Law firm as litigant can recover employed Solicitors fees under Costs Order in Queensland?

Jones Leach Lawyers Pty Ltd ACN 164 332 647 v Crosby (No 2.) [2020] QMC 15

The Plaintiff Jones Leach Lawyers Pty Ltd was successful in its claim against the Defendant a former client for the recovery of fees levied. The Plaintiff sought particular costs orders in respect to various aspects of the proceedings including costs Review Application on an indemnity basis and costs of the proceedings otherwise on a standard basis. Magistrate Hay ordered that costs of the review and proceedings generally be paid on a standard basis.

The Defendant submitted that following Bell Lawyers Pty Ltd v Pentelow (2019) 372 ALR 555; [2019] HCA 29 (where the Chorley exception was overturned that Solicitors can recover costs as against self-represent litigants who cannot) that the Plaintiff cannot recover costs. Magistrate Hay when applying paragraph 47 of Bell Lawyers Magistrate Hay held that as the proceedings was conducted by an employed Solicitor rather than the Principle the Plaintiff was entitled to recover costs. Bell Lawyers held that corporate litigants with employed solicitors can recover costs, where otherwise an incorporated legal practice with a sole principle/ director cannot recover costs. The High Court did not address the issue of employed Solicitors of Incorporated Legal Practices.

However, Magistrate Hay appears not to have considered United Petroleum Australia Pty Ltd (ACN 164 398 832) v Herbert Smith Freehills [2020] VSCA 15 where the Victorian Supreme Court held that Incorporated Legal Practices can not recover costs even if the proceedings were conducted by employed Solicitors. The Victorian Supreme Court noted that there was a functional separation by employed Solicitors with their corporate employers. This is contrasted with employed Solicitors of Incorporated Legal Practices who operate under the instructions of Partner/ Director Solicitors who have a beneficial interest in the proceedings.

Accordingly, it appears that the status as to Incorporated Legal Practices recovering costs when the proceedings where conducted by employed Solicitors remains unresolved in Queensland.