WILLIAMS Love & Nicol Lawyers Pty Ltd v Wearne
[2015] ACAT 23
•16 March 2015
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
WILLIAMS LOVE & NICOL LAWYERS PTY LTD v WEARNE
(Civil Dispute) [2015] ACAT 23
XD 1356 of 2014
Catchwords: CIVIL DISPUTE – cost agreement for legal work done by the law practice – objection to invoiced items – whether the law practice has exceeded its instructions or lacked competence – whether client was overcharged – the enforceability of a contract providing for payment of cost of recovery action in the Tribunal.
Legislation
Cited:ACT Civil and Administrative Tribunal Act 2008 ss. 16, 17 and 48
Legal Profession Act 2006 ss. 276, 279, 286, 294 and 304A
Trade Practices Act 1974 Part IVA
Court Procedures Rules 2006 Division 3.2.7
Cases Cited:Trpkovski v Williams Love Nicol Lawyers Pty Ltd [2014] ACAT 13
Trinity Law Pty Limited v Krishinan [2009] ACAT 45
Texts/Papers
Cited:‘Professions and the Competition and Consumer Act’, Australian Competition and Consumer Commission
Tribunal: Ms E. Symons – Presidential Member
Date of Orders: 16 March 2015
Date of Reasons for Decision: 16 March 2015
ACT CIVIL & ADMINISTRATIVE TRIBUNAL XD 14/1356
BETWEEN:WILLIAMS LOVE &
NICOL LAWYERS PTY LTD
Applicant
AND: NECIA WEARNE
Respondent
TRIBUNAL: Ms E. Symons – Presidential Member
DATE:16 March 2015
ORDER
The Tribunal Orders that:
The respondent pay to the applicant the sum of $4,342.38 in respect of the outstanding invoice;
The respondent pay to the applicant the sum of $270 in respect of filing fees;
The respondent pay to the applicant the sum of $474.12 in respect of interest on the monies payable in order (1) above;
That the above sums be paid by the respondent to the applicant within 28 days of these orders;
The applicant provide the respondent with an itemised list of its recovery costs within 14 days of this decision; and if the parties are unable to reach agreement on the amount of the recovery costs within a further 14 days subject to (6) below, the applicant is granted liberty to ask the tribunal to relist the matter for the determination of the recovery costs; and
If the applicant does not ask the Tribunal to relist the matter within 28 days of providing the itemized list of recovery costs to the respondent, the applicant’s claim for the recovery costs will be dismissed.
………………………………..
Ms E. Symons – Presidential Member
REASONS FOR DECISION
In the reasons below, a reference to ‘tribunal’ refers to the ACT Civil and Administrative Tribunal generally, whereas ‘Tribunal’ refers to the current member hearing this matter.
Background
The applicant, Williams Love & Nicol Lawyers Pty Ltd, was at all material times trustee for the WLTB Unit Trust trading as ‘Bradley Allen Love Lawyers’ and a law practice as defined in the Legal Profession Act 2006 (ACT).
At all relevant times, the respondent was a lawyer practising in the ACT.
On 18 October 2013 the respondent’s then employer, the Legal Aid Commission (ACT) (LAC), wrote a letter to the respondent giving her notice of an investigation in relation to allegations of possible misconduct with respect to actions taken by the respondent in July 2013. The respondent received this letter, by email, on 23 October 2013.
On Friday 25 October 2013 the respondent received an email and letter from Clayton Utz which stated that they had been engaged by LAC to conduct an investigation into the allegation of misconduct as outlined in the LAC letter dated 18 October 2013. In this letter Clayton Utz invited the respondent to attend a meeting with Andrew Klein, Senior Associate at Clayton Utz, and stated “After you have responded to the allegation, and provided me with any materials you wish me to consider, or alternatively, advised me that you do not wish to respond to the allegation, I will then provide a report to the LAC.”
On Tuesday 29 October 2013, the respondent engaged the applicant for an initial conference in relation to the allegation. The applicant charged the respondent $492.80 for this conference which the respondent paid in full.
The respondent then engaged the applicant and instructed it to draft and prepare a response (the response) to the allegation (the respondent’s instructions).
On 31 October 2013 the applicant prepared and provided to the applicant a letter confirming the respondent’s instructions and an ACT standard costs agreement, costs disclosure statement, retainer and schedule (which the applicant had dated 31 October 2013 and signed). The letter included a legal fee budget of $5,500 (GST included), estimate of fees ($5,000 plus GST and disbursements) and payment proposal.
On 1 November 2013 the respondent paid $1,000 into the applicant’s trust account.
On 4 November 2013 the respondent signed the costs agreement and schedule referred to in paragraph 8 above.
On 7 November 2013 the applicant and the respondent discussed, by telephone, the costs of the matter and scope to extend the budget.
On 11 November 2013 the respondent paid $200 into the applicant’s trust account.
On 15 November 2013 the applicant sent an email to the respondent stating that it would likely exceed their estimate of $5,500 inclusive of GST. This email included the following statement: “Noting the new information that has come to light and the amendments to be made to the statutory declaration [sic - the response], we anticipate a further $2,500 - $5,000 plus GST to finalise your response.”
Between 31 October 2013 and 29 November 2013 the applicant undertook legal work in relation to drafting the response.
The applicant rendered invoice B7047 for $11,000 on 29 November 2013 to the respondent. After deduction of the $1,200 paid by the respondent, the balance outstanding was $9,800.
Between 3 December 2013 and 29 April 2014 the respondent paid $2,400 to the applicant.
The respondent has not made any further payment to the applicant since 29 April 2014. The amount outstanding is $7,400.
The relationship between the applicant and the respondent came to an end around May/June 2013.
The respondent emailed the applicant on 3 June 2014 disputing the charges for the work billed in invoice B7047. The applicant replied to the respondent’s letter on 7 August 2014 and rejected the respondent’s claims.
The respondent did not apply to the ACT Supreme Court pursuant to Division 3.2.7 of the Legal Profession Act 2006 (ACT) (LP Act) to have all or any part of the applicant’s costs assessed for fairness and reasonableness. The time to do so has now expired.[1] The respondent, as a sophisticated client as defined in the LP Act, has not contracted out of the operation of Division 3.2.7 in the retainer.
The Application
[1]Division 3.11.3 of the Court Procedures Rules 2006 (ACT) (the Rules)
On 1 October 2014 the applicant filed a Debt Application in the ACT Civil and Administrative Tribunal for the outstanding legal fees of $7,400 plus interest in accordance with clause 10 of the agreement and “Contractual Interest”.
The respondent filed a Response on 24 October 2014 disputing the amount claimed and seeking a stay pending the resolution of her complaint to the ACT Law Society.
On 5 December 2014 the applicant filed an amended application in which it sought the outstanding legal fees of $7,400 plus interest in accordance with clause 10 of the agreement and its costs of recovering the outstanding fees in invoice B7047 pursuant to the indemnity in clause 16 of the Agreement. The applicant also filed a chronology and a bundle of documentation comprising:
a)email from respondent to Juno Tajudeen (JST) 29 October 2013;
b)email from applicant to respondent, dated 31 October 2013, enclosing invoice dated 30 October 2013; letter confirming instructions and providing a legal fee budget , estimate and Schedule of Costs Agreement; and ACT Standard Costs agreement and retainer;
c)trust receipt dated 1 November 2014 in the amount of $1,000;
d)file note of JST dated 7 November 2013;
e)trust receipt dated 11 November 2013 in the amount of $200;
f)email from JST to respondent dated 14 November 2013 enclosing draft response;
g)email from JST to respondent dated 14 November 2013;
h)email from the respondent to JST dated 18 November 2013;
i)email from the applicant to Andrew Klein at Clayton Utz enclosing response to allegation;
j)letter from the applicant to the respondent dated 29 November 2013 enclosing tax invoice and account details;
k)trust account receipts for $200.00 dated 3 December 2013, 6 December 2013, 20 December 2013, 17 January 2014, 31 January 2014, 17 February 2014, 28 February 2014, 14 March 2014 (2 payments), 11 April 2014 and 29 April 2014;
l)email from the applicant to the respondent dated 30 May 2014;
m)email from the respondent to the applicant enclosing letter to applicant dated 30 May 2014; and
n)email from the applicant to the respondent dated 7 August 2014 and enclosing letter from the applicant to the respondent dated 7 August 2014 which enclosed:
i. email from JST to the applicant dated 15 November 2013, copy of executed statutory declaration and second draft response dated 15 November 2013;
ii. copy of JST’s email to the respondent dated 15 November 2013 and the respondent’s email to JST dated 18 November 2013 and the second draft response with the respondent’s tracked changes and comments; and
iii. statement of account to the respondent dated 5 August 2014.
On 6 January 2014 the respondent filed a bundle of documentation comprising:
a)email from Simon Jackson to the tribunal dated 6 January 2014;
b)email from Andrew Klein dated 24 October 2013 enclosing copy of letter from Clayton Utz to the respondent; copy letter from the LAC to the respondent dated 18 October 2013; a copy of section 9 of the Public Sector Management Act 1994; copy of Section g - Workplace Behaviours of the Enterprise Agreement;
c)email from the respondent to JST dated 31 October 2013 enclosing copy of ‘background to email being written’ and copy of email from the respondent to John Boersig at Legal Aid ACT 9 October 2013;
d)email from JST to the respondent dated 1 November 2013;
e)email from JST to the respondent dated 15 November 2013 enclosing second draft response;
f)email from the respondent to JST dated 18 November 2013 enclosing second draft Response with tracked changes and comments;
g)email from JST to Andrew Klein dated 18 November 2013 requesting particulars of the relevant sections of the PSMA, the management standards and Territory laws the applicant was said to have breached;
h)email from the applicant to the respondent dated 30 May 2013 and email from the respondent to the applicant dated 3 June 2014 enclosing letter from the respondent to the applicant;
i)copy of the respondent’s affidavit dated 6 August 2013 in proceedings OR 14/30 before the tribunal; and
j)email from the respondent to JST dated 7 November 2013 enclosing blank Form 1410 and blank form 956.
On 13 January 2015 the respondent filed an amended response in which she denied liability to pay the amount claimed.
On 16 January 2015 the applicant filed a costs disclosure statement which had been omitted from the bundle of documents filed on 5 December 2014.
The matter was heard on 4 February 2014. Ms Scotton, solicitor with the applicant, appeared for the applicant. Ms Warwick, of counsel, appeared for and with the respondent. Neither party gave evidence at the hearing. The hearing proceeded by way of submissions. At the conclusion of the hearing the Tribunal reserved the decision.
The applicant’s submissions
The applicant made the following submissions in relation to its application:
(a)The legal services contracted for by the respondent were provided to the respondent pursuant to the terms of the retainer and the instructions provided by the respondent to the applicant.
(b)The applicant’s costs agreement complied with Division 3.2.3 of the LP Act and in particular with sections 269, 272, 276 and 277.
(c)Pursuant to rule 442 of the Rules it is not sufficient for the respondent to deny the debt.[2] She must deny the matters of fact from which her liability is alleged to arise and the respondent has admitted these matters of fact in her amended response.[3]
The respondent’s submissions
[2]Applicant’s outline of Submissions at [36]
[3]At paragraph 22(f)- the retainer; at [36],[37], [38], [41], [42], [43], [44], [45], [46] and [47] -that the applicant performed work for the respondent pursuant to the retainer ; at [51] - the retainer provides that the estimate for professional fees is not a quotation and is subject to change; [35] and [51] - the applicant advised the respondent the fees were likely to change; and at [39], [44] and [45] - the respondent continued to instruct the applicant after being advised that the fees were likely to exceed the estimate.
The respondent made the following submissions in relation to the application:
(a)that it was an express term of the agreement that the applicant was instructed by the respondent only to act in relation to the allegation of misconduct made by the Legal Aid Commission, and for that purpose to draft and prepare her response.[4] This was confirmed by the applicant in its letter to the respondent dated 31 October 2013;
[4]Amended response at [23]
(b)that the applicant performed work relating to fraud, professional misconduct and Law Society prosecutions all of which were outside the scope of the agreement and not properly chargeable under the agreement;[5]
[5]Amended response at [47]
(c)the applicant represented that it was an employment law specialist firm with experience and expertise in employment law and misconduct investigations and the applicant relied on these representations;[6]
[6]Amended response at [26]
(d)the respondent relied on the disclosures on the applicant’s letter dated 31 October 2013 signed by Mr John Wilson that he was an Accredited Specialist in Employment and Industrial Law and listed in Best Lawyers Australia;[7]
[7]Amended response at [25]
(e)the agreement between the parties arose from the conference on 29 October 2013 and the applicant’s advertising and reputation as well as the following documents: the email from Mr Wilson to the respondent on 31 October 2013, the letter from the applicant to the respondent dated 31 October 2013, the tax invoice and receipt dated 31 October 2013, the schedule to the costs agreement, the applicant’s costs disclosure statement and the ACT Standard Costs Agreement and Retainer;
(f)it was an implied term of the agreement that the applicant would allocate a solicitor with experience and expertise in employment law and misconduct investigations to act in this matter;[8]
[8]Amended response at [29]
(g)it was an implied term of the agreement that the applicant would allocate a highly experienced solicitor because:
(i) as the respondent was a practising solicitor it was a matter of professional comity;[9] and
[9]Amended response at [30]
(ii) the respondent was seeking legal advice in relation to an allegation of misconduct; her present employment was at risk, and potentially her future entitlement to practice as a solicitor was also at risk.[10]
[10]Amended response at [31]
(h)it was an implied term of the agreement that the applicant would not charge for work in the nature of training, development, instruction, supervision, management and mentoring;[11]
(i)the applicant charged for work performed by persons not subject to the retainer;[12]
(j)between 29 October 2013 and 15 November 2013 the applicant performed work in preparing, drafting and redrafting the response without obtaining the relevant Form 1410 on which the allegation of misconduct was based; the applicant’s work was therefore performed without the materials necessary to take instructions and to perform the work.[13] The fees charged for this work are not properly chargeable;
(k)the work performed by the applicant between 29 October 2013 and 15 November 2013 in preparing, drafting and redrafting the response was thrown away on 19 and 20 November 2013 when the response was redrafted and excluded most of the earlier draft responses. The fees charged for this work are not properly chargeable; and
(l)it was an express term of the agreement that the legal budget was $5,500 and the legal fee budget is a cap on fees. The respondent did not expressly agree to increase the legal budget and any fees charged in excess of the budget are not properly chargeable under the agreement. [14]
The applicant’s further submissions
[11]Amended response at [32]
[12]Amended response at [41]
[13]Amended response at [42]
[14]Amended response at [52]
The applicant made the following submissions in relation to the amended response:[15]
(a)the respondent’s denial of liability relates to the assessment of the applicant’s fees. There is no defence in contract that a bill is unfair or unreasonable;
(b)the Tribunal is unable to consider the respondent’s allegations regarding the reasonableness of the fees charged;[16]
(c)the conferences were held for the purpose of review, care and conduct and to obtain proper instructions from the respondent and are properly chargeable under the retainer and in the usual course of practice of private law firms;
(d)clause 6 of the retainer entitled the applicant to change, at any time, the persons responsible for the day to day conduct of the respondent’s matter and the retainer enabled the applicant to charge for work done by any of its employees;
(e)the applicant charged for work performed in accordance with the instructions of the respondent, who was an admitted solicitor;
(f)the scope of the respondent’s instructions was such that it was necessary for the applicant to advise on fraud, professional misconduct and Law Society prosecutions which were ancillary to the allegation and required the applicant to exercise care, skill and diligence in relation to same; and
(g)the legal fee budget does not form part of the retainer and the retainer prevails over any statements or representations made to the respondent.
[15]Applicant’s Outline of Submissions at [39] and [40]
[16]Trpkovski v Williams Love Nicol Lawyers Pty Ltd [2014] ACAT 13 and Trinity Law Pty Limited v Krishinan [2009] ACAT 45
The Tribunal is satisfied that the issues which arise from the parties’ contentions are as follows:
The issues
a)whether there is a debt due and payable by the respondent to the applicant in respect of the legal services provided;[17]
[17] Applicant’s Outline of Submissions at [4]
b)whether the tribunal has jurisdiction to consider the respondent’s allegations regarding reasonableness of the fees charged;
c)whether the applicant’s employees acted competently in providing the legal services to the respondent;
d)whether the applicant exceeded its instructions; and
e)whether the applicant’s costs of recovery of the monies owed to it can be claimed.
Consideration of the issues
Whether there is a debt due and payable by the respondent to the applicant for the legal services provided
In considering this issue it is necessary for the Tribunal to consider the costs agreement, the respondent’s submissions that the costs were capped by the legal fee budget and the applicant’s submissions.
The costs agreement
Section 279 of the LP Act provides if a valid costs agreement exists, then it forms the basis upon which costs are to be recovered. Section 286 of the LP Act provides that a costs agreement may be enforced as per any other contract. Sections 279 and 286 are found in Part 3.2 Costs Disclosure and Assessment of the LP Act.
In an earlier tribunal decision of Trinity Law Pty Limited & Krishinan[18] (Trinity Law) the tribunal considered a costs agreement and the provisions of Part 3.2 of the LP Act. That tribunal found that the agreement complied with Part 3.2 of the LP Act and, as a valid costs agreement, pursuant to sections 279 and 286 of the LP Act, that agreement formed the basis upon which costs are to be recovered, namely in the same way as any other contract. That tribunal also found that the tribunal has jurisdiction over contractual disputes. At paragraph 44 the tribunal said:
If the applicant (the law firm) only carried out the work as instructed, within the limit of the estimate provided in the cost agreement and does so competently, then the only remaining contractual issue is whether the bill of costs is correctly drawn with reference to the fees agreement. In such circumstances there is no defence known to the law of contract that the bill is unfair or unreasonable.
[18] [2009] ACAT 45
Those findings are equally applicable in the present matter. There was no dispute between the parties, and the Tribunal is satisfied and finds, that the agreement between the applicant and the respondent complied with Part 3.2 of the LP Act and that it is a valid costs agreement. The Tribunal is further satisfied the agreement forms the basis upon which costs are to be recovered - that is in the same way as any other contract.
Part 4 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) relates to civil disputes. A civil dispute application is defined in section 16 as:
..an application that consists of 1 or more of the following applications:
(a) A contract application;
(b) A damages application;
(c) A debt application
(d) ….
Section 17 of the ACAT Act provides that a person may make a civil dispute application to the tribunal.
Accordingly, the Tribunal is satisfied and finds the tribunal has jurisdiction over contractual disputes.
The estimate and the legal fee budget
At the hearing the Tribunal determined that there was no merit in the respondent’s submission that the legal fee budget referred to in the letter from the applicant to the respondent dated 31 October 2013 was a cap on the legal fees and that fees in excess of that budget were not properly chargeable. The Tribunal sets out its reasons below.
Clause 24 of the retainer provided that the terms of the retainer prevail over any statements or representations made to the respondent. The letter dated 31 October 2013, which refers to the legal fee budget, does not form part of the retainer.
The retainer set out the manner in which the applicant would charge the respondent in clauses 5 and 21. The estimate in the retainer was $5,500 (including GST). In accordance with section 276 of the LP Act the applicant provided the respondent with the further estimate that the estimate they had given previously would be exceeded by between $2,000 and $5,000.
Conclusion
There was no dispute that the applicant had performed work for the respondent pursuant to the retainer; that the applicant had provided an estimate of fees and subsequently advised the respondent that the fees were likely to exceed the estimate; and that the respondent continued to instruct the applicant after being advised that the fees were likely to exceed the estimate.
Subject to considering the remaining issues, the Tribunal is satisfied and finds that the rendering of an invoice that is within the limit of the estimates provided and which is correctly drawn with reference to the costs agreement creates a debt due and payable by the respondent to the applicant for the legal services rendered.
Whether the tribunal has jurisdiction to consider the respondent’s allegations regarding reasonableness of the fees charged?
As stated in Trinity Law, there is no defence known to the law of contract that the bill is unfair or unreasonable.
The LP Act makes clear provision for an aggrieved party to apply to the Supreme Court within 12 months from the date of service of the original invoice to seek a costs assessment in the ACT Supreme Court. The Costs Disclosure Statement provided to the respondent by the applicant clearly set out her rights to apply to the Supreme Court for an assessment if she disputed all or any part of the applicant’s legal costs.
To the extent that the respondent raised in her response to the application, that all or some of the applicant’s costs were unfair or unreasonable, the appropriate action for the respondent to have taken was to have applied to the Supreme Court for a costs assessment within 12 months after the day of service of the invoice or the request for payment. The respondent did not do so. She is now out of time to make that application.
As an Australian Legal Practitioner, the respondent is a ‘sophisticated client’ as defined in section 304A of the LP Act; as such she is not able to make an application for an assessment of the applicant’s costs out of time.[19]
[19]Section 294(7) of the Legal Profession Act 2006
In Trinity Law that tribunal also considered whether a defence based on a bill being unfair or unreasonable might conceivably enliven equitable principles of unconscionability that are embodied in Part IVA Trade Practices Act 1974 and stated:
…there are obvious reasons why such a defence would seem to have no application in the present case:
a. It is generally not unconscionable for a party to rely upon the terms of a contract per see (sic)( Millers Annotated Trade Practices Act 25th ed at [1.51AA.10])
b. The Respondent is himself a lawyer who stands in no position of disadvantage relevant to the Applicant.
c. The Respondent has a relevant remedy in the Supreme Court under division 3.2.7. of the Act.
The above statements equally apply to the respondent in the present matter.
Conclusion
The Tribunal is satisfied and finds that the tribunal does not have jurisdiction to consider the respondent’s allegations regarding the fairness or reasonableness of the fees charged.
Whether the applicant’s employees acted competently in providing the legal services to the respondent?
This issue was at the heart of the respondent’s submissions. The respondent variously submitted that the solicitor/s acting for her did not demonstrate the experience and expertise in employment law and misconduct investigations she expected from the applicant’s advertising and representation that it was a specialist law practice; that some of the work the subject of the claim was not undertaken competently; that the applicant charged her for work which was in the nature of training, development, instruction, supervision, management and mentoring and for which she should not be liable; and that she was charged for work performed by persons not subject to the retainer. The respondent also alleged that the applicant had exceeded its instructions. The Tribunal will consider this issue below.
The present matter differs from the Trinity Law matter as in that case the respondent had not alleged that the applicant had exceeded its instructions or lacked competence.
The respondent submitted that, given the nature of the allegation against her and the fact that she was a practising solicitor, she had sought out a legal practice with a specialty in the areas the subject of the allegation, namely employment law and misconduct.
In retaining the applicant she relied upon the representation on the applicant’s website that it was an employment law specialist firm with experience and expertise in employment law and misconduct investigations and that John Wilson, one of the applicant’s partners, was an Employment and Industrial Law Accredited Specialist with the NSW Law Society’s accreditation scheme.
In reliance on these representations the respondent telephoned John Wilson to make an appointment. Gabrielle Sullivan returned the respondent’s telephone call and as neither she nor John Wilson were able to see the respondent at that time Ms Sullivan made an appointment for the respondent to see another solicitor, Juno Tajudeen.
After the respondent had an initial conference with Juno Tajudeen she received a letter from the applicant dated 31 October 2013. There were two endorsements on this letter - one stating that John Wilson was an Employment and Industrial Law Accredited Specialist and the second stating that he was listed in Best Lawyers Australia, which lists lawyers in private practice chosen through professional peer review.
The schedule (the schedule) to the Cost Agreement enclosed with this letter identified that the ‘Partner Responsible’ for the respondent’s matter was ‘John Wilson’ and the ‘Person Acting’ was ‘Juno Sheik Tajudeen’.
The respondent relied on the endorsements on the 31 October 2013 letter and the information in the schedule in continuing to instruct the applicant to prepare and draft the response for her.
The respondent submitted that Ms Tajudeen, as the person identified in the schedule as acting for her, did not handle her matter with the due care, skill and competence that she was entitled to expect from the applicant. The respondent also submitted that the applicant had not properly supervised Ms Tajudeen.
The respondent based these submissions on the fact that the misconduct allegation which was being investigated concerned the respondent signing a Form 1410 statutory declaration in July 2013. At the conference between the respondent and Ms Tajudeen on 29 October 2013 the respondent handed Ms Tajudeen all of the documents she had in her possession. As the respondent did not have a copy of this Form 1410 in her possession she expected her solicitor would obtain a copy of the document from the investigator at the earliest opportunity.
The applicant did not obtain a copy of the Form 1410 until 13 business days later on 15 November 2013 when John Wilson had looked at the response Ms Tajudeen had been drafting. In her email to the respondent dated 15 November 2013 Ms Tajudeen wrote:
…
The response was reviewed by John Wilson today subject to a number of outstanding matters.
During his review John identified the need to have a copy of the statutory declaration in question. We requested this from Mr Klein (copy attached) and received it at 4pm today.
From our review of the statutory declaration, we have become aware that the stat dec had been signed by the client. This will affect the response. …
Please provide your further instructions regarding the statutory declaration so that we can amend the response accordingly.…
The Form 1410 was a critical document. It transpired that when the applicant obtained this document they ascertained that it had been signed by the respondent’s then client after she had signed it. The respondent was not aware that it had been signed by her client.
The applicant’s itemised account shows that, between 31 October 2013 and 14 November 2013, Ms Tajudeen had been conferring with Ms Sullivan, without having the crucial Form 1410, ‘regarding a strategy to respond and a discussion of the way forward’ on the following dates and times and with the following charges:
31/10/13
JST (Ms Tajudeen)
5 units (30 minutes)
$112.29
GMS (Ms Sullivan)
5 units (30 minutes)
$157.91
7/11/13
JST
4 units (24 minutes)
$ 89.83
GMS
4 units (24 minutes
$126.32
12/11/13
JST
2 units (12 minutes)
$ 44.91
$531.26
Between 12 November 2013 and 14 November 2013 Ms Tajudeen has recorded 80 units or eight hours of time which was charged to the respondent for ‘Draft response’ without her having seen the Form 1410 statutory declaration. The cost charged for this work was $2,526.36.
The itemised account states that on 15 November 2013 Ms Tajudeen continued to draft the response, then conferred with John Wilson to review it and then drafted an email to the investigator requesting copy of the statutory declaration. The itemized account records 17 units or one hour forty two minutes at a cost of $381.78 for this work. It is not clear to the Tribunal how much of this charge was referable solely to Ms Tajudeen continuing to review her draft response before conferring with John Wilson.
Without including the work charged for 15 November 2013 the cost of the work charged for conferring and drafting the response without the Form 1410, as set out in [63] and [64] above exceeds $3,000.
As stated in [51] above, the respondent contended that the applicant’s failure to obtain the Form 1410 until 15 November 2013 demonstrated that the solicitor/s acting for her did not have the experience and expertise in employment law and misconduct investigations she expected from the applicant’s advertising and representation that it was a specialist law practice and that the bulk of the work carried out between 31 October 2013 and 14 November 2013 was not undertaken competently.
The respondent also contended that the applicant charged her for work which was in the nature of training, development, instruction, supervision, management and mentoring and for which she should not be liable. She based this contention on the itemised account which showed that Ms Tajudeen often conferred with another solicitor, Ms Sullivan.
The respondent said she did not become aware until 19 November 2013 that Ms Tajudeen was conferring with Ms Sullivan. She had been charged by both solicitors for their time spent in conferring with each other.
The Standard Costs Agreement states that the Law Practice is retained by the client (clause 4) as the client’s legal practitioner/s and clause 6.2 states that the Law Practice reserves the right to change, at any time the partner responsible for the overall supervision of the Matter; and/or the Person (s) responsible for the day to day conduct of the Matter. These are clearly set out in the Agreement.
The respondent signed this agreement. Being a solicitor, the Tribunal would expect that the respondent had read the Agreement and knew all of its terms.
Given the contents of clause 4 and clause 6.2 of the Standard Costs Agreement, the Tribunal is not satisfied that there is any merit in the respondent’s submission that she should not be charged for time spent by other employees of the applicant working on her matter.
However, the respondent also submitted, and the Tribunal concurs, that it is an implied term in the agreement that the applicant would not charge the respondent for work in the nature of training, development, instruction, supervision other than by the partner named in the Schedule, management or mentoring. The respondent should not have to pay for a law practice to teach their staff to do their work.
It was the respondent’s claim that the applicant should have allocated either a highly experienced solicitor with the knowledge and ability to handle her matter or a solicitor with experience and expertise in employment law and misconduct investigations. It was a matter which clearly could have serious ramifications on the respondent’s ability to be able to continue to work as a legal practitioner and thus on her livelihood. She understood that in having Ms Tajudeen acting for her, with John Wilson, being the partner responsible, that her matter would be handled by people with the relevant experience and expertise.
The Tribunal noted that the applicant, in the draft response of 15 November 2013, stated that “Care and caution are particularly necessary when, as here, an adverse finding may result in the loss of capacity to earn a livelihood.” The applicant emphasised the seriousness of the matter for the respondent in that draft response where it referred, at some length, to the Standard of Proof and to the High Court decision of Briganshaw v Briganshaw[20]and stated “…we respectfully submit that the standard of proof must rise to the level of a serious matter”. [21]
[20](1938) 60 CLR 336
[21] At paragraph 12 of the draft response
While the statements in the preceding paragraph were, in the Tribunal’s opinion, properly not included in the response sent to the applicant’s investigator on 20 November 2013, they support the respondent’s claim that her matter was a serious matter and that it was an implied term of the Agreement that the applicant would allocate a highly experienced solicitor to the matter as her present employment was at risk and potentially, her future entitlement to practice as a solicitor was also at risk.
It was not clear why the draft response that Ms Tajudeen had been working on was not seen by John Wilson until 15 November 2013. What appears to have occurred is that Ms Tajudeen had been conferring Ms Sullivan. The respondent submitted that this was “in house supervision, management and mentoring” and not properly chargeable to her. She said her being charged for both solicitors’ time spent on her matter was tantamount to ‘double handling’ or ‘double dipping’.
It is not possible for the Tribunal, in the absence of any evidence, to determine whether Ms Sullivan was in fact supervising, managing or mentoring Ms Tajudeen or whether Ms Sullivan was appointed by the applicant, pursuant to clauses 4 and 6.2 of the Standard Costs Agreement, to become jointly responsible for the day to day conduct of the respondent’s matter.
Nevertheless, the fact is that neither Ms Tajudeen nor Ms Sullivan had identified the need to obtain the crucial Form 1410 until John Wilson alerted them to this failure on 15 November 2013. The Form 1410 had not been provided to the respondent by the investigator so she was unable to provide it the applicant. She was entitled to expect that the applicant would have the expertise and experience to determine what documentation needed to be obtained from the investigator.
When the Form 1410 was obtained it transpired that it had the client’s signature on it. The respondent was not aware of this fact. It was a very relevant fact. That Form 1410 was referred to in both the letter to the respondent from the LAC dated 18 October 2013 and the letter from Clayton Utz sent on 24 October 2013. The applicant should have obtained it from the investigator at the earliest opportunity.
The respondent submitted that the various responses drafted before the applicant obtained the Form 1410 were not used in the response sent to the investigator on 20 November 2013 and as this work was thrown away and of no value to her she should not be charged for it.
It is clear from the documentation that once that Form 1410 was obtained the matter progressed quickly and the response was provided to the investigator in three working days.
It appears from the itemized account that Ms Tajudeen continued to work on the draft response after 15 November 2013 and charge the respondent for this work until Ms Sullivan took over drafting the response on 20 November 2013. The itemized account shows that the respondent has been charged, in round figures, $6,600 for the work undertaken after the Form 1410 was obtained and the response was sent to the investigator.
It is true that a comparison of Ms Tajudeen’s draft responses with the actual response sent on 20 November 2013 bear little resemblance.
Conclusion
In considering the respondent’s submission that some of the work for which she has been charged was not done competently and of no value to her the Tribunal has taken into account all of the documentation and the submissions from the parties.
The Tribunal is satisfied and finds that the applicant’s failure to obtain a copy of the Form 1410 at the earliest opportunity demonstrated a lack of competence, care, skill and attention which the respondent, as a client in a serious matter, was entitled to expect from a law practice which represented that it was, among other things, an employment law specialist firm with experience and expertise in employment law and misconduct investigations.
In this regard, the Tribunal is satisfied and finds that a significant proportion of the work undertaken by the applicant between 31 October 2013 and 15 November 2013 was of little value to the client because the applicant had not obtained the Form 1410. The Tribunal will return to this issue in [100] below.
Australian Consumer Law
Given the Tribunal’s findings above and given that neither party made submissions in relation to the applicability of Australian Consumer Law (ACL) in this matter, it is not strictly necessary to consider the ACL.
Nevertheless, the Tribunal makes the following observations about the ACL as it appears to the Tribunal that the agreement between the parties in this matter is likely to be regarded as a consumer contract.
Schedule 2 of the Competition and Consumer Act 2010 (Cth) is known as the Australian Consumer Law (ACL). It is consumer protection law that applies Australia wide. The definition in section 2 of the ACL explicitly includes “any business or professional activity”. The Australian Competition and Consumer Commission, in its publication, Professions and the Competition and Consumer Act[22], clearly believes that the ACL applies to the activities of lawyers.
[22]
The ACL contains consumer guarantees in relation to the supply of services in sections 60 to 62. When applied to lawyers, these guarantees mean that lawyers guarantee to consumers who acquire the lawyers’ services wholly, as in this case, or predominantly, for personal consumption, that they will provide legal services with due care and skill, which are fit for the purpose and within a reasonable time. These guarantees may form the basis of a complaint by the consumer about the lawyer’s competence and diligence or quality of service. The ACL brings a lawyer’s customer service obligations into sharp focus.
In this matter the respondent did variously allege that the applicant had not carried some of its work with due care and skill, and/or competently and/or that some of the services provided were not fit for the purpose. These claims would seem to be covered by the ACL.
The respondent’s instructions
The applicant submitted at the hearing that the applicant was entitled to expect the respondent, as a solicitor, would provide competent instructions and that her instructions were not consistent and this was why Ms Tajudeen had conferred with Ms Sullivan.
Not surprisingly, this submission was contested by the respondent at the hearing as there had not been any prior indication or claim that the respondent’s instructions were not consistent or caused the need for Ms Tajudeen to confer with Ms Sullivan. The Tribunal is satisfied that this is the case and accordingly finds that there is no merit in the applicant’s submission.
Whether the applicant exceeded its instructions?
The respondent submitted that it was an express term of the Agreement that the applicant was to act on behalf of the respondent in relation to the misconduct allegation, and for that purpose, to draft and prepare her response. The respondent further submitted that the applicant has charged her for work performed outside the scope of the Agreement, which related to fraud, professional misconduct and Law Society prosecution, and as such the work was not properly chargeable.
The applicant submitted that, given the scope of the respondent’s instructions, it was necessary for the applicant to advise on fraud, professional misconduct and Law Society prosecution as they were ancillary to the application and required the applicant to exercise care, skill and diligence in relation to the same.
The investigator’s letter to the respondent stated:
It is very important that you are aware that any information that you provide to me in the course of my investigation may potentially incriminate you in respect of any future criminal prosecution that may be taken against you in respect of the allegation, or may incriminate you in respect of any disciplinary process that may be undertaken against you in respect of the allegation by a body such as the ACT Law Society and/or the Office of the Migration Agents Registration Authority...
The Tribunal is satisfied that in acting for the respondent, it was incumbent on the applicant to research and advise on fraud, professional misconduct and Law Society prosecution. The investigator had alerted the respondent to these possibilities. The applicant needed to exercise care, skill and diligence in drafting the response to the allegation to ensure any information provided to the investigator had been considered in relation to potential criminal prosecutions and /or disciplinary action against the respondent.
The Tribunal finds that there is no merit in the respondent’s submission.
Conclusion
The Tribunal is satisfied and finds that a significant proportion of the work undertaken by the applicant before obtaining the Form 1410, namely that set out in [62] and [63] above, was not carried out competently or with the necessary care, skill and attention and is not properly chargeable to the respondent. This amounted to $3,057.62 and is not payable by the respondent. When this amount is deducted from the amount claimed, $7400.00, the amount owing to applicant is $4342.38.
The Tribunal is satisfied that the remainder of the work undertaken up to and including 15 November 2013 and the work undertaken after 15 November 2013 has been properly carried out and the costs for that work are payable by the respondent.
Whether the applicant’s costs of recovery of the monies owed to it can be claimed pursuant to clause 16 of the Agreement?
Clause 16 provides:
RECOVERY OF MONEYS OWED
Should the Law Practice seek to recover any moneys 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 tribunal considered this issue in Trpkovski v Williams Love & Nicol Lawyers Pty Ltd[23] (Trpkovski). In that case the respondent law practice had submitted to the tribunal a schedule of costs which included the conduct of the entire matter and related to far more than time spent recovering the debt. That tribunal determined an amount to be paid to the respondent law practice pursuant to clause 16 of the retainer. In coming to this decision the tribunal said:
25.The Tribunal acknowledges that there is 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 otherwise orders. 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.
26. 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 en example, see Residential Tenancies Act (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)).
27.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.”
[23][2014] ACAT 13
The respondent submitted, in this no costs jurisdiction, that contractual costs are a matter for the discretion of the tribunal and that it would be inappropriate to allow the applicant to charge the respondent for all the hours they claim to have spent on recovering the debt. The respondent submitted that if any costs order was made it should be modest. The applicant submitted that there was no authority for any costs order being modest.
In determining this issue, the Tribunal has taken into consideration the reasons in Trpskovski and that there is a signed agreement to pay costs.
While the Tribunal is satisfied, for the reasons set out in Trpkovski, that the applicant is entitled to recover its recovery costs from the respondent pursuant to clause 16, in exercising its discretion a relevant factor for the Tribunal is that the respondent contested the amount of the original account and she has been partially successful.
Unlike Trpskovski, the applicant in this matter did not provide a schedule of the recovery costs to the Tribunal. In the absence of a schedule the Tribunal proposes that orders be made that:
a)the applicant provide the respondent with an itemised list of its recovery costs within 14 days of this decision; and if the parties are unable to reach agreement on the amount of the recovery costs within a further 14 days, subject to (c) below, the applicant is granted liberty to ask the tribunal to relist the matter for the determination of the recovery costs; and
b)If the applicant does not ask the Tribunal to relist the matter within 28 days of providing the itemized list of recovery costs to the respondent, the applicant’s claim for the recovery costs will be dismissed.
Conclusion
The applicant has sought contractual interest on the outstanding amount. The Tribunal has set out the interest calculations in Schedule A at the end of this decision.
For the reasons set out above, the Tribunal will make the following orders:
a)The respondent pay to the applicant the sum of $4,342.38 in respect of the outstanding invoice;
b)The respondent pay to the applicant the sum of $270 in respect of filing fees;
c)The respondent pay to the applicant the sum of $474.12 in respect of interest on the monies payable in order (a) above
d)That the above sums be paid by the respondent to the applicant within 28 days of these orders;
e)The applicant provide the respondent with an itemised list of its recovery costs within 14 days of this decision; and if the parties are unable to reach agreement on the amount of the recovery costs within a further 14 days subject to (6) below, the applicant is granted liberty to ask the tribunal to relist the matter for the determination of the recovery costs; and
f)If the applicant does not ask the Tribunal to relist the matter within 28 days of providing the itemized list of recovery costs to the respondent, the applicant’s claim for the recovery costs will be dismissed.
………………………………..
Ms E. Symons, Presidential Member
Schedule A Interest Calculations
| Invoice | Amount | Tribunal decision | Less paid | Outstanding |
| B7047 29/11/14 | $11,000.00 | $11,000 - $3,057.52 = $7,942.38 | $1,200.00 (29/11/13) | $6,742.38 |
| $200.00 (03/12/13) | $6,542.38 | |||
| $200.00 (06/12/13) | $6,342.38 | |||
| $200.00 (20/12/13) | $6,142.38 | |||
| $200.00 (03/01/14) | $5,942.38 | |||
| $200.00 (17/01/14) | $5,742.48 | |||
| $200.00 (31/01/14) | $5,542.38 | |||
| $200.00 (14/02/14) | $5,342.38 | |||
| $200.00 (28/02/14) | $5,142.38 | |||
| $200.00 (14/03/14) | $4,942.38 | |||
| $200.00 (28/03/14) | $4,742.38 | |||
| $200.00 (11/04/14) | $4,542.48 | |||
| $200.00 (29/04/14) | $4,342.38 |
Interest calculation
| Amount outstanding | Clause 10 Interest rate | Period | Amount |
| $6,742.38 | 8.75% | 29/11/13 –03/12/13 , 5 days | $ 8.09 |
| $6,542.38 | 8.75% | 04/12/13 –06/12/13, 3 days | $ 4.70 |
| $6,342.38 | 8.75% | 07/12/13 –20/12/13, 14 days | $ 21.29 |
| $6,142.38 | 8.75% | 21/12/13 –31/12/13, 11 days | $ 16.20 |
| $5,942.38 | 8.50% | 01/01/14 –03/01/14, 3 days | $ 4.15 |
| $5,742.38 | 8.50% | 04/01/14 - 17/01/14, 14 days | $ 18.72 |
| $5,542.38 | 8.50% | 18/01/14 - 31/01/14, 14 days | $ 18.06 |
| $5,342.38 | 8.50% | 01/02/14 –14/02/14, 14 days | $ 17.42 |
| $5,142.38 | 8.50% | 15/02/14 –28/02/14, 14 days | $ 16.76 |
| $4,942.38 | 8.50% | 01/03/14 –14/03/14, 14 days | $ 16.11 |
| $4,742.38 | 8.50% | 15/03/14 –28/03/14, 14 days | $ 15.46 |
| $4,542.38 | 8.50% | 29/03/14 –11/04/14, 14 days | $ 14.81 |
| $4,342.38 | 8.50% | 12/04/14 - 29/04/14, 18 days | $ 18.20 |
| $4,342.38 | 8.50% | 30/04/14 - 30/06/14, 62 days | $ 62.69 |
| $4,342.38 | 8.50% | 01/07/14- 04/02/15, 219 days | $221.46 |
| Total Interest | $474.12 |
HEARING DETAILS
FILE NUMBER: | XD 14/1356 |
PARTIES, APPLICANT: | Williams Love and Nicol Lawyers |
PARTIES, RESPONDENT: | Necia Wearne |
COUNSEL APPEARING, RESPONDENT | Ms Warwick |
SOLICITORS FOR APPLICANT | Williams Love Nicol Lawyers |
SOLICITORS FOR RESPONDENT | Ms L. Scotton |
TRIBUNAL MEMBERS: | Ms E. Symons – Presidential Member |
DATES OF HEARING: | 4 February 2015 |
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