Wang King Group P/L v Connolly & Co - [2020] SADC 152

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Minor Civil Review)
WANG KING GROUP P/L v CONNOLLY & CO
[2020] SADC 152
Judgment of Her Honour Judge Schammer
27 October 2020
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA
The applicant, Wang King Group Pty Ltd, retained a law practice, Connolly & Co (the respondent) to provide legal services to it with respect to a dispute with its landlord.
The respondent commenced proceedings in the Magistrates Court seeking to recover outstanding fees as set forth in an invoice sent to the applicant on 29 July 2018. The applicant refused to pay the invoice as it claimed the respondent had agreed to provide the services for a fixed fee of $1,900.00 plus GST, being a sum already invoiced and paid by the applicant.
The Magistrate determined the terms of the retainer were embodied in a letter of engagement dated 24 February 2017 and signed by Mr Wang, on behalf of the applicant, on 3 March 2017. The Magistrate ordered judgment for the respondent for an amount to be agreed, or failing such agreement, ordered the costs be assessed or adjudicated by the Supreme Court and made ancillary orders as to costs.
The applicant lodged an Application for Review on 3 April 2020 and therefore just outside of the 21 day time period as provided by r 279A(2) of the District Court Civil Rules 2006.
Held:
The terms of the retainer are as embodied in the letter of engagement.
In the event the respondent’s claim for outstanding legal costs cannot be resolved, that claim is to be assessed or adjudicated by the Supreme Court, in accordance with clause 37 or clause 39 of Schedule 3 of the Legal Practitioners Act 1981 (SA).
Orders:
1.   Extending the time for the applicant to commence the Application for Review to 3 April 2020.
2.   The judgment of the Magistrate is affirmed.
3.   The Application for Review is dismissed.
4.   No order as to costs.
Legal Practitioners Act 1981 (SA) s 39; Magistrates Court Act 1991 (SA) s 38, referred to.
Harradine v District Court of South Australia [2012] SASC 96, considered.

WANG KING GROUP P/L v CONNOLLY & CO
[2020] SADC 152
Introduction

In August 2019, a law firm, Connolly and Co (the respondent) issued proceedings in the Magistrates Court seeking to recover a sum of $2,280.04 (plus costs) by way of unpaid fees it claimed were due and payable to it for legal services provided to the applicant, Wang King Group Pty Ltd (Claim).
The applicant retained the respondent to provide legal services to it with respect to an ongoing dispute with its landlord. The applicant paid the first invoice dated 9 March 2017 issued by the respondent, in the sum of $1,900.00 plus GST (first invoice). The applicant did not pay the second invoice dated 29 July 2018 in the sum of $2,282.04 (inclusive of GST), which remains outstanding and is the subject of the Claim.
The applicant disputes the terms of its agreement with the respondent. The applicant claims that the respondent, through its solicitor Mr Jia, agreed to act for the applicant for a fixed, flat fee of $1,900.00 plus GST, notwithstanding terms to the contrary in a letter of engagement dated 24 February 2017, signed by Mr Wang on behalf of the applicant on 3 March 2017 (letter of engagement).
Magistrate’s Decision
The Claim proceeded to trial before a Magistrate on 5 March 2020. The Magistrate explained that she had no jurisdiction to determine the reasonableness of the fees charged by the respondent, being a matter solely within the jurisdiction of the Supreme Court and that her role was confined to determining what were the terms of the agreement as between the parties.
The trial was conducted by way of an enquiry using the inquisitorial process. The Magistrate heard evidence from the principal of the respondent, Ms Connolly, and from Mr Wang, the sole director of the applicant. Mr Wang was assisted by a Mandarin interpreter.
In addition, several documents were tendered, including the letter of engagement, the two invoices sent by the respondent to the applicant and various emails including emails between the parties and Mr Jia. Mr Jia is a Mandarin speaking solicitor who was previously employed by the respondent and provided some of the relevant services. Importantly, Mr Wang maintained that Mr Jia represented to him that his only liability for costs was a fixed upfront fee of $1,900.00 plus GST.
Mr Jia was not called to give evidence by either party at the trial before the Magistrate, despite his evidence being critical to the disputed issue as to what, if any representation was made by him to Mr Wang as to the terms of the retainer.
The Magistrate delivered an ex tempore judgment wherein she determined that the terms of the retainer were as set out in the letter of engagement, namely that the respondent would charge the applicant fees for work done as per the Supreme Court scale and expenses actually incurred.
The Magistrate ordered judgment for the respondent for an amount to be agreed by the parties, or failing agreement to be assessed or adjudicated by the Supreme Court pursuant to s 39 of the Legal Practitioners Act 1981 (SA). In addition, she ordered the applicant pay the respondent’s costs in the sum of $417.00, comprising the issue fee of $153.00, trial fee of $214.00 and attendance fee of $50.00.
The Application for Review
Extension of Time
Pursuant to r 279A(2) of the District Court Civil Rules 2006 (SA) (‘the Rules’), being the rules in operation as at the relevant date, an application for review must be commenced within 21 days after the date of the judgment the subject of the review.
The application for review was issued on 3 April 2020, being more than 21 days after the date of the Magistrate’s judgment, delivered on 5 March 2020.
The applicant seeks an extension of time to commence the application for review. Mr Wang explained that he lodged the application seven days late for matters related to Covid-19 and specifically a requirement that he quarantine for a period of 14 days shortly after the Magistrate’s decision. I accept that explanation.
Under r 295, the Court had the power to extend the time for the commencement of an appeal. I have been unable to find a corresponding provision in the Uniform Civil Rules 2020 (UCR), which arguably apply to the review, although pursuant to r 12.1(2)(c) of the UCR, I have the power to vary the time fixed by or under a provision of the rules.
The court must do justice between the parties. I have a discretion whether or not to grant the extension of time.
In this instance, the application for review was lodged only seven days late during a period of great uncertainty and disruption caused by Covid-19. There is no suggestion that the respondent will be prejudiced in the granting of the extension.
As such I grant the applicant an extension of time to 3 April 2020 to commence the application for review.
Grounds of Review
The applicant considers that the Magistrate’s decision is unfair. He relies on two grounds:
1that the parties agreed the payment method was ‘case by case’ (by which I understand the applicant to mean, it was agreed between the parties that the respondent would charge only a fixed flat fee for all services rendered, rather than on an hourly rate as per the Supreme Court scale); and
2that he was not notified in advance of any additional fees, before being sent the second invoice.
The Procedure on Review
Section 38 of the Magistrates Court Act 1991 (SA) (MCA) outlines the procedure to be followed in the determination of minor civil actions in the Magistrates Court and provides a mechanism whereby a party dissatisfied with a judgment given in a minor civil action may apply to the District Court for a review of the matter.
Section 38(7) of the MCA states:
38—Minor civil actions
(7)The following provisions apply to such a review by the District Court:
(a)subject to paragraph (ab), the right of a party to be represented by a legal practitioner at the review will be determined in accordance with subsection (4);
(ab)if, in the case of a review that relates to a minor civil action in respect of a transferred proceeding within the meaning of Part 3A of the South Australian Civil and Administrative Tribunal Act 2013, a party was represented by a legal practitioner at the proceeding, then the party may be represented by a legal practitioner at the review by the Court;
(b)the Court may inform itself as it thinks fit and, in doing so, is not bound by the rules of evidence;
(c)the Court may, if it thinks fit, re-hear evidence taken before the Magistrates Court;
(d)     in determining the matter, the Court may—
(i)    affirm the judgment; or
(ii)     rescind the judgment and substitute a judgment that the Court considers appropriate; or
(iii)    if the review arises from a default judgment or summary judgment, rescind the judgment and—
(A)substitute a judgment that the Court considers appropriate; or
(B)remit the matter to the Magistrates Court for hearing or further hearing;
(e)in hearing and determining the review, the Court must act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms.
In Harradine v District Court of South Australia,[1] Blue J outlined the principles which apply to a review by a District Court judge of a minor civil action.
[1] At [53].
The review is not in the nature of an appeal, nor is it necessarily a hearing de novo as the judge is entitled to have regard to the evidence adduced before the Magistrate. The judge is not required to re-hear the evidence, although the judge may do so. Where a case turns on disputed facts or credibility the judge may consider it appropriate to hear the evidence afresh. A judge may also receive ‘fresh evidence’ in certain circumstances.
Ultimately s 38(7)(e) of the MCA requires the judge to ‘act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms’.
Analysis of the Magistrate’s Decision
The Magistrate found, in accordance with Mr Wang’s evidence, that the letter of engagement had been signed by Mr Wang on behalf of the applicant, and that although Mr Wang had not read all of the document, its contents had been explained to him by Mr Jia.
The Magistrate found that the letter of engagement set out, in plain language, the terms of the agreement. Those terms included the scope of the services to be provided, namely ‘to advise and represent’ the applicant in relation to a Formal Notice received from Piper Alderman, acting on behalf of the landlord, asserting the applicant was in breach of its under lease.
Clause 4 of the agreement is entitled ‘Fees’ and states:
We will charge for our services at the scale fixed by the Supreme Court, as varied by the Court from time to time. It is a term of this agreement that any increase will apply automatically to you. A copy of the current scale is attached.
Clause 8 of the agreement is entitled ‘Costs Estimates’. It is important to set out the terms of this clause in full:
8.1It is not possible at this time to provide an accurate estimate of the total costs of this work. We will call it Stage 1 of this matter. If we have to represent you further after responding to Piper Alderman’s letter we would commence another stage of the proceedings with a new and revised cost estimate. At this Stage 1 we can only provide an estimate of our costs of:
·   attending to take initial instructions, and
·   further frequent attendances in person and by phone, and
·   perusing and considering the lease, Disclosure Statement, various written records and materials you have provided, and
·   responding formally in writing to the Notice from Piper Alderman on your behalf, and
·   receiving any response we may get and to advise you on it.
In our letter to Piper Alderman we will address your numerous grievances against the conduct of Ms Naomi Triguboff Travers, Director of the underlessor company and also the conduct of her Agent. It will be an extremely detailed letter written with reference to the relevant legislation and common law applicable in this case. We advise that we believe legal costs for Stage 1 will be less than $1,900 (+ GST).
8.2We emphasise that the estimate is just that, a preliminary estimate. It is not a quote or a fixed maximum charge. The actual costs will be based on the work actually done and the expenses actually incurred. As there will undoubtedly be further work after we receive a response we will provide another estimate at the time depending on whether a resolution is anticipated or we may recommend court proceedings. (my emphasis)
The Magistrate found that the terms of the signed letter of engagement were clear. In the absence of Mr Jia giving evidence, the Magistrate was unable to accept Mr Wang’s uncorroborated evidence that the terms of that signed agreement were varied, such that it was agreed that the respondent would only charge $1,900.00 plus GST for all of the work undertaken by it for the applicant with respect to the dispute.
The Hearing on Review
The application for review was listed for hearing on 10 September 2020.
At that time, only Mr Wang, on behalf of the applicant and Ms Connolly, on behalf of the respondent were present. Again, Mr Jia was not called to give evidence.
The applicant tendered a document, Exhibit A1, which contained a summary of his submissions and copies of various documents, most of which had been before the Magistrate.
Mr Wang submitted that the Magistrate ought to have accepted his evidence that the respondent agreed to undertake the services for a fixed fee of $1,900.00 plus GST. He submitted this was supported by the fact that the first invoice was not an itemised invoice with entries charged as per the Supreme Court scale. Further, he submitted this invoice was issued (and paid) at the outset of the retainer and before the respondent had in fact provided any of the services.
Mr Wang maintained that given the nature of the dispute, he, on behalf of the applicant, would not have retained the respondent if he had understood the charges would be so high and he would not have continued to retain the respondent if he had known he would be charged additional fees. He emphasised that at no time after the provision of the first invoice had the respondent advised him that the costs estimate of $1,900.00 plus GST had been expended, such that from that point in time additional charges would be incurred, nor had he ever received any revised fee estimate. Instead, the respondent had simply continued to provide the services for over a year and then sent him the second, more detailed, invoice.
Mr Wang emphasised the terms of a letter sent to him by the respondent on 2 March 2017 (the 2 March letter), being after he first met with the respondent with respect to the dispute (21 February 2017) but before he signed the letter of engagement (3 March 2017). In that letter, Ms Connolly, on behalf of the respondent stated:[2]
We are unable to expend further time and resources on your behalf until (a) you enter into a retainer with us, and (b) you provide us will ALL the records we require…
We look forward to receiving all of these items if you wish to proceed with our services. We need them most urgently today if we are able to represent you properly during attempts to resolve and regularise this difficult relationship with your landlord.
[2] Evidence 1 of Exhibit A1.
Mr Wang submitted that by this letter he understood that he would not be charged for the work undertaken by the respondent prior to the execution of the letter of engagement, being work undertaken as a ‘business strategy to attract new clients’. It is apparent that this was, in part, why he believed the quote of $1,900.00 plus GST related to all of the work actually undertaken by the respondent for which payment was required.
Mr Wang repeated submissions made before the Magistrate to the effect that he believed he had been overcharged and double charged by the respondent. Specifically, Mr Wang considered that Mr Jia’s departure from the respondent meant that Ms Connolly was required to re-read documents already considered by Mr Jia and to obtain instructions from him, which had already been provided to Mr Jia. As the Magistrate had done at trial, I explained that the Court’s jurisdiction did not extend to determining the reasonableness of the invoices rendered by the respondent, being a matter solely within the Supreme Court’s jurisdiction.
Ms Connolly gave evidence at the hearing on review, that she was present at the initial meeting with Mr Wang (and Mr Jia) and that Mr Wang wanted to know in advance how much his fees would be, but she explained to him that it was not possible to provide an estimate, as it was uncertain whether the matter would proceed to litigation. She said it was in this context that the initial estimate of $1,900.00 (plus GST) was determined being only for the Stage 1 works.
The Stage 1 works are described in the letter of engagement at clause 8.1.
Ms Connolly gave evidence that after the Stage 1 works were completed, Mr Wang had continued to request the respondent’s assistance to address ongoing issues with the landlord, often arriving unannounced. She believed Mr Wang, as a businessman, was fully aware that he would be required to pay for the provision of the ongoing services. She disputed Mr Wang’s claim that the first invoice was sent before any of the Stage 1 works had been undertaken, and said that considerable work, exceeding the sum charged, had been undertaken to that point in time.
I enquired of Ms Connolly whether the respondent had ever provided the applicant with a further fee estimate after the provision of the first invoice, as contemplated by Clause 8.2 of the agreement. Ms Connolly responded that the revised fee estimate ‘was only to be provided if we went to court’, that she was sure that Mr Wang knew the applicant would be charged for the ongoing provision of services and that she had mentioned cost when he kept coming back for more advice.[3]
[3] T 9.34-36, T 10.22-23, T 19.5-11 (Transcript 10/9/20).
It was apparent that Mr Jia’s evidence was critical on the primary issue in dispute, namely what were the terms of the retainer, and, specifically, what he had told Mr Wang as to the meaning of Clause 8.1 of the letter of engagement, and/or, whether at any time after the completion of the Stage 1 works he had provided a revised fee estimate to the applicant or told Mr Wang that ongoing fees were being incurred.
In the circumstances, I explained to Mr Wang the importance of Mr Jia’s evidence and of the fact that Mr Jia could be subpoenaed to give evidence if he was not otherwise prepared to do so. I adjourned the hearing to enable Mr Jia to attend to give evidence on the next occasion and for an itemised invoice to be provided by the respondent with respect to the work which was the subject of the first invoice.
The hearing resumed on 20 October 2020. Unfortunately, Mr Jia was not in attendance. Mr Wang explained that he had contacted Mr Jia, who had told him he did not want to come to court as he was working for the respondent at the relevant time, and that the respondent should call him to give evidence, if that was required.
Mr Wang had prepared a further summary of his submissions, which was tendered as Exhibit A2. In that summary, Mr Wang reiterated (and expanded upon) his previous submissions, namely that:
1The respondent’s services had been retained over a dispute relating to an overcharge of $3,000, and as such, it was not logical that he would spend more than that on legal fees, in order to recover that sum.
2He had not properly read the letter of engagement and was reliant on Mr Jia to properly explain its contents to him, given his imperfect grasp of English.
3He had been promised by the respondent that they would charge a fixed fee of $2,090, and he had paid the first invoice accordingly.
4Even if he was to be charged an hourly rate, why was the first invoice for the sum of $2,090 and not itemised.
5He had never been given a revised fee estimate at any time.

In addition, Mr Wang raised the concerns he had previously expressed as to potential over charging by the respondent and his dissatisfaction with the services provided.
Ms Connolly produced an itemised invoice comprising the work in the first invoice, for services provided between 21 February 2017 and 6 March 2017 (Exhibit R1). When itemised and charged in accordance with the Supreme Court scale, the cost of those services totalled $2,569.00 plus GST, being more than the sum of $1,900.00 plus GST actually charged in the first invoice.
Mr Wang noted the invoice comprised work undertaken by the respondent before he signed the letter of engagement. He referred again to the 2 March letter, which he said supported his assertion that the services provided by the respondent before he signed the letter of engagement were provided for free, such that they were not part of the flat fee of $2,090.00. He interpreted that letter as meaning if he did not continue to use the respondent’s services, he did not have to pay any fees.[4] He said that once he paid the first invoice, the work then started.
[4] T 42.36-38.
Ms Connolly refuted the suggestion that the respondent had ever offered to undertake any work for free and said that if Mr Wang had not signed the letter of engagement it is likely she would have referred him elsewhere, and sent him an invoice for the work already undertaken.
Ms Connolly acknowledged that she had not provided a further fee estimate to the applicant after the completion of the Stage 1 works. However, she explained that she had recommended the applicant proceed to litigation with respect to the numerous unresolved issues it had with the landlord and that the dispute was not about a discrete issue, but was ongoing. As such, it was difficult to provide any further ongoing fee estimate.
She produced a copy of the letter from Piper Alderman to the applicant dated 18 February 2017 (Exhibit R2), the receipt of which had prompted the applicant to seek the respondent’s assistance. She explained that the scope of the Stage 1 works included replying to that letter (after taking instructions and reviewing all relevant material) and also raising with Piper Alderman the applicant’s multiple additional concerns pertaining to the lease. Exhibit R3 is a file copy of the letter subsequently written by the respondent to Piper Alderman dated 6 March 2017.
Ms Connolly gave evidence that at the first meeting with Mr Wang, she had told him that it would cost $1,900.00 (plus GST) for the respondent to read through all the papers he provided, consider their relevance and write to Piper Alderman, but from then on, he must pay scale. She recorded this in a note on the file. She had understood Mr Jia, who was also present, explained this to Mr Wang in Mandarin.
She reiterated her earlier evidence, namely that Mr Wang continued to seek the respondent’s assistance after that work had been completed, for ongoing issues encountered by the applicant with the landlord, and that she believed Mr Wang was well aware the applicant was required to pay for these ongoing services.
Discussion and Findings
General
Mr Wang gave evidence both at trial and on the hearing of the review with the assistance of a Mandarin interpreter. My impression was that Mr Wang had a good, but imperfect, understanding of the English language. He responded to many of my questions in English, with those responses consistent with him having understood the question. He prepared and submitted documents to the court in English.
Having regard to Mr Wang’s apparent level of proficiency in English, I consider it likely he understood much of what was told to him in English at the initial meeting (and other meetings) with the respondent. Insofar as there was a potential for misunderstanding, I accept the evidence of both Mr Wang and Ms Connolly that Mr Jia communicated with Mr Wang in Mandarin, and explained matters to him in Mandarin.
Both Mr Wang and Ms Connolly presented as honest witnesses and I accept that each was a credible witness, doing their best to explain their recollection of what had transpired.
The relevant events occurred over three years ago. There were some minor differences in the evidence given by Mr Wang before the Magistrate, as compared to his later evidence given at the hearing of the review, which I consider can be explained, at least in part, by that passage of time. For example, before the Magistrate, Mr Wang said the applicant’s dispute with the landlord involved a sum of between $4,000.00 to $5,000.00,[5] however at the hearing on review, he said that sum was around $3,000.00.[6]
[5] T 19.11.
[6] T 15.16.
Ms Connolly had the benefit of being able to refresh her memory by reference to the contents of the respondent’s file pertaining to the applicant.
I accept Ms Connelly’s evidence that Exhibit R1 was prepared by her, as best she could, having regard to what was recorded on that file.
Initial Meeting
Having regard to Exhibit R1 and the evidence given both before the Magistrate and upon review, I am satisfied that Mr Wang, on behalf of the applicant, met for the first time with Ms Connolly and Mr Jia of the respondent on 21 February 2017, at which time there were discussions in English, with pertinent matters explained to Mr Wang by Mr Jia in Mandarin. Those discussions related to an ongoing and difficult dispute between the applicant and its landlord, and included, inter alia, a request by the applicant for the respondent’s assistance to respond to a letter from the landlord’s solicitors outlining alleged breaches of the lease by it, and seeking to agitate concerns the applicant had with respect to the landlord (including matters pertaining to the fit out and its partial destruction by the landlord, signage, colour schemes, rubbish fees and the like). This was in the context of a lengthy commercial lease, with several years left to run.
I accept the evidence of Ms Connolly, supported by her file note, that at that meeting, Mr Wang was concerned to negotiate a fixed fee for the respondent’ services. I accept her evidence that she told Mr Wang that the fee to obtain his instructions, consider all the relevant documents and then write to the landlord’s solicitors would be $1,900.00 plus GST, but that any work thereafter would be charged as per the Supreme Court scale. I accept her evidence that she had understood, from what she observed, that Mr Jia explained this to Mr Wang in Mandarin.
Letter of Engagement
I am further satisfied that after the initial meeting, the letter of engagement was drafted, and settled by Ms Connolly, and was intended to reflect what she had said at the initial meeting as to the terms upon which the respondent would act for and charge the applicant.
However, the letter of engagement included slightly different terms to those discussed at the initial meeting. Rather than specifying a fixed fee for the Stage 1 works, Clauses 8.1 and 8.2 of the letter of engagement stated that the cost estimate of ‘less than $1,900.00 (+ GST)’ for Stage 1 of the works was not a quote, nor a fixed minimum charge, and that the actual costs would be charged as per the Supreme Court scale for ‘the work actually done and the expenses actually incurred’.[7]
[7] Evidence 5 of Exhibit A1.
However, the letter of engagement outlined in plain language the work to be included in Stage 1, and stated clearly that further work would incur additional charges at the Supreme Court scale.
The letter of engagement is dated 24 February 2017. Mr Wang, on behalf of the applicant, signed the letter of engagement on 3 March 2017, being after receipt of the 2 March letter,[8] and after he had met several times with Mr Jia.[9]
[8] Evidence 1 of Exhibit A1.
[9] Exhibit R1.
As outlined by the Magistrate in her judgment, although Mr Wang said he had not read or understood all of that document, he acknowledged that Mr Jia had explained its contents. In light of Ms Connolly’s evidence that cost was an issue of concern for the applicant, I consider it likely, and I find, that when explaining the terms of the letter of engagement to Mr Wang, Mr Jia did explain the effect of clauses 8.1 and 8.2, namely that if additional work, beyond that in Stage 1, was undertaken, additional costs would be incurred based on the actual work undertaken, and in accordance with the Supreme Court scale. This finding is also consistent with what Mr Wang told the Magistrate at trial, namely that Mr Jia had explained everything to him.[10]
[10] T 21.29-30.
First Invoice
The first invoice was prepared in a manner consistent with Ms Connolly’s recollection (and file note) of what was discussed as to costs at the initial meeting, rather than in accordance with the letter of engagement, being in narrative form, rather than containing individual items. It included the items described as the Stage 1 works in the letter of engagement, in the sum of $1,900.00 plus GST, rather than the higher sum of $2,569.00 plus GST, being the actual cost for such work charged in accordance with the Supreme Court scale.
On its face, the manner in which the first invoice was prepared lends some support to the applicant’s contention that the terms of retainer were not as contained in the letter of engagement. However, the real issue in dispute between the parties was whether the respondent was entitled, pursuant to its retainer, to charge the applicant additional fees, over and above the $1,900.00 plus GST, for work undertaken after the completion of the Stage 1 works, or whether that was a fixed fee for all services provided by the respondent to the applicant.
The first invoice clearly lists the work undertaken and charged for in the invoice, being the Stage 1 works as described in the letter of engagement. It is consistent with Ms Connolly’s recollection that the fee of $1,900.00 plus GST only related to the Stage 1 works, with any further work to attract additional fees. The letter of engagement similarly makes it clear that any work undertaken after the completion of the Stage 1 works would be charged in accordance with the Supreme Court scale.
Retainer
While Mr Wang is now firm in his belief that Mr Jia told him the respondent would charge only one fixed fee of $1,900.00 plus GST for all of the services it provided to the applicant, I simply cannot accept that evidence as being reliable, insofar as it conflicts with what is contained in the letter of engagement and what Ms Connolly explained about fees at the initial meeting, in the absence of Mr Jia giving evidence.
I consider Mr Wang is now mistaken as to his recollection of his discussions with both Ms Connolly and Mr Jia as to the basis upon which the respondent would charge the applicant. I consider it likely, and I find, that Mr Wang’s recollection has also been influenced by his belief that the services provided by the respondent were not of value, as the applicant did not achieve the outcome it had hoped.
I am satisfied that it was a term of the retainer that the respondent was entitled to charge the applicant for services provided after the completion of the Stage 1 works as per the Supreme Court scale, and that these additional services were not intended to be included in the fee estimate of $1,900.00 plus GST relating to the Stage 1 works.
Although not initially raised at trial, on review, Mr Wang was adamant in his evidence that he was only required to pay for services provided after he signed the letter of engagement on 3 March 2017. He noted from Exhibit R1 that most of the work in the first invoice was undertaken before 3 March 2017.
However, whether the respondent would (or would not) have charged the applicant for the services it rendered between 21 February 2017 and 3 March 2017 had Mr Wang not signed the letter of engagement is irrelevant.
Upon signing the letter of engagement, Mr Wang, on behalf of the applicant, agreed to its terms. Those terms were not that the respondent would only charge the applicant for services rendered after 3 March 2017. Rather, as previously stated, the letter of engagement made it clear that the applicant would be charged for the Stage 1 works – which expressly included items such as attending upon Mr Wang to obtain his initial instructions, other attendances, and reviewing the relevant paperwork in order to respond to the Piper Alderman letter, thus including services undertaken prior to 3 March 2017.
Notwithstanding Mr Wang’s evidence to the contrary, I am not satisfied that Mr Jia ever represented to Mr Wang that, despite the clear terms of the letter of engagement, and what was explained by Ms Connolly at the initial meeting, the applicant would be charged a fixed fee of $1,900.00 plus GST for all of the respondent’s services, including those undertaken after the completion of the Stage 1 works.
I find that the terms of the retainer (contract) between the applicant and the respondent are governed by the letter of engagement.
Further Fee Estimate
Pursuant to clause 8.2 of the letter of engagement, the respondent agreed to provide another fee estimate in the event that additional work, beyond that of Stage 1, was required.
I accept the evidence of Ms Connolly, which was not in dispute, that the applicant continued to seek assistance from the respondent with respect to its ongoing dispute with the landlord after the completion of the Stage 1 works. As such, there were additional works undertaken by the respondent, as foreshadowed by clause 8.2.
I accept Mr Wang’s evidence, supported by that of Ms Connolly, that at no stage after the provision of the first invoice (and therefore after the completion of the Stage 1 works) did the respondent provide another fee estimate to the applicant, such that the respondent is, on its face, in breach of clause 8.2. The second invoice was not sent until 29 July 2018, more than a year after the first invoice.
Pursuant to Part 3 of Schedule 3 of the Legal Practitioners Act 1981 (SA), a law practice is required to make certain disclosure as to costs to its clients. That obligation extends to disclosing to a client ‘an estimate of the total legal costs if reasonably practicable or, if that is not reasonably practicable, a range of estimates of the total legal costs and an explanation of the major variables that will affect the calculation of those costs’.[11]
[11] Clause 10(1)(d).
Further pursuant to clause 18 of Schedule 3, if a law practice does not disclose to a client anything required by Part 3, and the client has entered into a costs agreement with the law practice, the client may apply to set aside that agreement under clause 30 and/or, on an adjudication/taxation of costs, the amount of costs may be reduced by an amount considered by the Supreme Court to be proportionate to the seriousness of the failure to disclose.
I accept Ms Connolly’s evidence that the applicant’s dispute with its landlord was ongoing and that Mr Wang continued to seek advice with respect to it from the respondent on an ad hoc basis. I accept that it may not have been reasonably practicable for the respondent to give an estimate of the total legal costs payable for the services in those circumstances.
Further, the terms of the letter of engagement were clear, namely that additional fees would be charged as per the Supreme Court scale for additional work done after the completion of Stage 1. I do not accept Mr Wang’s evidence that he was told otherwise. As such, I find that the applicant must have known that if the respondent provided further services to the applicant after the completion of the Stage 1 works, it would charge for the provision of those services on the Supreme Court scale.
Notwithstanding this, having regard to Mr Wang’s evidence, I accept that had the respondent provided a further fee estimate at any time after the completion of the Stage 1 works, this may have prompted the applicant to stop seeking the respondent’s services.
However, in my view, whether the respondent’s failure to provide any such estimate or any range of estimates as required by clause 10 of Schedule 3 is such that the agreement should be set aside, or costs reduced on adjudication, is not a matter over which I have jurisdiction to determine, being a matter for the Supreme Court.
Summary
I agree with the Magistrate’s finding, namely that the letter of engagement contains the terms of the applicant’s retainer with the respondent. Those terms did not include a term that only a fixed fee of $1,900.00 plus GST was to be charged by the respondent for all services it rendered to the applicant. The terms of the retainer entitled the respondent to charge the applicant for the Stage 1 works, including those undertaken prior to 3 March 2017, and additional services provided upon the completion of the Stage 1 works, calculated on the Supreme Court scale.
In the event the respondent’s claim for outstanding legal costs from the applicant cannot be resolved, that claim is to be assessed or adjudicated by the Supreme Court, in accordance with clause 37 or clause 39 of Schedule 3.
The respondent failed to comply with clause 8.2 of the letter of engagement in that it did not give a revised fee estimate to the applicant at the time of performing the additional services. Whether that may give rise to any potential for the agreement to be set aside, or for the costs to be reduced, is a matter for the taxing master.
Orders
1Extending the time for the applicant to commence the Application for Review to 3 April 2020.
2The judgment of the Magistrate is affirmed.
3The Application for Review is dismissed.
4No order as to costs.