Mr Kirk about why something was being done, the question should have been asked. The correspondence, the various conferences including with counsel and the very cost agreement itself periodically raised before Mr Kirk the opportunity to question what was going on. The descriptions as set out in the invoices clearly indicate what was happening.
There can therefore be no basis for the first part of Mr Kirk’s claim for any itemized accounts.
The notice disputing accounts
Can Mr Kirk then have an extended time in which to file the notice that would effectively give rise to an assessment of the costs?
Rule 1.14 of the Family Law Rules 2004 allows extensions of time generally under the rules. It reads:
(1)A party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order.
(2)A party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed.
Discretion to extend time
Nothing in the rules gives guidance as to how that power should be exercised. It is clearly discretionary. Authorities relating to discretion can do no more than provide consideration of what is to be taken into account.
In NHC and YY [2006] FamCA 610 14 July 2006 (Full Court, Bryant CJ, Kay and Boland JJ), the Full Court was dealing with an appeal against orders made by Holden J in the Family Court of Western Australia. The application related to an appeal against a refusal to grant an extension of time for the appellant to dispute certain interim costs accounts rendered by her solicitors and thereafter, to have those costs accounts assessed. The Full Court said that the wife did not dispute the granting of an extension of time involved in exercise of discretion. She submitted that Holden J had failed to properly consider all of the matters relevant to the exercise of his discretion and on balance, he should have exercised his discretion in her favour. It was argued that there had been no prejudice or hardship to the relevant solicitors.
On the appeal, the appellant argued a number of matters but particularly, that the trial judge should have found that her failure to do what was required in the time prescribed by the rules was reasonable if the court found that the solicitor would not be happy to continue acting for the wife if she required taxation of their bill. She argued that the fear of losing the solicitor was the basis to extend time.
The Full Court said that they were of the view that evidence of the conversations between solicitor and client would have been fundamental. That evidence was not before the trial judge. Had it been, the Full Court took the view that there would have been a different finding and the trial judge would have exercised his discretion in favour of the appellant.
The Full Court referred to a variety of authorities. No principle seems to me to arise from this decision. The Full Court was simply saying that the issue was a discretionary one and it could do no more than provide a guide which did not fetter the discretionary power of a trial judge.
Counsel for Mickelham Solicitors also drew to my attention the decision of Lindenmayer J in Strudwick and Johnson (1996) 20 Fam LR 789. That decision does little more than reaffirm the principle to which I have just referred. His Honour pointed out that there was no proper basis upon which to restrict the power to extend the time as set out in the rules. His Honour said that the discretion was a wide one. He pointed to the fact that one had to look at the delay and see what the explanation for it was and what hardship would be suffered if an extension was not granted. His Honour also raised the question of prejudice to which I have already referred.
In Gallo v Dawson (1990) 93 ALR 479, a litigant had brought an action in the High Court naming Dawson J as the defendant. She was well out of time. She sought an extension of time. McHugh J said that the object of the rule relating to time was to ensure that rules which fixed times did not become instruments of injustice. He said that the discretion to extend time was given for the sole purpose of enabling the court to do justice between the parties. His Honour then said:
This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences of the parties of the grant or refusal of the application for extension of time.
His Honour went on to say that when the application related to time to file an appeal, it was always necessary to consider the prospect of the applicant succeeding in that appeal. There are distinct similarities with the position here.
History of proceedings
I have dealt with much of the background. The real issue in this case is about Mr Kirk’s unhappiness at having incurred significant legal costs when the matter was apparently easily resolvable as he saw it (or later presumed). There is no evidence about the way that Mickelham Solicitors conducted the proceedings to suggest that they were doing anything disproportionate to the issues in dispute. Mr Kirk told the Legal Services Commissioner:
J. Udorovic QC the barrister briefed indicated that the wife would receive a maximum of $50,000 and at best will receive nothing. If I had known that legal costs would exceed the amount I was going to have to pay the wife I would not have incurred them.
The invoices show that a conference with Mr Udorovic occurred on 22 January 2007. Mr Kirk continued his instructions well beyond that date and another counsel was also involved later. Mr Kirk allowed that to happen notwithstanding the very clear advice he apparently received in January. In addition, how much he had incurred in legal costs as I have already set out is relevant to the question of the discretion I am asked to exercise.
Conduct
The evidence is that Mickelham Solicitors provided information when it was requested. Mr Kirk disputed that that satisfied the requirements of the rules. His pursuit of the technical argument whilst ignoring the information in the file of Mickelham Solicitors was puzzling. He had independent legal advice about that at the time.
Consequences
Mr Kirk is still litigating over the matter in the Melbourne Magistrates’ Court. I have been told that there is an argument about negligence.
There is no doubt that a strict reading of the rules will cause Mr Kirk unhappiness but I cannot say injustice. He does not dispute the execution of, nor the understanding of, the costs agreement. He does not dispute all of the activities referred to in the invoices that were undertaken. What he complains about is that he was asked to pay more than he expected. I do not accept that that is realistic or reasonable having regard to all of the steps Mickelham Solicitors took to keep Mr Kirk informed of what was occurring. There can therefore be no injustice to him in that regard.
This last consideration must however be examined from the point of view of both parties. Mickelham Solicitors have been patient. They have taken the steps in the Magistrates’ Court that they were entitled to on the basis of what I have set out above. They were entitled to litigate. Because of the time that has elapsed and the arguments put by Mr Kirk, my view is that to now allow Mr Kirk to commence the investigative process that he should have taken earlier at a time when he had legal advice not to mention the question of the absence of the pursuit of the information in the file, would cause Mickelham Solicitors hardship. The hardship to them seems to me to outweigh any injustice to Mr Kirk.
Although Gallo v Dawson related to an appeal and in that regard, I must add, a final appeal, McHugh J said it was necessary to consider the prospects of success. It is not for me to pre-empt or speculate what would happen if the whole issue of proportionality and necessity were canvassed and argued. However, on what I have seen and heard, I do not see any real prospect of success having regard to all of the matters that I have canvassed.
In my view, there is no basis in this case to grant the indulgence in the orders sought by Mr Kirk.
Each party raised at the end of their submissions, the question of costs. I have made orders providing for written submissions and upon receipt of those, I will determine the matter in chambers.
I certify that the preceding One Hundred and Six (106) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate:
Date: 1 August 2008
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Costs
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Stay of Proceedings
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Summary Judgment
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