Monopak Pty Ltd v Maxim Litigation Consultants
[2007] WASC 112
•25 MAY 2007
MONOPAK PTY LTD & ANOR -v- MAXIM LITIGATION CONSULTANTS [2007] WASC 112
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2007] WASC 112 | |
| Case No: | LPA:39/2006 | 12 MARCH 2007 | |
| Coram: | MASTER NEWNES | 25/05/07 | |
| 24 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed | ||
| B | |||
| PDF Version |
| Parties: | MONOPAK PTY LTD (ACN 088 054 728) COLIN JAMES PALLAS MAXIM LITIGATION CONSULTANTS |
Catchwords: | Practice and procedure Application by client for extension of time to require solicitors to tax their costs Whether appeal lies under O 60 r 4(1) from decision of taxing officer under s 229 of Legal Practice Act 2003 refusing extension Effect of O 60 r 4(6) Principles to be applied on application for extension Effect of payment by client of costs sought to be taxed Relevance of prejudice to solicitors by delay Turns on own facts |
Legislation: | Legal Practice Act 2003 (WA), s 228, s 229, s 242 Legal Practitioners Act 1893 (WA), s 67A Rules of the Supreme Court 1971 (WA), O 1 r 4, O 60A r 4(1), O 60A r 4(6), O 66 |
Case References: | Harrison v Hocking [2000] WASC 188 Lawecki v Marcel Kalfus & Co (1985) FLC 91-644 Retail Equity Pty Ltd v Murie and Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994 Webb v Bateman, unreported; SCt of WA; Library No 6305; 27 May 1986 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
COLIN JAMES PALLAS
Second Plaintiff
AND
MAXIM LITIGATION CONSULTANTS
Defendant
Catchwords:
Practice and procedure - Application by client for extension of time to require solicitors to tax their costs - Whether appeal lies under O 60 r 4(1) from decision of taxing officer under s 229 of Legal Practice Act 2003 refusing extension - Effect of O 60 r 4(6) - Principles to be applied on application for extension - Effect of payment by client of costs sought to be taxed - Relevance of prejudice to solicitors by delay - Turns on own facts
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Legislation:
Legal Practice Act 2003 (WA), s 228, s 229, s 242
Legal Practitioners Act 1893 (WA), s 67A
Rules of the Supreme Court 1971 (WA), O 1 r 4, O 60A r 4(1), O 60A r 4(6), O 66
Result:
Appeal dismissed
Category: B
Representation:
Counsel:
First Plaintiff : Mr D J Garnsworthy
Second Plaintiff : Mr D J Garnsworthy
Defendant : Mr S V Forbes
Solicitors:
First Plaintiff : Cullen Babington Hughes
Second Plaintiff : Cullen Babington Hughes
Defendant : Stewart Forbes
Case(s) referred to in judgment(s):
Harrison v Hocking [2000] WASC 188
Lawecki v Marcel Kalfus & Co (1985) FLC 91-644
Retail Equity Pty Ltd v Murie and Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994
Webb v Bateman, unreported; SCt of WA; Library No 6305; 27 May 1986
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1 MASTER NEWNES: This is an appeal under O 60A r 4(1) against the order of a Registrar dismissing an application by the plaintiffs under s 229 of the Legal Practice Act 2003 (WA) (the "Act") for an extension of time within which to require the defendant to have its costs taxed.
Does an appeal lie under O 60A r 4?
2 There arose, as a preliminary issue, a question as to whether an appeal lies under O 60A r 4(1) in the case of a decision made by a Registrar when acting in the capacity of a taxing officer under s 229 of the Act.
The relevant statutory provisions
3 It is necessary first to turn to s 229 of the Act which provides that:
"A taxing officer may -
(a) enlarge the time prescribed for the taking of any step in this Division;
(b) give direction for substituted service of any notice or document required to be served."
4 Section 228 of the Act provides that " 'taxing officer' means a taxing officer of the Supreme Court".
5 Order 1 r 4 of the Rules of the Supreme Court 1971 (WA) (the "Rules") provides that " 'Taxing Officer' includes a Registrar, and any other officer of the Court having power to tax costs." The power to tax costs currently lies with, and is exercisable by, the Registrars of the Court: Supreme Court Act 1935 (WA), s 155.
6 The provisions dealing with an appeal from a Registrar are set out in O 60A r 4 which provides, so far as relevant:
"(1) Subject to paragraph (6), a person affected by an order or decision of a Registrar may appeal from it.
…
(6) This Rule does not apply to an order or decision of a Registrar -
…
- (c) when acting as a Taxing Officer."
The plaintiffs' submissions
7 It was submitted on behalf of the plaintiffs that the words "taxing officer" in s 229 were not used in the sense that they were used in O 60A r 4(1). Counsel referred to the decision of Franklyn J in Webb v Bateman, unreported; SCt of WA; Library No 6305; 27 May 1986 as authority for the proposition that in determining whether or not to extend time, a Registrar is exercising his or her powers as a Registrar, not as a "Taxing Officer" within the meaning of O 60A r 4(6). While that decision preceded the Act, the wording of the relevant provisions of s 67A of the Legal Practitioners Act 1893 (WA) and what was then O 67 r 21(7)(c) of the Rules, although not identical, were in all material respects to the same effect as s 229 of the Act and O 60A r 4(6) respectively.
The defendant's submissions
8 It was argued by counsel for the defendant that the effect of O 60A r 4(1) was that no right of appeal existed against a decision under s 229. The decision in Webb v Bateman (supra) was not to the point as there the Act contained no definition of a "taxing officer" or set out what were the functions of a taxing officer. The Act, on the other hand, contains a definition of a "taxing officer".
9 Counsel referred to Harrison v Hocking [2000] WASC 188, where Hasluck J held that the power to extend time was specifically vested in the taxing officer under s 68A(d) of the Legal Practitioners Act 1893 (WA) and that any inherent jurisdiction of the Court in that regard had been displaced.
10 It was submitted that the inclusion in the Act of a definition of "taxing officer" reflected a legislative intention that the jurisdiction to determine applications under s 229 was to vest exclusively in a "taxing officer", as defined, and to exclude any appeal under O 60A r 4.
Does an appeal lie?
11 While it is the case that Webb v Bateman (supra) concerned the predecessor to the Act, I do not consider that such differences as exist between the two statutes leads to a different result. In Webb v Bateman, s 68A(d) of the Legal Practitioners Act contained a provision to the same effect as s 229 of the Act. The Legal Practitioners Act conferred the power to tax costs on "the taxing officer of the Supreme Court". Then, as now, s 155 of the Supreme Court Act provided that the Registrars shall be
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- the taxing officers of the Court. Order 1 r 4 contained the same definition of a "Taxing Officer" as it does now.
12 In relation to the provisions for appeals from a Registrar, what was then O 67 r 21 was to the same effect as the current O 60A r 4(1), and O 67 r 21(7)(c) was to the same effect as the current O 60A r 4(6).
13 In Webb v Bateman, having reviewed the relevant provisions of the Legal Practitioners Act andthe Rules, Franklyn J concluded that, when exercising powers conferred by s 68A(d) of the Legal Practitioners Act, a Registrar, although in fact the "taxing officer", was not "acting as a taxing officer" within the meaning of what was then O 67 r 21(7)(c) of the Rules. A Registrar was "acting as a taxing officer" when concerned with the taxation of a bill of costs, but was not acting in that capacity when dealing with an application for an extension of time under s 68A(d) of the Legal Practitioners Act. An appeal therefore lay under O 67 r 21(1) and was by way of a hearing de novo.
14 Suffice it to say that I respectfully agree with his Honour's reasoning and the conclusion at which he arrived. I consider that the same result must follow in this case. That is to say, the exclusion contained in O 60A r 4(6) does not apply to a decision of a Registrar made as a "taxing officer" under s 229 of the Act. While s 229 of the Act identifies the person who is empowered to extend time under that section, it does not follow that when so acting a person is "acting as a Taxing Officer" within the meaning of O 60A r 4(6). I consider that a person is "acting as a Taxing Officer" within the meaning of O 60A r 4(6) when exercising the powers of taxation, allowance and certification of bills of costs, not in the determination of an application under s 229 of the Act. Order 60A r 4(6) excludes an appeal under O 60A r 4(1) in the former instance because a separate regime exists for the review of the taxation of a bill of costs: O 66 r 53 - 56.
15 I do not consider that anything said by Hasluck J in Harrison v Hocking (supra) is inconsistent with that conclusion. In that case, his Honour was concerned with an application by originating summons by which, among other things, the applicant sought an order enlarging the time within which she may require the practitioner to tax his bill of costs, relying upon the Court's inherent jurisdiction. Hasluck J concluded that any inherent jurisdiction of the Court to enlarge time had been displaced by the vesting of that power in the taxing officer by s 68A(d) of the Legal Practitioners Act. His Honour was not, therefore, concerned with an appeal against the decision of a taxing officer under the statute and,
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- although he had occasion to consider the reasoning of Franklyn J in Webb v Bateman, his Honour did not indicate any disagreement with that reasoning.
16 It follows, in my view, that O 60A r 4(1) applies to the decision of the Registrar in this instance and that the present appeal is a hearing de novo.
17 It is to the substantive merits of the appeal that it is then necessary to turn.
The facts
18 The defendant acted for the plaintiffs between 9 June 2005 and 10 May 2006 in the defence of proceedings (the "New South Wales action") brought against the first plaintiff in the District Court of New South Wales by Nuplex Industries (Australia) Pty Ltd ("Nuplex"). The second plaintiff ("Mr Colin Pallas") is the chief executive officer of the first plaintiff. The defendant was instructed to dispute the jurisdiction of the New South Wales District Court and to seek to have the New South Wales action heard in the Supreme Court of Western Australia, where the first plaintiff intended to commence proceedings against Nuplex for damages for alleged breach of contract, negligence, and misleading and deceptive conduct.
19 The claim against the first plaintiff in the New South Wales action was for an amount of $169,150.60, plus interest and costs. The first plaintiff considered that it had a claim against Nuplex for a substantial amount, although there was some difference between the parties to this appeal as to what was said by the representatives of the first plaintiff in relation to the potential magnitude of the claim. But it was, on either view, in the order of several hundred thousand dollars.
20 On 21 June 2005, the defendant forwarded to the first plaintiff a retainer agreement in the form of a letter addressed to the first plaintiff. The letter dealt with a number of matters relevant to the relationship of solicitor and client. Under the heading "Accounting", the defendant said that it would provide periodic notes of its fees, and may from time to time provide separate accounts for disbursements. The accounts were payable within 14 days of receipt, in the absence of any other agreement. Relevantly for present purposes, the defendant said:
"Periodic notes of our fees and charges are final accounts for the work detailed in those accounts. Accordingly, any rights
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- which you have concerning taxation of those accounts must be exercised within 30 days of receipt of those accounts."
21 The defendant also expressly referred to the Act and noted, among other things, that the Act provided that within 30 days of receipt of a lump sum account the first plaintiff may, by notice in writing, require the defendant to provide it with an itemised account, and that within 30 days of receiving an itemised account the first plaintiff may, by notice, require the defendant to submit the account to the Taxing Officer of the Court for review of the amounts charged.
22 The letter set out the hourly rates that would be charged by the different categories of members of the defendant's professional staff who might be involved in the matter and provided an estimate of the first plaintiff's costs of the action up to the lodging of grounds of defence. The estimate was a range of $6000 to $10,000, plus disbursements of $1000.
23 The day after the letter was sent to the first plaintiff, the defendant instructed a firm of solicitors in New South Wales to act as its agent in the New South Wales action and the defendant also arranged for New South Wales counsel to be briefed.
24 The defendant initially rendered an account dated 30 June 2005 and, following that, accounts dated 31 July 2005 and 31 August 2005 respectively.
25 It seems that by September 2005 none of those accounts had been paid and nor had the retainer agreement been signed and returned to the defendant.
26 On 16 August 2005, Ms Ivey, the solicitor at the defendant having day to day conduct of the matter on behalf of the first plaintiff, had a meeting at the offices of the first plaintiff with two representatives of the first plaintiff, Mr Kevin Pallas, a director, and Mr John Senior, the company accountant and company secretary, for the purpose of taking further instructions on the matter. It appears that the subject of the defendant's accounts of June and July 2005 was not raised at that meeting.
27 On 7 September 2005, Mr Kevin Pallas sent to the defendant an e-mail in which he said, among other things, that the representatives of the first plaintiff wished to arrange a meeting with the defendant to discuss "work completed to date, future tasks, and cost implications."
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28 It appears that there was a telephone conversation between Mr Colin Pallas of the first plaintiff and Mr Stewart, a partner of the defendant, on 12 September 2005 in the course of which Mr Colin Pallas requested itemisation of the defendant's accounts for June, July and August 2005. An itemisation was provided by the defendant by letter dated 16 September 2005.
29 On 3 October 2005, the defendant wrote by e-mail to Mr Colin Pallas noting that there had been no response to the itemised accounts, the executed retainer agreement had not been returned to the defendant and none of the defendant's accounts had been paid.
30 Mr Senior replied on 10 October 2005 saying he had been instructed by Mr Colin Pallas to make an interim payment of $20,000 in order to progress the matter. Mr Senior said he believed it was still the intention of the directors of the first plaintiff to arrange a meeting with Mr Stewart as soon as possible "to resolve some of their on-going concerns about the matter."
31 The defendant replied on the same day, among other things, expressing surprise at the mention of "on-going concerns" in light of the telephone discussion of 12 September 2005 and the fact that no response had been received to the itemised accounts.
32 No reply was received to that e-mail despite several follow up e-mails and, on 17 October 2005, the defendant wrote again by e-mail saying that it was not in a position to engage in any further comprehensive work on behalf of the first plaintiff until the outstanding accounts were paid.
33 On 18 October 2005, Mr Senior replied saying that the "on-going concerns" were those of the directors and he could not comment on their nature. Mr Senior said that he understood that due to the travel commitments of Mr Colin Pallas, Mr Pallas had not had time to review the itemised accounts. Mr Senior said that both Colin and Kevin Pallas wished to have a meeting with the defendant and he would try to arrange a time for them.
34 It appears that an amount of $20,000 was paid by the first plaintiff on 11 October 2005, although the defendant says that an amount of $46,000 had in fact been promised in reduction of its accounts.
35 A meeting took place on 21 October 2005 between Ms Ivey, on behalf of the defendant, and Messrs Colin Pallas, Kevin Pallas and Senior,
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- on behalf of the first plaintiff. Ms Ivey says that in addition to discussing strategy for the case, Mr Colin Pallas asked questions about the costs. Ms Ivey says she described the work done to date and the work that would have to be done in the future. Mr Colin Pallas said they [the first plaintiff's representatives] would discuss the outstanding accounts on their return to their office and make a decision by lunchtime on the following Monday on how to proceed. Ms Ivey said she reiterated that the defendant would not incur further costs until its outstanding accounts were paid.
36 Mr Colin Pallas says that at the meeting of 21 October 2005 he told Ms Ivey that the level of fees was unaffordable for the first plaintiff and he would need to discuss whether it was worthwhile to continue with the matter at all due to the level of fees being charged by the defendant.
37 On 27 October 2005 a further amount of $29,094.74 was received from the first plaintiff. At that stage an amount of $50,087.91 plus disbursements was owing on the defendant's outstanding accounts. The sum of $26,817.74 was credited to the accounts rendered by the defendant and the balance was paid toward agent's fees in New South Wales.
38 The defendant rendered further accounts in October, November and December 2005. Despite various requests for payment, no further payments were received by the defendant and the executed retainer agreement was not returned.
39 On 2 December 2005, Mr Kevin Pallas wrote by e-mail to the defendant saying that the first plaintiff had arranged a meeting with Nuplex to take place on 12 December 2005 and it was content that the defendant "remain in a 'downed-tools' situation".
40 On 12 December 2005, Mr Stewart of the defendant telephoned the first plaintiff and spoke to Mr Colin Pallas regarding the defendant's outstanding accounts and the retainer agreement. Mr Pallas said he was looking into it and would call Mr Stewart back before 9.30 am the following day. He did not do so.
41 Mr Stewart wrote by e-mail on 19 December 2005 to Mr Colin Pallas saying that he [Mr Stewart] regretted he had been unable to capture Mr Pallas's attention or convey with sufficient clarity the level of his apprehension. Mr Stewart went on to say that he had "now exhausted every appropriate attempt to settle matters commercially."
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42 On 21 December 2005, Mr Colin Pallas responded by e-mail to the defendant in which he described the settlement discussions in which the plaintiffs had been involved direct with Nuplex and its solicitors. Mr Colin Pallas said that he had learned in the course of those negotiations that the total fees charged by the defendant greatly exceeded the fees charged to Nuplex by their solicitors. He said the amount of the defendant's fees were a significant factor in the ongoing settlement negotiations. After referring to the state of those negotiations, Mr Colin Pallas went on to say:
"In the interim we will need to have your costs 'taxed' to evaluate the likely outcome of a 'with costs' settlement through litigation. This will give us a better indication of the differential in order to make a decision on our options. My proposal with regard to settlement of your account is that whilst we are in the process of attempting to find even a marginally palatable resolution including recovery of some of the legal costs that we make an interim payment of 50% of your outstanding invoices with settlement of the balance by the end of January subject to the costs being 'taxed' in order to present them to Nuplex in the revised format. … This is therefore an honest approach of accommodating both of our circumstances in the short term. I trust you will respond accordingly."
43 The Christmas break then intervened and there the matter apparently rested until, on 30 January 2006, Ms Ivey received a telephone call from Messrs Colin and Kevin Pallas, on behalf of the first plaintiff, who informed her that the negotiations with Nuplex had broken down and that the defendant should continue to prepare for a hearing of the objection to the jurisdiction of the New South Wales District Court. Ms Ivey said Messrs Colin and Kevin Pallas indicated that Mr Colin Pallas would contact Mr Stewart in relation to the outstanding costs. They said that the delay in payment was nothing personal but simply involved the company's inability to pay large legal costs. They also asked that a meeting be arranged after a directions hearing listed in the New South Wales District Court on 3 February 2006, to discuss the future approach to be taken to the litigation and future costs.
44 Ms Ivey says that the defendant commenced preparation for the hearing despite the outstanding costs.
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45 The defendant wrote to the first plaintiff on 3 February 2006 informing it that the hearing of the application for a stay of proceedings was set down for 24 March 2006 in the New South Wales District Court.
46 On 16 February 2006, Ms Ivey wrote to the first plaintiff outlining the work that needed to be done to prepare for the hearing of the application but saying that that work could not be commenced until some arrangement had been made in relation to the outstanding costs and the executed retainer agreement returned.
47 On 20 February 2006, Ms Ivey sent to the first plaintiff copies of the affidavits served by Nuplex in the New South Wales action and reminded the first plaintiff of the contents of her earlier e-mail. On 27 February 2006, Ms Ivey forwarded a further affidavit filed by Nuplex and again reminded the first plaintiff of the contents of her earlier e-mail.
48 There appears to have been no response to that e-mail correspondence until, on 3 March 2006, Mr Colin Pallas telephoned Mr Stewart and told him that he wanted to reach an agreement so that the defendant would continue to act for the first plaintiff. An agreement was reached, among other things, that the first plaintiff would pay some of the outstanding accounts by an immediate payment of $15,000 and the balance by five equal monthly instalments.
49 The first payment was not in fact made until 9 March 2006 and the first weekly instalment was not made on the due date.
50 On 15 March 2006, the defendant, by Mr Stewart, wrote to the first plaintiff noting that the payment had not been made and asking if there was any reason why the defendant should not cease to act. Mr Colin Pallas replied by e-mail on 16 March 2006, saying, among other things, that "there is not much [in Mr Stewart's e-mail] for [Mr Pallas] to argue about." He went on to explain the financial problems the first plaintiff was encountering in paying the defendant's accounts and said that a part-payment had now been made. Mr Pallas said the first plaintiff would "continue to reduce the balance as & [sic] when the funds are available in the shortest possible cycle", but that the first plaintiff could only pay to the extent its reasonable cash flow allowed.
51 The second weekly payment was received on 21 March 2006, some seven days late. On 22 March 2006, the defendant wrote to the first plaintiff saying that it would not act further in light of the first plaintiff's failure to pay the instalments on time and to return the executed retainer agreement.
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52 On 23 March 2006, a meeting took place at the first plaintiff's offices, attended by Ms Ivey and Mr Stewart on behalf of the defendant and Messrs Kevin and Colin Pallas on behalf of the first plaintiff. At the meeting, a retainer agreement in the form of a letter from the defendant to Mr Colin Pallas was executed. The letter recited that Mr Colin Pallas had requested the defendant to continue to act on the first plaintiff's behalf and the letter set out the terms upon which the defendant had acted, and would continue to act, for the first plaintiff. The retainer agreement was otherwise in the same terms as the earlier retainer agreement. The estimate of the range of costs and disbursements likely to be incurred by the first plaintiff were expressed as being as discussed in conference on 23 March 2006.
53 In an affidavit of 26 October 2006 filed in support of the application for an extension of time, Mr Colin Pallas says he signed the retainer agreement only because he was told by the defendant's representatives that unless he did the first plaintiff would not be represented at the hearing in the New South Wales District Court the following day.
54 Ms Ivey says that Mr Colin Pallas was told that all endeavours would be made to protect the position of the first plaintiff at that hearing but the defendant could not continue to act while its accounts continued to remain outstanding.
55 Agreement was also reached at the meeting on 23 March 2006 as to the payment of the defendant's outstanding accounts and the accounts rendered up to that time were subsequently paid. The defendant's accounts for work after that date have not been paid.
56 There is, however, a conflict in the evidence as to what was said about costs at the meeting on 23 March 2006. Ms Ivey says that Mr Colin Pallas said that the defendant's costs were reasonable for the work done and offered a number of commercial reasons why the first plaintiff had been unable to pay the outstanding accounts.
57 On the other hand, in his affidavit of 26 October 2006, Mr Colin Pallas says that at the meeting he indicated to Mr Stewart that the defendant's level of fees was "completely unacceptable" to him and the first plaintiff. Mr Pallas says that he had previously said this in telephone and e-mail correspondence to Mr Stewart and Ms Ivey. He gives, however, no details of those previous occasions.
58 The defendant's retainer was terminated by the first plaintiff on 10 May 2006.
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59 On 11 May 2006, the plaintiffs' new solicitors, Cullen Babbington Hughes, wrote to the defendant requesting itemisation of all the accounts rendered by the defendant to the first plaintiff. The defendant initially expressed reluctance to provide itemised accounts in respect of accounts that had already been paid but, by letter dated 12 May 2006, provided an itemisation of its earlier accounts.
60 On 23 May 2006, Cullen Babbington Hughes wrote to the defendant saying, among other things, that they had sought advice on the costs charged by the defendant and once they had that advice it was likely that they would be instructed to request the defendant to tax its costs.
61 On 9 June 2006, Cullen Babbington Hughes wrote to the defendant requesting that it submit all of its accounts for taxation. Cullen Babbington Hughes contended that the 30-day time limit for taxation only began to run from the time itemised bills of costs were received. The itemised bills of costs had only been received on 12 May 2006, with the result that the time did not expire until 11 June 2006. Cullen Babbington Hughes also contended that it was irrelevant that itemisation of earlier accounts had been provided as the itemisations were not in respect of a final account. A final account could only be rendered when the contract between the solicitor and the client had been completed.
62 The defendant replied that the letter of 9 June 2006 was the first request it had received that its costs be taxed and that no itemisation of any accounts, apart from those provided on 16 September 2005, had previously been requested. The defendant said that, with the exception of the account it rendered in April 2006, it was now too late for the plaintiffs to require taxation of the costs.
63 Cullen Babbington Hughes, on behalf of the plaintiffs, wrote to the Acting Principal Registrar of this Court on 10 July 2006 requesting an extension of time for the taxation of the defendant's bills of costs.
64 In an affidavit dated 9 August 2006 and filed in support of the application, Mr Colin Pallas says that he did not read or observe "for some time" the statement on the defendant's accounts that the first plaintiff had 30 days in which to request taxation of the costs. He says that was because the accounts were processed by an employee of the first plaintiff. He only became aware of the escalating legal costs in "late 2005."
65 Mr Pallas says that when the defendant did not respond to his request in December 2005 to tax its costs he was unsure how to proceed and how to compel the defendant to do so. Mr Pallas says he felt under pressure to
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- sign the retainer agreement on 23 March 2006 because of the threat by the defendant to withdraw its services. He says he was "unsure of [his] rights and not in a position to best enforce [his] rights as regarding [his] ability to tax the invoices at the relevant time."
66 In his affidavit, Mr Pallas says the defendant has charged him and the first plaintiff a total amount in excess of $160,000. He says he has been advised by Mr Garnsworthy of counsel that the defendant's fees are significantly higher than is reasonable and that at taxation the bills may be reduced to between $30,000 and $60,000.
67 In his affidavit dated 26 October 2006, Mr Pallas says that the first plaintiff's failure to make timely payment of the defendant's accounts was "in summary, that the plaintiffs were very unhappy with the level of fees being charged by [the defendant]." He denies the defendant's allegations that the first plaintiff was difficult to obtain instructions from, saying that responses were given "as soon as we could, given our other work pressures."
68 Mr Pallas says that he disputed the defendant's accounts sent on 16 September 2005, but he does not say when or in what manner he did so.
69 According to Mr Pallas, he came to the agreement with the defendant on 3 March 2006 regarding payment of the defendant's outstanding fees under duress because Mr Stewart told him that the first plaintiff would not be represented at a hearing in New South Wales on 3 March 2006 unless the payments were made.
The application for an extension of time
70 The application for an extension of time was heard by a Registrar of this Court on 5 December 2006.
71 In their submissions in support of the application, the plaintiffs' solicitors argued that, although an applicant may be seen as seeking an indulgence in requesting extra time, a practitioner should be seen to be willing to subject his account to taxation even when that request is made out of time. Counsel referred to Retail Equity Pty Ltd v Murie and Edward, unreported; SCt of WA (White J); Library No 940163; 31 March 1994.
72 It was argued on behalf of the plaintiffs that there was a real and substantial argument that the costs rendered by the defendant were
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- excessive. It was submitted that the plaintiffs' delay was not excessive. It was the result of the pressures of running a business employing 50 people. If the time was not extended, the plaintiffs would have to meet costs which were excessive and unreasonable. On the other hand, there was no prejudice suffered by the defendant, apart from the prospect that its bills might be reduced.
73 On behalf of the defendant it was argued that, throughout, the first plaintiff had failed to make timely payments to the defendant and although the defendant had reduced its bills significantly on a number of occasions, the plaintiffs had still paid only two-thirds of the amounts billed by the defendant and only one-third of the disbursements incurred by the defendant for its New South Wales agents. Prior to June 2006, the first plaintiff had only requested an itemisation of three accounts and that itemisation had been provided in September 2005.
74 It was submitted that the plaintiffs were not unsophisticated parties and had been informed of their rights to require itemisation and taxation of the defendant's costs by the letter which constituted the first retainer agreement. In the circumstances, there was no adequate explanation for the plaintiffs' delay in seeking itemisation or taxation. In any event, the delay was manifestly excessive. It was also submitted that there was no evidence that the amount of the costs was excessive.
75 It was further submitted on behalf of the defendant that the conduct of the parties was relevant to the enlargement of time sought. The plaintiffs had failed to make timely, or (in part) any, payments to the defendant, despite continuing to instruct the defendant and making promises to pay outstanding costs, and the first plaintiff had failed to execute the retainer agreement. By way of contrast, the defendant had continued to act for the plaintiffs despite the continuing failure of the plaintiffs to make payments in a timely manner. The defendant had also incurred substantial costs in pursuing the payment of the accounts and the execution of the retainer agreement. The defendant had not charged interest for late payments. It had also been left with a substantial liability to its New South Wales agents.
76 It was submitted that it would now be a considerable task for the defendant to prepare the bills for taxation, in circumstances where the plaintiffs had had ample time to indicate dissatisfaction with the accounts but had failed to do so.
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The decision on the application
77 The learned Registrar dismissed the application for an extension of time and, although he did not provide written reasons for decision, his reasons, I think, sufficiently emerge from the transcript of the hearing.
78 The learned Registrar found that the plaintiffs had not provided a satisfactory explanation for the delay. He considered it was not sufficient for the plaintiffs to say that Mr Colin Pallas was not aware of the notices indorsed on the defendant's various accounts as to the time limits for a request to tax the costs. The e-mail of 21 December 2005 was also not sufficient to constitute a request for taxation of the bills rendered to that date.
79 The learned Registrar also considered that where accounts are paid, the client must show special circumstances in order to resile from the implicit admission as to its liability for, and the reasonableness of, those accounts. No special circumstances had been shown.
80 The learned Registrar found that the plaintiffs' request, by the letter from their solicitors dated 9 June 2006, to tax the defendant's costs was out of time in respect of accounts rendered before the account dated 30 April 2006. In relation to earlier accounts, the plaintiffs had failed to discharge the onus on them to establish why payment of the accounts was not an admission of the reasonableness of the accounts and the first plaintiff's liability for them.
81 It was also found by the learned Registrar that each of the monthly accounts rendered by the defendant was a final account to which the time limit for a request for taxation of costs applied. No request for taxation of the accounts had been made within the time limit because of practices within the first plaintiff.
82 The learned Registrar held that the plaintiffs had not discharged their onus of satisfying him that the time period should be extended.
83 It is against that decision that the plaintiffs appeal.
The merits of the appeal
The plaintiffs' submissions
84 It was submitted on behalf of the plaintiffs that the learned Registrar had wrongly failed to apply the principles applicable to an application for an extension of time to tax a bill of costs, as set out by Franklyn J in Webb
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- v Bateman (supra), namely, the reasons for the delay, whether there are valid reasons for believing that a refusal to enlarge time might result in injustice to the client, whether there is evidence that the bill might be excessive, the nature and degree of prejudice to the practitioner, and the practitioner's reasons for opposing the enlargement.
85 Counsel argued that the learned Registrar's decision to refuse the enlargement of time failed to protect the plaintiffs against excessive charges in circumstances where it was evident that the charges were excessive. It was also argued that the learned Registrar failed to take into account the plaintiffs' reasons for the delay, and should have found that the delay was not, in the circumstances, unreasonable. In particular, the plaintiffs had asked the defendant to tax its costs on 21 December 2005 and the defendant had failed to act on that.
86 The plaintiffs had also repeatedly told the defendant that the costs were unreasonable but they had felt obliged to continue with the defendant's services until the matters being handled by the defendant were at an appropriate stage. Once that stage was reached, the plaintiffs immediately instructed new solicitors who asked the defendant to tax its costs.
87 Counsel further submitted that the learned Registrar erred in failing to find that the plaintiffs would suffer an injustice if time were not enlarged. The costs charged by the defendant were entirely disproportionate to the amount in issue and the plaintiffs were unaware of the total costs incurred because the accounts were paid automatically by an employee of the first plaintiff without coming to the attention of the directors.
88 It was argued that the learned Registrar erred in accepting the defendant's argument that there was no evidence establishing that the charges were excessive. The test is not whether the charges are excessive, but whether it appears they might be excessive. Counsel submitted that, prima facie, the costs incurred for the work done appeared to be excessive.
89 It was further submitted that the learned Registrar erred first, in finding that the clients had admitted the reasonableness of the accounts by paying them, and secondly, in concluding that where an account is paid the client must prove that there are special circumstances before time for taxation of the costs will be extended.
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90 It was also argued that the learned Registrar erred in not having regard to his own earlier ex tempore ruling in the matter of Q Legal that accounts rendered by a practitioner will not be regarded as final accounts unless the client has been warned that by signing the costs agreement the client waives the right to have the costs taxed at the end of the retainer. There was no such clause in the costs agreement.
91 Counsel argued that the plaintiffs would suffer injustice if the time were not enlarged in circumstances where there had not been inordinate delay on their part.
The defendant's submissions
92 It was submitted on behalf of the defendant that the learned Registrar correctly found that there was no proper explanation for the delay in seeking taxation of the costs. It was not sufficient for Mr Colin Pallas to say he was not aware of the accounts. The notices on the accounts were clear and by the letter containing the first retainer agreement the first plaintiff was put on notice of its entitlements to require an itemised account and taxation of the costs charged.
93 Counsel argued that the learned Registrar had correctly found that under the costs agreement monthly accounts were treated as final accounts to which the provisions relating to taxation applied, and that those bills were not taxed simply because of business practices within the first plaintiff.
94 It was further submitted that the learned Registrar correctly followed the principles set out in Lawecki v Marcel Kalfus & Co (1985) 10 Fam LR 464, that where an account is paid, the client must establish there are special circumstances before the discretion to extend time can be exercised. That applied with particular force in this case where not only was there payment of accounts by the plaintiffs, but Mr Colin Pallas had executed a costs agreement after ten of the twelve accounts in question had already been rendered.
95 It was argued that the e-mail of 21 December 2005 from the defendant was not sufficient to constitute a request for taxation of the costs. In any event, it had to be read in the context of the subsequent e-mail of 16 March 2006 in which Mr Colin Pallas said there was not much for him to argue about in relation to the costs, but that the first plaintiff would pay them as its reasonable cash flow allowed.
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96 Counsel for the defendant submitted that there was no evidence that the bills were excessive. It was also argued that it would now be a considerable task for the defendant to prepare the bills for taxation.
97 Counsel submitted that the learned Registrar was therefore correct in finding that the plaintiffs had failed to make out the grounds for an extension of time.
Should the appeal be allowed?
98 I might observe at the outset that I find difficulty with the proposition advanced on behalf of the plaintiffs that the learned Registrar was in error in finding that the various accounts rendered by the defendant were final accounts and that he should have found that the retainer was a whole contract, so that a final account was rendered only upon the date of the last account when all of the accounts the defendant had rendered up to that point constituted a final account.
99 If that proposition were correct, it would seem to follow that the time within which the plaintiffs were entitled to request itemised accounts and that the costs be taxed ran, at the earliest, from the defendant's account of 30 April 2006. Given that itemised accounts were requested on behalf of the plaintiffs on 11 May 2006 and provided by the defendant on 12 May 2006, and the request for taxation made on behalf of the plaintiffs on 9 June 2006, if the plaintiffs' proposition were correct it would appear that no extension of time was in fact required. If that were the case, the application for an extension of time was unnecessary and pointless.
100 I did not understand counsel for the plaintiffs to press the submission with any great enthusiasm and do not think it is necessary for me to decide whether or not the plaintiffs' proposition is correct. What is before me for determination is the present appeal. I must assume for that purpose that the application for an extension of time was necessary and has some utility.
101 On the principles to be applied on an application to enlarge time, I would respectfully adopt the views expressed by Franklyn J in Webb v Bateman (supra), namely that the proper exercise of the discretion includes consideration of the following factors:
1. the purpose of the relevant provisions of the Act is to protect a client against excessive charges by a practitioner and to enable a client to be satisfied that bills of costs are not excessive, whilst imposing time limits to prevent a client from unfairly taking
- advantage of the provisions to delay the obligation to pay proper costs, and to avoid frivolous objections;
- 2. the reasons for the delay;
3. whether there are valid reasons for believing that a refusal to enlarge time might result in injustice to the client;
4. whether there is evidence suggesting that the bill might be excessive;
5. the nature and degree of prejudice to the practitioner;
6. the practitioner's reasons for opposing the enlargement of time (if it is opposed), it being of importance that as an officer of the Court the practitioner be seen to be acting honestly, ethically and with proper motives and not acting merely to prevent taxation of the bill taking place.
102 Of course, those factors are not immutable or exhaustive and in each case it will be a question of determining what is in the interests of justice in the particular circumstances of the case.
103 In the present case, I accept that there is a long history of late payment of accounts by the first plaintiff. The assertion by Mr Colin Pallas in his affidavit of 26 October 2006 that that was because the plaintiffs were unhappy with the level of fees being charged is difficult to reconcile with the reasons offered by representatives of the first plaintiff for the delays in payment of the various accounts. On the plaintiffs' own case, the first time that any concern was voiced about the level of fees was at the meeting of 21 October 2005, by which time accounts dating back to 30 June 2005 remained unpaid. And that concern appears to have been not so much as to the reasonableness of the costs, but rather the first plaintiff's capacity to meet them. It also appears that the concern Mr Pallas says he expressed on that occasion was not followed up by the first plaintiff.
104 If there was genuine concern about the reasonableness of the defendant's fees, it might be expected to have emerged in the correspondence between the first plaintiff's officers and the defendant. In fact, the only mention in the correspondence in the nature of concern about the level of fees appears to be in the e-mail of 21 December 2005, in the context of the settlement negotiations with Nuplex. Although the question of taxation of the costs was raised in that e-mail, that, it appears, was in the context of the settlement negotiations then underway between the first plaintiff and Nuplex. Those negotiations broke down shortly
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- afterwards and the subject of taxation of the defendant's accounts was not mentioned again until after the termination of the defendant's retainer in May 2006. Rather, in the meantime, promises continued to be made on behalf of the first plaintiff that the outstanding accounts would be paid.
105 Although Mr Pallas contends that the agreement of 2 March 2006, regarding payment of the defendant's outstanding accounts, was made under duress, because of the hearing listed for the following day, no such complaint was made in his subsequent e-mail of 16 March 2006, in which Mr Pallas says there is "not much for [Mr Pallas] to argue about" in Mr Stewart's e-mail complaining that the due payment had not been made. Mr Pallas also promised in that e-mail to reduce the outstanding balance when funds are available "in the shortest possible cycle", subject to the first plaintiff's cash flow. Nor does such a complaint appear to have been made at any other time prior to the filing of Mr Pallas's affidavit in support of the application for an extension of time.
106 I do not consider it is sufficient for the plaintiffs to proffer as the reason for the delay in seeking taxation that Mr Colin Pallas "did not read or did not observe" the 30-day notices indorsed on the accounts "for some time".
107 Mr Colin Pallas is the chief executive officer of the first plaintiff, which operates a commercial enterprise employing some 50 people. Neither Mr Pallas nor the first plaintiff can be regarded as a commercially unsophisticated client. In addition to the retainer letter sent in June 2005, each account contained a notice which set out the first plaintiff's entitlements to an itemised account and to tax the bill of costs. Even if Mr Pallas did not read the letter or any of the accounts, it is almost inconceivable that no-one else on behalf of the first plaintiff read them. In any event, the notices were there to be read and it would not be a satisfactory explanation that no-one on behalf of the first plaintiff took the trouble to read them.
108 Moreover, it would appear from the reference to taxation of costs in his e-mail of 21 December 2005 that, at least by that time, Mr Pallas was aware of the first plaintiff's entitlement to an itemised account and to tax the costs. The subject of taxation of costs was not raised again, however, until May 2006, after the termination of the defendant's retainer.
109 It was common ground that the majority of the accounts which it is now sought to tax were eventually paid. In that context it was submitted on behalf of the defendant, and accepted by the learned Registrar, that
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- where a client has paid an account, special circumstances must be shown before an extension of time will be granted to allow the client to require taxation of the account.
110 That principle was based on the decision of the Full Court of the Family Court in Lawecki v Marcel Kalfus & Co (supra) at 470 - 471. In that case, it was not in issue before the Full Court that such a principle applied. The Court endorsed it as a sound principle, observing that payment, without demur, of an account (whether of a solicitor or anyone else) is ordinarily treated as tantamount to an admission of liability and of the reasonableness of the account. Absent special circumstances, there was no reason why a client should be permitted to resile from that tantamount admission.
111 With respect, I am unable to agree that the exercise of the discretion is subject to such a principle. The discretion is at large and, in my view, cannot be fettered in that way. What weight (if any) is to be given to the fact that payment of the account in question was made without demur must depend upon the particular circumstances of the case.
112 In this case, I do not consider that the fact that the majority of the accounts have been paid is a factor weighing against the plaintiffs.
113 While the question of prejudice to the practitioner is a factor to be considered on an application of this nature, in my view it would be a mistake to approach such an application on the basis that it should be allowed as a matter of course unless the practitioner can show that substantial prejudice will be caused by an extension of time. It must not be forgotten that the Act specifically imposes time limits, and relatively short time limits, to ensure that if a taxation of costs is to be called for by the client, it is called for promptly. It is not the case that the statutory time limits are simply to be ignored unless the practitioner can show prejudice. The time limits are intended to be adhered to and after their expiration a practitioner is normally entitled to proceed on the basis that a taxation of costs will not be called for. The onus is on an applicant to show that it is in the interests of justice that the time limit should be extended. Whether or not such an extension would cause prejudice to the practitioner is only one of the factors which fall for consideration in determining what, in all the circumstances, is in the interests of justice.
114 The delay by the plaintiffs in this case is significant, particularly when regard is had to the time limits specified in the Act. The plaintiffs seek an extension of time to enable them to have taxed accounts rendered
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- on a monthly basis from 30 June 2005. The defendant was not requested to tax its costs until 9 June 2006 and the application for an extension of time was not filed until 12 July 2006.
115 I am satisfied from the material in evidence that the work involved on the part of the defendant in the taxation of the costs would be considerable. As I have said, the Act contemplates that any taxation of costs will be called for by the client promptly, when matters will still be reasonably fresh in the minds of all those involved. There can be no doubt that the work involved in connection with the taxation of bills of costs of the present nature will tend to become more difficult and time-consuming, and therefore costly, as time goes on and recollections of the relevant events start to fade. In that respect there is prejudice of a general nature inherent in any substantial delay. In this case, at least in relation to some of the accounts, there has been substantial delay.
116 On the question of prejudice to the plaintiffs if the time is not extended, an important consideration is whether it appears the amount of the accounts might be excessive. In my view, the plaintiffs have not demonstrated that. Although it appears they have obtained advice from Mr Garnsworthy of counsel, no evidence of Mr Garnsworthy nor relevant evidence in any other form has been sought to be tendered. In his affidavit of 9 August 2006, Mr Colin Pallas simply says that the plaintiffs have received advice from Mr Garnsworthy that the defendant's fees are excessive, and even in respect of that assertion there is no indication of the materials made available to Mr Garnsworthy or of the basis upon which Mr Garnsworthy expressed that opinion. Although Mr Garnsworthy appeared as counsel for the plaintiffs on this appeal, he quite properly resisted any temptation to try to give evidence from the Bar table.
117 In the course of argument, counsel for the plaintiffs referred me to some items in the accounts which he submitted were examples that suggested the defendant's accounts might be excessive. In my view, however, those items do not appear self-evidently to be excessive and I do not consider that those examples provide a proper basis upon which I could conclude that the amount of the costs charged by the defendant might be excessive. Nor does simply the total amount of the accounts, which is clearly substantial, enable any conclusion to be drawn as to whether the amount charged might be excessive.
118 That is not, of course, to suggest that on an application of this nature the Court should embark on something in the nature of a taxation of the costs in question. But sufficient must be put forward by an applicant to
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- show that the costs might be excessive. I do not consider that the plaintiffs have done so in this case.
Conclusion
119 Having regard to all of the circumstances, I am not satisfied that the plaintiffs have made out the grounds for an extension of time. In particular, I do not consider that the delay by the plaintiffs in requesting that the costs be taxed has been satisfactorily explained and I do not consider it has been shown that the costs might be excessive. In the circumstances, I do not consider that it is in the interests of justice that the time be extended.
120 I would therefore dismiss the appeal.
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