Lelas v Nigams Legal
[2022] WASC 213
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: LELAS -v- NIGAMS LEGAL [2022] WASC 213
CORAM: ACTING MASTER MCDONALD
HEARD: 24 MARCH 2022
DELIVERED : 28 JUNE 2022
FILE NO/S: LPA 7 of 2022
BETWEEN: DENNIS LELAS
Applicant
AND
NIGAMS LEGAL
Respondent
Catchwords:
Costs - Application for an extension of time for assessment - Lump sum bills - Turns on own facts
Legislation:
Legal Profession Act 2008 (WA), s 252, s 291(3), s 292(1), s295(6), s 295(7)
Legal Profession Regulations 2009 (WA), reg 82
Result:
Time extended
Category: B
Representation:
Counsel:
| Applicant | : | A J Camp |
| Respondent | : | C Bass |
Solicitors:
| Applicant | : | Alan Camp |
| Respondent | : | Nigams Legal Pty Ltd |
Case(s) referred to in decision(s):
Frigger v Murfett Legal Pty Ltd [2012] WASC 447
Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112
Watson v Hewett & Lovitt Pty Ltd [2022] WASC 184
ACTING MASTER McDONALD:
Summary
This is an application for an extension of time within which to have bills of costs rendered by the applicant's practitioner assessed pursuant to s 295(7) of the Legal Profession Act 2008 (WA) (the Act).
The parties came before me on 24 March 2022 at which time I made orders for the filing of further affidavits. The parties were at liberty to apply for a further hearing by 21 April 2022, failing which the matter would be determined on the papers. Neither party applied for a further hearing.
For the following reasons, I am satisfied an extension of time in which to have the respondent's bills assessed should be granted in relation to Invoice 1014 and Invoice 1093. The application for an extension of time in which to assess Invoice 979 and Invoice 1083 is refused.
Application
On 7 February 2022 the applicant filed an application for an assessment of costs (the Application) of three invoices, namely Invoice 979 issued on 1 February 2019, Invoice 1014 issued on 7 November 2019 and Invoice 1093 issued on 24 March 2020 together with a chamber summons seeking leave for an extension of time. While the application does not refer to Invoice 1083 issued on 19 March 2020, the applicant sought orders by way of a minute filed on 9 March 2022 that the respondent serve itemised versions of all four invoices issued to the applicant. The Application proceeded on the basis that it applied to all four invoices issued to the applicant.
The Application is supported by the following affidavits:
(a)affidavit of Mr Dennis Lelas sworn on 3 August 2021 and filed 11 March 2022;
(b)affidavit of Mr Alan Camp sworn and filed on 15 March 2022;
(c)affidavit of Mr Alan Camp sworn and filed on 23 March 2022;
(d)affidavit of Mr Dennis Lelas sworn and filed on 6 April 2022.
The respondent opposes the Application and relies on the affidavit of Mr Shaswat Nigam sworn on 21 July 2021. The affidavit of Mr Nigam was originally filed in the Magistrates Court in support of the respondent's application for summary judgment for the sum $21,415.12 being the amount of costs outstanding and owed by the applicant in respect of all four invoices the subject of the Application. The affidavit was filed in this matter on 23 March 2022 (Nigam Affidavit).
Legal principles
An application by a client for a costs assessment must be made within 12 months after the bill is given, or the request for payment was made to the client or third party payer, or the costs were paid if neither a bill was given nor a request made.[1] A client, who is not a sophisticated client as defined under s 252 of the Act, may make an application for an assessment to be made out of time. The court may grant an application for an assessment to be made out of time if, having regard to the delay and the reason for the delay, it determines that it is just and fair for the application to be dealt with after the 12 month period.[2]
[1] Legal Profession Act 2008 (WA) s 295(6).
[2] Legal Profession Act 2008 (WA) s 295(7).
The interplay between s 295(6) and s 295(7) of the Act was considered by Master Sanderson in Watson v Hewett & Lovitt Pty Ltd:[3]
The way in which these two subsections interact is clear. Section 295(6) provides a 12 month limitation period. Absent s 295(7), this application would fail. Under s 295(7), an extension of time is available provided the client is not a 'sophisticated client'. The discretion embodied in s 295(7) appears to embody three elements. They are:
(a) the length of the delay;
(b) the reasons for the delay; and
(c) whether an extension is just and fair in the circumstances.
In other words, the discretion, while unfettered, must pay particular regard to the length of the delay and the reasons for the delay. That can be implied from the fact those two requirements are specifically mentioned in the subsection.
[3] Watson v Hewett & Lovitt Pty Ltd [2022] WASC 184 [16] - [17].
The relevant factors to be taken into account on an application to extend time were set out by Master Newnes (as he then was) in Monopak Pty Ltd v Maxim Litigation Consultants:[4]
[T]he proper exercise of the discretion includes consideration of the following factors:
1.the purpose of the relevant provisions of the Act is to protect a client against excessive charges by a practitioner and to enable a client to be satisfied that bills of costs are not excessive, whilst imposing time limits to prevent a client from unfairly taking advantage of the provisions to delay the obligation to pay proper costs, and to avoid frivolous objections;
2.the reasons for the delay;
3.whether there are valid reasons for believing that a refusal to enlarge time might result in injustice to the client;
4.whether there is evidence suggesting that the bill might be excessive;
5.the nature and degree of prejudice to the practitioner;
6.the practitioner's reasons for opposing the enlargement of time (if it is opposed), it being of importance that as an officer of the Court the practitioner be seen to be acting honestly, ethically and with proper motives and not acting merely to prevent taxation of the bill taking place.[5]
[4] Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112 [101].
[5] See also Supreme Court Consolidated Practice Directions, Practice Direction 4.7.5.
In relation to prejudice to the respondent, Hall J held in Frigger v Murfett Legal Pty Ltd:[6]
Generally speaking there are good reasons why compliance with time limits of the type relevant here should be adhered to. Legal practitioners are entitled to assume that in circumstances where the client was aware of their rights to seek an assessment and more than 12 months has elapsed since the date of the bill an assessment will not be sought. It may well be that they will arrange their businesses on the basis of such an assumption. It is also possible that a delay in seeking an assessment may prejudice a legal practice because memories may fade and the relevant legal personnel may move on to other positions.
[6] Frigger v Murfett Legal Pty Ltd [2012] WASC 447 [26].
Facts
Between 22 October 2018 and 24 January 2020, the respondent was engaged by the applicant to act for him in relation to a family violence restraining order, various criminal matters in the Magistrates Court and an insurance matter. This gave rise to the issue of the following bills:
(a)Invoice 979, issued on 1 February 2019 in the sum of $1,900 in relation to the family violence restraining order matter;[7]
(b)Invoice 1014, issued on 7 November 2019 in the sum of $7,145 (originally being a bill for $30,000 to which $19,183 held on behalf of the applicant in the respondent's trust account was applied and then further reduced by virtue of costs awarded to the applicant in the sum of $3,672) in relation to criminal matters;[8]
(c)Invoice 1083, issued on 19 March 2020 in the sum of $3,268.70 (originally being a bill for $4,768.70 to which $1,500 was applied from funds held on behalf of the applicant in the respondent's trust account) in relation to an insurance matter;[9] and
(d)Invoice 1093, issued on 24 March 2020 in the sum of $16,246.42 (originally being a bill $11,001.42 to which $1,900 was applied from funds held on behalf of the applicant by the respondent in its trust account and to which the outstanding amount on Invoice 1014 was added, namely, $7,145) in relation to criminal matters.[10]
[7] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.2].
[8] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.5].
[9] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.13].
[10] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.14].
The total amount outstanding on these four invoices was $21,415.21.[11] The applicant was invited to propose a payment plan. After sending several emails seeking payment, to which there was no reply, the respondent advised the applicant by letter dated 23 July 2020 it would commence proceedings in the Magistrates Court for summary judgment to recover the sum owed.[12]
[11] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.16].
[12] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.19].
Based on the affidavit material filed there was then a delay of approximately nine months after which time the respondent emailed the applicant on 8 April 2021 with a final demand to pay the sum of $16,246.42, being the outstanding amount owed on the criminal matters only.[13] Shortly thereafter, the respondent filed a general procedure claim in the Magistrates Court for summary judgment in the sum of $21,415.12 against the applicant. It was around this time the applicant engaged a solicitor to assist him to defend the summary judgment application and challenge the bills.
[13] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.20].
If there was a costs agreement between the applicant and the respondent, it has not been produced by either party.
There is no dispute that the applicant is out of time to have any of the bills assessed as of right.
The invoices attached to the applicant's affidavit are not itemised. The invoices attached to the Nigam Affidavit are itemised only to the extent they separate legal costs, office costs and disbursements.
At the bottom of each invoice issued by the respondent is a statement to the effect of the form prescribed by reg 82 of the Legal Profession Regulations 2009 (WA) for the purposes of s 291(3) of the Act.
As such, the applicant's right to request an itemised bill was referred to in fine print at the bottom of each of the invoices as was his right to have the costs assessed. The fine print also referred him to a fact sheet he could obtain from his solicitor, the Legal Practice Board's website or the Law Society of WA's website about his rights to challenge his legal costs. There was no explicit reference to any time limits imposed although it is not required in light of the respondent's compliance with s 291(3) of the Act.
The applicant states that when he received the first or second bill, he read that it had to be paid in 14 days, but he did not read the fine print on the bottom of the bill thoroughly. He says he tried to read it, but it did not make sense to him at all. He said he did not understand he could demand a bill be provided in a form that sets out the detail of each charge and how much was charged for each separate item of preparation or attendance until it was explained to him by his solicitor he engaged for the purposes of defending the summary judgment application taken against him in the Magistrates Court.[14]
[14] Affidavit of Dennis Lelas sworn on 6 April 2022 [3] - [4].
By at least 28 May 2021 the respondent knew that the applicant intended to defend the application for summary judgment or disputed the bills.[15] Following a number of unsuccessful attempts to resolve the claim, on 11 June 2021 the respondent filed its particulars of claim in the Magistrates Court.[16]
[15] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.21].
[16] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.23].
The applicant's solicitor sought to lodge the application for an assessment of costs out of time on 4 August 2021 (LPA 23 of 2021) but it appears there were numerous issues with the application which resulted in the present action not being commenced until 7 February 2022. Effectively, there was a further six month delay in attempting to file the application in the correct form.
Disposition
The applicant is eligible to make an application to extend time as he is not deemed to be a 'sophisticated client' under the Act. For the purposes of ascertaining the delays involved I have dealt with the invoices as if they are each pertaining to separate matters or files or retainers.
Family violence restraining order matter (Invoice 979)
Invoice 979 related to a family violence restraining order matter and was in the sum of $1,900. The application to assess these costs should have been brought by 1 February 2020.
The applicant states that on 11 January 2019 he gave a lawyer who worked for the respondent $900 cash for the family violence restraining order matter.[17] Upon receiving Invoice 979 for the sum of $1,900, he called his lawyer to advise that he had already paid $900 and states he was advised his lawyer would look after the matter.[18] The applicant says he heard nothing further until December 2019.[19] However, the respondent did send requests for payment of the outstanding fees on 24 May 2019, 11 December 2019, 14 January 2020, 23 January 2020, 17 April 2020, 1 May 2020, 12 June 2020 and 23 July 2020.[20]
[17] Affidavit of Dennis Lelas sworn on 27 July 2021 [13]; affidavit of Mr Dennis Lelas sworn on 6 April 2022 [1(a)].
[18] Affidavit of Dennis Lelas sworn on 27 July 2021 [15].
[19] Affidavit of Dennis Lelas sworn on 6 April 2022 [1(b)].
[20] Affidavit of Shashwat Nigam sworn on 21 July 2021 [4.3], [4.6] - [4.8], [4.16] - [4.19].
Even if the applicant is given the benefit of attempting to file this application on 4 August 2021, his application would still have been 18 months out of time, or two years out of time if taken from the date of filing. It is a significant period for a small bill.
The applicant states the person seeking the family violence restraining order failed to appear, presumably in support of his view that the bill was excessive. Nevertheless, the applicant's solicitors still had to prepare for the hearing. The sum of $1,900 does not seem excessive in the circumstances. It must have been apparent to the applicant, in light of several reminders, that the bill had not been reviewed. He chose to ignore these. He had demonstrated he was prepared to raise his concerns about the bill previously, namely that there may have been a failure to take into account $900 he had paid. There is no adequate explanation for why he did nothing in the face of further reminders. The extension of time in which to assess this bill is refused.
Insurance matter (Invoice 1083)
The respondent acted for the applicant in a complaint made to the Australian Financial Complaints Authority in respect of an insurer who refused to accept a claim by the applicant.[21] The applicant's complaint appears to be that the amount of $4,768.70 was excessive in light of the time taken and work done to resolve the matter.[22] The time in which to assess this bill expired on 19 March 2021. The affidavits filed by the applicant do not indicate any complaint was made about the amount charged. No explanation for an 11 month delay is given. The bill does not appear to be excessive. The request to extend time to assess this bill is refused.
Criminal matters (Invoice 1014)
[21] Affidavit of Shashwat Nigam sworn on 21 July 2021 attachment SN9.
[22] Affidavit of Dennis Lelas sworn on 6 April 2022 [6].
This invoice was for the work done between 10 January 2018 and 26 September 2019 by the respondent representing the applicant in respect of criminal charges. The applicant deposes that he was advised that the estimated costs of defending him at a trial would be $10,000.[23] Upon a plea to a lesser charge being entered, the applicant says he assumed he would be charged less than the estimate given, as the prosecution was ordered to pay costs, which he assumed would be deducted from the estimated $10,000 to defend him. He says he raised this with his lawyer and was advised by his lawyer that he would look into the matter. The applicant's understanding was that his lawyer would speak to the administrative staff about the amount billed.[24]
[23] Affidavit of Dennis Lelas sworn on 27 July 2021 [11]; affidavit of Dennis Lelas sworn on 6 April 2022 [2]
[24] Affidavit of Dennis Lelas sworn on 6 April 2022 [2].
Instead, the bill he received, according to the applicant, was in excess of $40,000, reduced to $26,171.14[25] (although what is actually charged is $30,000 on a but say basis less $19,183 transferred from monies held on trust, meaning $10,817 was outstanding).[26] The applicant said he was shocked by the bill and thought it must have been a mistake. He had considered he had paid the respondent in full by virtue of what he had already paid into the trust account.
[25] Affidavit of Dennis Lelas sworn on 27 July 2021 [17].
[26] Affidavit of Dennis Lelas sworn on 27 July 2021 attachment DL2; affidavit of Shashwat Nigam sworn on 21 July 2021 [4.5].
Assuming the criminal matters (the subject of Invoice 1014) are separate to the later criminal matters (the subject of Invoice 1093), the time to commence an application to assess the costs was 6 November 2020. The respondent made numerous requests for payment prior to that time. The application is 15 months out of time.
In the absence of any costs agreement being produced or there being any itemisation of the $30,000 in legal costs charged in Invoice 1014, it is difficult to make any findings in relation to whether an estimate was given or if the amount charged was excessive for the work done. It is clear from the correspondence that the work included numerous appearances, sentencing and preparation for trial on serious charges to which a plea for a lesser charge was ultimately accepted.[27]
[27] Affidavit of Shashwat Nigam sworn on 21 July 2021 attachment SN3.
Without the costs agreement or any responsive affidavits from the respondent, I have no basis to reject the applicant's evidence that he was told costs would be capped. If the amount was to be capped in the sum of $10,000, clearly the invoices for the criminal matters exceed that estimate significantly. If there was no such cap, I cannot ascertain if the bills are excessive in the absence of itemisation. However, there is evidence that the applicant did query the costs as being significantly more than what had been estimated and he had already paid sums into the respondent's trust account.
Invoice 1093
This invoice relates to further criminal related matters. The last invoice was issued to the applicant on 24 March 2020 which encompassed the outstanding costs of the criminal matters in Invoice 1014. The time in which to assess Invoice 1093 was 24 March 2021.
The applicant said this bill was a complete overlap (presumably with the earlier invoice 1014) or 'over‑charge' and it added to his confusion and belief that there had been further mistakes in relation to his bills.[28]
[28] Affidavit of Dennis Lelas sworn on 27 July 2021 [21].
The applicant deposes that on receipt of the bill for $16,642.42 (the amount outstanding for work done on all criminal matters) he believed nothing had been done to sort out the bills and felt helpless for a long period of time until he engaged a solicitor to assist.[29]
[29] Affidavit of Dennis Lelas sworn on 6 April 2022 [11].
That confusion is understandable in light of the absence of any itemisation. It was only with the benefit of the Nigam Affidavit filed in the Magistrates Court was it possible to ascertain what amounts were owing in respect of which bills. There may have been further correspondence between the solicitors and the applicant which made the reconciliation between bills and what had been paid into the trust account clearer, but it was not provided to the Court.
While the purpose of the s 295(7) of the Act is not to allow a client who refuses to pay his or her solicitor's costs further time to avoid their obligation to pay for services rendered, these were large lump sum bills for matters in the Magistrates Court which had not gone to trial. The applicant had paid significant sums into the respondent's trust account. The amounts payable were difficult to reconcile with what had been paid and what was outstanding. There was no description of the work done. There was an assumption by the applicant that someone within the law practice would review these bills.
While the right to seek an itemised bill was mentioned on each invoice, the applicant states he did not read that thoroughly which, of itself, would be an insufficient reason for the delay. However, he states that he did not understand that itemisation meant he could demand a bill that sets out the detail of each item and how much he was charged for that item. There is nothing before me that indicates that the respondent advised the applicant independently about the process for assessment and the time in which it must be brought.
Prejudice to the respondent
In this instance the respondent had made repeated demands for payment of the outstanding invoices up until 23 July 2020. On the affidavits filed, there was no further attempt to recover the outstanding fees until 8 April 2021. By then the time to seek an assessment of the last bill issued had expired on 24 March 21.
The prejudice to the respondent is that it has not been paid in full for the work undertaken in the case of the family violence restraining order and in relation to the insurance matter for two to three years. Depending on whether the criminal matters were related, the applicant is at least 11 or 15 months out of time to seek an assessment. While there is no evidence of any practical difficulty in having the bills assessed, the time limits are there for a reason. Law practices should be paid in a timely way for their services. In addition, the law practice has incurred expenses in bringing an application for summary judgment in the Magistrates Court.
Conclusion
Section 295(7) of the Act provides the court with the discretion to allow an assessment of costs beyond the 12 month limit prescribed. I accept the respondent gave the applicant multiple opportunities to pay or query the bill. Nevertheless, it seems the applicant was confused as to what he was being charged for and how those bills were to be reconciled with what he had already paid to the applicant’s solicitor.
The respondent was aware by May 2021 that the applicant disputed the bills, some 7 months after the time to assess Invoice 1014 had expired and 2 months the time to assess Invoice 1093 had expired.
I accept there may have been other communications between the applicant and the respondent about his unpaid bills and I accept that bills were formulated on a 'but say' basis and did not seek payment of all costs incurred. In addition, there is evidence that the respondent appeared on behalf of the applicant in relation to his criminal matters in the Magistrates Court despite not being able to obtain instructions, so that the applicant was not prejudiced. I also accept a decision may have been made by the respondent not to expend further time and money to address the matters raised in the applicant's affidavits in support of this application. However, I am required to determine this matter based on what has been filed.
Weighing up the length of the delay, the reasons for delay and the fact the applicant had queried the amount charged against the general prejudice to the respondent in having to now itemise bills in an assessable form and have them assessed, in my view, favours granting an extension of time, in relation to the two invoices dealing with the criminal related matters. While 11 and 15 month delays in seeking an assessment for each of the bills respectively are not small delays, the applicant had raised concerns with the respondent about the discrepancy in the amounts outstanding with the amount he had been quoted and how much he had already paid into trust.
There is also a further matter which weighs in the balance. In order to obtain an enforceable judgment for the amounts owed, the respondent could have had the bills assessed. Instead the respondent sought summary judgment of the debt after any rights of the applicant to challenge the bills became time-barred in circumstances where the amounts are disputed and where the bills do not itemise the work done. Further, the respondent will not provide itemised accounts unless the applicant is successful in this application, presumably on the basis that until that time the applicant is not a person entitled to apply for an assessment of the legal costs to which the bill relates (s 292(1) of the Act). The prejudice suffered by the respondent is therefore losing the forensic advantage of pressing for a summary judgment application against the applicant who does not know to what work the legal costs in the lump sum bills relate. In all the circumstances that seems neither just nor fair.
I would refuse the extension of time to assess Invoice 979 (the family violence restraining order matter) and Invoice 1083 (the insurance matter). They appear to be discrete matters, do not appear to be excessive and there is no explanation for the delay in relation to the latter.
Having regard to the delay and the reasons for the delay, I am nevertheless satisfied it is just and fair to allow an extension of time in which to assess Invoice 1014 and Invoice 1093 being the costs of dealing with the criminal matters.
I will make orders accordingly and hear from the parties in relation to costs and programming orders.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LH
Associate to Principal Registrar McDonald
28 JUNE 2022
3
0