_Bannerot v Garland Waddington_

District Court of Queensland|2008-07-25|Before: Re P

**[1] This is an application for assessment of legal costs as between a law practice and a client pursuant to s 335 of the Legal Profession Act 2007 (the 2007 Act). Although the 2007 Act applies to the application for assessment, the legislation applicable at the time the relevant legal work was done was the Queensland Law Society Act 1952 (the 1952 Act). The application, which has been properly made in accordance with the applicable provisions of the UCPR, has given rise to an interesting question about the application of s 48I of the 1952 Act. The current equivalent provision, s 319 of the 2007 Act, is in similar but not identical terms.

[2] There was no dispute that the applicant as client retained the respondent law practice to provide legal services in connection with a proceeding in the Federal Magistrates Court to which the applicant was a party, involving custody of children. The material refers to a dispute that existed at one time between the parties as to whether there was a client agreement under the 1952 Act in existence between the applicant and the respondent, but the respondent has now conceded before me that this proceeding and any assessment of costs have to be resolved on the basis that there was no applicable client agreement in respect of the legal services provided. Accordingly, under s 48I(1) of the 1952 Act "the maximum amount of fees and costs a practitioner or firm may charge and recover from a client for work done is - (b) if ... there is a scale for the work provided under an Act - an amount calculated in accordance with the scale; or (c) if ... there is no scale for the work provided under an Act - an amount assessed as a reasonable amount for the work by a tribunal costs assessor."

[3] The first issue which arises is whether paragraph (b) or paragraph (c) applies. It was submitted on behalf of the applicant that paragraph (b) applies, the applicable scale being that provided in Schedules 3 and 4 of the Federal Magistrates Court Rules. Although those schedules do not in terms purport to provide a scale of costs to be used as between lawyer and client, they provide a scale which is applicable to the work done and it is provided under an Act, and therefore pursuant to s 48I(1)(b) the fees and costs are to be assessed in accordance with that scale.

[4] The first difficulty with this argument, which was recognised by counsel for the applicant, was that there is authority in the Supreme Court that there is only a "scale for the work provided under an Act" for the purposes of that provision of the 1952 Act where the scale provided is one made applicable by or under that Act to costs as between lawyer and client. On this basis, it was held in Gilbert v Kozicki [2007] QSC 268 that the scale in Schedule 1 to the UCPR, although entitled "Scale of Costs - Supreme Court", was not a scale provided under an Act for work done in connection with a proceeding in the Supreme Court, because it did not purport to be a scale applicable between lawyer and client.

[5] That conclusion was reached essentially by applying dicta in an earlier decision of the Supreme Court, Herald v Worker Bee (Brisbane) Pty Ltd [2004] 2 Qd R 263. In that case the question was whether there was a valid client agreement in circumstances where it was alleged that the client agreement was invalid because the client agreement did not include a copy of the Supreme Court scale of fees, as required by s 48(4) of the 1952 Act, on the basis that it was a "scale for the work provided under an Act". Fryberg J said that there was no requirement to include that scale, because the scale in Schedule 1 to the UCPR was not a scale for the work provided under an Act, because the schedule was established by r 690 of the UCPR which appeared in Part 2 of Chapter 17, and r 678(2) as it then stood provided that Part 2 did not apply to costs to which the 1952 Act Part 2A Division 6A applied. That division was concerned with the assessment of costs under a client agreement. Accordingly the costs were not to be calculated in accordance with the Supreme Court scale and therefore the scale was not one which was required to be attached to the client agreement.

[6] His Honour said it was much more likely that the Act was drafted with scales in mind which fixed solicitor and client costs, which until the 1990s were common in the District and Magistrates courts and in other inferior courts: p 265. In the end, however, his Honour decided the case on the basis that, even if this were an applicable scale and there was an obligation to include it, the failure to comply with that obligation did not have the effect of rendering the client agreement void pursuant to s 48F, because of the terms of that section. Nevertheless, his approach was followed in Gilbert (supra). At [44] a submission was noted that at the time the relevant provisions of the 1952 Act were introduced by the Civil Justice Reform Act 1998 there were no scales under legislation fixing costs as between solicitor and client, so parliament must have intended that the reference to the scales was to the scales which then existed, even though they purported to fix only costs payable under an order, that is ordinarily between parties to litigation.

[7] The problem with that submission was that it was wrong. At the time of the enactment of the 1998 Act, the Supreme Court Rules provided in O 91 r 30:**

"In causes and matters commenced after these rules come into operation, solicitors shall be entitled to charge, and shall be allowed the fees set forth in Schedule 2, in all causes and matters, and no higher fees shall be allowed in any case, except as by this order otherwise provided."

**[8] That applied to the situation as between a solicitor and a client, as well as in relation to taxation under court orders, as shown by the application of the rule by the Full Court in Re: Macdonnell, Henchman and Hannam [1910] St R Qd 324, which dealt with the taxation of a solicitor and client bill of costs.[2] There was nothing in Schedule 2 at the time to suggest to the contrary. When I was working in a solicitor's office, many years ago, it was commonplace that if a bill to a client had to be drawn in taxable form it was drawn in accordance with the schedule.

[9] The position in the District Court was essentially the same. Rule 364 of the District Court Rules picked up the rules of the Supreme Court about taxation, and r 365 provided that "unless another rule provides otherwise, a court, registrar or taxing officer may only allow a cost under the schedule of scale of fees and costs". The schedule that was in force during 1998 clearly applied as between solicitor and client as well as to costs taxed or assessed under an order, as shown by general notes C and E at the beginning, and by the note at the beginning of the section dealing with fees allowable to counsel on taxation in certain cases. The portion was the same in the Magistrates Court.[3] Obviously then at the time the 1998 amendment was made there were scales in Queensland, which did apply to costs as between lawyer and client, in relation to litigation matters. I think it is obvious that those were the scales that the legislation intended to make applicable in these circumstances.

[10] It was only at the commencement of the UCPR in 1999 that r 678 provided that Part 2 of Chapter 17, including the rule providing for the schedules, did not apply to costs to which the 1952 Act Part 2A Division 6A applied. That did not exclude entirely the operation of the scales in relation to costs as between lawyer and client. Division 6A did not apply if the client was the Commonwealth or a state, a public company, a subsidiary of a public company, a foreign company, or a registered Australian body within the meaning of the corporations law, or a partnership or joint venture if one of the partners or joint venturers is one of the above: s 6ZA(2). It is not difficult to understand what r 678(2) was intended to achieve; it was to make it clear that the mechanism provided in Part 2 of the UCPR, which included the whole process of assessment of costs by a registrar, did not apply to the process of assessment of costs under the 1952 Act. It was entirely consistent with the 1952 Act provisions, albeit arguably surplusage. Nevertheless, there was nothing in r 678(2) which would indicate that the schedules did not apply to costs as between lawyer and client in those circumstances which did not fall within Division 6A of Part 2A of the 1952 Act.

[11] There is also the consideration that, at least arguably, Division 6A of Part 2A of the 1952 Act applied only in circumstances where there was a client agreement, that is to say, the situation when s 48I(1)(a) of the 1952 Act applied. The heading of the Division provided expressly that it applies to "assessment of account under client agreement", s 6ZA contemplated a client agreement in subsection (1)(a)(i), and s 6ZB(1) assumed not merely that there was a client agreement but that its validity or enforceability was not thereafter to be challenged.[4] The explanatory note to the Civil Justice Reform Bill 1998, which introduced Division 6A of Part 2A to the 1952 Act, said nothing inconsistent with this, and in the introduction[5] referred to the failure of the previous process centred on taxation by an officer of the Supreme Court adequately to address the increased use of agreements between solicitors and their clients.[6]

[12] If Division 6A of Part 2A only applied to assessments of accounts where there was a client agreement, it would not apply in circumstances where there was no valid client agreement so the solicitor's costs were to be limited by the amount of the court scale. In those circumstances, r 678 did not exclude the operation of r 690, and hence the schedules.[7] It may be, however, that the terminology of r 690 was an impediment to the argument that the schedules established by that rule on the coming into force of the UCPR applied to costs as between solicitor and client. Nevertheless, if r 678 did not have the effect assumed by Fryberg J, it means that the conclusions reached in the Supreme Court matters ought not to be followed.

[13] Apart from that, I would have thought that it was a plausible construction of s 48I(1)(b) that it applied to scales not otherwise applicable as between solicitor and client, on the basis that the scales were made applicable by s 48I(1)(b) itself. However, it is not necessary for me to consider that question further in this matter, because, for reasons which I will set out in a moment, even if the approach adopted in those decisions is not to be followed, there is not a scale for the work provided under an Act for the purposes of s 48I(1)(b), for other reasons.

[14] The Acts Interpretation Act 1954 provides (and provided in 1998) in s 6(1) that in an Act:**

"Act means an Act of the Queensland Parliament, and includes -

(a) a British or New South Wales Act that is in force in Queensland; and

(b) an enactment of an earlier authority empowered to pass laws in Queensland that has received assent."

**[15] As s 7 of that Act indicates, when the legislature wants to refer to legislation other than Queensland legislation, or legislation in force in Queensland as if it were Queensland legislation, it uses the word "law" rather than the word "Act". It is true that s 4 of the Acts Interpretation Act provides that the application of (relevantly) s 6 may be displaced wholly or partly by a contrary intention appearing in any Act, and it was submitted on behalf of the applicant that it was necessary to displace that meaning in order to give a purposive construction to the 1952 Act, or at least the amendments effected to that Act in 1998. It is true that the 1998 amendments are to be interpreted in a way which will best achieve the purpose of the Act, pursuant to s 14A of the Acts Interpretation Act 1954. There is, however, nothing in the 1952 Act, the 1998 amending Act, or the explanatory note for the 1998 amending Act which indicates an intention that the term "Act" in s 48I(1)(b) is to have anything other than the meaning provided by s 6, or that the purpose of that amending Act would be better achieved by a wider use of the term.

[16] It seems to me to be entirely consistent with the purpose of that legislation to have a scheme under which s 48I(1)(b) would apply only scales which were, directly or indirectly, under the control of the Queensland legislature. In addition, it would be unusual for the State legislature to build in this way on Commonwealth legislation or subordinate legislation. Such a scheme would be likely to give rise to constitutional difficulties. For example, at the time the 1998 amendments were passed, the Family Court rules provided a separate mechanism for dealing with disputes between the solicitor and the client in relation to work done in the Family Court.[8] It is unlikely therefore that the Queensland legislation intended to extend to work in the Family Court, because I strongly suspect that any such intention would have been frustrated by s 109 of the Constitution.

[17] Accordingly on the whole I am not persuaded that a contrary intention appears in the 1952 Act or the 1998 amending Act, and in my opinion there is no sufficient reason to displace the meaning given to the term "Act" by s 6 of the Acts Interpretation Act where it appears in s 48I(1)(b). That is fatal to the applicant's argument that in circumstances where paragraph (a) did not apply, the costs were to be assessed by reference to the scale established under Commonwealth legislation, namely the scale in the Federal Magistrates Court Rules. It follows that the applicable limitation on the amount that the respondent could charge for this work was that contained in s 48I(1)(c).

[18] In these circumstances it is unnecessary to consider whether in any event even if the Queensland legislation had purported to make the Federal Magistrates Court scale applicable, it could validly have done so. The current Federal Magistrates Court rule 21.09 provides relevantly:**

"(1) This subdivision[9] applies to costs payable, or to be taxed, under an Act, these rules or an order of the court, in a proceeding.

(2) Subject to paragraph 21.02(2)(c) and 21.11(2)(a), Chapter 19 of the Family Court Rules does not apply to a family law or child support proceeding in the court.

(3) Unless otherwise provided, these rules do not regulate the fees to be charged by lawyers as between lawyer and client in relation to proceedings in the court."

[19] Subsection (3) is followed by a note in the following terms:

"For any dispute between a lawyer and a client about the fees charged by the lawyer, see the state or territory legislation governing the legal profession in the state or territory where the lawyer practices."

**[20] It was submitted on behalf of the applicant that the effect of this note was specifically to make applicable the provisions in the 1952 Act in force at the time, so that they operated by reference to the scale provided by the Federal Magistrates Court rule. However, it seems to me that that argument focuses on the terms of the note, and has insufficient regard to the terms of sub-rule (3), which provides expressly that the rules do not regulate fees to be charged by lawyers as between lawyer and client in relation to proceedings in that court. In circumstances where Commonwealth legislation provides in effect that the scale is not to be used for a particular purpose, there would appear to me to be difficulties, in view of s 109 of the Australian Constitution, in state legislation purporting to do precisely that. It would seem to me, with respect, that if the 1952 Act purported to make applicable the scale provided by the Federal Magistrates Court rules, it would be inconsistent with the terms of sub-rule 21.09(3), and would be to that extent invalid under s 109. However, it is not necessary for me to decide this question, and therefore it is not an obstacle to my deciding the application that no notices have been given to Attorneys-General as required by the Judiciary Act 1903 (Cth) s 78B.

[21] Accordingly it is not appropriate for the costs to be assessed under s 48I(1)(b) of the 1952 Act; they should be assessed under paragraph (c), namely the amount assessed as a reasonable amount for the work by the costs assessor. It was not disputed that the costs assessment should be undertaken by the costs assessor nominated by the applicant, Mr Michael A Graham. Two other issues which I should decide emerged in the course of the argument. The first was whether the applicant was entitled to have assessed costs other than those covered by the final bill, on the basis that more than 12 months had elapsed since the earlier bills had been given. However, it seems to me clear that this is the effect of s 333 of the 2007 Act, since the earlier bills must have been interim bills for the purposes of that section.

[22] Subsection (1) makes it clear that an interim bill is one covering part only of the legal services the law practice was retained to provide. In the present case the respondent was retained to act in relation to particular proceedings in the Federal Magistrates Court, and that means the whole of the proceedings. There may well have been an entitlement to give interim bills, but prima facie that was a retainer for the entire work involved,[10] and it follows that there was an entitlement to have the costs assessed at the time of the assessment of the final bill under s 333(2), so long as the final bill is within the 12 month period. Accordingly the costs assessor should assess the costs for the whole of the retainer.

[23] In addition, the respondent asked that I give a direction that the costs be assessed applying a rate of $300 per hour plus outlays plus GST. However, in my opinion this is not a matter which should be decided in a preliminary way by the court under r 743G. That rule indicates various matters which ought to be decided by a court prior to an assessment proceeding, because they might involve the resolution of disputed questions of fact and law more appropriately determined by a court rather than by a costs assessor, the resolution of which would impact on the process of assessment to be undertaken by the costs assessor. But the assessment of what is an appropriate hourly rate for work done by the lawyer is central to the process of determining what is a reasonable amount for the work, which determination was by s 48I(1)(c) specifically a matter for the costs assessor. In addition, s 341 of the 2007 Act provides matters which are to be considered by a costs assessor carrying out this assessment, and it would not be appropriate for the court to decide anything which would interfere with the proper performance by the costs assessor of his duty under s 341. Accordingly I will not give that direction.

[24] I order that the whole of the legal costs charged by the respondent to the applicant in respect of the respondent's acting for the applicant in the proceedings in the Federal Magistrates Court be assessed pursuant to the Legal Profession Act 2007 by Mr Michael A Graham. I direct that the costs be assessed under s 48I(1)(c) of the 1952 Act. I will reserve the question of the costs of this application; although the respondent has been successful in relation to the major matter contested in the course of the proceeding before me, the question of whether the costs ought to be assessed by reference to the Federal Magistrates Court scale, the applicant was successful in relation to other matters disputed, and it is in any case appropriate to leave the question of the costs of these proceedings to be decided until after the assessment is known. Accordingly costs are reserved.**

[1] It was not disputed that the assessment is now to be undertaken by a costs assessor pursuant to Division 7 of Part 3.4 of the 2007 Act, rather than a tribunal costs assessor appointed under the 1952 Act.

[2] See also D. G. Ogle Pty Ltd v Bowdens [1979] Qd R 507 at 509.

[3] See Magistrates Court Rules 1960 s 321 and Schedule 5, especially note 1 to Part 1.

[4] ASIC v Atlantic 3 Financial (Aust) Pty Ltd [2006] QCA 540.

[5] p 378 of the bound volume of 1998 Explanatory Notes.

[6] Agreements as to costs were permitted under the Solicitors Act 1891, relocated in 1995 to the Legal Practitioners Act 1995. By s 15 costs payable under such an agreement were not subject to taxation, but there were other practical difficulties with those provisions.

[7] In its current form, r 678(2)(a) provides expressly to this effect, so the reasoning in the Supreme Court decisions is not applicable since 10 December 2007.

[8] Re P's Bill of Costs [1982] FamCA 51; (1982) FLC 91-255 at 77,418; 80 ALJ 645.

[9] This is the subdivision which provides for how costs are to be taxed, and on what scales.

[10] Baker v Legal Services Commissioner [2006] QCA 145 at [3] per McPherson JA.

Queensland Law Society Act 1952

Civil Justice Reform Act 1998

Interpretation Act 1954

See Magistrates Court Rules 1960s 321

Legal Practitioners Act 1995

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