Luscombe v Australasian Solicitors Pty Ltd trading as HHG Legal Group
[2023] WASCA 141
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: LUSCOMBE -v- AUSTRALASIAN SOLICITORS PTY LTD trading as HHG LEGAL GROUP [2023] WASCA 141
CORAM: VAUGHAN JA
VANDONGEN JA
MULLINS AJA
HEARD: 11 SEPTEMBER 2023
DELIVERED : 2 OCTOBER 2023
FILE NO/S: CACV 102 of 2022
BETWEEN: JILLIAN LUSCOMBE
Appellant
AND
AUSTRALASIAN SOLICITORS PTY LTD trading as HHG LEGAL GROUP
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: CURTHOYS J
Citation: LUSCOMBE -v- AUSTRALASIAN SOLICITORS PTY LTD trading as HHG LEGAL GROUP [2022] WASC 335
File Number : CIV 1502 of 2021
Catchwords:
Legal practitioners - Solicitors - Costs agreement - Whether the primary judge erred in finding that the respondent had complied with the disclosure requirements of s 260(1)(c) and s 260(1)(f) of the Legal Profession Act 2008 (WA) - Whether the primary judge erred in finding that the respondent provided a revised estimate and complied with the disclosure requirements of s 267 of the Legal Profession Act - Where the appellant applied pursuant to s 288(2) of the Legal Profession Act to set aside the costs agreement - Whether the agreement was not fair - Whether the agreement was not reasonable
Legislation:
Family Law Act 1975 (Cth)
Legal Profession Act 2008 (WA), s 260, s 267, s 268, s 288
Legal Profession Uniform Law (WA)
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
| Appellant | : | Mr R Graham |
| Respondent | : | Ms A Pascoe |
Solicitors:
| Appellant | : | Graham & Associates Lawyers |
| Respondent | : | Pascoe Legal |
Case(s) referred to in decision(s):
De Mol v WHL Legal Pty Ltd [2017] WASC 354
Luscombe v Australasian Solicitors Pty Ltd trading as HHG Legal Group [2022] WASC 335
Stevenson v Zafra Pty Ltd [2021] WASCA 181
VAUGHAN JA:
I have the considerable advantage of having read Mullins AJA's reasons in draft. I agree with her Honour's reasons and conclusions in relation to grounds 1(a) and 1(c). Accordingly, I too would dismiss ground 1(a) and uphold ground 1(c). However, I take a different view to Mullins AJA on ground 1(b).
In explaining why I would uphold ground 1(b) in part I will not repeat the totality of the factual background or the statutory context as is recounted by Mullins AJA. Nor is it necessary to repeat the relevant part of the primary judge's reasons. Relevantly, ground 1(b) related to the costs disclosure made as to potential costs recovery or adverse costs. In this respect, s 260(1)(f) of the Legal Profession Act 2008 (WA) (as in force at the material time) provided that a law practice must disclose to a client:
if the matter is a litigious matter, an estimate of:
(i)the range of costs that may be recovered if the client is successful in the litigation; and
(ii)the range of costs the client may be ordered to pay if the client is unsuccessful.
In purported compliance with this obligation, HHG disclosed:
13.PARTY AND PARTY COSTS AWARDED BY THE COURT
The Client agrees that the Law Practice has explained to the Client that:
13.1The general rule in relation to family law matters in Western Australia is that each party to the proceedings is to bear the party's own costs.
13.2.In certain circumstances, a party may obtain a costs order against another party (the Party and Party Costs). However, unless that party obtains exceptional costs orders from the Court, the Costs Scale outlines the maximum costs that that party can recover from the other party.
13.3If the Client obtains a costs order against another party, the Law Practice estimates that approximately 35% to 60% of the Client’s costs may be recovered from that other party.
13.4Any payment by that other party may not be enough to meet all the costs that the Client has paid or owes to the Law Practice.
…
13.6If that other party obtains a costs order against the Client, the Client may be required to make a payment towards the costs incurred by that other party. The Law Practice estimates that approximately 35% to 75% of the other party's costs (depending on the rates charged by the other party’s solicitors) may be recovered from the Client.
Paragraph 13.3 must be read with the range of estimates of the total legal costs that HHG provided as to the appellant's own costs (see [50] below). This, in substance, provided an upper point for the estimate of the range of costs that may be recovered if the client was successful - the percentage figures could be applied to the disclosed range of estimates of the total legal costs. The lower point for the estimate of the range was nil, as was plainly disclosed by par 13.1. So understood there was sufficient disclosure in accordance with s 260(1)(f)(i). That part of ground 1(b) fails.
I am, however, unable to accept that there was proper disclosure in accordance with s 260(1)(f)(ii). The disclosure as to adverse costs emerges from pars 13.1 and 13.6. Again, so far as the general rule is stated in par 13.1 to be that each party bears its own costs in litigation of the relevant kind, there is adequate disclosure of the bottom point of the estimate of the range of costs that the appellant might be ordered to pay if she is unsuccessful in the litigation. The bottom point is nil. But, as to the upper point of the estimate of the range of costs the appellant might be ordered to pay if unsuccessful in the litigation, all that is said is that the appellant might have to pay 35% ‑ 75% of the other party's costs depending on the rates charged by the other party's solicitors.
This, in my opinion, is insufficient for compliance - or even substantial compliance - with the disclosure requirement in s 260(1)(f)(ii) of the Legal Profession Act. The nomination of a range of percentage figures by way of costs recovery is meaningless to a client in the position of the appellant where the client is not informed of the likely actual costs to be incurred by the other party. A client in the position of the appellant is left to speculate on the likely actual costs to be incurred by the other party.
The primary judge held that there was adequate disclosure observing that '[i]t is difficult to see how a party's right to recover costs from the other party could been [sic] expressed other than by a percentage estimate'. I respectfully disagree. As Tottle J said in De Mol v WHL Legal Pty Ltd:
[L]itigation lawyers are capable of providing estimates of the ranges of total costs in difficult and complex litigation together with an explanation of the variables based on past experience and taking into account current charge out rates and relevant features of the litigation, such as the complication of third party proceedings. Inevitably there will be areas of uncertainty as to the amount of the work that will be required because of the difficulty in predicting how the other party or parties will approach the litigation and other imponderables. These uncertainties can be accommodated by expanding the range of the estimates and by appropriate qualifications reflecting the uncertainties. It must be remembered that what is required is 'estimates'. Likewise, based on experience and familiarity with the costs determinations, litigation lawyers are capable of estimating the amount of a client's expenditure on legal costs that might be recovered from the unsuccessful party and what might be recovered from the client in the event of an adverse costs order.[1]
[1] De Mol v WHL Legal Pty Ltd [2017] WASC 354 [105].
Indeed, if a litigation lawyer lacks the necessary knowledge, skill and experience so as to be capable of providing an estimate of the range of the costs the client may be ordered to pay if the client is unsuccessful in proposed litigation, the lawyer should be considering whether he or she should be accepting the client's instructions.
HHG did not comply, or substantially comply, with the disclosure requirement in s 260(1)(f)(ii). There was no disclosure of the upper point of the estimate of the range of costs that the appellant may be ordered to pay if she was unsuccessful in the litigation. To that extent the appellant has established error in terms of ground 1(b).
Accordingly, in considering ground 2, I have evaluated whether the costs agreement was not fair or not reasonable by reference to the facts and matters referred to by Mullins AJA together with the additional failure to disclose in terms of s 260(1)(f)(ii) that I have described above. I am, however, not satisfied that the costs agreement was not fair or not reasonable for the purpose of s 288 of the Legal Profession Act even taking into account that additional disclosure failure. It follows that the primary judge did not err in the manner contended by ground 2. In this respect I agree generally with Mullins AJA's reasons for dismissing ground 2. The additional disclosure failure that I consider to have been made makes no material difference to the normative assessment required by s 288. Counsel for the
appellant accepted as much at the appeal hearing. Counsel stated, correctly, that this disclosure would not be enough of itself in the particular facts of the case to bespeak that the costs agreement was not fair or not reasonable.[2]
[2] Appeal ts 16.
The position might be otherwise where the retainer was to act in a context where there was no general rule to the effect that, ordinarily, each party will bear its own costs. Where the general rule is that costs follow the event - such that orders for adverse costs are the norm - the evident statutory purpose of the disclosure required by s 260(1)(f)(ii) has greater significance than the present case. In a litigious matter, a client is to be informed of an estimate of the range of costs he or she may be ordered to pay if unsuccessful so that he or she may make an informed decision about proceeding with the litigation. In the circumstances of the present case the disclosure failure was of lesser weight because the appellant was adequately informed of the applicable general rule that each party to the proceedings is to bear the party's own costs.
It follows that I, like Mullins AJA, would dismiss ground 2. Accordingly, the appeal must be dismissed despite the appellant's success on grounds 1(b) and 1(c). I agree with the orders proposed by Mullins AJA.
VANDONGEN JA:
I have had the advantage of having read the separate draft reasons of both Vaughan JA and Mullins AJA. Like Vaughan JA, I agree with Mullins AJA's reasons and conclusion in relation to ground 1(a) and would dismiss that ground. I also agree with Vaughan JA's reasons and conclusion in relation to ground 1(b) and I would uphold that ground. However, I am of the view that ground 1(c) should be dismissed.
As will become clear, I also agree with Vaughan JA and Mullins AJA that ground 2 should be dismissed. Given that I have reached a different conclusion in relation to ground 1(c) it is appropriate that I express my reasons for dismissing that ground, and for dismissing ground 2, separately.
Ground 1(c)
By ground 1(c) the appellant contends that the primary judge erred in law in finding that the respondent 'provided a revised estimate and complied with, or substantially complied with, the disclosure requirements in s 267 of the [Legal Profession Act 2008 (WA) (LPA)]'. This ground relies on [114] of the reasons, which is in the following terms:
In effect, HHG did provide a revised estimate. When the issue of Ms Luscombe's involvement in the SMSF arose, HHG advised her that they would be seeking $50,000 towards costs. Plainly, that $50,000 was requested from the estate to deal with the allegation of improper conduct by Ms Luscombe in relation to the withdrawal from the SMSF and the payment of the death benefit. Although the request for $50,000 was not specifically identified as an estimate, it is difficult to see it as anything else. In any event, the $50,000 fell within the $35,000 to $95,000 range stated in cl 5 of sch 2 in the Costs Agreement.
I adopt, without repeating, Mullins AJA's helpful summary of the facts that relate to this aspect of the primary judge's reasons.
It is unfortunate that even though the appellant specifically relied on an alleged failure by the respondent to comply with the ongoing obligation to provide costs disclosure, pursuant to s 267 of the LPA, what is set out in [114] of the primary judge's reasons is the full extent of his express findings on this issue. As can be seen, the primary judge found that the request for a payment of $50,000 constituted a 'revised estimate'. However, no clear findings were made about whether this revised estimate, or anything else, constituted a 'substantial change to anything included in a disclosure already made under [div 3 of the LPA]' and, if so, whether the respondent had disclosed that change in writing as soon as practicable after it had become aware of the change, as was required by s 267 of the LPA.
I do not think it is implicit that the primary judge found that by 11 July 2019 there was a substantial change to the costs disclosure that had already been provided. Instead, I am of the view that the primary judge found that there was no relevant substantial change and that, as a consequence, the respondent had not failed to comply with the continuing costs disclosure obligation provided for in s 267 of the LPA.
The primary judge recorded the parties' submissions about this issue at [112] ‑ [113]:
Ms Luscombe submitted that HHG did not comply with the obligation of ongoing disclosure in relation to what she said were 'substantial changes'. She submitted that no revised costs estimates were provided as new issues emerged including in July 2019 when a request to Ms Luscombe's daughter's estate was made for $5,000 and then $50,000 to meet Ms Luscombe's ongoing legal costs and when HHG anticipated that it may be required to prepare for and attend a financial mediation and brief counsel.
HHG submitted that in circumstances where a range of estimates of $35,000 to $95,000 was provided, no attempt was made to articulate what the 'substantial change' to the previous disclosure was. (footnotes omitted)
Accordingly, his Honour's finding that the respondent did, in effect provide a revised estimate was in direct response to an issue that had been raised by the appellant. In that regard, the primary judge found, contrary to the appellant's submission, that the respondent did provide revised costs estimates as new issues emerged. However, it is the final sentence of [114] of the reasons that is of significance, particularly when it is read in the light of the respondent's submission about this issue.
In the final sentence of [114] the primary judge noted that the respondent's request for $50,000 '[i]n any event … fell within the $35,000 to $95,000 range' that was stated in the costs agreement. In my view this finding is consistent only with the primary judge having accepted the respondent's submissions and reaching a conclusion that regardless of whether the respondent had provided a revised costs estimate, the respondent's request for payment of $50,000 from the appellant's daughter's estate to be held on trust to cover the appellant's ongoing and anticipated future costs did not amount to a substantial change to anything included in the original costs disclosure, because that amount fell within the range of costs that had been originally estimated.[3] In particular, it amounts to a finding that the request did not amount to any substantial change to the range of estimates of the total legal costs that had already been disclosed in accordance with s 260(1)(c)(i) of the LPA.
[3] It should also be noted that according to Mr Majoe's unchallenged evidence, when the request for payment of $50,000 was made the appellant had only incurred a total of $4,003.30 in legal fees with the respondent (exhibit D [51]).
It follows that for the appellant to succeed on ground 1(c), she must establish that the primary judge erred in concluding that the respondent did not fail to comply with s 267 of the LPA. In that context it is important to note some matters that emerge from the text of s 267 of the LPA.
Firstly, s 267 imposes an obligation on a law practice to disclose to a client 'any substantial change to anything included in a disclosure already made under [div 3]'. Accordingly, s 267 directs attention to what has already been disclosed to a client in accordance with div 3 of pt 10 of the LPA. The obligation to disclose then arises only if there has been any 'substantial change' to any disclosure previously made. This is not to deny that changes to disclosures already made may be affected by events or circumstances that are not, themselves, the subject of a costs disclosure. However, the focus of the obligation under s 267 is on substantial changes to anything included in a disclosure that has already been made.
Secondly, the obligation to disclose any relevant substantial change only arises 'as soon as is reasonably practicable after the law practice becomes aware of that change'. This means that to determine whether a law practice has complied with s 267 it will be necessary to give consideration to what was known by the law practice about the relevant change, and when the law practice became aware of that change.
As the respondent submitted, the basis on which the appellant has asserted that the respondent has failed to comply with s 267 of the LPA has been nebulous.[4] Throughout the course of these proceedings there has been a distinct lack of focus on and clarity about what is alleged to have been the relevant substantial change in the disclosure that was originally made by the respondent. There has been a corresponding lack of consideration given to the question of whether the respondent was aware of any such change, if indeed a substantial change occurred.
[4] Respondent's submissions [36].
At the hearing of the appeal, under questioning from members of the coram, counsel for the appellant ultimately contended that there had been a substantial change to the original disclosure that had been provided by the respondent in cl 5 of sch 2 of the costs agreement. As has already been observed, this clause relevantly disclosed that if the matter involved litigation over an extended period of time the appellant may spend between $35,000 and $95,000. In effect, counsel submitted that there had been a substantial change to this range of estimates because by the end of the retainer invoices close to $42,000 had been issued to the appellant, and because the work that had been done was predominantly concerned with seeking to obtain money from the deceased daughter's estate to pay for the legal costs.[5] However, it remains unclear why the appellant contended that the respondent became aware that there had been a substantial change in the disclosure that was originally given to the appellant and, if so, at what point the respondent became aware.
[5] Transcript 11 September 2023, 19-20.
In my view the appellant's submission that the trial judge erred in finding that the respondent had complied with s 267 of the LPA cannot be accepted. Because my views about this issue cannot affect the outcome of this appeal, having regard to the conclusions reached by Vaughan JA and Mullins AJA in relation to ground 1(c) and ground 2, it is only necessary to explain my reasons in relation to this issue in summary.
Most significantly, the appellant has not referred to any evidence that there had been any substantial change in the range of costs estimates that were originally provided by the respondent. In that regard the appellant has not drawn the court's attention to any evidence that there was a substantial change to that range of costs estimates when the respondent requested $50,000 from the appellant's daughter's estate. Further, she has not referred to any evidence that there were any substantial changes in the range of estimates at any other time in the four months that the respondent was engaged to act for the appellant. In that regard I agree with the respondent's submission that the appellant has merely assumed, without any evidentiary basis, that the range of estimates that was originally disclosed became no longer applicable at some point in time during the currency of the respondent's retainer. Although there were some changes to the original scope of work, and there was evidence that the respondent had issued invoices to the appellant totalling $42,646.70 for work undertaken between May 2019 and October 2019, the appellant did not point to any evidence that was capable of positively establishing that the original estimated range had substantially changed at any relevant point in time.
In any event, even if there was evidence that a relevant substantial change had occurred there is no evidence that the respondent became aware of that change, or whether, if it did become aware, that it was reasonably practicable for it to have complied with the obligation to give ongoing disclosure in accordance with s 267 before it advised the appellant in late September 2019 that it was not able or willing to continue to be retained.
It is also important to appreciate that the appellant's counsel did not put to either of the two witnesses who were called by the respondent to give evidence at the hearing before the primary judge any suggestion in cross‑examination that there had been a substantial change to anything that had been included in the original costs disclosure. There was also no suggestion that the respondent had become aware of any such change. The cross‑examination on the issue of ongoing disclosure consisted of just two questions, both of which were put to Mr Majoe. The first question elicited evidence that he had not provided a written revision of cost estimates. The second question amounted to a suggestion that he had not provided a revision because he was too busy, a suggestion that was rejected by Mr Majoe. In those circumstances it would have been unfair for the primary judge to have resolved issues about whether s 267 had been complied with in the manner now contended for by the appellant.
For these reasons I would dismiss ground 1(c).
Ground 2
It is necessary for me to consider ground 2 in the light of the primary judge's findings[6] that the respondent failed to expressly disclose to the appellant that she had the right to be notified of any substantial change in the disclosure that had been provided in accordance with s 260(1)(b)(iv),[7] and that she had the right to progress reports pursuant to s 260(1)(g).[8] In my view, the respondent's failure to use the word 'right' in both cases was immaterial. This conclusion aligns with the primary judge's unchallenged finding at [143] of his reasons that the appellant would not have acted differently if the respondent had complied with those aspects of its disclosure obligations.
[6] Luscombe v Australasian Solicitors Pty Ltd trading as HHG Legal Group [2022] WASC 335 [143].
[7] Luscombe [77].
[8] Luscombe [101].
It is also necessary to decide whether the failure to comply with s 260(1)(f)(ii), which is the subject of ground 1(b), stigmatised the costs agreement as being not fair or not reasonable. In that regard I agree with Vaughan JA's reasons and conclusion.
It follows that I would dismiss ground 2 and, notwithstanding my conclusion that ground 1(b) should be allowed, the appeal should be dismissed.
I agree with the orders proposed by Mullins AJA.
MULLINS AJA:
The appellant was unsuccessful in her application pursuant to s 288(2) of the Legal Profession Act 2008 (WA) (LPA) before the learned primary judge to set aside the costs agreement dated 31 May 2019 between the respondent solicitors (HHG) and her: Luscombe v Australasian Solicitors Pty Ltd trading as HHG Legal Group [2022] WASC 335 (the reasons).
The appellant had been represented by one firm of solicitors (the former firm) when in March 2019 she intervened in the proceedings in the Family Court of Western Australia that had been commenced against her daughter (the daughter) in July 2018 by her daughter's husband (the son‑in‑law). When the daughter separated from the son-in-law in March 2017, the appellant was involved in the care of her granddaughter who was the child of the daughter and the son‑in‑law. When the daughter passed away from cancer in late December 2018, the appellant was acting as the primary carer of her granddaughter. The appellant was seeking a parenting order for her granddaughter and an order that she be able to live in the house that was the property of the daughter and the son‑in‑law. On 26 March 2019 the Family Court made interim parenting orders by consent for the appellant to be joined in the proceedings in substitution of the daughter in relation to the previous parenting orders and made various interim financial orders including an order in respect of the payment of the son‑in‑law's legal costs from the daughter's estate.
The appellant was unhappy with the representation in the proceedings by the former firm and had a personal referral to HHG. Accompanied by her son and his partner, the appellant consulted Dr Cohen of HHG on 20 May 2019 who took initial instructions and provided preliminary advice. Shortly after the consultation, the appellant was provided with the form of the costs agreement which she signed on 31 May 2019 and returned to HHG. HHG was retained by the appellant to act in relation to 'Family Law matter' and Mr Majoe of
HHG took over the appellant's matter in June 2019. The former firm filed a notice of ceasing to act on 6 June 2019 and HHG filed a notice of address for service on 26 June 2019.
Mr Majoe attended the Family Court on behalf of the appellant on 2 July 2019 when orders were made by consent in relation to the payment of the death benefit payable from the superannuation fund to the daughter's estate and for the payment of various amounts from that sum for the legal costs and other expenses of the son‑in‑law and the appellant's son who was appointed as the executor and trustee of the daughter's estate. HHG issued eight invoices to the appellant totalling $42,646.70 for work undertaken between May 2019 and 4 October 2019 which were the subject of assessment proceedings when the application was heard by the primary judge. The assessment proceedings are stayed pending finalisation of the appellant's pursuit of the application to set aside the costs agreement.
Grounds of appeal
There are two grounds of appeal. The first ground challenges the findings made by the primary judge that the respondent:
(a)complied with, or substantially complied with, the disclosure requirement in s 260(1)(c) of the LPA (at [85] ‑ [86] of the reasons);
(b)complied with, or substantially complied with, the disclosure requirement in s 260(1)(f) of the LPA (at [94] of the reasons); and
(c)provided a revised estimate and complied with, or substantially complied with, the disclosure requirements in s 267 of the LPA (at [114] of the reasons).
There were other allegations of inadequate costs disclosures made by the appellant which were the subject of findings by the primary judge that are not in contention on this appeal.
If the appellant succeeds on one or more of her challenges to the findings of the primary judge in relation to the costs disclosures, that will require this court on the appeal to take that into account in considering whether the costs agreement was not fair or not reasonable.
The second ground of appeal challenges the primary judge's finding (at [142] of the reasons) that there was nothing in the costs agreement nor in the circumstances and conduct of the parties before, when or after making the costs agreement that could be said to be not fair or not reasonable and asserts the primary judge ought to have found that the costs agreement was not fair or not reasonable and exercised the discretion to set it aside.
The legislation
The LPA was repealed on the commencement of the Legal Profession Uniform Law (WA) on 1 July 2022 but the appellant's appeal must be dealt with under the LPA.
Section 260 of the LPA dealt with disclosure of costs to the client. Section 260(1)(c) and (f) provided:
(1)A law practice must disclose to a client in accordance with this Division ‑
…
(c)an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable ‑
(i)a range of estimates of the total legal costs; and
(ii)an explanation of the major variables that will affect the calculation of those costs;
…
(f)if the matter is a litigious matter, an estimate of ‑
(i)the range of costs that may be recovered if the client is successful in the litigation; and
(ii)the range of costs the client may be ordered to pay if the client is unsuccessful …
Section 267 of the LPA provided:
A law practice must, in writing, disclose to a client any substantial change to anything included in a disclosure already made under this Division as soon as is reasonably practicable after the law practice becomes aware of that change.
The consequences for a law practice which did not disclose to a client anything required by div 3 of pt 10 of the LPA to be disclosed were set out in s 268 of the LPA. The consequence under s 268(1) was that the client need not pay the legal costs unless they had been assessed under div 8. The consequence under s 268(3) was that the client might also apply under s 288 for the costs agreement to be set aside.
Section 288(2) of the LPA provided that the Supreme Court may order that a costs agreement be set aside if satisfied that the agreement was not fair or reasonable. Section 288(3) then set out matters to which the Supreme Court could have regard in determining whether or not a costs agreement was fair or reasonable without limiting the matters to which the Supreme Court could have regard.
The costs agreement
The primary judge set out the relevant clauses of the costs agreement and otherwise summarised its provisions at [24] ‑ [45] of the reasons.
Clause 12 of the costs agreement is set out at [33] of the reasons. It is an acknowledgement by the client that HHG outlined a reasonable indication of the amount of the legal costs which the client may incur and that the estimates are outlined in schedule 2 to the costs agreement. Relevantly, clauses 4 ‑ 7 of schedule 2 provide:
4.As at the conclusion of the first meeting, we estimate that you will need to spend at least $___________________ ( ) on initial advice and preliminary steps.
5.If your matter is simple and settles quickly, you may spend as little as $3,000 to $9,000 in total. On the other hand, if your matter involves litigation over an extended period of time (which is statistically very unlikely), you may spend $35,000 ‑ $95,000 or more.
6.In rare financial issues cases involving large amounts of assets, high levels of complexity and/or extreme levels of emotion, fees can run into the hundreds of thousands of dollars. Again, we will only let this happen if you approve it, and if the amount being spent is proportionate to the size of the asset pool. These cases are extremely rare and we will immediately inform you if you fall into this category.
7.In any event, more specific cost estimates on your case will be provided within a short time of your first meeting, then updated fortnightly as required.
Clause 13.1 of the costs agreement recites the general rule in relation to family law matters in Western Australia that each party to the proceedings is to bear the party's own costs. Clause 13.2 then specified that in certain circumstances, a party may obtain a costs order against another party which is defined as 'the party and party costs' and further states that 'unless that party obtains exceptional costs orders from the Court, the Costs Scale outlines the maximum costs that that party can recover from the other party'.
The remaining provisions of clause 13 of the costs agreement relating to party and party costs are set out at [34] of the reasons:
13.3If the Client obtains a costs order against another party, the Law Practice estimates that approximately 35% to 60% of the Client's costs may be recovered from that other party.
13.4Any payment by that other party may not be enough to meet all the costs that the Client has paid or owes to the Law Practice.
13.5The Client agrees that the Law Practice may receive the Party and Party Costs awarded to the Client and deduct the Party and Party Costs from any amount that the Client owes to the Law Practice.
13.6If that other party obtains a costs order against the Client, the Client may be required to make a payment towards the costs incurred by that other party. The Law Practice estimates that approximately 35% to 75% of the other party's costs (depending on the rates charged by the other party's solicitors) may be recovered from the Client.
Clause 20 of the costs agreement provides that the law practice 'will inform the Client in writing of any substantial change' to anything included in the costs agreement, as soon as reasonably practicable after the law practice becomes aware of that substantial change.
Some relevant facts
The parties made submissions on the appeal by reference to facts that had not all been the subject of specific findings by the primary judge. The parties' agreed chronology for the appeal incorporated many of those facts. Three affidavits had been tendered before the primary judge. The deponents were the appellant, Dr Cohen and Mr Majoe. It was only the appellant and Mr Majoe who were cross‑examined. Mr Graham of counsel who appeared for the appellant before the primary judge and on this appeal conceded appropriately that, as Dr Cohen's evidence was not challenged before the primary judge, it was open for this court to act on it. There was only limited cross‑examination of Mr Majoe before the primary judge which left most of his affidavit intact. When the appellant entered into the costs agreement, she was living off her savings of $28,000. The appellant was cross‑examined extensively on her reasons for retaining HHG and her understanding of the terms of the costs agreement before she signed it and returned it to HHG. The appellant read the costs agreement before she signed it and she generally understood it. She could not recall what parts she did not understand. It emerged from the cross‑examination that is relied on by the respondent on this appeal that before the appellant signed the costs agreement she appreciated that it disclosed the sum of $95,000 as the top figure estimated for costs which she consciously thought seemed a lot of money but she signed and returned the costs agreement, because she needed to have a lawyer according to what she had been told by the Independent Children's Lawyer.
Where a relevant finding was made in the reasons, the summary of facts below refers to the reasons. If there is no reference to the reasons, the facts have been taken from the evidence that has been treated by the parties as agreed or unchallenged.
Dr Cohen charged the appellant a fixed fee of $440 for the initial consultation, did not charge for bringing himself 'up to speed' on the matter and he orally advised her that she would incur approximately $2,500 to $5,000 to prepare a response to the child‑related application: see [85] of the reasons. (Dr Cohen's precise evidence was that he required payment of the fixed fee of $440 before he met with the appellant and that he advised the appellant she would incur $2,500 to $5,000 for the child‑related application (that was the subject of the upcoming court hearing) plus counsel's fees.) Dr Cohen understood that the child‑related application was the one due to be heard on 2 July 2019.
The appellant had prior experience with a costs agreement, as she had entered into such an agreement with the former firm on 12 February 2019, and the appellant must have known that the fees charged by HHG were higher than the former firm's rates but she still chose to enter into the costs agreement: see [128] of the reasons.
Dr Cohen had formed the view that the appellant's matter 'had some degree of complexity' and the appellant conceded in her cross‑examination that HHG had always said that her matter was 'very complex'.
The ambit of the appellant's family law matters when HHG was retained was obtaining interim orders in relation to her granddaughter and an issue that arose from allegations made by the son‑in‑law regarding the appellant's withdrawal of $1 million in 2017 from the self-managed superannuation fund (SMSF) of which the appellant, the daughter and the son‑in‑law were members that had been used to acquire a rural property registered in the appellant's name: see [20] of the reasons. The son‑in‑law disputed that the appellant had accumulated $1 million in entitlements in the SMSF. The appellant had given a written undertaking to the Family Court on 16 November 2018 about dealing with assets without the written consent of the other party or in the ordinary course of business. When Mr Majoe took over the file, he identified there were two further issues related to the Family Court proceedings from the fact that the death benefit arising on the daughter's death (which the daughter had provided in her will for the appellant to inherit) was paid to the SMSF which were whether the appellant could deal with the death benefit without breaching the undertaking she had given to the court (if she did not have the consent of the son‑in‑law) and whether the death benefit was property for the purposes of the Family Law Act 1975 (Cth).
On 11 July 2019, the appellant wrote to Mr Majoe expanding the scope of work by asking HHG to seek payment from the daughter's estate to cover her past costs, Mr Majoe indicated that HHG would seek $50,000 for costs from the estate, and the appellant then queried whether the $50,000 included $10,000 to cover her past costs with HHG and the former firm: see [21] of the reasons. The letter of 11 July 2019 also specified aspects of the appellant's financial interests on which advice was sought and which HHG were requested to allow for in the lump sum sought from the estate for her legal fees.
The son‑in‑law opposed the release from the estate of $50,000 for the appellant's costs until she completed a 'form 13 ‑ financial statement': see [22] of the reasons. That was advised by his solicitors on 22 July 2019. The appellant requested advice from Mr Majoe on 23 July 2019 about alternative sources of funds to meet her legal fees. The appellant gave instructions to Mr Majoe to request the son‑in‑law's consent to a payout of the balance of the appellant's member entitlements in the SMSF in lieu of funds being released for her legal fees from her daughter's estate. The son‑in‑law would not consider the request until the appellant's form 13 ‑ financial statement was provided. It was not until 15 August 2019 that Mr Majoe had the appellant's sworn form 13 ‑ financial statement and was able to forward it to the son‑in‑law's solicitors.
On 19 September 2019 the appellant delivered a handwritten letter to HHG raising concerns about their fees and on the following day the appellant instructed Mr Majoe not to incur any further charges on her matter.
The reasons
The primary judge made a finding of one failure to disclose in relation to the requirement under s 260(1)(b)(iv) of the LPA that required a law practice to disclose the client's 'right' to be notified under s 267 of any substantial change to the matters disclosed under s 260. As clause 20 of the costs agreement merely provides that the law practice will inform the client of any substantial change to anything in the costs agreement, the primary judge concluded at [77] of the reasons:
The Costs Agreement should have expressly stated that Ms Luscombe had a 'right' to be notified under s 267 of the LP Act. The failure to state that she had such a right was a failure to comply with s 260(1)(b)(iv) of the LP Act. Other than failing to specifically refer to a 'right', s 260 was substantially complied with.
Even though it is not the subject of a separate ground of appeal, the appellant's written submissions assert that the primary judge erred in recording (at [83] of the reasons) that the appellant appeared to 'concede that it was not reasonably practicable to give an estimate of the total legal costs pursuant to s 260(1)(c)' of the LPA. That does appear to be a misstatement of the relevant paragraph of the appellant's submissions on which the primary judge relied for the concession. There is no consequence from that error as the appellant's focus on the appeal was her criticisms of the ranges of estimates of total costs given by HHG and the failure to revise them.
In relation to the appellant's complaint that HHG failed to adequately disclose an estimate of total legal costs pursuant to s 260(1)(c) of the LPA, the primary judge noted (at [41] of the reasons) that clause 4 of the schedule 2 had been left blank in relation to the estimate of costs for the initial advice and preliminary steps, but concluded at [85] of the reasons:
As already indicated, HHG did not complete the estimate of costs in relation to the costs for initial advice and preliminary steps in cl 4 of sch 2 of the Costs Agreement. However, it is apparent from Mr Cohen's affidavit that other than a fixed consultation fee of $440 Mr Cohen did not charge Ms Luscombe for bringing himself 'up to speed' on the matter and that he orally advised her that she would incur approximately $2,500 to $5,000 to prepare a response to the child-related application. That estimate is broadly consistent with the estimate of $3,000 to $9,000 if the matter is simple and settles quickly. (footnotes omitted)
In relation to the broad estimate given if litigation over an extended period was required, the primary judge concluded at [86] of the reasons:
The estimates of costs given in the Costs Agreement were broad but estimates of costs are difficult to give with precision. To impose an obligation to break down areas of costs to particular items is to go beyond the disclosure obligations arising from the text and context of the LP Act. Indeed, adopting such an approach may be more calculated to mislead than to be accurate. It is sufficient for a law practice to discharge its disclosure obligations by explaining the major variables. Typically, legal costs accelerate the longer the litigation lasts as the issues become more complex. The estimates reflect that fact.
In relation to the estimated amount that would be recovered if a costs order were made in favour of the appellant against another party set out in clause 13.3 of the costs agreement and the estimated percentage of the other party's costs that may be recovered from the appellant, if the other party obtained a costs order against the appellant set out in clause 13.6 of the costs agreement, the primary judge concluded (at [94] of the reasons) that it was difficult to see how a party's right to recover costs from the other party could have been expressed other than by a percentage estimate and the estimates were not meaningless.
In relation to the appellant's allegation that HHG had failed to comply with the ongoing disclosure requirements under s 267 of the LPA, the primary judge concluded (at [114] of the reasons):
In effect, HHG did provide a revised estimate. When the issue of Ms Luscombe's involvement in the SMSF arose, HHG advised her that they would be seeking $50,000 towards costs. Plainly, that $50,000 was requested from the estate to deal with the allegation of improper conduct by Ms Luscombe in relation to the withdrawal from the SMSF and the payment of the death benefit. Although the request for $50,000 was not specifically identified as an estimate, it is difficult to see it as anything else. In any event, the $50,000 fell within the $35,000 to $95,000 range stated in cl 5 of sch 2 in the Costs Agreement.
On the basis of the contents of the costs agreement and the circumstances and conduct of the parties in respect of making the costs agreement, the primary judge concluded (at [142] of the reasons) that the costs agreement had not been shown by the appellant to be not fair or not reasonable.
Ground 1(a)
There were several aspects of the ranges of estimated costs set out in clauses 4 and 5 of sch 2 to the costs agreement that were relied on in relation to ground 1(a):
(a)the estimate in clause 4 in relation to the initial advice and preliminary steps was left blank;
(b)there were two ranges of estimates in clause 5 when s 260(1)(c) of the LPA referred to 'a range of estimates';
(c)there was a gap between the two ranges of estimates in clause 5;
(d)clause 5 does not state the defined scope of the work for the estimate of '$35,000 ‑ $95,000 or more';
(e)the addition of the word 'more' after the upper figure of $95,000 did not provide for a true range.
The broad submission made on behalf of the appellant was that the ranges of estimates were 'meaningless'. Closer examination of the ranges of estimates in the circumstances in which the costs agreement was entered into by the appellant does not support a conclusion that the ranges of estimates in clause 5 of the costs agreement were meaningless.
The blank in clause 4 was immaterial when the appellant had paid $440 to Dr Cohen for the initial consultation and there were no other preliminary steps that were not covered by the first range of estimates in clause 5.
There are two ranges of estimates in clause 5, as each estimate relates to a different course for the litigation. The fact that s 260(1)(c) of the LPA referred to 'a range of estimates' did not preclude more than one range of estimates to accommodate different courses for the subsisting litigation that was the subject matter of the costs agreement. The fact that there is a gap between the two ranges of estimates is immaterial. The first range of estimates was for a quick resolution of the proceedings such as at the next hearing set for 2 July 2019. The second range of estimates was for ongoing litigation related to the length of time that the litigation continued. It is implicit from the scope of the retainer that the second range of estimates was also for resolution of the proceedings but over a period of time.
It was superfluous that the second range of estimates was suggested for litigation over an extended period of time that was described as 'statistically very unlikely' when the very reason that HHG was retained was because the proceedings were ongoing and likely to continue, because of the son‑in‑law's allegation in relation to the entitlements withdrawn by the appellant from the SMSF. The inclusion of that statement about litigation over an extended period of time being 'statistically very unlikely' that was inapplicable at the time the costs agreement was entered into by the appellant and HHG did not invalidate the disclosure of ranges of estimates of legal costs that was otherwise made by the costs agreement. The addition of the word 'more' was undesirable but could never be relied on by HHG, as the second range of estimated costs in clause 5 must be read beneficially for the client as '$35,000 ‑ $95,000'.
The appellant argued on the appeal that a range between $2,000 and $95,000 was too broad. That argument has no merit, when it is understood that there were two separate ranges of estimates, depending upon the timing of the resolution of the litigation.
In the circumstances where the appellant approached HHG to take over her representation in subsisting Family Court proceedings where there were child‑related and property issues, the scope of the subject matter of the costs agreement was adequately defined by 'Family Law matter'.
The appellant has not shown there was any error by the primary judge in finding in effect (at [85] ‑ [86] of the reasons) that HHG had complied with, or substantially complied with, the disclosure requirement in s 260(1)(c) of the LPA.
Ground 1(b)
In considering whether the primary judge erred in concluding (at [94] of the reasons) that it was sufficient to comply with s 260(1)(f) of the LPA for the relevant party and party costs to be expressed by a percentage estimate, it is relevant that the costs agreement disclosed at clause 13.1 that the general rule in family law matters is that each party to the proceedings is to bear the party's own costs. The significance of providing estimated recoverable party and party costs in the costs agreement for the client is reduced when it is unlikely that either party would be ordered to pay the costs of the other party. In those circumstances, compliance with s 260(1)(f) was still required for the purpose of informing the client of estimated party and party costs in the unlikely event that such a costs order would be made in proceedings in the Family Court.
The appellant relies on the failure of the costs agreement to state expressly the estimated amount of the other party's legal costs or the range of estimated costs for the other party. Clause 13.6 alerted the appellant to the fact that the other party's costs would depend on the rates charged by the other party's solicitors. It is implicit from the costs agreement that, subject to the rates charged by the other party's solicitors, the only amount to which the appellant could apply the range of percentages set out in clause 13.6 of the costs agreement to calculate costs that she might have to pay the other party would be her own legal costs. The use of percentages was therefore adequate in the circumstances. There was no error in the primary judge's conclusion (at [94] of the reasons).
Ground 1(c)
It is implicit in the primary judge's finding (at [114] of the reasons) that HHG provided a revised estimate to the appellant when seeking the payment of $50,000 from the estate for the appellant's costs that the primary judge concluded that, by the time that request was made on 11 July 2019, there was a substantial change to what had been included in the disclosures in the costs agreement. Apart from s 267 of the LPA, HHG had contractually undertaken in clause 7 of schedule 2 to the costs agreement to provide 'more specific cost estimates' within a short time of the first meeting with the appellant which would then be updated fortnightly as required and no updated estimates had ever been provided. The appellant's requests made in the letter of 11 July 2019 also affected the scope of the work to be undertaken by HHG which must have affected the second range of estimated costs.
A revised estimate of the second range of estimated costs for resolution of the proceedings was therefore required from at least 11 July 2019. The fact that HHG informed the appellant that they were seeking an amount of $50,000 for costs from the daughter's estate was not equivalent to making the written disclosure required by s 267 of the LPA of a substantial change to anything included in the disclosure already made under div 3 of pt 10 of the LPA. The primary judge erred in failing to find that HHG had not complied, or substantially complied, with its ongoing obligation to disclose under s 267 from at least 11 July 2019. That failure to disclose can be relied on by the appellant pursuant to s 268(3) of the LPA as one of the factors relevant to whether the costs agreement should be set aside under s 288.
Ground 2
The legal principles applicable to an application under s 288 of the LPA were summarised in Stevenson v Zafra Pty Ltd [2021] WASCA 181 at [245]:
The current provision, s 288 of the LP Act, uses the language of 'fair or reasonable' (and to this extent uses language more like the UK 1870 Act). It is unnecessary and inappropriate to attempt an exhaustive analysis of the denotation of that phrase. It is sufficient, for present purposes, to observe that:
1.the word 'fair' in that disjunctive phrase is principally (albeit not necessarily exclusively) directed to a consideration of the circumstances relating to the formation of the costs agreement in the context of the solicitor's position as a fiduciary and officer of the court;
2.in determining whether a costs agreement is not 'reasonable', regard should ordinarily be had to (1) whether its terms are unreasonable, and (2) whether its effect on the client is unreasonable;
3.ultimately, however, the court is not confined to closed categories, and in determining whether an agreement is not fair or not reasonable, the circumstances must be considered as a whole, and, in that regard, the circumstances and conduct of the parties before, when and after the costs agreement is made may be considered (s 288(3)(d) and (e) of the LP Act); and
4.in determining whether a costs agreement is not fair or not reasonable, the court, at least as a starting point, would ordinarily have regard to the factors listed in s 288(3) of the LP Act. (footnotes omitted)
As to the fairness of the costs agreement at the time the appellant entered into it, there is no reliance on onerous terms or misrepresentations. The appellant also had the support of her son and his partner at the initial consultation with Dr Cohen and at least a week or so to consider the terms of the costs agreement before she signed and returned it to HHG. Although the appellant was living on her limited savings when she entered into the costs agreement, she was not without assets as she had the property purchased with the superannuation payment that was in issue in the Family Court proceedings and her potential benefits from the daughter's estate. The appellant acknowledged in her cross‑examination that she had read the costs agreement before she signed it and generally understood it and was keen to engage HHG to replace the former firm. The appellant sought to rely on her grief at the loss of her daughter and her responsibility, at the time she signed the costs agreement, as the primary carer for her granddaughter as factors to be taken into account in considering whether the costs agreement was fair. Those factors were also relevant to the circumstances in which the appellant found herself as a party to the Family Court proceedings brought by the son‑in‑law and her reasons for wishing to retain HHG. They do not displace her acknowledgement to the effect that she knew what she was doing when she entered into the costs agreement. There is no allegation that HHG took advantage of the appellant's grief and childcaring responsibilities. There was no error in the primary judge's conclusion that the costs agreement was fair.
In dealing with the second ground of appeal, this court must take into account that the appellant has succeeded on ground 1(c) of her appeal.
As summarised in Stevenson at [245], in determining whether a costs agreement is not reasonable the court would ordinarily start with the factors listed in s 288(3) of the LPA but is not confined to those factors.
The nature of the failure to comply with s 260(1)(b)(iv) of the LPA by not using the word 'right' found by the primary judge (at [77] of the reasons) was immaterial for the purpose of this exercise. The failure to provide a revised range of estimated costs from at least 11 July 2019 when there had been a substantial change to the disclosure in the costs agreement for the second range of estimated costs for resolution of the proceedings was a continuing failure but has to be considered in the context in which additional costs were being incurred at that stage. They were incurred at the appellant's request to obtain the release of funds that required the consent of the son‑in‑law for her legal costs, to undertake the additional matters on which the appellant sought advice in the letter of 11 July 2019, and the additional work generated by the appellant's failure to provide a sworn form 13 ‑ financial statement as soon as it was requested by the son‑in‑law's solicitors so that her request could be considered. There was also the appellant's instructions to pursue an alternative source of funds for her legal fees. In all the circumstances pertaining to the nature of the litigation for which the appellant had retained HHG, the continuing failure to make further disclosure upon a substantial change to the second range of estimated costs for resolution of the proceedings does not justify the conclusion that the costs agreement was not reasonable.
Even allowing for the appellant's success on this appeal in relation to ground 1(c), there should be no different conclusion than that reached by the primary judge in respect of the application under s 288 of the LPA.
Disposition of the appeal
Despite the appellant's limited success in the appeal in respect of ground 1(c), the outcome is the dismissal of the appeal. The limited success on ground 1(c) does not warrant a costs order other than the one that follows from the event of the dismissal of the appeal. The orders therefore are:
1.Appeal dismissed.
2.The appellant must pay the respondent's costs to be assessed if not agreed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
EM
Associate to the Honourable Justice Vaughan
2 OCTOBER 2023
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