Trpkovski v Williams Love Nicol Lawyers Pty Ltd - [2014] ACAT 13

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

TRPKOVSKI v WILLIAMS LOVE & NICOL LAWYERS PTY LTD
(Civil Dispute) [2014] ACAT 13

XD 13/882
Catchwords: CIVIL DISPUTE – cost agreement for legal work done by the legal firm – objection to invoiced items – whether the legal firm has engaged in misleading or deceptive conduct – whether applicant was overcharged – the Tribunal being a ‘no cost’ jurisdiction and the enforceability of a contract providing for payment of cost of recovery action
Legislation:ACT Civil and Administrative Tribunal Act 2008, ss 6, 7 and 48
Cases:Bell & de Castella and Rob de Castella’s Smartstart for Kids
Ltd [2013] ACAT 66
Chen v Kevin McNamara & Son Pty Ltd (No. 2)
[2012] VSCA 229
Trinity Law Pty Limited v Krishinan [2009] ACAT 45
Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410

Tribunal: Ms J. Lennard – Senior Member

Date of Orders: 5 March 2014
Date of Reasons for Decision: 5 March 2014

ACT CIVIL AND ADMINISTRATIVE TRIBUNAL XD 13/882
BETWEEN:
SASHA TRPKOVSKI
Applicant

AND:
WILLIAMS LOVE & NICOL LAWYERS PTY LTD
T/AS BRADLEY ALLEN LOVE LAWYERS
Respondent

TRIBUNAL: Ms J. Lennard – Senior Member

DATE:5 March 2014
ORDER

The Tribunal Orders that:

The application is dismissed.
The counterclaim is allowed. The applicant is to pay to the respondent within 28 days of the date of this order an amount of $6,941.93 being:
a.the filing fee of $260;
b.the debt owed of $4,364.80 plus;
i. $175.58 interest at the Magistrates Court’s rate on the amount of $2,758.80 from 28 March 2013 the date of this order;
ii.
$96.05 interest at the Magistrates Court’s rate on the amount of $1,606 from 17 April 2013 to 30 June 2013 to the date of this order;

and
c.the applicant is to pay the respondent within 28 days of the date of this order the amount of $2,047.50, being the costs of recovery allowed.
………………………………..
Ms J. Lennard – Senior Member

REASONS FOR DECISION

In September 2012 the applicant engaged the respondent to undertake work in relation to a legal claim he had against his former employers. On 24 September 2012 the respondent prepared and provided to the applicant a costs agreement and retainer. On 12 October 2012 the applicant entered into a cost agreement with the respondent. From then until April 2013 the respondent undertook work of a legal nature in relation to the claim by the applicant against his former employer. During that time the respondent issued to the applicant four invoices, two of which were paid. In April 2013 the relationship between the respondent and the applicant came to an end; the applicant believed he had been overcharged and entered into correspondence with the respondent in relation to the invoices.
An application was filed on 15 May 2013 by Mr Trpkovski. The applicant sought an order for a refund of $10,000 of the legal fees he had paid. He alleged that the respondent had misrepresented the level of its legal fees, and the manner in which the work would be done and that had overcharged him.
Attached to the application were copies of correspondence between the parties relating to the fees charged by the legal practice, a copy of a Costs Disclosure Statement and a copy of a Costs Agreement and Retainer, dated 24 September 2012, prepared by the respondent and signed, on or about 12 October 2012, by the applicant.
A response to the application and a counterclaim were filed by the respondent on 25 July 2013. The respondent relied on the Costs Agreement and Retainer executed by the applicant. The respondent asserted that the fees charged were within the estimates provided to the applicant and were otherwise in accordance with the Costs Agreement.
The counterclaim sought payment of unpaid invoices in the amount of $4,364.80 plus interest in accordance with the terms of the Costs Agreement. The respondent also claimed its costs of recovering the sums owing under the outstanding invoices pursuant to an indemnity in clause 16 of the Costs Agreement.
The matter was first heard on 10 October 2013. At that hearing it was evident that neither party had complied with the directions made by the Tribunal.
The applicant handed up copies of invoices and itemised accounts sent to him by the respondent during the course of the retainer between the parties.
The respondent provided a folder of evidence which included:
(a)a chronology of events;
(b)
correspondence between the parties and correspondence relating to

Mr Trpkovski’s legal matter being handled by the respondent;
(c)a copy of the cost disclosure statement prepared on 24 September 2012; and
(d)
a copy of the ACT standard costs agreement and retainer prepared on

24 September 2012; and
(e)a letter from the respondent to the applicant dated 5 April 2013, which summarised the progress of Mr Trpkovski’s legal matter to that date, set out a number of options which he could pursue, and estimated professional fees in relation to anticipated litigation in the range of $36,250-$58,900. Attached to this letter is an information sheet prepared by the respondent and headed “Commercial Litigation Procedures”.
Included in this bundle of documents were copies of invoices, including itemised accounts, sent by the respondent to the applicant.
On 10 October 2013 the Tribunal made directions which included a requirement for the applicant to provide, on or before 1 November 2013, an amended application setting out the orders sought; a written timeline of events; and a statement setting out which items in the invoices he objected to. The respondent was directed to file, on or before 22 November 2013, any further documents upon which it intended to rely at the hearing.
The applicant filed on 31 October 2013 the following documents:
(a)a chronology of events;
(b)further copies of correspondence between the applicant and the respondent;
(c)a copy of the cost disclosure agreement estimating legal fees to be in the range of $3750-$33,800; and
(d)a copy of the correspondence dated 5 April 2013 outlined in paragraph 8(e) above.
The matter was heard again by the Tribunal on 9 January 2014. The Tribunal notes that Mr Trpkovski had not complied with the directions issued on 10 October 2013: he had not specified the orders that he sought nor had he provided a statement detailing the invoice items he objected to.
Mr Trpkovski was nevertheless provided with an opportunity to identify those items in the itemised accounts. Mr Trpkovski did provide a copy of a document he supplied to the respondent on or about 15 November 2013. This document contained copies of the respondent’s invoices upon which the applicant had marked certain items to which he objected. The total of the charges objected to was more than $10,000. The objections appear to fall into the following broad categories:
(a)conferences and meetings conducted between the lawyers and paralegals with carriage of the matter;
(b)drafting statements of claims, letters and advice to the client – the objection seems to be to the word ‘drafting’; and
(c)reviewing correspondence.
In broad terms, Mr Trpkovski asserts that the respondent has overcharged him because several lawyers or paralegals were involved in the handling of his legal matter and the invoices reveal that on occasions he was charged for conferences between those lawyers and paralegals. The invoices also reveal that members of the legal practice had reviewed and amended each other’s work. Mr Trpkovski also asserts that the respondent engaged in misleading and deceptive conduct in that the Costs Disclosure Statement first prepared in September 2012 contained an estimate of legal fees in the range of $3,750 – $33,800 but his eventual fees estimated were of a greater amount. Mr Trpkovski makes the point that his original legal matter was for the recovery of an amount in the vicinity of $60,000 and that he would not have contemplated commencing proceedings to recover this amount had he been informed that the total cost of recovery could have been up to $58,900. The tribunal accepts Mr Trpkovski’s submission that this does not make commercial sense.
Mr Trpkovski was not able to demonstrate that any of the items charged were not in accordance with the contract between the parties, nor was he able to substantiate that any of the charges levied or work done was unreasonable or unnecessary. Some of his objections to the items charged appear to have stemmed from a misunderstanding by Mr Trpkovski of the work involved in drafting and reviewing documents. The drafting of statements of claim and correspondence and the reviewing of correspondence from the client or the other side in a legal matter represent work usually undertaken by any legal practice.
The invoices supplied to the Tribunal and the submissions of the respondent establish the total fees billed by the respondent to be $16,533.33, of which $4,364.80 remains unpaid. Mr Trpkovski provided no evidence to support or explain his original application for a refund of $10,000.
The respondent made the following submissions:
(a)the respondent complied with its statutory obligations to provide an estimate of legal costs;
(b)the applicant executed the Costs Agreement and Retainer. That document clearly states at clause 2.2 (a) that the estimates are based on the information available to the legal practice at the time of the disclosure; they are an estimate not a quotation and are subject to change; and that the legal practice gives no promise or guarantee that the cost estimates are accurate or will be accurate at the end of the matter;
(c)the applicant’s instructions changed after the initial instructions were provided and the respondent provided a further estimate in accordance with its statutory obligations;
(d)the fees charged were in accordance with the retainer;
(e)several staff members were involved in the day-to-day conduct of the matter: this is clearly disclosed in the agreement between the parties and was the most efficient and cost-effective manner of dealing with the legal matter;
(f)the charges are calculated in accordance with the terms of the costs disclosure statement and the costs agreement; and
(g)the applicant has not made an application to the Supreme Court of the ACT pursuant to Division 3.2.7 of the Legal Profession Act 2006 to have the respondent’s costs assessed for fairness and reasonableness.
The respondent counterclaimed for payment of the debt arising from two invoices issued to Mr Trpkovski but which remain unpaid. Mr Trpkovski did not deny that the invoices had been sent to him, nor did he address particular items within the accounts or object to them except in the broadest of terms.
The Tribunal having considered the evidence before it is not satisfied that

Mr Trpkovski has established on the balance of probabilities that the respondent law firm has engaged in misleading and deceptive conduct or that they have overcharged him. The evidence establishes that the invoices relate to charges that fall squarely within the Costs Disclosure Statement and the Costs Agreement and Retainer executed by the parties. The Tribunal therefore dismisses Mr Trpkovski’s application.
Having considered the evidence before it in relation to the respondent’s counterclaim, the Tribunal is satisfied that, pursuant to the contract between the parties, the respondent has performed work and has issued invoices. Invoice number B3078 issued 28 March 2013 in the amount of $2,758.80 and invoice number B3301 issued 17 April 2013 in the amount of $1,606.00, remain unpaid. Mr Trpkovski did not raise any objection to these invoices except in the broadest of terms in relation to the manner in which the work had been undertaken and his complaint in relation to the estimate of fees set out in the agreement between the parties.
The Tribunal has determined that the applicant is liable to pay to the respondent the amount of $4,364.00.
The Tribunal cannot consider the applicant’s complaint about the reasonableness of the fees charged and whether the manner in which the respondent undertook its work was fair or appropriate. This is because the Supreme Court has jurisdiction to assess legal fees charged by legal practitioners for fairness and reasonableness, regardless of the amount in dispute. This Tribunal’s jurisdiction concerns the contractual relationship between the parties. The question was considered in detail by the tribunal in the matter of Trinity Law Pty Limited v Krishinan [2009] ACAT 45 at paragraphs 18 to 51 and particularly at paragraphs 42 to 51.
The respondent claims pursuant to clause 16 of the Cost Agreement and Retainer entered into by the parties, payment of its costs of recovery of the moneys owed. Clause 16 provides: should the Law Practice seek to recover any monies due to the Law Practice under this Agreement whether by way of legal proceedings or otherwise the Client will be liable to pay for the Law Practice’s costs and time incurred in so doing at the rates set out under clause 5 and any other costs to the Law Practice in so doing including, but not limited to, Court Fees, fees charged by process servers, and fees charged by debt collection agents. The respondent pursuant to this clause seeks orders that the applicant pay the sum of $260 in respect of filing fees and the sum of $4,388.18 in respect of the respondent’s costs incurred in recovering the monies owed.
ACAT is primarily a ‘no cost’ jurisdiction. This is consistent with the stated purposes of ACAT set out in sections 6 and 7 of the ACAT Act: that the procedures of ACAT should be as simple, quick, inexpensive and informal as is consistent with achieving natural justice and observing procedural fairness. Section 48 makes it clear that parties in ACAT should bear their own costs unless the Tribunal orders otherwise. Where one party has caused unreasonable delay or obstruction before or while ACAT is dealing with the matter, then ACAT may make an order for costs. It should be noted that such a costs order is confined to those costs which arise from the unreasonable delay or obstruction.
Mr Trpkovski’s application, while perhaps misconceived, should not be characterised as one where a party has caused unreasonable delay or obstruction. There is no evidence that the application was made in bad faith. The Tribunal accepts that Mr Trpkovski failed to properly comply with directions and that it was difficult to respond to his claim because it was vague and was not supported by evidence. The decision of the Tribunal in Bell & de Castella and Rob de Castella’s Smartstart for Kids Ltd[2013] ACAT 66 does not mean that where an unsuccessful party has presented a poor, disorganised or unsubstantiated case and has not been successful that the successful party will automatically recover their costs. An applicant for costs would need to establish on the balance of probabilities that the unsuccessful party had acted in bad faith, caused unreasonable delay or deliberately obstructed the tribunal’s processes. This is not established in this matter.
The contractual term allowing for the payment by the client of the costs of recovering amounts owed to the law firm ought not to be read as automatically resulting in the recovery of those costs in jurisdictions such as ACAT. The respondent submits that the contract between the parties cannot be unlawful dependent on the jurisdiction in which the respondent seeks to have it enforced. That is, the respondent should not be denied its costs of recovery because the quantum of the claim is within ACAT’s jurisdiction and in circumstances where those recovery expenses would otherwise be awarded.
The applicant executed the retained, a contract which contained a clause allowing for the recovery of costs if action had to be taken to recover unpaid amounts from him. The applicant raised no defence to the counterclaim except for general assertions of overcharging. The respondent has incurred costs in preparing the counterclaim and in making written submissions regarding costs for the benefit of the applicant and the Tribunal. The Tribunal accepts the tenor of the written submissions that where a party enters into a contract which provides for the sending of invoices and the payment by the client of the costs of recovering money unpaid in relation to sent invoices, then prima facie each party is bound by the terms of that agreement.
The Tribunal acknowledges that there is a tension between the terms of the retainer between the parties and the ACAT Act which makes it clear at

section 48 that parties should bear their own costs, unless the tribunal orders otherwise. The Tribunal accepts the respondent’s submission that courts and tribunals should be cautious in holding that a statute intends to interfere with the rights and remedies given by the ordinary law of contract. In each case, the decision maker should have regard to the scope and purpose of the statute from which inferences may be drawn as to the legislative intention regarding the extent and effect of the prohibition which the relevant statute contains. While Yango Pastoral Co Pty Ltd v First Chicago Australia Ltd (1978) 139 CLR 410 dealt with the question of how a court should deal with an illegal contract, the general principle is applicable in this instance.
There is a general common law rule against contracting out of the effect of legislation and the Tribunal is aware of the ‘floodgates’ argument: should the respondent law firm be successful in obtaining a payment of the cost of recovering the money owed to it, it would be a simple matter for every trader or business in the ACT to include such a clause in contracts. There is nothing in the ACAT Act that indicates that it was the legislature’s intention that where parties entered into a contract containing a recovery clause, that that clause would not be enforceable in proceedings before ACAT. Where the legislature intends that clauses of contracts are not to be permitted, the relevant statute includes either specific prohibitions on clauses that are inconsistent with the statute, (for an example, see the Residential Tenancies Act 1997 (ACT)); or mechanisms by which the clauses may be struck down, (for an example, see the unfair contracts provisions of the Competition and Consumer Act 2010 (Cth)).
The Tribunal notes that costs are always a matter for the court or tribunal’s discretion, but that there may be a contractual basis for engaging a costs entitlement. An agreement to pay costs is a factor informing the exercise of the tribunal’s discretion, but such an agreement cannot require the exercise of that discretion in a particular way. [Chen v Kevin McNamara & Son Pty Ltd (No. 2) [2012] VSCA 229]. There are many instances and precedents in which courts have upheld and enforced such clauses.
The respondent has submitted a schedule of costs in relation to the conduct of this matter: that schedule shows a total of $15,185.50. The tribunal notes that the schedule of costs covers the conduct of the entire matter and relates to far more than the time spent recovering the debt owed. The Tribunal has perused the schedule of costs provided by the respondent and has determined that the appropriate amount to be paid by the respondent pursuant to clause 16 of the retainer is $2047.50 exclusive of GST.

………………………………..
Ms J. Lennard
Senior Member

PUBLICATION DETAILS

TO BE PUBLISHED

To be completed by Tribunal Staff

PART A

FILE NUMBER:	XD 13/882
PARTIES, APPLICANT:	Sasha Trpkovski
PARTIES, RESPONDENT:	Williams Love & Nicole Lawyers Pty Ltd T/as Bradley Allen Love lawyers
COUNSEL APPEARING, APPLICANT
COUNSEL APPEARING, RESPONDENT
SOLICITORS FOR APPLICANT
SOLICITORS FOR RESPONDENT
TRIBUNAL MEMBERS:	Ms J. Lennard – Senior Member
DATES OF HEARING:	10 October 2013 & 9 January 2014
PLACE OF HEARING:	ACAT Canberra

PART B

RECOMMENDATION:

FULL REPORT ( ) CASE NOTE ( ) UNREPORTED DECISION ( )

COMMENTS: