Watson v Hewett & Lovitt Pty Ltd - [2022] WASC 184

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   WATSON -v- HEWETT & LOVITT PTY LTD [2022] WASC 184
CORAM:   MASTER SANDERSON
HEARD:   ON THE PAPERS
DELIVERED          :   27 MAY 2022
PUBLISHED           :   27 MAY 2022
FILE NO/S:   LPA 5 of 2022
BETWEEN:   ANTONY JOHN WATSON
Applicant
AND
HEWETT & LOVITT PTY LTD
Respondent

Catchwords:

Legal practitioners - Application for extension of time to tax costs - Turns on own facts

Legislation:

Legal Profession Act 2008 (WA)

Result:

Time extended

Category: B

Representation:

Counsel:

Applicant	:	No appearance
Respondent	:	No appearance

Solicitors:

Applicant	:	Dwyer Durack
Respondent	:	Coulson Legal

Cases referred to in decision:

Frigger v Murfett Legal Pty Ltd [2012] WASC 447
Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112

MASTER SANDERSON:

By amended chamber summons filed 18 March 2022, the applicant seeks an extension of time for the assessment of the respondent's costs that were incurred when the respondent provided advice and assistance to the applicant during the administration of the estate of the late Shirley Ann Watson. The respondent provided the advice between 2010 and 2015. The respondent opposes the application. However, quite sensibly, counsel for the respondent suggested if the extension was granted the matter should proceed to a provisional assessment and only proceed to an assessment if the matter cannot be resolved at the provisional assessment stage. The parties agreed this is an appropriate course of action.
A number of affidavits have been filed by the applicant and the respondent. On behalf of the applicant, there is an affidavit of Antony John Watson sworn 15 January 2022, four affidavits of Daniel Ryan Gill, these affidavits being sworn on various dates between 9 February 2022 and 8 April 2022. The respondent relied on two affidavits. There was one affidavit of Amy Louise Pascoe sworn 2 March 2022 and an affidavit of Brian Richard Lovitt sworn 31 March 2022. Despite the fact there were eight affidavits, there was in large measure agreement as to the facts. Where it is necessary to do so, I will detail the factual conflicts between the parties.
The background to this application can be summarised as follows. Between 2010 and 2015, the respondent was engaged by the applicant and provided advice and acted in relation to three separate capacities. They were:
(a)advising the executor of the estate;
(b)advising the trustee of the Robert Watson Family Trust; and
(c)advising the beneficiary of both the estate and the trust.
The respondent sent all of its bills to the applicant in his capacity as executor of the estate. The bills intermingled work the respondent had undertaken for the applicant in each of his three capacities. All of the bills were paid from the estate.
Commencing in or about April 2015, the respondent on behalf of the applicant applied to the court to pass its accounts. After considering the matter, on 4 November 2016, Registrar S Boyle declined the respondent's application. The registrar's primary reason for not passing the accounts was the intermingling of costs for the services that were provided to the applicant in his three separate capacities. It is clear the learned registrar was quite correct in making the decision she did.
From November 2016, when the respondent failed to have the accounts passed through until the present, a large amount of work has been undertaken on the issue of costs. In his written submissions, counsel for the applicant groups that work into three separate time periods. I propose to follow the grouping system used by counsel. However in doing so, I note that on 5 May 2022, the respondent lodged a chronology which, when matched with the evidence, is an accurate account of what occurred. It is a useful document. As and where necessary, I have referred to this chronology even though I have adopted the approach used by the applicant.
The applicant defines the 'first period' as between November 2016 through until December 2018. During the first period, the solicitors for the parties conferred in an effort to identify deficiencies in the bills. The conferral between the solicitors resulted in the respondent conceding it did not have a costs agreement with the applicant. Further, the respondent also conceded that without a costs agreement, it could charge the applicant no more than the applicable scale for the work that it undertook for him. Having made that concession, on 6 March 2018, the respondent reissued its bills for the first time. The adjustment that was made to the bills at this time involved applying the applicable scale rate to work that had been undertaken as opposed to the respondent's usual client rates.
Following the reissue of the bills on 6 March 2018, additional conferral occurred between the solicitors for the parties. That additional conferral resulted in the respondent undertaking a further review of the bills. In this further review, the respondent attempted to separate out the intermingled work. On 13 December 2018, the respondent reissued the bills for the second time. These further reissued bills contained adjustments that removed work that the respondent says it undertook for the applicant in a capacity other than as an executor of the estate.
The first period lasted for approximately two years. During this time the respondent undertook a series of tasks which the applicant says were only required because the respondent did not observe its legal obligations in the first instance. Accordingly, the applicant says the respondent is almost entirely responsible for the delay during the first period of just over two years.
The 'second period' dates from the reissue of the bills on 13 December 2018 through until late February 2021 when the applicant says he actively sought to progress the matter. The applicant says his activities included:
(a)On 23 April 2019, requesting copies of any additional documentation on which the respondent sought to rely. The applicant made a further request on 26 June 2019. The documentation was provided by the applicant's then solicitor on or about 31 July 2019. That is a period of just over three months from the initial request.
(b)In a letter of 26 June 2019, the applicant wrote to the respondent's solicitors providing a number of comments on the bills. As at 26 September 2019, the applicant's solicitors had not received a response to those comments and a follow-up letter was sent. No response was received until 6 January 2020.
(c)On 6 January 2020, the applicant's solicitor wrote to the respondent's solicitor informing them the applicant was prepared to settle the matter subject to the respondent addressing a series of requested adjustments to the bill of costs in relation to a series of disputed items. The applicant's solicitor's letter included an explanation as to why each of the items were disputed.
(d)Following the 6 January 2020 letter, the parties exchanged multiple without prejudice letters in an attempt to settle the matter. Based upon the chronology, it would appear there were 23 separate communications between the solicitors. However, by February 2021, it was clear the matter would not settle and the bills would need to be taxed.
(e)By letter dated 24 February 2022, the respondent's solicitor advised the respondent would not oppose an application for an extension of time to have the bills assessed. This letter is of some significance. It is found in the second affidavit of Mr Gill as attachment 'DRG1'.
The 'third period' extends from February 2021 until the present. During this period, the applicant was party to separate proceedings concerning the distribution of the estate and the trust property. On 4 May 2021, I made orders requiring the parties in the estate and trust proceedings to mediate. The applicant says in light of this development, he decided he would await the outcome of the mediation before seeking taxation of the bill. He says he considered that the settlement of the estate and trust proceedings would allow him more flexibility to agree to settle the costs dispute. Clearly, he had not given up hope of reaching a settlement.
The mediation of the estate and trust proceedings occurred on 26 October 2021 and was unsuccessful. However, discussions between the parties continued through the latter half of 2021. Eventually, these discussions lead to a settlement. The evidence shows the applicant's solicitors updated the respondent's solicitors during 2021 on events occurring in the estate and trust proceedings. They also advised the respondent as to the applicant's decision to delay taxation of the bill of costs pending the outcome of the estate and trust proceedings.
The estate and trust proceedings were not laid to rest until mid-January 2022. By letter dated 31 January 2022, the applicant's solicitor provided written confirmation to the respondent's solicitor of the outcome of the estate and trust proceedings and advised it now intended to proceed with the present application. In his written submissions, counsel for the applicant says there has been 'extensive consultation' between the solicitors for the parties. The respondent's chronology notes three letters passing between the parties, all of which were open. Presumably then, the consultation was oral. Importantly, on 1 February 2022, the respondent's solicitor wrote to the plaintiff's solicitor advising that since almost 12 months had elapsed between the letter of 24 February 2021 in which the respondent said it would not oppose an extension of time, any application for extension would now be opposed.
In his written submissions (pars 23 to 30), counsel for the applicant deals with the impact of COVID‑19 business interruptions. He says this was particularly a factor in the latter parts of the second period and the entirety of the third period. In particular, counsel notes that the COVID‑19 restrictions limited the possibility of face to face negotiations. So far as I am aware, this is the first time that in an application for an extension of time the difficulties occasioned by COVID‑19 restrictions have been raised. Reality must be faced. There is no doubt that the COVID‑19 restrictions themselves and the uncertainty they generated has caused delay. Of course, every situation is dependent upon its own particular circumstances. But it would be unrealistic not to acknowledge that the business environment in general and the practice of law in particular has been impacted by the pandemic.
This application is brought pursuant to s 295(6) and s 295(7) of the Legal Profession Act 2008 (WA). These two sections read as follows:
(6)An application by a client or third party payer under this section must be made within 12 months after -
(a)the bill was given in accordance with Division 7 or the request for payment was made to the client or third party payer; or
(b)the costs were paid if neither a bill was given nor a request was made.
(7)However, an application that is made out of time, otherwise than by -
(a)a sophisticated client; or
(b)a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned,
may be dealt with by the taxing officer if the Supreme Court, on application by the taxing officer or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12 month period.
The way in which these two subsections interact is clear. Section 295(6) provides a 12 month limitation period. Absent s 295(7), this application would fail. Under s 295(7), an extension of time is available provided the client is not a 'sophisticated client'. The discretion embodied in s 295(7) appears to embody three elements. They are:
(a)the length of the delay;
(b)the reasons for the delay; and
(c)whether an extension is just and fair in the circumstances.
In other words, the discretion, while unfettered, must pay particular regard to the length of the delay and the reasons for the delay. That can be implied from the fact those two requirements are specifically mentioned in the subsection.
Applications of this nature are dealt within the Consolidated Practice Directions at 4.7.5(7). That provision provides that the supporting affidavit should address the following issues:
(a)details of the delay in bringing the application for assessment;
(b)the reasons for the delay;
(c)whether there is evidence that suggests the bill may be excessive;
(d)whether the law practice has indicated it would oppose the application; and
(e)why it would be just and fair for the assessment to be dealt with after the 12 month period.
For the sake of completeness, I should note the accounts as originally invoiced, totalled $100,937.26. Broken down, the respondent's costs amounted to $83,292.26 and there were payments to two separate counsel, one in an amount of $8,277.50 and one in an amount of $9,367.50. After the reissue of the invoices, an amount of $15,713.03 was refunded by the respondent to the applicant. This refund included $3,977.85 interest. Counsel for the respondent notes in her submissions there was no obligation on the respondent to pay interest on any amount refunded.
There are limited authorities on the proper approach to an extension of time under s 295(7). There are two decisions which are relevant - Frigger v Murfett Legal Pty Ltd [2012] WASC 447 and Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112. In Frigger, Hall J noted at [26]:
26Generally speaking there are good reasons why compliance with time limits of the type relevant here should be adhered to. Legal practitioners are entitled to assume that in circumstances where the client was aware of their rights to seek an assessment and more than 12 months has elapsed since the date of the bill an assessment will not be sought. It may well be that they will arrange their businesses on the basis of such an assumption. It is also possible that a delay in seeking an assessment may prejudice a legal practice because memories may fade and the relevant legal personnel may move on to other positions.
In my view, in this case, the applicant has established an extension of time would be justified. In reaching that conclusion, I have taken into account a number of factors. In particular, I note the time restriction in s 295(6) is substantial and not merely procedural. That requires a clear case to take it out of the norm and remove the protections afforded to the law practice and referred to by Hall J in the passage quoted above. The factors relevant here are first, the fact that there was no costs agreement as between the applicant and the respondent. Second, the respondent sent its accounts just to the estate when it was clear it had provided advice and services to three separate parties. That inevitably meant a degree of confusion. Third, the respondent admitted overcharging the applicant and although it has made some refunds, it is not unreasonable to expect there are still some real differences between the parties. Fourth, the parties negotiated in good faith over a period of time in an attempt to reach a settlement. This explains much of the delay, particularly in the second period. Fifth, the decision by the applicant to take no action while an attempt was made to settle the estate and trust proceedings, on its face, seems reasonable, if not entirely justified.
Finally, and perhaps most importantly, as at February 2021, the respondent was prepared to agree the applicant should have an extension of time to bring this application. That necessarily implies that as of that date, the respondent had in his possession, all the information and material necessary to deal with an assessment of costs. It is not clear why as between then and now, the position should have changed. Essentially, that means the possibility of prejudice by reason of lost documents or fading memories is not a consideration. The delay between the respondent's concession and the filing of this application is not such as to prejudice the respondent.
For these reasons, I would propose making orders in terms of the applicant's chamber summons. That summons anticipates costs of this application being in the cause. That would be an appropriate order. However, if the parties are unable to agree as to the form of orders, or if either party seeks an alternative costs order, short submissions ought be filed within seven days of the publication of these reasons.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Associate
27 MAY 2022