Pamplin and F Firm Pty Ltd

[2010] FamCA 647

FAMILY COURT OF AUSTRALIA

PAMPLIN & F FIRM PTY LTD [2010] FamCA 647

FAMILY LAW – COSTS – Extension of time to request itemised bill

APPLICANT: Ms Pamplin

RESPONDENT: F Firm Pty Limited

FILE NUMBER: SYF 3838 of 2006

DATE DELIVERED: 28 July 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATE: 7 June 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Aitkins Lawyers

COUNSEL FOR THE RESPONDENT: Mr Johnston

SOLICITOR FOR THE RESPONDENT: F Firm Pty Limited

Orders

1. That the time by which the wife shall be entitled to file and serve a written request pursuant to Rule 6.21 of Schedule 6 to the Family Court Rules to F Firm Pty Limited to provide an itemised costs account in relation to all costs and out of pocket expenses that firm had charged the wife other than those the subject of accounts dated 1 and 10 February 2009 is hereby extended for 28 days from the date of these orders.

2. That costs are reserved.

IT IS NOTED that publication of this judgment under the pseudonym Pamplin & F Firm is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3838 of 2006

MS PAMPLIN

Applicant

And

F FIRM PTY LIMITED

Respondent

REASONS FOR JUDGMENT

1. The applicant wife seeks to be able to challenge the costs charged by solicitors, F Firm Pty Limited (F Firm), who acted for her in Family Law proceedings against her husband from early 2007 to early 2009.  The proceedings were mainly for property settlement pursuant to s 79, but originally there were also issues involving children and child support.  The wife has paid F Firm $232,353.37 and the matter has not yet been concluded.  She alleges that F Firm have both over-serviced and overcharged her.  I am not in a position to decide whether this claim is justified.  That is a matter which is not relevant to these proceedings which are limited to whether the wife should be let in to challenge the costs despite her failure to do so within the time limits required by the rules.

2. The wife’s case for extending the time limits which she did not meet is based on two fundamental allegations. One is that she did not know her rights to challenge costs and the obligations attached to those rights at any relevant time because the solicitors failed to provider her with a costs notice, either when she engaged them or at all. The other is that, because the solicitors failed to provider her with accounts which are itemised as required by the rules she could not fully appreciate that she was being overcharged when she received the accounts.

3. The wife engaged F Firm on 10 January 2007 and terminated their retainer on 9 February 2009.  F Firm was not the first or last firm of solicitors to act for the wife in the proceedings in this Court against her husband.  Mr Bill Karras, a well known and highly respected solicitor had acted for her until she changed to F Firm.  On ending F Firm’s retainer, the current solicitors have acted for her.  One is left to wonder about the veracity of her claimed ignorance if Mr Karras provided her with a copy of the appropriate costs notice.  The wife’s current solicitors commenced acting for her on 9 February 2009. 

4. On 25 February 2009 they wrote to F Firm specifically requesting itemised costs accounts for the two most recent costs invoices from F Firm; those dated 1 and 10 February 2009, and also requesting itemised costs accounts “for all previous tax invoices from” F Firm.  As the third most recent invoice was sent by F Firm to the wife on 1 January 2009, the wife is out of time to request itemised accounts, if the accounts sent are insufficiently itemised, for all but the February 2009 invoices, with one possible exception, that dated 1 February 2007 which she says she did not receive.  This invoice is for $11 521.84.  It is partly included in the $232 353.37 which she says she paid F Firm.  The invoice for March 2007 indicates that of the $11 521.84, $3521.84 is included as still due, so $8000.00 must already have been paid by the wife, making the amount she has paid $240 353.37.  Although this is a huge amount for costs, especially as the wife has incurred further costs to her solicitors, I have not come to any conclusion on whether such expense is justified.  This Court is very familiar with cases where costs at this and higher levels are justified as it is with cases where such levels of costs are charged but not justified.

5. In acting for the wife, F Firm worked to investigate and advance her claims.  As early as 25 July 2007, the solicitors at F Firm commenced to draft an application to the Family Court of Australia for appointment of a forensic accountant as Court Expert.  They planned to approach the Court for an order to that effect.  The significance of this will emerge in due course.  The application was listed for hearing on 29 January 2008.

6. The Family Law Rules for costs changed from 1 July 2008.  A new Chapter 19 replaced the former Chapter 19.  The new Chapter 19 applies to any fresh application, presumably for final orders or for interlocutory orders, commenced after 30 June 2008 or where the work charged for was done under a costs agreement made after that date, although the lawyer was first retained prior to 30 June 2008.  The rules which apply to costs under retainers or costs agreements entered into before the new rules came into effect are preserved for easy reference in Part 6 of Schedule 6 to the current rules.  The rules to be applied to the solicitor client costs dispute between the wife and F Firm are in important respects different for work done and agreements made before and after 30 June 2008.

7. A major difference involves disputes over solicitor client costs. Wherever a costs agreement or retainer came into effect prior to 30 June 2008, the rules now retained in Schedule 6 specifically regulate the charges for work done under them.  They create a scheme where the solicitor is able to charge properly at the rates specified in a valid costs agreement and the scale of costs specified by the rules is to apply only in default of such an agreement and provided the retainer was granted prior to 30 June 2008 whether it applies to work done before or after that date.  For cost agreements and retainers entered into after 30 June 2008, the Family Law Rules do not provide for solicitor client cost disputes.  The Family Law Rules, after 30 June 2008, are largely limited to party party costs and leave disputes between solicitor and client to be resolved by the law of the state where the retainer was entered into or the costs agreement was made.  If this is not perfectly clear from Chapter 19, the definition of “Costs agreement” in the dictionary in the rules makes this tolerably clear. An exception is that the current Chapter 19 places an obligation on lawyers to inform their clients, usually in writing, of actual costs to date whether paid or owing and of estimated future costs on the happening of specified court events.  As I have said, the first indication in the evidence before me that a court event which could result in contested court proceedings was contemplated is on 25 July 2007.  The application in contemplation was ultimately filed on 17 September 2007 and determined between the parties by orders made by a registrar on 6 March 2008. Another application was listed for hearing before a judicial registrar 17 March 2008. It was for interim costs. Orders were made after the contested hearing. These were made on 18 March 2008.

8. There is a written costs agreement between the wife and F Firm.  It is sufficient at this stage to say that it was accepted by the wife on 10 January 2007 in an email she sent to F Firm.  Clause 16 of it excepts “Court proceedings” from its cover.  It provides that in the event “it becomes a necessity for [F Firm] to appear for the wife in Court proceedings” the firm will “provide a further costs disclosure and agreement”.  It may be that “Court proceedings” means “a contested hearing” in the context of the agreement but the meaning of the term is uncertain.  The costs agreement of 10 January 2007 does not provide for any retainer and is not an agreement for any work done “in relation to a hearing” whatever that term means. 

9. Thus, for all work commenced before 1 July 2008 and not involving preparation for a hearing and charges for the hearing itself, what is now Part 6 of Schedule 6 is to be applied as though there has been a costs agreement between the wife and her solicitor.  For work related to a hearing, these rules apply both generally and to set the costs chargeable by the solicitor. For work commenced by F Firm for the wife after 30 June 2008 as a result of a fresh application made or related to a hearing after that date, NSW solicitor client costs legislation applies. 

10. The costs agreement I have before me, that of 10 January 2007, sets costs between the wife and F Firm, if it is a valid agreement, for work done by F Firm to prepare for and permit settlement of the children’s dispute, the child support departure and the property settlement dispute between the husband and wife from 10 January 2007 to 30 June 2008 and continuing without contemplation of a resort to a hearing. If the agreement is not valid for all or any of these periods, the scale of costs in Part 6 of Schedule 6, really Chapter 19 as it stood before 1 July 2008, will apply to costs disputes between F Firm and the wife.

11. Copies of the solicitors’ monthly statements of accounts and memorandum of costs from 1 March 2007 to 1 July 2008 are in evidence.  Each of these memoranda of costs detail items of work done and the date it was done. In most instances, there is no indication of the identity of the person who did the work, no indication of the time taken to do the work described in an item and no indication of the charge made or the rate applied for the item.  In fact, the memoranda do not even state the total monthly cost.  Each statement of account simply identifies the memorandum to which the account applies, the total charge for the months work and, in some instances, the GST which makes up the total charge.  Disbursements are usually described by category.  The date on which the charge was incurred is identified and the charge made plus GST is stated without any indication, for any multiple disbursement, of what the charge has been for each individual unit or what number of individual instances or units of the category is being charged for.  There is no attempt to distinguish between work done for a hearing and non-hearing work and therefore no way of knowing what charges ought properly be made under the costs agreement and which ought not.

12. Rule 6.15 of Schedule 6 allows a lawyer to make a written agreement with a client for work to be done.  It requires, by 6.15(2)(e), that such a costs agreement must be signed by the lawyer and the client.  On 9 January 2007, F Firm sent a letter to the wife which is signed by Mr F the principal of F Firm which enclosed “Terms of Engagement” which purports to be the terms of the costs agreement. The agreement was accepted by the wife, and therefore made by an email which she sent to Mr VA, the employed solicitor at F Firm who was to have the essential conduct of the wife’s case. The email was expressed to be a confirmation of her “agreement with” the “costs disclosure and agreement” outlined in the letter of 9 January 2007.  The Terms of Engagement are signed by Mr F.  The wife did not sign the Terms of Engagement or her email.  Nor did she sign an acknowledgement appended to the letter about signing the Terms of Engagement, accepting them and advising her of other matters which the rules and good sense required, including the requirements of rule 6.16 of Schedule 6 that the solicitor was required to give her, and had given her, a Costs Notice.

13. The failure to sign a costs agreement, although a mandatory requirement under the rules referred to, and failure to provide a costs notice are not fatal to the enforceability of a costs agreement governed by Schedule 6.  This is not only due to Rule 1.12 of the Rules of Court, it is also implicit as a result of 6.18 of Schedule 6 which allows a court with jurisdiction to set aside a costs agreement which does not comply with Part 6.4 of the Schedule, and in particular sub-clauses 6.15(2) and clause 6.16. A relevantly defective agreement would have to be extant to be set aside by the Court, so there seems to be little doubt that an agreement will continue to bind the solicitor and client if it does not so comply unless it is set aside. Here there has been no application to set the agreement aside.

14. Part 6.6 of Schedule 6 is an attempt to create a code for dealing with disputes or potential disputes between a solicitor and his client.  6.21 entitles the client, on receiving a bill from a solicitor which the client wishes to dispute or is considering disputing, to demand an itemised bill of costs provided the demand is made within 28 days of receipt of the bill.

15. By 6.23 certain matters must be included in a bill of costs for it to be regarded as properly itemised.  Each item must be allocated a number and must be described with sufficient detail to enable a costs assessor to tax it.  The requirement of numbering is mainly for the convenience of the costs assessor or for identification in the event that there is a taxation dispute.  The absence of numbering could not cause any significant inconvenience or harm to a client.  This rule, by sub-rule (3), prescribes the format of the account and certain information it must contain. The date when the work itemised was done, the amount charged and amount payable for each individual item, as well as a description of that item which includes the status within the lawyers office of the person who did the work encompassed by the item must be stated for each item.  Where what is claimed are out of pocket expenses or the like, the date and amount of each item of cost together with a description of the nature of the expense and the name of the person to whom the out of pocket expense was paid is to be stated.

16. By 6.22, a lawyer who is served within time with a request for an itemised bill of costs must provide a bill within 28 days of receipt of the request.  By 6.24 a client who has been served with an itemised bill may dispute it by serving a Notice Disputing Itemised Costs Account within 28 days of service upon the client.  Of course, the rules permit that where there is sufficient justification, times for taking each step can be extended. Dispensation from strict compliance with the rules for the content of a properly itemised bill in a proper case is also available under the rules.

17. The bills which were sent to the wife for work done and dated between 1 March 2007 and 1 July 2008 inclusive fail in many respects to rise to the standard required by Schedule 6.  The items are not sufficiently detailed to allow a distinction to be made between charges for work not involving a hearing and charges which are not covered by the costs agreement because they are for preparation for a hearing or for appearance at one.  They do not identify what the status of and charge is for the person who worked on an item, nor the time charged for, nor the amount payable per item.  The bills are simply impossible to tax by reliance on them even if relatively obvious obtainable information which the wife should have known about when she received them is resorted to. I find that none of these bills; the memoranda of costs with the accompanying accounts, amount to properly itemised costs accounts.

18. Thus the question which follows is whether or not time should be extended so the wife can effectively request properly itemised accounts.  This question must be considered in the context of the wife’s claim of ignorance.  After all, the rules are essentially concerned with balancing fairness with the need to ensure litigation progresses in a reasonable and proper manner.  If ignorance which has resulted in the wife’s failure to ensure her rights is caused or sufficiently caused by the solicitor’s failure to take the specific steps required by the law, including by the Rules, there would have to be extremely strong counterbalancing reasons for refusing to extend time to do what she did not know she could and should do.

19. The wife’s case is that she was ignorant of her rights because, when she first engaged F Firm, she was not supplied with a costs notice, the very requirement which the rules impose to ensure people are or should be aware of their rights.  F Firm says she received the costs notice at the appropriate time in the appropriate manner.

20. Originally the wife swore in her affidavit of 29 May 2009 that she did not remember having been “provided with” a client services agreement; that is, a costs agreement, by F Firm.  It was obviously going to be her argument at that time that because of this, she need not pay costs except as taxed under the default scale in the Rules.  She stated that she held no copy of the costs agreement and that when she obtained her file from F Firm it also had no costs agreement in it.  She relied on the inference from these defects to base a case that there was no costs agreement. This is likely to have been a disingenuous argument by the wife who is unlikely to have forgotten the existence of the costs agreement. 

21. In response to this affidavit, Mr ME, a senior associate and solicitor at F Firm, not only said she received one, he annexed a copy of the costs agreement and the letter by which it was sent to the wife, both of which are signed by Mr F and dated 9 January 2007. He also annexed an email from the wife sent on 10 January 2007 acknowledging receipt of the letter and accepting the agreement. In this acceptance she used the same phrase F Firm used for the subject reference in its letter, “costs disclosure and agreement”, for her subject reference in the email she sent F Firm. It is highly probable that the wife received the costs agreement and accepted it, thereby creating a retainer under the agreement.

22. In her 29 May 2009 affidavit, the wife was clear and unambiguous about receipt of the costs disclosure pamphlet. She said she had not received it. Mr ME, in his affidavit, does not say, because he cannot say, that the wife received a costs notice.  However, what he said is intended to base the submission that it is more probable than not that she did.  Although he probably had a supervisory role over the work F Firm did for the wife, it was Mr VA, an employed and more junior solicitor, who is likely to have been primarily responsible for doing it. He is likely to have been the solicitor dealing with the wife from the outset and is likely to be the one who could say whether he recalls including a costs notice with the costs agreement when it was sent to the wife and, if he is unable to recall, what his usual practice was in relation to providing prospective clients or clients with the notice, if he had a usual practise. 

23. I have been told by counsel for F Firm that the reason Mr VA was not called as a witness is that he is no longer in the employ of F Firm and was overseas at the time of hearing.  I was also informed, when I remarked that these two factors would not prevent reliance on an affidavit by Mr VA, that he had been overseas for some time.  It was not suggested that unsuccessful attempts had been made to contact him or that there was no attempt because there was no known and reasonable method of doing so. 

24. As these proceedings were commenced more than one year ago and it is natural that F Firm rather than the wife should call him and I am not satisfied that I have been provided with a reasonable and satisfactory excuse for not calling him as a witness by filing an affidavit from him,  Jones v Dunkel (1959) 101 CLR 298 applies to create the inference that Mr VA;s evidence would not have assisted F Firm if he had given evidence, and that Mr VA did not enclose the costs notice or cannot recall doing so and did not have a practice from which it could be deduced that in all probability the costs notice was sent with the letter and costs agreement on 9 January 2007.

1. Mr F, although he signed the letter of 9 January as well as the Costs Agreement enclosed with the letter, did not swear an affidavit in these proceedings.  He is F Firm’s principal. It was not suggested there was any excuse for his failure to give evidence which, in the usual course of events, would be expected to be given by him or on his behalf if he had relevant knowledge of the inclusion of the costs notice. The Jones v Dunkel inference, of the same nature as that which is derived from the failure of Mr VA to give evidence, is the consequence of the failure of Mr F to give evidence.

2. The letter from F Firm of 9 January is, as I have said, on the topic described as “Family Law Proceedings Costs Disclosure and Agreement” and refers to the “attached Terms of Engagement”.  As the costs agreement attached is headed “Terms of Engagement” the reference to “Costs Disclosure” could refer to a costs notice if one was included with the letter.  However, both the letter and the costs agreement refer to costs in sufficient details for it to be entirely reasonable for a person in receipt of the letter and Terms of Engagement to think that, by these references, the solicitors were making the costs disclosure referred to without suspecting that an intended inclusion might have been inadvertently omitted from the documents sent. Thus, the prospect that enquiries should be made about the intended inclusion would not be raised even if the wife had, on engaging Mr Karras, been given a costs notice.  The terms of the letter sent to her and the costs agreement itself, especially the tenor of these which creates a veneer of protecting the client’s rights while failing to do so in the absence of a costs notice, would tend to distract the wife from seeking further information and therefore from having notice of the extent of her rights and obligations. This is despite the letter of 9 January 2007 containing this statement:

   “Part 19.5 of the Rules fixes the costs which solicitors may charge for work done in Family Law proceedings.  The Family Court has issued a document entitled Family Court Costs Notice, the contents of which are summarised in the pamphlet attached hereto.”

   and later stating:

   “In accordance with Chapter 19 of the Rules we enclose a Costs Notice in the form approved by the Principal Registrar.  We encourage you to peruse this document.”

3. A recipient of the letter would be excused from thinking, on reading this part of it, that the Terms of Engagement summarises the contents of the Costs Notice, particularly in the light of the immediately preceding part of the letter which is:

   “That document contains a schedule of the costs that solicitors and counsel may charge for work performed after 6 December 1999.  The Rules also provide, however, that a solicitor acting for a party to proceedings may charge on a different basis than that provided by the Rules as summarised in the pamphlet attached hereto provided that the solicitor enters into a written agreement with such party in relation to the costs of the proceedings and charges such party in accordance with that agreement.”

4. This part of the letter, because the costs agreement deals with specific charge rates, sufficiently makes it seem that the costs agreement is itself the summary of the costs notice pamphlet.  Most importantly, there is nothing in the letter which informs the wife of the right to challenge the solicitor’s costs invoices and to seek a proper bill of costs and the time limitations involved.

5. I have already mentioned the addendum to the letter. It is a form of acknowledgement for the wife to sign.  If signed, it acknowledges the wife being provided with the Costs Notice pamphlet.  Not only was this not signed by the wife, the letter itself recognises the lack of necessity that the acknowledgement be given because it says of the Terms of Engagement, “Receipt of further instructions from you will signify of your acceptance” of them, thereby making the acknowledgement irrelevant to agreement, despite requesting that the wife sign it. 

6. The costs agreement itself seems to admit that the solicitors would not send a properly itemised bill of costs.  Under the heading “Your right to secure a bill of costs”, the contract provides:

   “You have the right to secure a bill of costs from us.  If we send you a lump sum bill you may request an itemised bill within 30 days of receipt of the lump sum bill.”

7. Of course, the rule, 6.21 of Schedule 6, Part 196.6 as it was when the contract was executed, provided a 28 day limitation period to request an itemised cost account.  More significantly, however, the contract gives no indication of a right to challenge a properly itemised account or the time limited to do so in the Family Court.

8. Nevertheless, the costs agreement does provide information about the wife’s right to challenge the costs of the solicitors.  Bizarrely, this is directed at challenges made in the Supreme Court of New South Wales. It is as though the situation which came into existence after 30 June 2008 was anticipated by the solicitors in the document which is signed by Mr F and dated 9 January 2007.  Included in the letter of the same date, which is also signed by Mr F, was a latterly amended version of the standard costs agreement used by the solicitors rather than the one which was used in this instance. The difficulties in regarding the costs agreement as giving the wife notice of her rights are compounded by its next paragraph which plainly asserts that the law of New South Wales, rather than federal law applies to the legal costs in the matter.  At 9 February 2007, federal law applied.

9. On service of Mr ME’s affidavit, the wife changed her stance.  She filed an affidavit sworn on 26 August 2009 in which she admitted having a copy of “the Client Service Agreement”; that is, the costs agreement but maintained her denial of receipt of any costs notice.

10. The evidence which might favour a finding that the wife had received a costs notice or was so aware of her relevant rights under the Family Law Rules, so far as they apply to the work done and charged for by F Firm, is far from sufficient to permit such a finding. I am not satisfied the wife knew her rights to request a proper itemised bills of costs on receipt of each of the accounts she received from 1 March 2007 to 1 July 2008.

11. Although the Family Law Rules changed from July 2008, they provide that the previous rules continue to apply to applications, whether final or interim, which were commenced prior to 1 July 2008 provided that there has been no new cost agreement or retainer for them on or after that date. 

12. The account or tax invoice dated 1 July 2008 which the wife received was, as usual, accompanied by a memorandum of costs. In this instance it is dated 4 July 2008. Its form and the amount of detail changed from previous memoranda. Now included for each item are the initials of the solicitor in F Firm’s office who did the work charged for, a statement of the precise amount of time charged for and of the amount charged. 

13. The costs agreement of 10 January 2007 provides a list of hourly rates for the various tasks of solicitors and others who might do legal work or quasi legal work for the wife in the conduct of Family Law proceedings against the husband.  The rates for other charges such as out of pockets for printing and telephone calls are also specified in the costs agreement.  By resort to the costs agreement and the invoices and the memoranda of costs sent on or after 4 July 2008, the wife and a taxing officer would have most of the information needed to understand how the solicitors’ charges are calculated and to tax them.  The exceptions are, however, of critical importance. 

14. An exception is the failure to indicate whether or not some of the items are to be taxed on the cost scale provided in Schedule 6. One cannot tell in many instances whether the individual items are for work done under the costs agreement or outside it; that is, for “Court Proceedings” in the context of Family Law Act disputes. One wonders if it is at all possible for any particular item to be categorised as being or not being “in relation to court proceedings”. It may be that all work done could be said to have been done “in relation to court proceedings” in this case.

15. The other exception in relation to the particularisation of individual items is the failure to provide any indication of whether or not they are for fresh applications commenced after 30 June 2008.  Items charged for before that date can be charges for the preparation of fresh applications commenced after that date. If items are not covered by the costs agreement, it may well be, depending on the circumstances, that, if these are for work done after 30 June 2008, they are under a new retainer.  Whether or not this is the case ought to be discernable from the description of the item. This is not able to be determined for any work done and charged for after that date.

16. The complaint about lack of numbering which applies to all memoranda of costs sent to the wife is nothing more than about a technical defect which could cause her no injustice. All the memoranda sent after 4 July 2008 permit the wife to understand how the charges are calculated; all obviously being calculated in accordance with the costs agreement. Because the charges may or may not be covered by the costs agreement and may or may not be covered by the Family Law rules and because one cannot say, in such circumstances, what the true situation is, the memoranda of costs and accounts sent after 30 June 2008 which are governed by the Family Law Rules are also insufficiently itemised.

17. One must consider all relevant circumstances to decide if time should be extended for the wife to seek a itemised bill of costs for such of the accounts that the Family Law Rules apply to.  The wife did not seek to challenge these accounts and obtain itemised bills for all accounts sent to her once she was no longer ignorant of her rights in relation to her solicitors’ charges to her.  The evidence before me indicates that originally she only challenged and sought itemised accounts in respect of the 1 February 2009 and 10 February 2009 invoices.  The wife’s new solicitors requested itemised bills for these on 25 February 2009, well within the time limited to do so for such items in these which come within the Family Law Rules rather than New South Wales law regulating the relationship between solicitor and client.  The wife does not need an extension of time to make the request for proper bills.  No such bills have been provided by F Firm. The only other evidence of any demand for a proper bill of costs is in the wife’s Application in a Case filed 29 May 2009.  This seeks such a bill for all invoices which have been sent to the wife. 

18. I am not satisfied that the wife became or should have become aware of her rights in any cost dispute with F Firm until not long before the letter of 25 February 2009 was sent.  The wife engaged her solicitors on 9 February 2009, and at some time between then and 25 February she must have been informed of her rights to challenge the 2 February 2009 account from F Firm.  It may not have been until later that the advice she received encompassed her rights to challenge all bills she recovered from F Firm even if she had paid them.

19. After 25 February 2009 F Firm’s first written response to the request for an itemised bill for February 2009 was on 6 April 2009.  The request was refused.  Within 2 days, the wife’s current solicitors replied to F Firm arguing the wife’s case on the February 2009 bills but also pointing out that the costs agreement does not meet the requirements of the NSW legislation or the Family Law Act, thereby implicitly asserting that costs on the Family Law scale rather than costs set by the agreement are to be charged for family law work. 

20. In the context of what was really occurring were settlement negotiations and the fact that all bills except those of 1 and 10 February 2009 have been paid in full, I am of the view that the request in effect contained in the Application in a Case filed on 29 May 2009 filed after F Firm’s failure to reply to the wife’s solicitor’s letter of 8 April, in circumstances where F Firm had not replied to the wife’s solicitor’s letter of 25 February until 6 April, was not a delay which should prevent the wife being given an extension of time to allow her to seek properly itemised bills.  As she has done so by the Application, it should only be necessary for the time for doing so to be extended to 30 May 2009 to be effective in relation to the part of the solicitor / client dispute which is covered by the Family Law Rules which were in effect until 1 July 2008 and continue to apply to any extent beyond that date. However, for more abundant caution I shall extend the time for the wife to request fully itemised bills of cost to 28 days from the publication of this judgment and making of the orders consequent upon it.

21. I have not overlooked the actual delay of the wife in making the challenge and the desirability of upholding rules which exist for an easily appreciated purpose. However, by the rules themselves, time limitations are not irrevocably fixed (see Rule 1.12). In a case like this, where it is in the public interest to ensure litigants know their rights to challenge a bill of costs and deficits in the solicitor’s practices and procedures are probably the source of the failure of the wife to know her rights or of the solicitor to be able to demonstrate that she did know them because she received the document designed to ensure she did, I should exercise my discretion to extend time.  The solicitor client cost rules are not only for the protection of clients, they are for the protection of solicitors.  They cannot achieve either end unless relatively strictly upheld, so the Court should apply them in a manner which will encourage relatively strict compliance.  Even if it is the case that the wife really knew her rights and / or received a proper costs notice at the appropriate time, the failings in the costs agreement and bill of costs are so extensive that the wife should be entitled to a proper bill in respect of any failure to seek one within the time set by the Rules.

22. I have not dealt with any dispute over work which is regulated by the law of New South Wales.  No submissions or arguments were put before me on it.  There was no mention of it.  I hold the view that the Court has inherent jurisdiction to regulate the conduct of proceedings before it, including power to make orders necessary to determine disputes between solicitors and their clients over their legal costs in Family Court proceedings, whether those costs were incurred and whether there has been a costs agreement or not. The Court can, in any event, regulate costs disputes in proceedings in the Court which are governed by state law or a mix of state and federal law because of its accrued jurisdiction.  Despite this, because there is an obvious legislative policy for allowing solicitor client costs disputes to be dealt with under state law and because I am not sufficiently familiar with the law to be applied and was not addressed on it, I should decline to deal with that aspect of the dispute. I shall leave the parties to resolve the state aspect of their dispute by using the state process for doing so.  I shall make orders which reflect the above.

I certify that the preceding fourty-six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen.

Associate:     

Date:              28 July 2010