Bond Legal Pty Ltd v Bhetwal; Bond Legal Pty Ltd v Subedi

Catchwords: COSTS – review of decision of Manager, Costs Assessment – where application for review of solicitors’ costs made out of time – where Manager, Costs Assessment granted the defendants an extension of time for assessment of costs charged to them – whether it would be just and fair to grant extension of time – extension of time just and fair in the circumstances

Legislation Cited: Legal Profession Uniform Law Application Act 2014 (NSW), s 93B(3)
Legal Profession Uniform Law (NSW), ss 169, 198(1), 198(3)-(4)
Uniform Civil Procedure Rules 2005 (NSW), r 49.19

Cases Cited: Frigger v Murfett Legal Pty Ltd [2012] WASC 447
Golden Destiny Investments Pty Ltd v McCrohon Bergseng Partners t/as MBP Legal [2016] NSWSC 1639
Hawkins v Barkley-Brown [2010] NSWSC 48
Hazan v The Manager, Costs Assessment [2023] NSWSC 1587
Solarus Projects Pty Ltd v Vero Insurance Ltd [2013] NSWSC 328
Tomko v Palasty (No 2) (2007) 71 NSWLR 61; [2007] NSWCA 369

Texts Cited: G E Dal Pont, Law of Costs (5th ed, LexisNexis, 2021)

Category: Principal judgment

Parties: 2024/357003
Bond Legal Pty Ltd (ABN 35 616 199 350) (Plaintiff)
Roshan Bhetwal (First Defendant)
The Manager, Costs Assessment (Second Defendant)
2024/357080
Bond Legal Pty Ltd (ABN 35 616 199 350) (Plaintiff)
Bigyan Subedi (First Defendant)
The Manager, Costs Assessment (Second Defendant)

Representation: Counsel:
K P Smark SC (Plaintiff in both proceedings)
L Morgan (First Defendant in both proceedings)
Submitting Appearance (Second Defendant in both proceedings)
Solicitors:
Burlaz Legal (Plaintiff in both proceedings)
Martin Bell & Co (First Defendant in both proceedings)
Crown Solicitors for NSW (Second Defendant in both proceedings)

File Number(s): 2024/357003 and 2024/357080

Publication restriction: Nil

JUDGMENT

Introduction

1. By two summonses filed on 26 September 2024 and amended on 22 October 2024, Bond Legal Pty Ltd seeks a review of two decisions of the Manager, Costs Assessment (the MCA) granting an extension of time to two clients of Bond Legal, Mr Roshan Bhetwal and Mr Bigyan Subedi, to apply for an assessment of the costs charged to them. In place of the orders made by the MCA, Bond Legal seeks orders dismissing the applications for assessment. The original summons in each case only named the MCA as the defendant. The amended summonses in each case added Mr Bhetwal and Mr Subedi respectively as the first defendant and named the MCA as the second defendant. The MCA has filed a submitting appearance in both matters.

2. The applications for review are brought under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 49.19(1). That rule provides:

Subject to subrule (2), if in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit.

3. Decisions of the MCA are reviewable by the Court in the same manner as the decisions of Registrars: see Legal Profession Uniform Law Application Act 2014 (NSW) s 93B(3). I say something more about the nature of that review below.

Background

4. Mr Bhetwal and Mr Subedi arrived in Australia from Nepal in late 2018 on student visas. Both were studying for a Diploma of Information Technology at Ransford College in Parramatta. In March 2019, they were involved in a serious motor vehicle accident and were badly injured while driving from Sydney to Melbourne with three other friends. The two passengers in the front seats died. The other surviving passenger, Mr Abhishek Ghimire (who is not a party to the proceedings), also suffered serious injuries.

5. All three of the surviving passengers retained Bond Legal in their third party claims against QBE Insurance (Australia) Limited. The principal of Bond Legal is Mr Bharat Pokharel, who is also Nepalese and fluent in Nepali. Mr Bhetwal and Mr Subedi both gave evidence that their English is fair but not good.

6. The evidence is that both Mr Bhetwal and Mr Subedi signed costs agreements with Bond Legal and that Mr Pokharel explained the agreements to them in Nepali. The agreements disclosed that both clients would be charged an hourly rate calculated at $800 per hour ($80 per six minute unit) plus GST for a Principal Solicitor, $500 per hour for a Solicitor and $190 per hour for Administrative Staff. Both costs agreements estimated that “the cost of the work to bring your matter to hearing, inclusive of GST” to be $156,000 including professional fees of $130,000 and disbursements of $25,000. Attached to each costs agreement was a document titled “General Terms of Business”. Clause 6 of that document was in the following terms:

Your Rights in relation to a Dispute concerning Costs

If you have a dispute in relation to any aspect of our legal costs you have the following avenues of redress:

(a) in the first instance we encourage you to discuss your concerns with us so that any issue can be identified and we can have the opportunity of resolving the matter promptly and without it adversely impacting on our business relationship;

(b) you may apply to the Manager, Costs Assessment located at the Supreme Court of NSW for an assessment of our costs. This application must be made within 12 months after the bill was provided or request for payment made or after the costs were paid.

There is no evidence that that clause specifically was explained to either Mr Bhetwal or Mr Subedi. Mr Ghimire signed a similar costs agreement with Bond Legal.

7. The third party claims were settled on 22 December 2020 following an informal settlement conference. Bond Legal’s fees were paid from that settlement. The amount for which each claim was settled and the amount in legal fees that were deducted are set out in the following table:

| Client | Settlement Amount | Amount Deducted | | Mr Ghimire | $400,000 | $128,109.09 | | Mr Bhetwal | $400,000 | $126,818.18 | | Mr Subedi | $500,000 | $126,926.41 |

8. There is a dispute about whether Mr Bhetwal and Mr Subedi were provided with a bill of costs at or about the time of settlement, but the likelihood is that both were. Both bills of costs contained the following notification in small print at the end:

Notification of client's rights

You may request an itemised bill from us after receiving a bill that is not itemised or is partially itemised within 30 days after the date that the costs in that bill become payable.

In the event of a dispute in relation to legal costs you may:

• seek the assistance of the NSW Commissioner;

• have the costs assessedii.

…

An application for costs assessment must be made within 12 months after:

(a) the bill was given to you, or the request for payment was made to you, the third party payer or other law practice; or

(b) the legal costs were paid if neither a bill nor a request was made.

…

ii If you make a complaint about the costs to the NSW Commissioner you cannot have the costs assessed unless the costs dispute is unable to be resolved by the NSW Commissioner and they have notified the parties of their entitlement to apply for a costs assessment or the NSW Commissioner arranges for a costs assessment.

9. At some stage within the 12 month review period, Mr Ghimire made an application for an assessment of his costs. On 17 January 2022, the costs assessor assessed his costs at $31,360. In reaching that conclusion, the costs assessor concluded that Mr Ghimire’s costs agreement was void because Bond Legal had not provided Mr Ghimire with a revised costs estimate. The costs assessor also said:

13.1 The scope of the work required in this case was quite limited. There was no contest as to liability. There could not be. There was no contest as to the entitlement to Common Law damages and there was no need for a MAS process.

13.2 Counsel was not involved so there was no need to deliver any brief or read advice from counsel.

13.3 There was no Assessment Hearing.

13.4 There were no court proceedings (I mention this because the possibility of court proceedings is referred to in the Costs Agreement).

13.5 The scope of the medico-legal opinion obtained was very narrow:

(i) Dr Bodel;

(iii) Dr Morris.

13.6 In addition, the Respondent collected the clinical records from the two hospitals, the ambulance report, a copy of the police report, the record of interview and a number of other documents.

13.7 There was only one complex document prepared by the Respondent and this was the Particulars prepared a day before the ISC.

13.8 A significant feature of this case is that there were many conferences, far more than one would normally expect in a case like this, and the accumulated costs from the many conferences were significant in amount.

10. In circumstances that are not clear from the evidence, at some time in late December 2023, Mr Bhetwal and Mr Subedi learned the results of Mr Ghimire’s assessment.

11. Subsequently, on 5 July 2024, they each made an application for an assessment of the costs payable by them. Following the exchange of written submissions between the parties, the MCA sent a letter to the parties informing them of his decision that an extension was granted in respect of each costs application. The letter concluded:

As the costs applicant’s [sic] seem to have genuine concerns and objections about the legal costs that have been charged, and the costs respondents compliance with their disclosure requirements. The potential merits of this application support the request for an extension of time with those merits ultimately being a matter for a costs assessor to determine.

Regardless of whether or not an extension of time is granted one party will experience some form of prejudice. The MCA is of the view that the greater prejudice would be experienced by the costs applicant’s [sic], if they were denied an opportunity to have their matter assessed and their allegations properly considered.

Having said that, in the interests of what is just and fair in the circumstances and having considered the material provided, the MCA has extended the time for these costs assessment applications.

Principles relating to review

12. Under s 198(1) of the Legal Profession Uniform Law (NSW) (LPUL) (which applies as a law of New South Wales by virtue of s 4 of the Legal Profession Uniform Law Application Act 2014 (NSW)) a client may make an application for an assessment of the legal costs payable to a law practice. Such an application must be made within 12 months after the bill has been given to the client or the relevant legal costs were paid: s 198(3). Section 198(4) provides an exception to the time limit:

However, an application that is made out of time may be dealt with by the costs assessor if the designated tribunal, on application by…the client…, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period.

13. In considering whether it is “just and fair for the application for assessment to be dealt with after the 12-month period”, it is necessary to consider all relevant matters including: (1) whether the client was aware of the right to seek costs assessment; (2) whether there is evidence that the bill might be excessive: (3) whether the bill had been paid without demur and the lawyer’s reasons for opposing the extension: see generally, GE Dal Pont, Law of Costs (5th ed, LexisNexis, 2021) at [5.12]. The power to extend time should not be approached on the basis that it should be allowed unless the legal practitioner can show actual substantial prejudice: Frigger v Murfett Legal Pty Ltd [2012] WASC 447 (per Hall J at [30]); Golden Destiny Investments Pty Ltd v McCrohon Bergseng Partners t/as MBP Legal [2016] NSWSC 1639 (per Davies J at [43]-[45]); Dal Pont at [5.12].

14. The Court's power of review under UCPR r 49.19 is not an appeal and is not subject to the restrictions that apply to appeals: Tomko v Palasty (No 2) (2007) 71 NSWLR 61; NSWCA 369 at [6], [10] and [42]-[52] (Tomko). An applicant for review does not have to demonstrate that there has been a material error of fact or law in the decision under review: Tomko, at [52(2)]; Solarus Projects Pty Ltd v Vero Insurance Ltd [2013] NSWSC 328 at [34]-[40]; Hazan v The Manager, Costs Assessment [2023] NSWSC 1587 at [2]. Nor do the limits against receiving fresh evidence apply, as such, to the review: Tomko at [49]‑[52]; Hawkins v Barkley-Brown [2010] NSWSC 48 at [16]-[24].

Consideration

15. I have concluded that Bond Legal’s application in both matters should be dismissed. I accept that there has been a very substantial delay in this case, that Bond Legal will necessarily suffer some prejudice as a result of that delay and that there is a public policy in bringing disputes, including disputes concerning costs to an end, which is reflected in the time limit imposed by s 198(3) of the LPUL.

16. However, in my opinion the MCA was right to conclude in these cases that those considerations were outweighed by the matters favouring an extension. I accept the submission made by Mr Morgan, who appeared for Mr Bhetwal and Mr Subedi, that that the provisions of Part 4.3 of the LPUL, which concern the regulation of legal costs and include s 198, have an important consumer protection element. Section 169(b) specifically states that one of the objects of the Part is “to provide that law practices must not charge more than fair and reasonable amounts for legal costs”.

17. Mr Bhetwal and Mr Subedi were students from a foreign country with a limited command of English. They are unlikely to have had any sense of what would be reasonable for a solicitor to charge for the work performed for them or that rights might be available to them if they were dissatisfied with those charges. There is no evidence that those rights were explained to them. And they could not reasonably be expected to have read Bond Legal’s General Terms of Business or the fine print that formed part of the Bill of Costs. Consequently, the likelihood was that they were not aware of their rights until December 2023 when they learned that Mr Ghimire was successful in having his costs reduced. There was a further delay of approximately six months. But there is no evidence that either Mr Bhetwal or Mr Subedi appreciated that there was a time limit on when an application for review could be made. That delay of itself was not excessive. It follows that I am satisfied that there was a reasonable explanation for the delay in both cases.

18. The evidence before the Court suggests that Mr Bhetwal and Mr Subedi were substantially overcharged for the work that was performed for them. The position of each of them was not materially different from Mr Ghimire. They were injured in the same accident. As is apparent from the settlement amounts, the nature of the injuries each sustained was of a similar seriousness. The same limited issues were likely to arise in each case and the actual fees charged for each client were similar. The likelihood, then, is that if the applications are dismissed, Mr Bhetwal and Mr Subedi will have been overcharged for the services they were provided without any redress. As I have explained, that is contrary to one of the purposes of Part 4.3 of the LPUL.

19. Finally, it is not suggested that Bond Legal will suffer any particular prejudice if the extension granted by the MCA remains in place over and above the ordinary prejudice occasioned by any delay.

Conclusion and orders

20. For those reasons, in my opinion the application in each matter must be dismissed. There is no apparent reason why Bond Legal should not pay the costs of each application.

21. Accordingly, the orders of the Court are:

In matter 2024/00357080

1. The amended summons filed on 22 October 2024 be dismissed;
2. The plaintiff pay the first defendant’s costs as agreed or assessed.

In matter 2024/00357003

1. The amended summons filed on 22 October 2024 be dismissed;
2. The plaintiff pay the first defendant’s costs as agreed or assessed.

**********