Macdonald Rudder v Whitbread - [2021] WASC 395

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   MACDONALD RUDDER -v- WHITBREAD [2021] WASC 395
CORAM:   TOTTLE J
HEARD:   7 OCTOBER 2021
DELIVERED          :   11 NOVEMBER 2021
FILE NO/S:   CIV 1461 of 2021
BETWEEN:   MACDONALD RUDDER
Applicant
AND
JANET DENISE WHITBREAD
Respondent
ROXBURY TRADING PTY LTD
First Other Party
PAUL JAMES KENNEDY
Second Other Party
ROSLYN MAY KENNEDY
Third Other Party

Catchwords:

Judicial review - Taxing officer's assessment of invoices rendered by a law practice - Taxing officer determined costs assessment on a basis that differed from the way assessment conducted - Denial of procedural fairness - Jurisdictional error established

Judicial review - Taxing officer's assessment of invoices rendered by a law practice - Construction of s 260(1)(c) and s 267 of the Legal Profession Act 2008 (WA) - Taxing officer erred in construction of s 260(1) and s 267 of the Legal Profession Act 2008 (WA) - Jurisdictional error established

Judicial review - Taxing officer's assessment of invoices rendered by a law practice - Construction of s 268(4) of the Legal Profession Act 2008 (WA) - Taxing officer erred in the exercise of discretion under s 268(4) of the Legal Profession Act 2008 (WA)

Judicial review - Discretionary considerations - Taxing officer's decision has immediate impact on applicant's legal rights - Prerogative relief granted

Legislation:

Legal Profession Act 2008 (WA), s 251, s 260, s 262, s 265, s 266, s 267, s 268, s 269, s 271, s 282, s 286, s 288, s 297, s 301, s 302, s 304, s 305, s 308
Rules of the Supreme Court 1971 (WA), O 66 r 53, O 66 r 55

Result:

Application granted

Category: B

Representation:

Counsel:

Applicant	:	M D Cuerden SC
Respondent	:	No Appearance
First Other Party	:	M Mckenna
Second Other Party	:	M Mckenna
Third Other Party	:	M Mckenna

Solicitors:

Applicant	:	MACDONALD RUDDER
Respondent	:	No Appearance
First Other Party	:	Gilbert + Tobin
Second Other Party	:	Gilbert + Tobin
Third Other Party	:	Gilbert + Tobin

Cases referred to in decision:

A Law Firm v RT [2021] WASC 149
Apache Northwest Pty Ltd v Agostini (No 2) [2009] WASCA 231
BHP Billiton Iron Ore Pty Ltd v Construction, Forestry, Mining & Energy Union of Workers [2006] WASCA 49; (2006) 151 IR 361
CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384
Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163
D G Ogle Pty Ltd v Bowdens [1979] Qd R 507
Lalios v O'Brien [2021] VSC 105
Lawrie v Lawler [2016] NTCA 3; (2016) 39 NTLR 1
Minister for Immigration and Border Protection v SZMTA [2019] HCA 3; (2019) 264 CLR 421
Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 264 CLR 1
Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514
Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1
Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531

TOTTLE J:

Introduction

This application for judicial review arises out of an application for assessment of two invoices rendered by the applicant, a law practice, to the other parties, (Roxbury and Mr and Mrs Kennedy). The assessment application was made under s 297 of the Legal Profession Act 2008 (WA) (the Act). The invoices related to legal work undertaken by the applicant in connection with an action brought against Roxbury and Mr Kennedy.
The application was heard by the respondent, a registrar of this court, in her capacity as a taxing officer within the meaning of the Act that is, as a taxing officer of this court.
On 14 May 2021 the registrar published a decision dealing with certain preliminary matters.[1] The applicant contends that in making that decision the registrar made a number of jurisdictional errors and errors of law which entitle it to prerogative relief in the form of an order for certiorari. As I explain, I consider that the applicant has made out three of the five grounds upon which it seeks relief.
[1] A Law Firm v RT [2021] WASC 149 (Primary Reasons).
Before turning to the grounds of the application I will outline the relevant provisions of the Act, the factual background, the proceedings before the registrar and the critical aspects of the registrar's decision.

The relevant provisions of the Act

The long title of the Act states it is an Act: to provide for the regulation of legal practice in Western Australia; and, to facilitate the regulation of legal practice on a national basis; and for other related purposes. The Act is divided into 19 parts. With the limited exception of those parts dealing with general matters, each part regulates a different aspect of the legal profession.
The purposes of pt 10 of the Act are expressed in div 1 of pt 10 as follows:
251.Purposes
The purposes of this Part are as follows —
(a)to provide for law practices to make disclosures to clients regarding legal costs;
(b)to regulate the making of costs agreements in respect of legal services, including conditional costs agreements;
(c)to regulate the billing of costs for legal services;
(d)to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.
Division 3 of pt 10 regulates costs disclosure. Section 260 is the primary provision and it states (relevantly):
260.Disclosure of costs to clients
(1)A law practice must disclose to a client in accordance with this Division -
(a)the basis on which legal costs will be calculated, including whether a costs determination applies to any of the legal costs; and
(b)the client's right to —
(i)negotiate a costs agreement with the law practice; and
(ii)receive a bill from the law practice; and
(iii)request an itemised bill after receipt of a lump sum bill; and
(iv)be notified under Section 267 of any substantial change to the matters disclosed under this section;
and
(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;
and
(d)details of the intervals (if any) at which the client will be billed; and
(e)the rate of interest (if any) that the law practice charges on overdue legal costs, whether that rate is a specific rate of interest or is a benchmark rate of interest (as referred to in subsection (2)); and
(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;
…
(4)For the purposes of subsection (1)(f), the disclosure must include -
(a)a statement that an order by a court for the payment of costs in favour of the client will not necessarily cover the whole of the client's legal costs; and
(b)if applicable, a statement that disbursements may be payable by the client even if the client enters into a conditional costs agreement.
Section 262 provides that disclosure under s 260 must be made in writing 'before or as soon as practicable after the law practice is retained. There is no requirement that a client sign or otherwise acknowledge the law practice's written disclosures given under s 260.
Section 265 provides that if a costs agreement involves what is termed an 'uplift fee', before entering into the costs agreement, the law practice must disclose the law practice's legal costs, the uplift fee (or the basis for its calculation) and the reasons why the uplift is justified.
Section 267 imposes an obligation of ongoing disclosure. It states:
267Ongoing obligation to disclose
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.
Section 268 specifies the effects of a failure to disclose anything required to be disclosed by div 3. It states (relevantly):
268Effect of failure to disclose
(4)If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the taxing officer to be proportionate to the seriousness of the failure to disclose.
Section 269 provides that a law practice must give a client, on reasonable request, a written report of the progress of a matter and a written report of the legal costs incurred to date or since the last bill in the matter.
Division 4 of pt 10 regulates legal costs generally and included in div 4 is s 271 that sets out the basis upon which legal costs are recoverable. It states:
271.Basis on which legal costs are recoverable
Subject to Division 2, legal costs are recoverable -
(a)under a costs agreement made in accordance with Division 6 or the corresponding provision of a corresponding law; or
(b)if paragraph (a) does not apply, in accordance with an applicable costs determination; or
(c)if neither paragraph (a) nor paragraph (b) applies, according to the fair and reasonable value of the legal services provided.
Division 6 regulates the manner in which costs agreements may be made and the circumstances in which they may be set aside. Before considering the provisions of div 6 in more detail, some general points may be made. A 'costs agreement' is an agreement about the payment of legal costs.[2] A 'costs determination' is a legal costs determination made by the Legal Costs Committee established under pt 10 of the Act.[3] Common features of costs determinations are that they allow law practices to charge according to prescribed scales which classify work according to particular tasks or 'items'. They also specify maximum amounts that may be charged for particular 'items' and maximum hourly rates that may be charged depending on the seniority of the practitioner undertaking the work.
[2] Legal Profession Act 2008 (WA) s 252.
[3] Legal Profession Act 2008 (WA) s 252.
Section 282 forms part of div 6 and s 282(2) provides that a costs agreement must be written or evidenced in writing. There is no requirement that a costs agreement be signed.
Section 288 provides, on application by a client, that the Supreme Court may order the costs agreement be set aside if satisfied the agreement is not fair or reasonable. Section 288(3)(c) provides that in determining whether or not a costs agreement is fair or reasonable the court may have regard, among other matters, to whether the law practice has failed to make any of the disclosures required under div 3.
Division 8 of pt 10 governs costs assessments. Section 297 provides that a law practice, which has complied with various requirements set out in div 7 of pt 10 in respect of a bill for legal costs, may apply to a taxing officer for an assessment of the whole or any part of the legal costs to which the bill relates.
Section 301 sets out the criteria to be taken into account in making an assessment. It states:
301.Criteria for assessment
(1)In conducting an assessment of legal costs, a taxing officer must consider -
(a)whether or not it was reasonable to carry out the work to which the legal costs relate; and
(b)whether or not the work was carried out in a reasonable manner; and
(c)the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that Section 302 or 303 applies to any disputed costs.
(2)In considering what is a fair and reasonable amount of legal costs, the taxing officer may have regard to any or all of the following matters -
(a)whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with this Act;
(b)any disclosure made by the law practice under Division 3;
(c)any relevant advertisement as to —
(i)the law practice's costs; or
(ii)the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf;
(d)the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter;
(e)the retainer and whether the work was 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.
Section 302 governs how a taxing officer must approach the assessment of disputed costs that are the subject of a costs agreement. It states:
302.Assessment of costs by reference to costs agreement
(1)A taxing officer must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if —
(a)a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs; and
(b)the agreement has not been set aside under Section 288,
unless the taxing officer is satisfied that -
(c)the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3; or
(d)Division 6 precludes the law practice concerned from recovering the amount of the costs; or
(e)the parties otherwise agree.
(2)The taxing officer is not required to initiate an examination of the matters referred to in subsection (1)(c) and (d).
Section 304(2) provides, among other matters and subject to limited exceptions, that if the taxing officer is satisfied the law practice failed to comply with div 3, the law practice must pay for the costs of the assessment.
Section 305(1) provides for the taxing officer to certify in writing the amount of the disputed costs allowed and the costs of the assessment. A certificate under s 305(1) is binding on the parties and is enforceable as if it were a judgment of the Supreme Court.
Section 308 provides that a costs assessment may be reviewed by the Supreme Court in accordance with the Rules of the Supreme Court 1971 (WA). O 66 r 55 is the provision of the Rules of the Supreme Court 1971 that provides for review of a certificate signed by a taxing officer. To put the O 66 r 55 procedure in context, it is necessary to refer to Order 66 r 53. O 66 r 53 makes provision for an application to the taxing officer to review the allowance or disallowance of any item in a bill of costs. O 66 r 53 states:
53.Party dissatisfied with taxation may object and apply for review
(1)A party who contends that the taxing officer has made an error in principle in allowing or disallowing any item or part of an item in a bill of costs taxed by him may, at any time before a certificate of taxation dealing finally with that item is signed, or at such earlier time as may, in any case, be fixed by the taxing officer -
(a)deliver to the other party interested in the allowance or disallowance and carry in before the taxing officer, an objection in writing to the allowance or disallowance specifying in the objection by a list, in a short and concise form, the items or parts of items objected to, and the grounds and reasons for the objections; and
(b)thereupon apply to the taxing officer to review the taxation in respect of those items or parts.
(2)Pending the consideration and determination of the objection, the taxing officer may if he thinks fit issue a certificate of taxation for or on account of the remainder or of part of the bill of costs. Any further certificate which may be necessary shall be issued by the taxing officer after his decision upon the objections.
Order 66 r 55 makes provision for a party dissatisfied with a certificate of a taxing officer to apply for a review to judge in chambers. Order 66 r 55 states:
55.Review of taxation by judge
(1)If a party is dissatisfied with the certificate of the taxing officer as to any item or part of an item objected to under rule 53 of this Order, he may, within 14 days from the date of the certificate, or such other time as the Court, or the taxing officer at the time he signs his certificate, allows, apply to a judge in chambers for an order to review the taxation as to that item or part of an item.
(2)The judge, if of opinion that the taxing officer has made an error in principle, may thereupon make such order to rectify the error as the judge thinks just.
(3)The certificate of the taxing officer is final and conclusive as to all matters which have not been objected to in accordance with these rules.

The factual background

The factual background was not controversial. The following account is derived from the primary reasons and the affidavits read by the parties.[4]
[4] Affidavit of Garrick Jeremy Garvey sworn on 4 June 2021; Affidavit of Roslyn May Kennedy sworn on 23 October 2020; Affidavit of Terrence William East sworn on 4 November 2020; Affidavit of Catherine Fraser sworn on 14 July 2021.
In 2019 an action was commenced in this court against Roxbury and Mr Kennedy as first and second defendants respectively.
On 7 August 2019, Mr and Mrs Kennedy met a partner in the applicant, Mr Stuart MacDonald, and sought advice from him about the dispute. He provided some preliminary advice and gave Mr and Mrs Kennedy a costs disclosure in relation to the preliminary advice in which he estimated the cost of the preliminary advice to be $3,000. Mr MacDonald confirmed his advice in a letter from the applicant to Mr and Mrs Kennedy sent on 7 August 2019.
The applicant's letter of 7 August 2019 attached a written 'disclosure notice and costs agreement in relation to the action and the counterclaim [Roxbury and Mr Kennedy wished] to mount'. The document described as a 'disclosure notice and costs agreement' in the letter of 7 August 2019 was a single document containing information about legal costs and setting out the terms on which the applicant was prepared to act on behalf of Roxbury and Mr Kennedy. The costs disclosure contained in the document was premised on the trial of the action taking two days. The applicant estimated, 'that the total legal costs will be in the range of $15,000 to $150,000 plus GST, assuming any discount offered in return for prompt payment is accepted'. The applicant stated that the estimate included disbursements of $5,000 and that '[t]he major variables that will affect the calculation of total legal costs are: whether [the] action can be settled.' Clause 7.2 of the disclosure notice stated that there were many variables which may impact on cost and listed 13 factors which were 'most likely to affect cost'. Clause 7.3 of the disclosure notice listed some 13 factors that were major variables that will affect the calculation of 'total legal costs' in litigious matters.
On 13 August 2019 Mr MacDonald sent a letter to Roxbury and Mr and Mrs Kennedy and referred to instructions he had received from Mr Kennedy about the facts and the potential defences and claims that might be available to Roxbury. In the letter Mr MacDonald stated:
4.The issues raised are both extensive and complex. Given the amount of money involved it is likely they will be hard fought. My cost estimate of $150,000 is hopelessly inadequate to deal with these issues. To raise the issues could cost around $50,000. To go to trial could cost at least another $300,000 or thereabouts.
5.Mr Kennedy asked the writer if I was able to handle this litigation. My answer to this is:I would want the help of another competent lawyer; preferably senior counsel to assist first in the formulation of your claim, and second at trial. If senior counsel is used, costs could increase.
6.There is no way to colour or hide the magnitude or cost of this suite of disputes. We are not in a position to carry you on costs. You will have to find the resources to fight the case from other sources. Of course, as Mr Kennedy intimated, your opponents may not be up for the fight. They may compromise. Let us hope so. Either way they must, in my view, be met with strength. You may find lawyers prepared to carry you.

On 19 August 2019 the 'Disclosure Notice' sent to Mr and Mrs Kennedy under cover of the applicant's letter of 7 August 2019 was signed by Mr and Mrs Kennedy in their capacities as directors of Roxbury and by Mrs Kennedy in her capacity as guarantor. Each of Roxbury and Mr and Mrs Kennedy was named as a client. It was not in dispute either on the assessment application or on this application that the 'Disclosure Notice' signed on 19 August 2019 constituted the costs agreement between the parties and I will refer to it as the 'Costs Agreement'. The Costs Agreement provided for the applicant to charge on a 'time cost' basis; that is, by applying hourly rates to the time spent by fee earners working on the matter.
On 14 August 2019 the plaintiff in the action applied for an interlocutory injunction. Mr MacDonald appeared in opposition to the application at a hearing held on 20 August 2019 and at subsequent hearings.
On 2 September 2019 Mr MacDonald advised Mr and Mrs Kennedy that the costs were 'well over $50,000' and, that while he did not expect them to pay all of the costs immediately, they 'must be aware of costs and make a substantial contribution now'.
In addition to resisting the injunction application made by the plaintiff in the action, the applicant filed and served a defence and counterclaim, which was subsequently amended (apparently more than once) and made an application for summary judgment in respect of the counterclaim. In response to the summary judgment application, the plaintiff in the action sought to have the dispute referred to arbitration and this generated a further interlocutory application.
On 28 October 2019 Mr MacDonald wrote to Mr and Mrs Kennedy and referred to instructions provided at a meeting on 25 October 2019. Mr MacDonald addressed the issue of costs and stated:
I attach a bill for cash disbursements only. As orally advised legal fees are approaching $100,000. I must still consider these costs before rendering a bill. I can carry you for some of these costs (assuming my instructions, or the facts, do not change). However, I will require you to pay a substantial portion of the costs as we progress.
On 12 November 2019 the applicant rendered an invoice for $117,905.
On or about 9 December 2019 Mr and Mrs Kennedy retained another firm of solicitors and the applicant rendered a further invoice for $6,198 that day.
The applicant's invoices of 12 November and 9 December 2019 were prepared in accordance with the Costs Agreement; that is, they attached a schedule of fees and disbursements which set out: the date on which work was done, the identity of the person who undertook the work, a brief description of the work undertaken, the number of units of six minutes over which the work was undertaken, the number of six minutes units charged and the dollar amount charged.

The assessment application

On 9 March 2020 the applicant filed an application for assessment of the costs the subject of the invoices rendered on 12 November and 9 December 2019.
On 24 September 2020 the applicant filed a bill of costs which reproduced the detailed itemisation of work contained in the schedules to the invoices.
On 23 October 2020 objections to the bills of costs were filed on behalf of Roxbury and Mr and Mrs Kennedy. The objections were formulated by reference to the entries in the bill as described in the preceding paragraphs. The objections were colour coded according to categories:
(a)objections that related to resisting the injunction application;
(b)objections that related to a summary judgment application;
(c)objections that related to the seniority of the practitioner undertaking the work;
(d)objections that related to unreasonable amendments to the defence and counterclaim;
(e)objections that related to unreasonable amount of time spent on the preparation of defence and counterclaim globally; and
(f)miscellaneous objections.
The respondents' supported their objections with written submissions. In a section of the submissions headed 'Factual background' the respondents referred to the applicant's letter to the respondents of 13 August 2019 and quoted the cost estimate contained in that letter and then stated:
Despite the advice provided as to costs above, Mr MacDonald did not provide an updated cost disclosure for Mr and Mrs Kennedy to review and sign. The most recent costs disclosure letter signed by the Kennedy's [sic] is that for which the estimate is $15,000 - $150,000.
The concluding section of the respondents' written submissions contained these contentions:
65Though the present matter is not governed by the scale set out in the Supreme & District Courts (Contentious Business) 2020 (WA), the Respondents' submission is that Macdonald Rudder's own cost agreement wording limits the amount of costs they should logically be able to recover from the Respondents.
66As noted above, where clause 7.5 and 7.6 of the disclosure notice provided by Macdonald Rudder to the Respondents stated that Macdonald Rudder “estimate that you would have to pay the opposing party [or conversely, recover from the opposing party] around 50%-70% of the amount which you would have to pay us under the proposed agreement”, the reciprocal is that Macdonald Rudder should be able to recover legal costs somewhere between 1.4 times and 2 times scale costs.
67Accordingly, pursuant to the cost agreement, the reasonable amount to be recovered is somewhere in the between $51,000 and $72,000. Costs incurred in excess of this amount were incurred because of the unreasonable and 'ham-fisted' way in which Macdonald Rudder went about the carriage of the Proceedings, including by resisting the irresistible injunction and pursuing an unwinnable summary judgment application. (emphasis added)
In addition to the objections and submissions, an affidavit sworn by Mrs Kennedy on 23 October 2020 was filed and served.
On 9 November 2020 the applicant filed and served a response to the objections, responsive submissions and an affidavit sworn by Mr Terrence East, a solicitor employed by the applicant.
The assessment hearing took place on 25 November 2020. The applicant was represented by one of its partners, Mr Lang. Roxbury and Mr and Mrs Kennedy were represented by Mr McKenna. The affidavits of Mrs Kennedy and Mr East were accepted into evidence. Mr McKenna informed the registrar that the parties had agreed the registrar 'should deal with the overarching objections, and then to the extent necessary, run through a line by line analysis'.[5] The registrar agreed with the approach and said she would hear from the parties in relation to the 'overarching matters' and publish a decision on those matters so the parties could confer and consider how her decision affected the individual items.
[5] ts of assessment hearing dated 25 November 2020, 3.
Mr McKenna identified the first issue as 'the adequacy of the cost disclosure in the overall context'. His submission on this issue proceeded as follows:[6]
To be clear there are two costs agreements, one of which is dated 7 August and relates to preliminary advice which is estimated to cost in the order of $3,000. The [latter]is apparently dated 7 August and signed on 19 August, and it's for an estimate of 15 to $150,000. And in between those is an email of 13 August that refers to the 15 to $150,000 estimate being wholly inadequate and that it may take an additional 300,000 to go to trial. I beg your pardon, it's a letter attached to an email. All of those are attached to the affidavit of Ms Kennedy.
…
None of those go to the costs of interlocutory proceedings. None of those talk to the costs that - the recoverable costs of interlocutory proceedings, and in that context, the estimates are, with the greatest of respect to my friends, woefully inadequate, and as a matter of fairness overall, one ought to look to the 7 August second letter estimated 150,000, and then bear in mind that we are talking a bill of $124,000 which already is discounted for not getting beyond interlocutory processes and not even to the close of pleadings.
Now, we've made some comments about the maths of the costs recovery in flipping the estimates so that if one were to look at the potential costs recovery generously in relation to interlocutory matters, we would say that the proper costs would be somewhere in the order of 50 to $72, 000. Otherwise, the disclosure documents are completely inadequately saying a third to a half in terms of costs recovery if successful. That's essentially our submission in relation to the overall adequacy of the costs disclosure and the limits that it should impose on the taxation overall.
[6] ts of assessment hearing dated 25 November 2020, 4.
Mr McKenna's reference to 'comments about the maths of the costs recovery in flipping the estimates' appears to refer to the contentions in the written submissions which I have set out above.
The gravamen of Mr McKenna's submissions (as expressed in the italicised sections of the passage quoted above) was that the applicant failed to comply with its disclosure obligations because its estimate of the costs recoverable from the other party to the litigation, specifically disclosure of the proportion of the costs of the interlocutory proceedings that might be recovered, was inadequate.
Responding to Mr McKenna's submissions on disclosure, Mr Lang contended that the applicant's letter of 13 August 2019 formed part of the costs disclosure. Mr Lang went on to paraphrase his understanding of the criticism of the applicant's disclosure as follows:[7]
Now, my friend contends that the costs disclosure is hopelessly inadequate, I think to use his words to alert the client to the costs recoverable from the other side, and I think also the difference between - I may have - I hope I'm not misquoting him - the difference between that which he would be charged, or they would be charged on scale as compared to under the agreement which often is one and the same.
[7] ts of assessment hearing dated 25 November 2020, 6.
This was followed by some discussion between the registrar and Mr Lang about Mr McKenna's submission which, in turn, led to Mr McKenna providing this clarification:[8]
I will just clarify one submission to which my friend may wish to respond, the estimate of costs that we back-calculated by reference to the 30 to 50 per cent discount was done by referring to scale and then adding the - adding back in the discount. So it's scale plus the amount that my friend said would be the irrecoverable portion. . . . it is really a rough and ready approach to say, look, if it's correct to say 30 to 50 per cent recovery then one should multiply the scale by two to three times to work out the range of costs that ought to be charged on a solicitor-client basis.
[8] ts of assessment hearing dated 25 November 2020, 7.
After some further exchanges Mr Lang said:[9]
Okay. Yes. Well, I didn't come effectively prepared to do a, you know, on a scale thing, and I think of its limited relevance other than to see is the estimate way out of portion, and certainly, I wouldn't have thought at 30 per cent that the bottom estimate would potentially on a party/party would only be 30 per cent of your actual legal costs. We've got two hard fought interlocutory, a summary application and an injunction matter with two hearings.
And we've got some fairly substantial - and it's apparent from the papers - some very long attendance and lots of documents. So you would think, you know, roughly 10 to 15, for instance, on the interlocutory, so, you know, 20 to 30,000, that sort of range, and getting up, it's a very difficult one, but, again, if it wasn't 30 or $40,000 that would be a surprise. That's not the exercise we're here for today, but certainly, my - - -
[9] ts of assessment hearing dated 25 November 2020, 9.
To which the registrar responded:[10]
No, I think it's just how Mr McKenna says he has calculated his estimate, yes.
[10] ts of assessment hearing dated 25 November 2020, 9.
A few moments later Mr McKenna made the following submissions in reply:[11]
[I]f I might just respond to a couple of things that were said, we don't cavil with the potential for the - well, we don't cavil with the 13 August letter being a costs estimate, but we make a point that the cost estimate is 50,000 initially plus 300,000 to take it to trial. No reference to interlocutory proceedings.
…
And the point that there is no further costs disclosure is, to make it absolutely clear, there was no costs disclosure in relation to each of the interlocutory applications separate from the documents to which you have been referred. And it's in that context that we say, given that my friends have also said you can expect to recover 30 to 50 per cent, that one should be able to back-calculate what they ought to have charged. So that's where that estimate comes from, and I don't think I can assist you further in relation to that matter, other than to say we obviously rely on our written submissions generally. (emphasis added)
[11] ts of assessment hearing dated 25 November 2020, 9.
After the exchanges to which I have referred, counsel moved onto issues which are not relevant to this judicial review application.

The registrar's decision

The registrar commenced her reasons by setting out her understanding of the issues raised by the application and stated:[12]
At the hearing it was agreed that I would determine the preliminary issues raised in respect of the bill of costs as any, or all, of those determinations might impact on a line by line assessment of the items objected to by the clients in the bill of costs.
The preliminary matters can be categorised as follows:
(i)whether the costs agreement executed on 19 August 2019 (the costs agreement), viewed in the context of the requirements under the Act, (a) contains sufficiently inadequate disclosure of legal costs under s 266 of the Act such that the taxing officer's discretion, under s 268(4) of the Act, is enlivened; and (b) if that discretion is enlivened, should it be applied such that the clients' costs liability should assessed on a basis other than under the costs agreement; and
(ii)whether the work undertaken by the law firm in relation to each of (i) resisting of the interim injunction application; and (ii) the summary judgment application was, in each case, work reasonably done and/or conducted consequent on proper advice and/or on instructions.
[12] Primary Reasons [5] - [6].
The registrar then set out the factual background before reproducing the relevant provisions of the Act. The registrar observed that Roxbury and Mr and Mrs Kennedy carried the burden of satisfying her, on the balance of probabilities, that the costs disclosure given by the applicant was inadequate for the purposes of the Act. The registrar identified her task as follows:[13]
Therefore, on the basis of the evidence and submissions before me, I must consider whether I am satisfied, on the balance of probabilities (the clients carrying the onus), that the costs agreement fails to disclose anything required under the disclosure requirements of div 3. If I am so satisfied then I do not have to consider the disputed costs by reference to the provisions of the costs agreement, I may use my discretion to reduce the amount that would otherwise be allowed (s 268(4) of the Act), or to assess the costs other than by reference to the costs agreement (s 302(1)(c) of the Act).
[13] Primary Reasons [44].
The registrar went on to observe that:[14]
If there has been a lack of disclosure for the purposes of s 266(4) then costs may be reduced by an amount considered by the taxing officer to be proportionate to the seriousness of the failure to disclose. The Act provides no guidance as to how to determine such a reduction. Since no application has been made to set aside the costs agreement, it is implicit that the costs agreement is still valid and that the matter therefore does not automatically fall into s 271(b) such that costs are assessed by virtue of the applicable costs determination. I must independently reach a conclusion, if I find anything in the costs disclosure to be inadequate, as to what reduction in costs is proportionate to the seriousness of the failure to disclose on the facts of this matter; or whether I should proceed to assess costs other than by reference to the costs agreement pursuant to s 302(1)(c).
[14] Primary Reasons [47].
The registrar set out her understanding of the effect of the disclosure requirements in div 3 of pt 10 of the Act before giving consideration to whether the applicant had complied with those requirements. The registrar concluded the applicant had not complied with the disclosure requirements. I set out the relevant passages of the registrar's reasons later. In summary the registrar concluded that the applicant had not provided 'meaningful costs disclosure', in particular, the disclosure provided was deficient because there was no breakdown of the costs likely to be incurred in the various interlocutory applications which could have assisted Mr and Mrs Kennedy to understand their 'growing legal costs exposure'. The registrar concluded:[15]
Based on the above findings, on the balance of probabilities, the clients have persuaded me that the law firm gave inadequate explanation of the substantial changes to costs disclosure (made in the disclosure notice) consequent on interlocutory applications. The law firm failed to give the required costs disclosure as soon as reasonably practicable after the law firm became aware of those changes. Accordingly, I find that the law firm has not satisfied the requirements as to both disclosure and ongoing disclosure set out in s 260(c)(ii) of the Act read with s 267 of the Act.
I therefore find that my discretion, under s 268(4) and s 302(1)(c) of the Act is enlivened, as the law firm failed to disclose to the clients something required under div 3 of the Act to be disclosed.
I must therefore consider whether the costs should be reduced by an amount I determine to be proportionate to the seriousness of the failure to disclose, or whether the costs should be assessed on a basis other than by reference to the costs agreement.
[15] Primary Reasons [98] - [100].
The registrar then gave consideration to the applicant's approach to the injunction application and the summary judgment application and to the costs generated by these applications. The registrar undertook a wide-ranging analysis of the applicant's management of these aspects of the litigation. She expressed views as to whether the applicant had given proper advice to Mr and Mrs Kennedy, whether it had received instructions to undertake the work completed by it and whether the applicant's opposition to the injunction application and bringing of the summary judgment application was reasonable. The registrar gave detailed consideration to the merits of both interlocutory applications.[16]
[16] Primary Reasons [105] - [140].
In relation to the injunction application the registrar concluded:[17]
Accordingly, I cannot be satisfied that the clients gave informed instructions on the injunction proceedings on the basis of advice on prospects, costs and the relative merits of opposing, or conceding, the injunction application in the context of the litigation as a whole. However, it is clear the clients wanted to oppose the interlocutory [injunction] application. As to whether any, or all, of the work was necessarily done (in that it would have to have been done in any event for the substantive litigation), that also has to be seen in the context of the litigation. A client can, of course, insist that a lawyer persist with a weak argument (subject to that lawyer's obligations as an officer of the court), and in those circumstances a client must pay for the legal work done, but there is no evidence that this is what happened here. Here, the work was done in a vacuum of proper costs disclosure, advice and informed instructions. The absence of proper costs disclosure impacts on what a proper costs reduction as a consequence of failure to disclose should be.
The question also remains what, if any, costs charged to the clients on both the interim injunction application and the injunction application were ultimately costs which would have had to be incurred in the matter in any event. Firstly, the costs of reading all of the plaintiffs' materials on both applications are recoverable, as those costs would have had to be incurred in considering whether or not to oppose the injunction application. Secondly, any costs incurred in preparing the clients' case on the injunction application which would have been incurred in preparing the matter for trial are recoverable. Hence, many of the costs incurred (other than specific preparation for, and attendance at, the injunction application hearings) would likely be costs which the law firm is entitled to recover in any event. This will be assessed at the final hearing of this matter.
I will hear the parties as to the quantum of the legal costs not reasonably charged in relation to the interim injunction application at the final hearing of this matter but I find, as a preliminary matter, that the amounts charged for work done in relation to the injunction application, in the absence of ongoing costs disclosure, and compounded by a failure to give legal advice as to the merits of opposing the interim injunction application, are prima facie relevant to the quantum of the reduction in costs to be made.
[17] Primary Reasons [138] - [140].

In relation to the summary judgment application the registrar expressed this view:[18]
I do not conclude that the work done in relation to the summary judgment application was unreasonably done but, in the context of failure to give ongoing costs disclosure a situation compounded by a failure to give clear legal advice as to merits, the circumstances of the summary judgment application are relevant to determine how costs should be reduced in this matter.
[18] Primary Reasons [160].
The registrar's conclusions on the question of whether the amount of costs should be reduced by an amount proportionate to the seriousness of the failure to disclose were as follows:[19]
[19] Primary Reasons [161] - [170].
In order to assess the effect of the failure to disclose, that failure to disclose has to be seen in the context of what was happening in the proceeding at the relevant time. The failure to adequately disclose the level at which fees were being incurred is intrinsically linked to what was causing fees to be incurred and what information the clients had about both their prospects of success in the interlocutory matters balanced with any sort of costs/benefit analysis of taking or opposing, those interlocutory steps.
In this matter, solicitor/client costs were increasing rapidly against interlocutory applications where no costs breakdown had been given such that the clients could assess the costs being incurred in interlocutory matters as against a total estimated budget for the entire proceeding (through to trial). Those costs were being incurred in a context where no costs/benefit advice was given, in particular, of opposing the interlocutory injunction application or pursuing a summary judgment application. The situation was compounded by there being no evidence before me that any advice was given on prospects as to either of those matters.
Hence, the consequence of the failure to disclose has to be seen in that full context before I can determine the costs consequence of the failure to disclose. The question is whether the failure to disclose had a serious consequence for the clients in the context of the fees being incurred absent a proper context being given to those fees.
I find that there was a serious consequence as the clients were never given sufficient, meaningful, ongoing disclosure such that they could understand (i) how legal fees were being incurred in the context of the overall proceeding as against interlocutory costs and (ii) how they could allocate their budget to best effect in the litigation.
In all of the circumstances I therefore find that my discretion is activated such that I should either make a reduction in the costs pursuant to s 286(4) by an amount considered by me to be proportionate to the seriousness of the failure to disclose, or assess the costs other than by reference to the costs agreement pursuant to s 302(1)(c).
In making my determination I have regard to the fact that there is still a costs agreement on foot. The adverse effect of the failure to disclose was that the clients were never in a position to see their current exposure to solicitor/client costs in the context of the steps being actually taken in the litigation as against the anticipated future solicitor/client costs likely to be incurred in the standard procedural steps required in the proceeding if the matter went to trial. There was no breakdown of costs incurred into the context of expected future costs. The law firm had significant relevant information which should have been utilized to give the clients that costs disclosure.
In DG Ogle v Bowdens, the Full Court of the Queensland Supreme Court was dealing with the assessment of costs under the Queensland equivalent of s 286(4). The court held that the cost assessor was entitled to draw on his or her experience in this field of expertise to inform his or herself as to what factors, including scales of costs to take into account, in discharging his or her obligations. This included that there was an applicable scale of costs against which the costs could be assessed in lieu of using the costs agreement. By applying the relevant scale, the approach under s 286(4) becomes effectively the same as that made under s 302(1)(c).

The factors I must consider in this case include the failure to comply with the disclosure requirements under s 260 and s 267 and the consequences of the failure under s 268(4). I am entitled to use for this purpose the costs scale that would apply in the absence of a costs agreement, namely the Supreme and District Courts (Contentious Business) Determination 2018 (WA) (the Supreme Court scale).
I am permitted to ameliorate the reduction in costs from the costs agreement to the scale by allowing a care and consideration component not included in the Supreme Court scale. In that regard, I take into account that the clients had agreed to pay the law firm at hourly rates above those provided by the scale.
I consider that in applying s 268(4) and s 301(1)(c), it is fair and reasonable to adopt a similar rate of remuneration for professional fees of the respondent by reference to the remuneration allowed by the Supreme Court scale, plus a care and consideration component not included in the Supreme Court scale.

The registrar determined that the applicant should only be permitted to recover solicitors' costs capped at the applicable hourly rates provided in the 'Supreme Court scale' and, as a consequence, the applicant should redraw the bill of costs in accordance with her reasons. The registrar directed that the bill should not include amounts for work she had determined had not been undertaken reasonably.
No orders carrying the registrar's reasons into effect were made.

Availability of prerogative relief

The function of an order in the nature of certiorari is to remove the legal consequences, or purported legal consequences, of an exercise or purported exercise of power which has, at the date of the order, a discernible or apparent legal effect upon rights.[20]
[20] Probuild Constructions (Aust) Pty Ltd v Shade Systems Pty Ltd [2018] HCA 4; (2018) 264 CLR 1 [28] (Kiefel CJ, Bell, Keane, Nettle and Gordon JJ).
I am satisfied that the registrar's decision changed the applicant's legal position or, at the very least, operated to 'clear the decks for such a change'.[21] The registrar's decision deprived the applicant of its right to recover costs in accordance with the 'time cost' approach specified in the Costs Agreement and required it to file and serve a bill of costs prepared on the basis of a costs determination with some adjustment to the hourly rate. Accordingly, the registrar's decision is one amenable to challenge by way of an application for an order for certiorari.
[21] Aronson M, Groves M and Weeks G, Judicial Review of Administrative Action and Government Liability (6^th ed, 2017).

The judicial review grounds

The grounds were amended by leave at the hearing. They are reproduced in these reasons in their amended form.

Ground 1

Ground 1 is as follows:
1.The respondent committed jurisdictional error by denying the applicant procedural fairness in that the respondent failed to put the applicant on notice that she might:
(a)make a finding that the applicant had failed to comply with its disclosure obligations (except for the client's assertion that the applicant's letter to the client dated 13 August 2019 [26] did not constitute disclosure because it was not signed by the client);
(b)tax the bill by reference to the scale or other than by reference to the provisions of the costs agreement in reliance on s 268(4) and/or s 302(1)(c) of the Legal Profession Act 2008 (Act); or
(c)make any decision which would have the effect of reducing costs under s 268(4) of the Act.

Some general principles

Procedural fairness is a matter of substance and not form. There will be a denial of procedural fairness if, in all the circumstances, there has been actual unfairness or practical injustice in the decision-making process.[22]
[22] Apache Northwest Pty Ltd v Agostini(No 2) [2009] WASCA 231 [220] (Buss JA).
A judicial officer is not bound by the manner in which the parties conduct a matter, but it is a general principle of curial proceedings that if the judicial officer contemplates determining the controversy on a basis that differs from the way it was conducted, the parties should be informed so that they have the opportunity to address any new or changed issues that may arise.[23]
[23] BHP Billiton Iron Ore Pty Ltd v Construction, Forestry, Mining & Energy Union of Workers [2006] WASCA 49; (2006) 151 IR 361 [33] - [39] (Le Miere J); Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208; (2005) 3 DDCR 1 [78] - [79] (Ipp JA).
Where the subject matter of a hearing is sufficiently clear, however, there is no obligation for the decision maker to provide a 'preview of proposed or tentative conclusions or findings'.[24]
[24] Lawrie v Lawler [2016] NTCA 3; (2016) 39 NTLR 1 [192]-[194] (Doyle and Duggan AJJ); Lalios v O'Brien [2021] VSC 105 [56] (Kaye JA).
Breach of the obligation of procedural fairness constitutes jurisdictional error on the part of a tribunal if, and only if, the breach is material. The breach is material if it operates to deny the applicant an opportunity to give evidence or make arguments to the tribunal and thereby to deprive the applicant of the possibility of a successful outcome. The applicant is not required to prove that a different decision would have been made but to establish that there was a realistic possibility that a different decision could have been made.[25]

Application of the principles

[25] Minister for Immigration and Border Protection v SZMTA [2019] HCA 3; (2019) 264 CLR 421 [2], [45] (Bell, Gageler and Keane JJ).

I am satisfied that the parties approached the assessment hearing on the basis that the applicant's costs would be assessed based on the Costs Agreement and not on any other basis.
The existence of the Costs Agreement and its terms were matters of central importance to the assessment. The applicant prepared the bill of costs filed on 24 September 2020 on the basis of the Costs Agreement and the objections filed on behalf of Roxbury and Mr and Mrs Kennedy were prepared on a basis that assumed that the assessment would proceed on the basis of the Costs Agreement.
Had Roxbury and Mr and Mrs Kennedy wanted to contend that the assessment of the applicant's costs proceed other than by reference to the Costs Agreement one would have expected that contention, and the basis upon which it was advanced, to have featured prominently in their written submissions. Not only did the written submissions not contend that the costs assessment should proceed on some basis other than the Costs Agreement, but they contained no clearly articulated criticism of the costs disclosure made by the applicant.
The only reference to costs disclosure in the written submissions relied on by Roxbury and Mr and Mrs Kennedy was the observation, which formed part of the factual background Section of the submissions, to the effect that although Mr MacDonald had revised the applicant's estimate of total costs to $350,000 in writing, he 'did not provide an updated cost disclosure for Mr and Mrs Kennedy to review and sign. The most recent cost disclosure letter signed by the [Kennedys] is that for which the estimate of $15,000 - $150,000.'
The observation was flawed for a number of reasons. First, it implied that the applicant was under an obligation to provide Mr and Mrs Kennedy with an updated costs disclosure for them to sign when it was under no such obligation. Second, the observation implied that Mr and Mrs Kennedy did not have an opportunity to review the updated costs disclosure made in the letter of 13 August 2019 when in fact they had such an opportunity because they did not sign the costs agreement until 19 August 2019. Third, the observation implied that the costs disclosure made in the letter of 13 August 2019 was not to be considered a costs disclosure for the purposes of the Act. As Mr McKenna acknowledged at the costs assessment hearing, however, the letter of 13 August 2019 contained a costs estimate and plainly it formed part of the applicant's costs disclosure. Finally, the observation, which was the only mention of costs disclosure in the submissions, did not put the applicant on notice of the argument about costs disclosure raised at the costs assessment hearing.
As referred to earlier, the argument raised by Mr McKenna at the hearing that the applicant's costs disclosure was inadequate involved two points. First, the applicant had failed to disclose what level of costs might be recoverable from the plaintiff in the action in respect of the interlocutory applications. Second, there had been a failure to comply with the ongoing obligation to give disclosure because the applicant had not given an estimate of the costs of the interlocutory applications.
Importantly, however, at no stage of the oral argument was there any submission made on behalf of Roxbury and Mr and Mrs Kennedy to the effect that the registrar should assess the applicant's bills otherwise than in accordance with the Costs Agreement.
On the hearing of this application for judicial review Mr McKenna contended that, at the assessment hearing, it was clear that the key issues in dispute were the adequacy of the costs disclosure and whether the bills of costs ought to be reduced in the light of the lack of disclosure. Mr McKenna contended the applicant should have been aware that a proportionate reduction in its fees, or an assessment on some basis other than the Costs Agreement, were possible outcomes in the light of the criticisms of its costs disclosure. Mr McKenna relied on the general principle that there is no obligation for the decision-maker to provide a 'preview of proposed or tentative conclusions or findings' where the subject matter of a hearing is sufficiently clear. He argued, in effect, that because the adequacy of costs disclosure was raised as an issue, there was no obligation on the registrar to disclose the possibility that she might exercise the discretion conferred by s 302(1)(c) to assess the applicant's costs on some basis other than the Costs Agreement.
I have given close consideration to the written submissions, other materials filed in advance of the assessment hearing and to the transcript of the assessment hearing and, with respect, I do not accept the contention that the key issues in dispute were clear. Not only was the contention that the costs should be assessed on some basis other than the Costs Agreement not raised in the written submissions but in my view, it was far from clear from the oral argument precisely how it was said that the applicant had failed to comply with the disclosure obligation imposed on it by div 3 of the Act nor what consequences Roxbury and Mr and Mrs Kennedy contended should follow. And, importantly nothing was said at the assessment hearing that put the applicant on notice that Roxbury and Mr and Mrs Kennedy contended that the applicant's costs should be assessed otherwise than on the basis of the Costs Agreement nor that the registrar might assess the applicant's costs other than on the basis of the Costs Agreement.
In oral submissions, the applicant's senior counsel, Mr Cuerden SC, accepted that if the registrar found that there had been a failure to disclose anything required to be disclosed by div 3, the applicant should be taken to have been on notice that such a finding might lead to a reduction in the 'amount of costs' proportionate to the seriousness of the failure to disclose in accordance with s 268(4). In my judgment, however, that is a qualitatively different outcome from assessing the costs on some basis other than the Costs Agreement. Having regard to the respondents' written submissions, the oral submissions made at the assessment hearing and the respondents' objections, I do not accept that the applicant ought to have been aware of the possibility that the registrar might assess their bills otherwise than in accordance with the Costs Agreement.
Against that background, I am satisfied also that it was incumbent on the registrar to inform the parties of the possibility that she might assess the applicant's bills on the basis of the 'Supreme Court scale' and to give the parties an opportunity to make submissions in respect of that proposed course of action. The registrar did not do so, and in my judgment, the applicant was deprived of the opportunity to make submissions on the construction and application of s 302(1) which could have resulted in a different decision.
Ground 1 is made out in so far as it alleges that the registrar denied the applicant procedural fairness by failing to put the applicant on notice that she might assess the applicant's bill by reference to the 'Supreme Court scale' and not by reference to the Costs Agreement. In that respect the registrar made a jurisdictional error.
Before leaving ground 1, I record that it was contended on behalf of Roxbury and Mr and Mrs Kennedy that even if it was found that the registrar made a 'minor error', relief should be refused because it would be 'a futile waste of resources' for the decision 'to be sent back to be re‑made'. It was contended that it was plain that the applicant's disclosure was manifestly lacking and that the disputed bills therefore ought to be reduced and that any taxing officer would, or at least could, have made the same findings as the registrar.
Applications for judicial review are concerned with the legality of decision-making and not with the merits of the decision. The contention that it would be futile to quash the decision invites a more detailed consideration of the merits than is appropriate on an application for judicial review. It is sufficient for me to conclude, as I do, that had the applicant been put on notice that the registrar was considering assessing the applicant's costs on a basis other than the Costs Agreement, it could have persuaded the registrar either that the discretion to do so had not been enlivened, or, if it had, that the registrar should not exercise that discretion.

Ground 2

Ground 2 is as follows:
The respondent committed jurisdictional error by failing and refusing to exercise her statutory jurisdiction to assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement pursuant to s 302(1) of the Act in circumstances in which the respondent did not profess to be satisfied and could not have been satisfied that the costs agreement does not comply in a material respect with any applicable disclosure requirements of Division 3 [44] as required by s 302(1)(c) of the Act, and in which no such power could otherwise exist under s 268(4) of the Act.
In the light of the conclusion that I have reached in respect of ground 1, it is unnecessary for me to determine ground 2. For the reasons I explain below, I will not determine the ground but will make some brief observations about the constructional difficulties presented by s 302(1)(c) of the Act (there were several other issues raised by ground 2 to which it is unnecessary for me to refer).
For ease of reference, the material parts of s 302(1) are as follows:
(1)A taxing officer must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if —
(a)a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs; and
(b)the agreement has not been set aside under Section 288,
unless the taxing officer is satisfied that —
(c)the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3.
The primary constructional difficulty is found in s 302(1)(c). Division 3 of the Act does not provide that a costs agreement must comply with any disclosure requirements. Division 6 of pt 10 regulates costs agreements. Section 282 governs how costs agreements are to be made and s 283 governs how conditional cost agreements are to be made. Neither Section (nor any other provision in div 6) provides that a costs agreement must comply with any of the disclosure requirements of div 3.

Rather it is the law practice that is required to give disclosure and, as has been seen, that may be done before or, as soon as practicable after, the law practice is retained. Thus, s 302(1)(c) assumes a relation between 'the agreement' (the costs agreement) and 'the applicable disclosure requirements' that is not to be found in div 3.
The construction issue was not raised at the hearing before the registrar. It is apparent from the primary reasons that the registrar proceeded on the basis that s 302(1)(c) should be construed as if the words 'the law practice' were substituted for the words 'the agreement' and that the reference to 'any applicable disclosure requirements' included the obligation of ongoing disclosure.
On behalf of Roxbury and Mr and Mrs Kennedy, Mr McKenna argued that the term 'the agreement' should be construed as meaning compliance by a law practice with its disclosure obligations, including its ongoing disclosure obligations.
Senior counsel for the applicant, Mr Cuerden SC, argued the reference in s 302(1)(c) to 'the agreement' meant any non-compliance had to be a non-compliance existing at the time the agreement was entered into. Mr Cuerden SC argued that a more expansive construction - one construing the reference to the agreement as referring to performance of the agreement including the compliance with the ongoing disclosure requirements - would not attach any significance to the legislature's use of the term 'the agreement'. Further, Mr Cuerden SC argued that construing the term 'the agreement' as referring to performance of the agreement would have the potential to confer on a taxing officer a power to set aside costs agreements, or at least important aspects of them, which by s 288 of the Act is a power reserved to the court rather than to a taxing officer.
The constructional issue engages considerations of the nature canvassed in Taylor v Owners - Strata Plan No 11564,[26] bearing on when it is permissible for a court to omit and insert words into the text of a statute.
[26] Taylor v Owners - Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531 [37] - [40] (French CJ, Crennan and Bell JJ).
A construction of a statutory provision that would promote the purpose or object of the statute is to be preferred over one that would not promote that purpose or object. [27] Adopting a construction of s 302(1)(c) that substitutes the term 'law practice' for the term 'agreement' promotes the purpose identified in s 251(a) of providing for law practices to make disclosures to clients regarding legal costs because a failure to make the required disclosures may enliven a discretion to assess costs on some basis other than an otherwise applicable costs agreement. If the provision is construed as if the term 'law practice' was substituted for the term 'agreement' then the 'applicable disclosure requirements' to which reference is made, are all the requirements specified in div 3 whether they arise before or after the making of the agreement. That appears to me to be the preferable construction but without the benefit of fuller argument, and given it is unnecessary to do so, I will not determine the issue.

Ground 3

[27] Interpretation Act 1984 (WA) s 18.

The third ground is as follows:
3.The respondent committed jurisdictional error by misconstruing the Act and thereby misconceiving the nature of the function which she was performing or the extent of her powers, in that the respondent:
(a)misconstrued Section 260 of the Act by imposing on the applicant an obligation not found in that Section namely to provide sufficient information, in addition to an estimate of total legal costs, in order to enable the client to make an informed decision as to how best to instruct their solicitors to conduct the litigation [48] [51] and in particular to categorise all cost estimates by reference to different stages or types of work [83] [87] [92] [93] [162] [164] [166] and give meaningful…disclosure [91] and adequate disclosure [94] so that the client could understand how legal fees were being incurred in the context of the overall proceeding as against interlocutory costs, and how they could allocate their budget to best effect in the litigation [164];
(b)misconstrued s 268(4) in finding that it applied at all alternatively before costs had been assessed [47].
The essence of ground 3(a) is that the registrar construed s 260(1)(c) and s 267 as imposing disclosure obligations on the applicant which are not to be found in provisions themselves. Ground 3(b) raises a separate point concerning s 268(4) which overlaps with the applicant's submissions in respect of ground 4 and I will address the point raised by ground 3(b) when dealing with ground 4.
The primary obligation imposed on a law practice by s 260(1)(c) is to disclose 'an estimate of the total legal costs if reasonably practicable'. In the alternative, if it is not reasonably practicable to disclose the estimate of the total legal costs, by s 260(1)(c) the law practice must provide a range of estimates of the total legal costs (s 260(1)(c)(i)) and an explanation of the major variables that will affect the calculation of those costs (s 260(1)(c)(ii)).
Whether a law practice provides an estimate of the total legal costs or a range of estimates and an explanation of major variables, the law practice is not required to provide by way of disclosure any apportionment of the costs over various aspects or stages of the work to be undertaken.
Pursuant to s 260(1)(f) in litigious matters a law practice must disclose an estimate of the range of costs that may be recovered if the client is successful and the range of costs the client may be ordered to pay if the client is unsuccessful. The law practice is not obliged to provide such estimates by reference to various stages of the litigation process.
Pursuant to s 267 a law practice must disclose any substantial change to anything included in a disclosure already made as soon as is reasonably practicable after the law practice becomes aware of that change. It is important to note that s 267 imposes an obligation to disclose any substantial change to what has previously been disclosed. Section 267 does not impose an obligation on a law practice to disclose information about matters that were not the subject of the earlier disclosure.
The registrar's approach to the construction of the disclosure obligations is apparent from the following passages of the primary reasons:[28]
[28] Primary Reasons [48] - [51].
The meaning of the word 'disclosure' in the context of legal costs disclosure does not appear to have been judicially considered but the purpose of disclosure, in a legal costs context, must be to provide sufficient information in order to enable the client to make an informed decision as to how best to instruct their solicitors to conduct the litigation.
That purpose is apparent from the Explanatory Memorandum that accompanied the Act when it was read as a Bill before the Parliament. In explaining the purpose of s 260 of the Act, the Explanatory Memorandum states (emphasis added):
It is a requirement that clients are appropriately informed as to the extent of legal costs that they will be liable for upon engaging a law practice.
The references to 'appropriately informed' in the Explanatory Memorandum indicates that compliance with the disclosure obligations must be assessed on a case by case basis, having regard to the adequacy of the disclosure in the context of the sophistication of the client and the steps being taken by the law firm incurring costs. What is adequate disclosure to a multi-national corporation in a simple debt claim may be significantly different to what is adequate for a small business or an individual embarking on complex litigation for the first time.
If there is a limited budget, adequate disclosure is that which enables a client to determine how best to allocate that limited budget in order to advance their cause.
And:[29]
Meaningful costs disclosure was absent [in December 2019]. An estimate as to likely discovery costs (based on the documents provided by all of their parties) could have been given; it was not. An estimate of the total costs expended on the injunction applications could have been given; it was not. An estimate of the costs of the stay application could have been given, it was not. It would have been simply impossible for the clients to assess where they sat on costs exposure unless the solicitor gave them a meaningful breakdown of costs; which never occurred [83].
The law firm relies on the 13 August 2019 letter. In that letter there was no indication given as to the costs likely to be incurred in the interlocutory injunction application or how that might affect the total estimate of legal costs to trial. Meaningful context, by which the clients could assess their costs exposure at any stage points in the litigation was completely lacking. To have indicated a top end of $350,000 in costs the solicitor must have had some idea of how those costs and the injunction costs broke down but no indication of that was given to the clients at all [87].
I find that, after the initial advice was given, the law firm failed to give further meaningful written costs disclosure updates as to the impact on costs of any of the interlocutory steps. The type, and number, of interlocutory steps in the proceedings amounted to a substantial change which created a need for further, adequate and meaningful costs disclosure. Such disclosure should have been made within a reasonable time of the law firm becoming aware of the impact of those matters on costs [91].
Specific mention was made by the law firm that costs were increasing rapidly but no breakdown of how those costs were being incurred, or applied, was given, and no written advice was given as to how the costs incurred in the interlocutory steps were impacting on the overall estimate of costs to trial given in the disclosure notice [92].
I further find that the general costs estimate in the disclosure notice did not contain a meaningful estimate of the total legal costs; a broad range of $35,000 to $350,000 is meaningless to an unsophisticated client in the context of civil proceedings without some breakdown against the known procedural steps which are required in the proceeding. Further, it is important to note that, after 13 August 2019, both the stay application and the summary judgment application came into existence, both of which were going to impact on costs. The clients were given no information as to how those matters would impact on their costs exposure to the law firm, they were merely advised as to party/party costs orders which might be made for, or against them, in those matters [93].
In this matter, solicitor/client costs were increasing rapidly against interlocutory applications where no costs breakdown had been given such that the clients could assess the costs being incurred in interlocutory matters as against a total estimated budget for the entire proceeding (through to trial). Those costs were being incurred in a context where no costs/benefit advice was given, in particular, of opposing the interlocutory injunction application or pursuing a summary judgment application. The situation was compounded by there being no evidence before me that any advice was given on prospects as to either of those matters [162].
I find that there was a serious consequence as the clients were never given sufficient, meaningful, ongoing disclosure such that they could understand (i) how legal fees were being incurred in the context of the overall proceeding as against interlocutory costs and (ii) how they could allocate their budget to best effect in the litigation [164].
In making my determination I have regard to the fact that there is still a costs agreement on foot. The adverse effect of the failure to disclose was that the clients were never in a position to see their current exposure to solicitor/client costs in the context of the steps being actually taken in the litigation as against the anticipated future solicitor/client costs likely to be incurred in the standard procedural steps required in the proceeding if the matter went to trial. There was no breakdown of costs incurred into the context of expected future costs. The law firm had significant relevant information which should have been utilized to give the clients that costs disclosure [166]. (emphasis added)
[29] Primary Reasons [83], [87], [91], [92], [93], [94], [162], [164], [166].
In my respectful opinion, the approach taken by the registrar to the construction of the disclosure requirements, and to s 260(1)(c) in particular, places too much reliance on the extract from the Explanatory Memorandum quoted by the registrar in the primary reasons.
At common law reference to extrinsic materials such as the Explanatory Memorandum is permissible as a means for discerning the mischief that the relevant provision was designed to overcome.[30] Care must be taken, however, to ensure that statements in extrinsic materials are not substituted for the legislative text.[31]
[30] CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2; (1997) 187 CLR 384, 408 (Brennan CJ, Dawson, Toohey and Gummow JJ).
[31] Re Bolton; Ex parte Beane [1987] HCA 12; (1987) 162 CLR 514, 518 (Mason CJ, Wilson and Dawson JJ).
The text of the disclosure provisions considered by the registrar (s 260(1)(c) and s 267) is clear. The sections describe the matters to be disclosed in relatively specific terms - 'the total legal costs', a 'range of estimates of the total legal costs', the 'major variables' and 'any substantial change'.
The reference in the Explanatory Memorandum to 'a requirement that clients are appropriately informed as to the extent of legal costs' does not justify imposing additional obligations on a law practice to disclose an apportionment of 'the total legal costs' over particular stages of the work to be undertaken or to tailor the disclosure according to the law practice's understanding of the client's budget.
In my view the registrar's construction involves a gloss on the statutory disclosure obligations not supported by text or context. Further, it is a construction unnecessary to achieve the statutory purpose of safeguarding clients. I accept, however, that when it can be done, costs disclosure as described by the registrar would undoubtedly constitute good practice. That said, the only certainty in litigation is its inherent uncertainty. In commercial litigation, at least, the issues in dispute are not always immediately apparent and they can change rapidly. In many cases these vicissitudes may make costs disclosure of the nature and extent contemplated by the registrar difficult, if not, impossible.
I am satisfied that the registrar misconstrued s 260(1) and s 267 of the Act in the manner for which the applicant contends and that, in so doing, the registrar made an error of law that I am satisfied was jurisdictional in nature. Distinguishing between jurisdictional and non-jurisdictional errors of law is difficult and if I have mischaracterised the error as jurisdictional that is of no moment because, in this instance, in the absence of orders carrying the registrar's reasons into effect, the error is an error of law on the face of the record for which certiorari will lie.[32]

Ground 4

[32] See generally, Craig v South Australia [1995] HCA 58; (1995) 184 CLR 163, 180 - 181 (Brennan, Deane, Toohey, Gaudron and McHugh JJ).

Ground 4 is as follows:
The respondent committed jurisdictional error by the orders she made in that she lacked power to make them.
As explained by the applicant's submissions, ground 4 alleges that the registrar erred in her construction and application of s 268(4).
For ease of reference, I set out the text of s 268(4):
268Effect of failure to disclose
(4)If a law practice does not disclose to a client or an associated third party payer anything required by this Division to be disclosed then, on an assessment of the relevant legal costs, the amount of the costs may be reduced by an amount considered by the taxing officer to be proportionate to the seriousness of the failure to disclose.
The applicant submitted that the registrar was required to determine 'the amount of the [applicant's] costs' in accordance with the Costs Agreement before considering the amount that was proportionate to the seriousness of the failure to disclose. Roxbury and Mr and Mrs Kennedy submitted that it was permissible for the registrar to effect a reduction in the applicant's costs by directing that they be assessed in accordance with the costs determination.
Section 268(4) requires a taxing officer to consider 'the seriousness of the failure to disclose' and to make a proportionate reduction in 'the amount of the costs'. If the discretion is enlivened and a taxing officer considers it should be exercised, the text of the provision specifies that the reduction is to be made to the amount of the costs. Necessarily this means that the amount of the costs must have been determined before the proportionate reduction is applied.
Varying the basis of assessment from 'time costing' to an item based 'costs determination' assessment, as the registrar did in this case, effectively omits the step of considering what proportionate reduction in 'the amount of the costs' should be made. In most, if not all cases, at the time an order is made varying the manner of assessment it will not be possible to say what precise change in the amount of costs will be brought about by the change in the manner of assessment. In other words, the quantum of a proportionate reduction in amount cannot be determined unless an assessment of the costs on the basis of the costs agreement is made to enable a comparison of the amounts of costs allowed by both assessment processes.
The registrar appeared to draw some support for the approach to the application of s 268(4) from the decision of the Full Court of the Queensland Supreme Court in D G Ogle Pty Ltd v Bowdens.[33]That decision does not provide assistance nor does it support the registrar's approach. The decision concerned a different costs regime that did not contain a provision comparable to s 268(4).
[33] D G Ogle Pty Ltd v Bowdens [1979] Qd R 507.
I am satisfied that the registrar erred in her construction of s 286(4). Ground 4 is made out.

Ground 5

Ground 5 is as follows:
The respondent committed jurisdictional error by making findings for which there was no evidence and/or were legally unreasonable, and amounted to errors of law on the face of the record namely:
(a)The agreement did not set out or refer to the relevant scale [96] [22], when the scale and a link to that scale is contained in clause 6.2 & 6.3 of the disclosure notice;
(b)At no point were the clients told that the costs being incurred by them were significantly more that the scale allowance [97] contrary to clause 6.4 of the disclosure notice.
As to the error alleged in ground 5(a), the registrar's finding that the applicant's disclosure notice did not set out or refer to the relevant scale was an error. The disclosure notice did refer to the scale in cl 6.2 and contained a hyperlink to the scale. As to the error in ground 5(b), the registrar's finding that Roxbury and Mr and Mrs Kennedy were not told the costs being incurred by them were significantly higher than the costs allowed by the scale overlooked cl 6.4 of the disclosure notice sent to Roxbury and Mr and Mrs Kennedy under cover of the applicant's letter of 7 August 2019 which stated:
Charging at an hourly rate without the limits imposed by the scale will almost always give rise to higher fees and quite possibly significantly higher fees, than if you were charged in accordance with the scale.
In the light of the conclusions reached in relation to grounds 1, 3 and 4 it is unnecessary to consider whether these factual errors had the capacity to, and did constitute, jurisdictional errors.

Discretionary considerations

Roxbury and Mr and Mrs Kennedy contended relief should be denied because the application was premature. It was argued that absent a final decision on the assessment of costs, it is not clear what, if any, amounts are in issue.
I do not accept that this is a reason to deny the applicant relief. For the reasons I have already given, the registrar's decision has an immediate impact on the applicant's legal rights. Further, if the registrar's decision is not quashed the applicant will be left without any opportunity to challenge the registrar's decision. If the assessment proceeds to a final hearing the applicant will have no appeal rights. The registrar's decision will not be susceptible to review by way of an application for review brought under Order 65 r 55 because what may be reviewed on such an application is the certificate of the taxing officer as to any item or part of an item. The applicant would not be able to challenge the registrar's decision as to the basis on which the registrar has assessed the costs.

Orders

The applicant contended that I should make an order that the matter be remitted back to another registrar but acknowledged that the power to make such an order may be lacking. In my respectful view it would be preferable for another registrar to assume the conduct of the assessment. I would hope, however, that the parties might consider resolving this unfortunate dispute about legal costs commercially without increasing their respective legal costs further.
I will hear the parties as to the orders to be made and costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
OK
Court Officer
10 NOVEMBER 2021