Likos v Idameneo (No 123) Pty Ltd
[2017] SASC 105
•11 July 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
LIKOS v IDAMENEO (NO. 123) PTY LTD
[2017] SASC 105
Judgment of Judge Roder a Master of the Supreme Court
11 July 2017
PROCEDURE - COSTS - AGREEMENTS AS TO COSTS
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - PLEADINGS - STRIKING OUT
This is an application for certain paragraphs to be struck out of a Notice of Dispute. The paragraphs relate to a solicitor’s cost agreement. Order made that the paragraphs be struck out.
Legal Practitioners Act 1981 Clauses 30 and 46, referred to.
Frigger v Shepherd [2014] WASC 477; Portuguese Cultural and Welfare Centre v Talbot Olivier Pty Ltd [2013] WASC 91; Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65, considered.
LIKOS v IDAMENEO (NO. 123) PTY LTD
[2017] SASC 105
This is a dispute between lawyer and former client about costs. On 27 March 2017 the plaintiff (the former client) filed a Notice of Dispute, pursuant to orders made by Judge Bochner on 24 February 2017. The Notice of Dispute is FDN 59.
By FDN 60 the lawyer sought an order striking out certain paragraphs of the Notice of Dispute or in the alternative further and better particulars.
On 12 May 2017 Judge Bochner ordered a detailed request for particulars and a response. The matter was listed for argument on 30 June 2017. The request for particulars and the response are part of FDN 63.
It is clear from the transcript of the hearing on 12 May 2017 that it was envisaged that the question of setting aside the costs agreement be decided as a preliminary point and that the Notice of Dispute and the further particulars ordered would be the vehicle for defining the scope of that question. Logically, that has to be the first question. Once it is decided, the parties will know whether the adjudication is to be pursuant to the costs agreement or pursuant to the applicable scale of costs.
The parties agreed that the Notice of Dispute should be treated as a pleading. That is clearly consistent with Judge Bochner’s order. The question is whether part of the Notice of Dispute should be struck out.
The lawyer seeks to strike out paragraphs 6-8 and 17-28 of the Notice of Dispute. Broadly speaking, those paragraphs raise the following categories of complaint:
·defective (sometimes called “deficient”) work;
·invoices charging for services not provided for in the retainer;
·barristers’ fees being excessive or unnecessary; and
·work done without instructions.
I was referred to Clauses 30 and 46 of Schedule 3 to the Legal Practitioners Act 1981. Those clauses relevantly provide:
30—Setting aside costs agreements
(1)On application by a client, the Supreme Court may order that a costs agreement be set aside if satisfied that the agreement is not fair and reasonable.
(2)In determining whether or not a costs agreement is fair and reasonable, and without limiting the matters to which the Supreme Court can have regard, the Court may have regard to any or all of the following matters:
(a) whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the law practice;
(b) whether any legal practitioner acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates;
(c) whether the law practice failed to make any of the disclosures required under Part 3;
(d) the circumstances and the conduct of the parties before and when the agreement was made;
(e) the circumstances and the conduct of the parties in the matters after the agreement was made;
(f) whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement;
(g) whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement.
(3)The Supreme Court may adjourn the hearing of an application under this clause pending the completion of any investigation or determination of any charge in relation to the conduct of any legal practitioner.
(4)If the Supreme Court orders that a costs agreement be set aside, it may make an order in relation to the payment of legal costs the subject of the agreement.
(5) In making an order under subclause (4)—
(a) the Supreme Court must apply the applicable scale of costs (if any) and any applicable recommendations as to the calculation of barristers' costs; or
(b) if there is no applicable scale of costs or recommendations—the Court must determine the fair and reasonable legal costs in relation to the work to which the agreement related, taking into account—
(i)the seriousness of the conduct of the law practice or any legal practitioner acting on its behalf; and
(ii) whether or not it was reasonable to carry out the work; and
(iii) whether or not the work was carried out in a reasonable manner.
(6)In making an order under subclause (4), the Supreme Court may not order the payment of an amount in excess of the amount that the law practice would have been entitled to recover if the costs agreement had not been set aside.
(7)For the purposes of subclause (5), the Supreme Court may have regard to any or all of the following matters:
(a) whether the law practice and any legal practitioner acting on its behalf complied with any relevant legislation or legal profession rules;
(b) any disclosures made by the law practice under Part 3, or the failure to make any disclosures required under that Part;
(c) any relevant advertisement as to—
(i) the law practice's costs; or
(ii)the skills of the law practice or of any legal practitioner acting on its behalf;
(d) the skill, labour and responsibility displayed on the part of the legal practitioner responsible for the matter;
(e) the retainer and whether the work done was within the scope of the retainer;
(f) the complexity, novelty or difficulty of the matter;
(g) the quality of the work done;
(h) the place where, and circumstances in which, the work was done;
(i) the time within which the work was required to be done;
(j) any other relevant matter.
(8) The Supreme Court may determine whether or not a costs agreement exists.
(9)The Supreme Court may order the payment of the costs of and incidental to an application under this clause.
(10) In this clause—
client means a person to whom or for whom legal services are or have been provided.
46—Criteria for adjudication
(1) In conducting an adjudication of legal costs, the Supreme Court must—
(a) consider—
(i)whether or not it was reasonable to carry out the work to which the legal costs relate; and
(ii) whether or not the work was carried out in a reasonable manner; and
(iii)the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that clause 47 or 48 applies to any disputed costs; and
(b) if the legal costs have been the subject of a complaint to the Commissioner of overcharging—have regard to any recommendation made by the Commissioner that the charges be reduced or an amount refunded to the client.
(2)In considering what is a fair and reasonable amount of legal costs, the Supreme Court may have regard to any or all of the following matters:
(a) whether the law practice and any legal practitioner acting on its behalf has complied with the law;
(b) any disclosures made by the law practice under Part 3;
(c) any relevant advertisement as to—
(i) the law practice's costs; or
(ii)the skills of the law practice or of any legal practitioner acting on its behalf;
(d) the skill, labour and responsibility displayed on the part of the legal practitioner responsible for the matter;
(e) the retainer and whether the work done was within the scope of the retainer;
(f) the complexity, novelty or difficulty of the matter;
(g) the quality of the work done;
(h) the place where, and circumstances in which, the legal services were provided;
(i) the time within which the work was required to be done;
(j) any other relevant matter.
(3)In conducting an adjudication of legal costs payable by a non‑associated third party payer, the Supreme Court must also consider whether it is fair and reasonable in the circumstances for the non‑associated third party payer to be charged the amount claimed.
I was also referred to Clause 18 of the Schedule. While I accept that that clause may be relevant to an argument as to liability to pay costs, I do not understand how it could be relevant to the question that is presently in issue – namely whether the costs agreement should be set aside.
Mr Holland, counsel for the lawyer, conceded that the matters raised by the paragraphs of the Notice of Dispute that are in dispute could appropriately be ventilated on an adjudication of costs. He described them as “taxation” issues. However, Mr Holland submitted that those issues do not and could not go to the question of whether the costs agreement should be set aside.
Neither counsel referred me to authority decided in this jurisdiction in respect of Clause 30(2) of Schedule 3. Mr Holland relied on the decision of Jenkins J in Frigger v Shepherd.[1] It appears that the relevant Western Australian legislation is to a similar effect to Schedule 3. Mr Campbell, for the plaintiff, agreed that Frigger is a relevant guide. I consider that it is appropriate to approach Clause 30(2) with the principles in Frigger in mind.
[1] [2014] WASC 477.
Mr Holland then relied on the decision of Hall J in Portuguese Cultural and Welfare Centre v Talbot Olivier Pty Ltd.[2] In that case there were claims that work had been done by lawyers that had not been agreed to and was unnecessary, that work was done incompetently and that a costs agreement had been signed under pressure and without authority. Hall J had no doubt that the first two complaints were “beyond the scope of this application” in that they were matters for taxation. They did not go to the issue of whether the costs agreement should be set aside. Hall J’s decision was upheld on appeal.[3]
[2] [2013] WASC 91.
[3] Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASCA 65.
In many cases, the question of whether a costs agreement is fair – or reasonable – will fall to be determined by reference to conduct leading up to and in the formation of the agreement. That said, it is clear that there can be cases in which conduct subsequent to the forming of the costs agreement will be relevant to setting it aside. Clause 30(2)(e) makes that clear. For example, circumstances may change. A costs agreement might, in changed circumstances, no longer be fair – or it might not still be reasonable.
In this case, Mr Campbell for the plaintiff was unable to point to any way in which the matters described by Mr Holland as “taxation issues” could go to the question of whether the costs agreement itself was not fair or reasonable. Mr Campbell said that his Notice “covered the field”. That seems to me to miss the point. This dispute has been structured so that a preliminary point – not the whole field – is to be decided at this stage.
I accept Mr Holland’s submissions. In this case allegations of “deficiency”, not charging according to a retainer, excessive or unnecessary costs and work done without or contrary to instructions do not appear to establish any basis to set aside the agreement in question. I am satisfied that those parts of the Notice of Dispute prejudice the proper conduct of this stage of the action and I will therefore order that they be struck out. There was also an application for further and better particulars of certain paragraphs. In light of the conclusions to which I have come, it is unnecessary to rule on that.
I emphasise that this decision does not mean that the plaintiff cannot rely on the allegations that I have directed be struck out when the matter proceeds to adjudication – on whatever basis that may be. Those allegations may then be relevant. They are not relevant at this stage.
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