Rohowskyj v S Tomyn & Co

[2015] VSC 511

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

S CI 2015 02879

ARGY DAVLOPOULOS ROHOWSKYJ	Plaintiff
v
S TOMYN & Co	Defendant

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JUDGE:	John Dixon J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 September 2015
DATE OF JUDGMENT:	23 September 2015
CASE MAY BE CITED AS:	Rohowskyj v S Tomyn & Co
MEDIUM NEUTRAL CITATION:	[2015] VSC 511

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COSTS – Whether just and fair to extend time to review bill – Legal Profession Act 2004, s 3.4.38(6)

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr Makowski	Arnold Thomas & Becker Solicitors
For the Defendant	S Tomyn & Co Barristers and Solicitors

HIS HONOUR:

1. The plaintiff applies for a determination that her application for costs review by the Costs Court be dealt with after the 12 month period in which an application for costs review can be made pursuant to s 3.4.38(5) of the Legal Profession Act2004 (Vic).

1. Section 3.4.38(6) of the Act provides that an application for costs review made out of time may be dealt with by the Costs Court if, relevantly, a judge of the court determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for review to be dealt with after the 12 month period.  That question was referred to the practice court judge by the Costs Court in the context of the plaintiff’s summons for taxation filed 4 June 2015.

1. I must consider three matters to resolve the application.

(a)   The period of the delay;

(b)   The reasons for the delay;  and

(c)    Whether it is just and fair to permit the application to be dealt with after the expiry of the period limited by the statute.

In the present context, the determination of what is just and fair involves three further matters ‑

(d)  Is the application for review futile since it would not be just and fair to the respondent to extend time for the costs court to deal with a futile application;  and

(e)   What is the extent of any prejudice to the respondent if the application is dealt with out of time; and

(f)     What is the just and fair balance of the right of the plaintiff to seek a review of the defendant’s legal costs and the right of the defendant to have that review conducted within the period set by the statute.[1]

[1]See generally Standford v Standford (2012) 247 CLR 108, [2012] HCA 52, The Concept DeveloperPty Ltd v Conroy & Ors [2015] VSC 464.

1. These considerations were applied in Gavriliuc & Anor v Geron.[2]  Emerton J refused to permit an application for review to be dealt with after the expiry of the 12 month period limited by the statute, because she was persuaded that –

   [2][2013] VSC 263.

(a)   The delay was significant;

(b)   The reasons for the delay were unconvincing and the applicants had acted against the advice of their costs consultant;

(c)    The applicants had ample opportunity in another tribunal (VCAT) to ventilate their complaints about the quantum of costs;

(d)  The respondent would suffer the prejudice of having to meet the same challenge to his costs a second time and suffer the further delay that would be involved in a taxation.

1. Emerton J again considered an application to extend time under the section in Tomasevic v Nowicki Carbone.[3] Her Honour approved of a statement in a leading textbook on the law of costs[4] that the considerations that may influence the Court in the exercise of its discretion to enlarge time are:

   [3] [2015] VSC 302.

   [4]G.E. Dal Pont, Law of Costs, 3^rd Edition, LexisNexis Butterworths, Australia, 2103.

(a)   The length of the delay, attached to which is the nature and degree of prejudice to the lawyer in allowing time to be enlarged, compared to the prejudice to the client in denying the application to extend time;

(b)   The reasons for the delay, specifically whether it is properly explicable;

(c)    Whether the client was aware of the right to seek costs assessment – which now in any case comes with costs disclosure obligations – and in this context, whether or not the client was represented is a relevant consideration;

(d)  Whether there is evidence suggesting that the bill might be excessive;

(e)   Whether the client has paid the bill without demur; and

(f)     The lawyer’s reasons for opposing the enlargement, it being important that, as an officer of the court, the lawyer is seen to act honestly, ethically and with proper motives, not merely to prevent the assessment of a bill taking place.

1. No other instance of judicial consideration in this State of the statutory provision was cited to me by counsel.

1. I should say a little more in respect of the fourth consideration.  I do not think that this consideration ought to be wholly discounted but it is difficult to conceive of circumstances where an application for review will appear futile on the limited material available to the court on a procedural application under s 4.3.38(6).  This consideration will ordinarily be assessed in a fairly summary way as it will not be appropriate for the parties to rehearse the review application before the judge on the referral out from the Costs Court that is contemplated by the section.

1. Brief reference may be made to the High Court’s decision in Jackamarra v Krakouer.[5]  In that case the issue was whether the merits of the appeal were appropriately evaluated by the Full Court when exercising the discretion to extend time for a procedural default, namely failing to enter an appeal, lodged in time, for hearing.  The Full Court had refused to extend time and dismissed the appeal, because the appeal lacked ‘any real prospect of success’.  Brennan CJ and McHugh J found that the Full Court had erred when it so concluded without a careful examination of all the evidence, an assessment that would not usually be expected or made on a procedural application.  Their Honours said –

Unless motions to extend time for appeals are to turn into full rehearsals for those appeals, appellate courts can only assess "the merits" in a fairly rough and ready way. In most cases, that assessment will be made from the statement of the applicant's case rather than from the opposing arguments or any detailed examination of the proofs of the argument. The merits are merely one of the factors that must be considered in determining whether the discretion to extend time should be exercised.

[5][1998] HCA 27, 195 CLR 516.

1. In a separate judgment, Kirby J noted that the starting point for the exercise of any power granted under legislation is the ascertainment of the terms of the grant and a consideration of the purposes for which the power has been afforded.  His Honour considered that mere procedural time limits in rules of court permit the court a more generous opportunity for indulgence than substantive provisions of legislation affecting rights.  Kirby J stated that relevant to the exercise is whether the case is arguable since if it is hopeless, unarguable or bound to fail, it would be futile to extend time.  Judging the merits of an application ordinarily involves no more than consideration of an ‘outline of the case’, by reference to limited materials.  Further, it would be inappropriate to put extensive materials on a procedural application to address issues of complexity and substance by a more thorough merits review.

1. Bearing these considerations in mind, I turn to the evidence on the application.  On 13 May 2014, the defendant  provided a lump sum assessment of their professional costs and outstanding disbursements.  The letter enclosed an assessment of the costs and disbursements completed by Grace Cost Consultants dated 2 April 2014.  The last day for an application under s 3.4.38 was 12 May 2015.  A summons for taxation was filed on 4 June 2015.  The delay was a period of 23 days, the period that is reasonably characterised as insignificant because it only increases the relevant period by about 6%.

1. An explanation for the delay has been provided by the plaintiff’s solicitor, who deposes that she took over the conduct of the file on about 27 April 2015.  From her review of the file, the plaintiff’s solicitor deposes that in September 2013, the plaintiff instructed her firm, Arnold Thomas & Becker, to take over the conduct of an injuries claim from the defendant.  A signed authority to obtain the file was provided to the defendant on 5 September 2013.  It was not until 19 November 2013 that the defendant informed the plaintiff’s solicitor that her file would be released upon payment of costs and disbursements. 

1. There was some discussion of a possible alternative arrangement and on 17 January 2014, Arnold Thomas & Becker requested a bill in taxable form within 21 days.  Despite regular follow up on this request, it was not until 7 April 2014 that the defendant advised that the file was being assessed by Grace Costs Consultants.  Arnold Thomas & Becker followed up on this information and on 12 May 2014 complained to the Legal Services Commissioner in relation to the conduct of the defendant over the preceding nine months.  The following day the defendant provided a lump sum assessment of their professional costs and outstanding disbursements which enclosed an assessment completed by Grace Costs Consultants and dated 2 April 2014. 

1. On 27 May 2014, the defendant informed Arnold Thomas & Becker that there was no disclosure statement signed by the plaintiff nor was there a costs agreement with her.  On 18 June 2014, Arnold Thomas & Becker requested that the defendant provide an itemised bill within 21 days in relation to the lump sum amount claim.  The previous history of dealings between these firms would suggest that some follow up was going to be required in order to obtain that itemised bill.  Due to default on the part of Arnold Thomas & Becker, to which it admits, the plaintiff’s file was not under active management and review until the plaintiff’s present solicitor took over the conduct of the matter.  The solicitor conducted a review of the file on 2 June 2015, sought advice from the costs consultant and issued the summons for taxation on 4 June 2015.

1. In these circumstances, the plaintiff submits that the delay can be explained by the refusal of the defendant to provide a bill in taxable form in response to their request and the admitted administrative error within the office of Arnold Thomas & Becker in failing to follow up on the request for the provision of a bill in taxable form.  The plaintiff contends that any convenience to the defendant should the extension of time be granted would be negligible.

1. In response, an affidavit from the principal of the defendant firm does not engage directly with the specific allegations made by the plaintiff’s solicitor.  However, the defendant asserts that no response was received from the plaintiff’s solicitor to the lump sum assessment provided on 30 May 2014, apart from a complaint to the Legal Services Commissioner.  Subsequently, the defendant informed the plaintiff that no bill in taxable form would be provided because the request was out of time.

1. In these circumstances, I am satisfied that the explanation for the delay is found in a combination of the dilatory responses from the defendant to the plaintiff’s requests that outstanding costs be resolved, in order that they might take over the conduct of the plaintiff’s claim. This dilatory behaviour created a need for follow up of the requests made to the defendant.  The plaintiff’s solicitor’s failure to follow through with the defendant and resolve the issue of outstanding costs also contributed to the delay. 

1. I am also satisfied that the defendant does not contend that it will be prejudiced if the application is dealt with out of time.  Further, the defendant does not offer any reason beyond unmeritorious reliance on the strict terms of the statute for opposing enlargement of the period for review.

1. The absence of disclosure as required by the Act to the plaintiff is a matter of significance. As a law practice, the defendant has an obligation to disclose the basis on which legal costs will be calculated and the other matters required to be disclosed under s 3.4.9 of the Act. Section 3.4.17 provides that if a law practice does not disclose to a client anything required by Part 3.4 Division 3 of the Act to be disclosed, the client need not pay the legal costs unless they have been reviewed by the Costs Court. The defendant is unable to demand payment of its costs because they have not been reviewed but seeks, I presume, to exercise a solicitor’s lien over the file that inhibits the plaintiff from pursuing her claim.

1. As the plaintiff is yet to receive an itemised bill of costs, I am unable to analyse more specifically the merits of the application for review. The plaintiff suggests that an inference might be drawn from the defendant’s offer, made after it revealed that there was no disclosure statement or signed costs agreement, to accept half of the costs that it claimed and the disbursements that had been incurred that the lump sum bill might be found to be excessive in review. I am satisfied that the application for review is not futile.

1. Further, in circumstances where there is neither a disclosure statement provided to the plaintiff nor a costs agreement between her and the defendant, and the delayed claim that the plaintiff brings is in relation to psychiatric injuries she sustained after her husband committed suicide whilst an in-patient at ‘The Melbourne Clinic’ in Richmond on her behalf and on behalf of her two children, suggesting she is a vulnerable litigant, it is just and fair that the plaintiff be permitted to prosecute an application for review of the legal costs charged by the defendant in the circumstances.

1. For these reasons, I am satisfied that the plaintiff should be enabled to seek a review of the defendant’s legal costs. I will order that the application for review by the summons for taxation filed 4 June 2015 be heard and determined by the Costs Court notwithstanding that that summons was not issued within the 12 month period specified by s 3.4.38(5). I will hear counsel on the question of costs.

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