Koutsourais v Metledge & Associates

The dispute before the New South Wales Court of Appeal involved a solicitor, Metledge & Associates, and two clients, a company and its principal. The solicitor had made informal claims for costs against both clients. Following a dispute and the service of a statutory demand on the company, the parties entered into an agreement whereby the company would pay all outstanding costs by instalments, and the solicitor would refrain from pursuing winding-up proceedings. Subsequently, the solicitor initiated legal action against the company to recover money allegedly due under this agreement.

The central legal issue before the Court of Appeal was whether the solicitor's claim for money payable under the subsequent agreement was a claim for "costs" within the meaning of section 192 of the *Legal Profession Act 1987* (NSW). Section 192 mandates that a bill of costs must be provided to a client at least 30 days before any legal action can be commenced to recover those costs. The court was required to determine if the agreement to pay costs by instalments altered the fundamental nature of the claim, thereby circumventing the statutory requirement for a formal bill of costs.

By majority, the Court of Appeal held that the claim retained its character as a claim for costs, notwithstanding the subsequent agreement. The court reasoned that the agreement was a direct consequence of the solicitor's entitlement to costs and did not fundamentally change the nature of the debt. Therefore, the solicitor's failure to provide a compliant bill of costs at least 30 days prior to commencing proceedings meant that the claim was barred by section 192 of the *Legal Profession Act 1987*. The appeal was allowed, and the costs orders were set aside.