COSTS – Legal practitioner’s bills – Review of bills – Discretionary considerations

COSTS – Legal practitioner’s bills – Review of bills – Discretionary considerations – Whether just and fair to extend time to review bills – Legal Profession Act 2004 s 3.4.38(6)

Androvitsaneas v Tartaglia & Associates [2016] VSC 361 (24 June 2016)

The applicant, a former client of the respondent firm, applied for a review of the costs charged to him by the respondent and sought an extension of time for that review as it was made beyond the 12 month time limit. The applicant sought a determination pursuant to s 3.4.38(6) of the Legal Profession Act 2004 (‘the LPA’).

The respondent acted for the applicant from June 2011 until 4 August 2014. The applicant sought an assessment of costs claimed by the respondent ‘pursuant to the bills of costs rendered to the applicant in the period 16 June 2011 and 31 December 2014’.

The factors to be considered in relation to the exercise of the court’s discretion are the extent of the delay, the reasons for the delay including the client’s knowledge of his or her rights, whether there is evidence that the bill may be excessive, whether the client paid the bill without demur and the reasons for the practitioner’s opposition to the extension of time including any prejudice to the practitioner (Mustafa v Velos [2012] VSC 133 (Whelan J). It was stated by Emerton J in Tomasevic v Nowicki Carbone [2015] VSC 302 at [17] that “There are good reasons why the legislation has imposed a 12 month time limit on making an application for costs review. Legal practitioners are entitled to organise their affairs on the basis that a review is unlikely if requested more than 12 months after the bill has been given”.

Ginnane J considered the background facts of the matter. A disputed fact was whether the client knew of his rights to review the costs of Members First Broker Network Pty Ltd in accordance with costs orders made in April 2012 and August 2013. Another disputed fact was whether the applicant ever requested itemised bills from the respondent. This was relevant as to whether he had accepted the reasonableness of the respondent’s bills and whether he had exercised rights provided to him pursuant to the LPA.

The judge noted s 3.4.9 of the LPA relating to costs disclosure. Four disclosure documents were given to the applicant, being a cost agreement and other disclosure statements in similar terms except with an increased estimate of costs.

There were eight documents delivered by the applicant purporting to be lump sum bills. The applicant’s case was:

· There were erroneous statements in the disclosure statements in relation to the time frame in which a costs review could be sought;

· Contrary to s 3.4.35 of the LPA, none of the lump sum bills included or was accompanied by a written statement setting out the avenues open in the event of a dispute as to legal costs or of the time frames for doing so;

· The lump sum bills were not of sufficient particularity or clarity to comply with the definition of “lump sum bill” pursuant to s 3.4.2 of the LPA;

· The disclosure statements did not comply in material respects with disclosure obligations in Part 3.4, Division 3 of the LPA;

· The applicant contended that the respondent firm did not comply with its statutory obligations to disclose matters relating to the retainer of counsel;

· Some bills did not provide any description of the work performed whatsoever.

The applicant explained the reasons for his delay based on the fact he had not previously been a party to commercial litigation and it was not until December 2014 when he obtained independent advice from a costs consultant and a new solicitor that he was informed of his rights in relation to legal costs. Further, the applicant submitted that there was a prima facie case that the bills were excessive in the absence of an itemised account for the costs charged by the firm, and further that there was no real prejudice to the firm as a result of the review.

The respondent firm conceded that it did not comply with disclosure requirements because of an ‘error and oversight’ on its part. Its practices have since been altered to comply with the LPA. The respondent submitted that the applicant was well aware of his rights and the possible costs consequences.

The judge noted that 3 years and 10 months had elapsed before the application for review was filed. After taking into account all the circumstances and evidence, the judge noted that whilst the delay was significant, it was in the context of ongoing litigation and the applicant did not deliberately delay the bringing of an application. Accordingly, it was found to be just and fair for the applicant’s application for review of costs to be dealt with after the 12 month period.