APPEALS AS TO COSTS – DISCRETION

PROCEDURE – COSTS – APPEALS AS TO COSTS – DISCRETION – where the applicant successfully sought an assessment of legal costs for services invoiced by each respondent in the District Court pursuant to s 335 Legal Profession Act 2007 (Qld) – where the respondents appealed the decision of the costs assessor in the District Court pursuant to r 742 Uniform Civil Procedure Rules 1999 (Qld) – where the review judge set aside the decision of the costs assessor in each case – where the applicant seeks leave to appeal the decision of the review judge in the District Court pursuant to s 118(3) District Court of Queensland Act 1967 (Qld) – whether leave to appeal should be granted to correct a substantial injustice to the applicant – whether there is a reasonable argument that there is an error to be corrected – whether the grounds of appeal advanced in the application warrant interference with the review judge’s decision

Farrar v Julian-Armitage & Anor [2015] QCA 289 (18 December 2015)

In this matter, the applicant and her former barrister (Ms Julian-Armitage) and former solicitors (Gregg Lawyers), the respondents, disputed legal costs in relation to a family law property settlement dispute. The respondents’ services were terminated in March 2011 and the order that there be costs assessments of the invoices was obtained once new lawyers were acting for the applicant. The costs assessor assessed costs significantly less than the amounts that had been paid.

The respondents’ applied for a review of the decision and it was ordered that the decision of the costs assessor be set aside. The applicant then brought applications for leave to appeal the review judge’s decision pursuant to s 118(3) District Court of Queensland Act 1967 (Qld).

The power to review a decision is contained in rule 742 of the Uniform Civil Procedure Rules 1999 (Qld). The Court is confined, unless it otherwise directs, to the evidence and issues which were before the costs assessor, however they have very broad powers including exercising all the powers of the costs assessor [at 14]. The approach to be taken was explained by Jordan CJ in Schweppes’ Limited v Archer [1934] NSWStRp 17:

“The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances ..., but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.”

Henry J noted the applicant applied for an assessment of legal costs under s 335 of the Legal Profession Act 2007 (Qld) (“LPA”) and that the criteria for assessment are contained in s 341 of the LPA. Disclosure obligations were also noted.

If leave was to be given, the four main issues in the grounds of appeal were:

1. Was the barrister directly retained?

2. Was the barrister obliged to disclose a change in her estimated legal fees?

3. What were the consequences of the barrister and solicitor not disclosing as soon as practicable?

4. Were the assessor’s reasons inadequate?

1. Was the barrister directly retained?

The costs assessor concluded the barrister was directly retained and did not comply with disclosure requirements of s 308 of the LPA. Accordingly, the costs were assessed by the fair and reasonable basis in s 341. The District Court judge found the barrister was not directly retained so did not have to comply with s 308. Henry J noted at [42] that ‘While there were aspects of the barrister’s conduct which gave circumstantial support to the argument the barrister had been directly retained, his Honour was correct to give less weight to that evidence than the direct evidence of the retainer arrangements actually entered into and the documentary evidence of the sequence of events in October 2009. The review judge’s reasoning towards the conclusion of fact that the barrister was not directly retained was orthodox’. Accordingly, it was found that there was no reasonable argument that there was an error to be corrected in relation to this first issue.

2. Was the barrister obliged to disclose a change in her estimated legal fees?

The barrister disclosed her estimate of fees in a letter to the solicitor in March 2009 however the total fees billed substantially exceeded the estimate. The costs assessor found that the barrister was non-compliant with s 308 and also breached continuing disclosure obligations under s 315. The review judge concluded that s 315 had no application to the barrister because s 315 did not apply to the disclosure which a barrister retained by a solicitor is required to make to the solicitor. Accordingly, the barrister’s obligation to disclose is to the solicitor not the client and it is the solicitor who should monitor the barrister’s likely billing in order to ensure the solicitor’s ongoing obligation of disclosure is complied with.

3. What were the consequences of the barrister and solicitor not disclosing as soon as

practicable?

The applicant instructed the respondents in October 2009. The first disclosure made by the barrister to the solicitor was in March 2010. It was also in March 2010 that the solicitor wrote to the applicant providing a written disclosure notice and offer to enter into a costs agreement. The costs assessor assessed work prior to 9 March 2010 using a fair and reasonable rate, and at the stipulated rate in the solicitor’s disclosure thereafter. The assessor assessed the barrister’s costs for the entire period using a fair and reasonable rate which was significantly less than the hourly rate actually charged by the barrister.

The review judge favoured a contextual interpretation of s 340, however Henry J also thought the literal interpretation was reasonably arguable ie. ‘that the reference in s 340 to “any disputed costs that are subject to a costs agreement” must necessarily include costs incurred after the agreement is entered into so that if the agreement is entered into without material compliance with Div 3’s requirements the costs assessor is not required to assess such costs by reference to the agreement.’ [at 69].

Taking into account the relatively short delay and the fact that when the applicant finally terminated the retainer the case was still not at the trial stage, it was concluded that there would be no substantial injustice in the costs for work performed after the entry into the costs agreement being assessed by reference to the rates the applicant agreed to. Accordingly, leave was not granted in relation to this issue.

4. Were the assessor’s reasons inadequate?

The Court noted that the assessor’s reasons quoted lengthy passages from the client’s written submissions followed by brief explanations of the assessor’s approach. The District Court judge concluded the reasons were inadequate.

Henry J stated that the reasons need not detail separate reasons for every reduction or adjustment but the reasons should be ascertainable, at least inferentially, from the reasons given [at 78]. It was concluded that the District Court judge’s conclusion as to the inadequacy of reasons was well-founded and there was no reasonable argument that he erred in reaching that conclusion.

Other grounds

Other grounds of appeal were raised (eg abandoned claim for uplift (see [91] to [95] and whether non-legal fees are legal costs (see [96 to [100]).

The application for leave to appeal was refused with costs.