Ciaglia v Beilby Poulden Costello Pty Ltd [2010] NSWSC 748 | Case summary

(d) that Brydens undertook to keep the defendants "regularly appraised" as to the status of the Supreme Court proceedings and immediately to advise the defendants when those proceedings were ultimately resolved. 4 The form of irrevocable authority sent to Brydens under cover of that letter was to authorise payment of the outstanding fees as a first priority from any moneys received in connection with the Supreme Court action against Pamela Ciaglia (the widow of Pasquale Ciaglia and executrix of his estate) "being proceedings number 3393 of 2006, or any other proceedings commenced in any court by [Mr Ciaglia] against Pamela Ciaglia". 5 In due course, Brydens responded by confirming that Mr Ciaglia would pay the disbursements and by giving the two undertakings sought. Brydens' response also enclosed an irrevocable authority signed by Mr Ciaglia and dated 28 February 2008. However, whereas the form of authority sought by the defendants was drafted so as to obtain payment of their fees from any moneys received in connection with any proceedings against Pamela Ciaglia, the form of authority in fact signed by Mr Ciaglia omitted the last words of that version, so that the undertaking was confined in its reference to proceedings number 3393 of 2006. After receiving the signed authority, the defendants transferred Mr Ciaglia's file to Brydens. However, apparently due to an oversight, a blue folder of documents that had been produced by another solicitor was omitted from the material transferred. 6 On 3 September 2008, the defendants wrote directly to Mr Ciaglia noting that proceedings number 3393 of 2006 had been discontinued and that fresh proceedings had been or were to be commenced against Pamela Ciaglia. The letter required Mr Ciaglia to sign a further irrevocable authority in relation to any other proceedings. It is not clear to me why that letter was sent directly to Mr Ciaglia rather than to Brydens. 7 In the absence of any response from Mr Ciaglia to that request, the defendants commenced proceedings against him in the Local Court claiming their outstanding fees. It is not clear when those proceedings were commenced. The original statement of claim does not appear to have been served on Mr Ciaglia. An amended statement of claim was filed on 27 October 2008. 8 On 24 November 2008, Brydens wrote to the defendants noting that an irrevocable authority had been previously signed by Mr Ciaglia and provided to the defendants. The letter stated "please note this authority undertakes to pay your fees at the conclusion of the matter. We do not believe a further authority is necessary". 9 The letter also noted that the defendants retained the blue folder of documents and sought return of those documents. 10 The defendants responded by letter dated 25 November 2008 reiterating their view that the authority previously executed by Mr Ciaglia did not "apply to the new proceedings". The letter stated: "In those circumstances, we will not release any documents until an appropriate proposal is put in respect of the payment of our fees". 11 Mr Ciaglia, who represented himself on the application before me, stated from the bar table that he attended the offices of the defendants to collect the blue folder but was told that he could not have it until he paid the defendants more money. As noted by Mr Livingstone, who appeared for the defendants, the contention that there was a further demand for money at that point was raised for the first time in Court and the defendants did not have an opportunity to respond to it. Accordingly, I have not placed any reliance on that allegation. It is clear, however, that the defendants did exercise a lien over the blue folder. So much may be gleaned from their own documents. In addition to the letter to which I have just referred, the defendants tendered a file note of a telephone conversation on 24 December 2008 between "Barry" (evidently a reference to William Barry Beilby, one of the defendants) and Brydens on 22 December 2008. The memo states: "[Barry] said to [Brydens] that we will do nothing until 31 January, 2009 after his return. They will forward some draft orders or an agreement in relation to the lien that we will retain over the file. When that has been considered, we will deal with the matter. In the meantime, we are not to hand over any files unless we have an undertaking and that issue apparently will not be rectified until late January." 12 Accordingly, the position as at the end of 2008 was that, although Brydens considered that Mr Ciaglia remained bound by the agreement reflected in the undertaking he had signed in February, the defendants considered that neither Mr Ciaglia nor they were bound by that agreement. The defendants were content, on that basis, to exercise a lien over documents that should have been returned in April. 13 That analysis is confirmed by a further exchange of correspondence in early 2009. On 12 January 2009, the defendants wrote to Brydens informing them that the Local Court had made an order for substituted service of the amended statement of claim filed the previous October. The letter reminded Brydens "to draft some orders or an agreement in relation to the lien that this firm will hold over the file". 14 On 28 January 2009 Brydens responded with an offer that Mr Ciaglia would execute an irrevocable authority in favour of the defendants in respect of their outstanding fees in the sum of $25,456.60 (the amount stated in the original authority); that upon receiving the executed authority the defendants would discontinue the Local Court proceedings and that the defendants would forward the blue folder to Brydens. 15 The defendants did not accept that offer. They responded by stating that the proposal seemed adequate "in principle" but sought an agreed rate of interest and specification of the date upon which the sum would be paid. The defendants stated, further, that they would not agree to discontinue the proceedings in the Local Court until they were paid and that they would only provide the documents over which they were exercising a lien after receiving the irrevocable authority. They also stated that the amount identified in the authority must be increased by $940, being their costs of the Local Court proceedings. Brydens did not respond to that counter offer and no agreement was ever reached. 16 In October 2009, Mr Ciaglia filed a defence in the proceedings in the Local Court contending that the defendants' costs should be assessed. The proceedings in the Local Court were subsequently stayed pending the outcome of the present application. 17 As already noted, the final tax invoice issued to Mr Ciaglia by the defendants was dated 24 September 2007. However, the bulk of that invoice was an account rendered on 15 May 2007, which remained unpaid. 18 Section 350(4) of the Legal Profession Act 2004 provides that an application by a client for a costs assessment must be made within 12 months after the bill was given. In accordance with that provision, Mr Ciaglia was required to apply for assessment of the bill no later than 24 September 2008 (and arguably by 15 May 2008). 19 I note that the tax invoice dated 24 September 2007 (and each of the earlier tax invoices issued to Mr Ciaglia) stated: "You may apply to have this bill of costs assessed under Division 11 of the Legal Profession Act 2004. Any such applications must be made within 60 days after this bill has been given to you". 20 It is not clear to me why the invoices nominated the period of 60 days as the period within which any application to have the bill of costs assessed had to be made. As already noted, the time limit identified in s 350(4) of the Legal Profession Act 2004 for making an application under Division 11 of the Act is 12 months. Section 333 of the Act provides that a bill must include or be accompanied by a written statement setting out, among other things, any time limits that apply to a costs assessment under Division 11. Section 331 of the Act provides that a law practice must not commence legal proceedings until at least 30 days after giving a bill in accordance with ss 332 and 333. Accordingly, there may be an issue as to whether the proceedings in the Local Court were properly commenced. I note, however, that the defendants have not had an opportunity to address that issue, and it may be that I am not reading those provisions correctly. 21 The present application invokes s 350(5), which provides: "However, an application that is made out of time, otherwise than by: (a) a sophisticated client, or (b) a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned, may be dealt with by the costs assessor if the Supreme Court, on application by the costs assessor or the client or third party payer who made the application for assessment, 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." 22 The defendants do not contend that Mr Ciaglia is a "sophisticated client" within the meaning of that section. They submitted, however, that it is not "just and fair" for Mr Ciaglia's application to be dealt with out of time since Mr Ciaglia elected, on legal advice, to agree to the quantum of costs claimed. It was submitted on that basis that Mr Ciaglia has waived any right to an assessment. I accept that was the position up until at least September 2008. The difficulty for the defendants, however, is that they themselves treated the agreement as having come to an end from that time. 23 Two steps taken by the defendants point unequivocally to that conclusion. The first is their commencement of the proceedings in the Local Court. The second is their decision to take advantage of their own inadvertent failure to return the whole of the file in April by exercising a lien over the remaining part of the file when Brydens sought to have it returned in November 2008. It is difficult to see why Mr Ciaglia should be kept to the bargain in those circumstances. 24 It does not necessarily follow, however, that it is just and fair for Mr Ciaglia's application for an assessment to be dealt with out of time. Section 350(5) requires the Court to have regard to the delay and the reasons for it. 25 In his affidavit sworn 22 June 2010, Mr Ciaglia stated that the explanation for his not seeking to have the costs assessed at an earlier point in time was that he had been involved in complex litigation in the Equity Division (ultimately determined in his favour: see Ciaglia v Ciaglia [2010] NSWSC 341) and the fact that he has also had the full-time care of his elderly mother. It was submitted on behalf of the defendants that, on a fair reading of the chronology of events, it is more likely that Mr Ciaglia's delay in seeking an assessment was reflective of his considered decision to agree to the quantification of the defendants' costs. However, Mr Ciaglia was not cross-examined as to the reasons to which he deposed, which are inherently credible. Accordingly, I accept that those matters contributed to the delay. 26 Separately, in his written submissions, Mr Ciaglia asserted that he has noticed many irregularities in the bill of costs, such as inflated costs, overcharging and doubling-up charges. It is neither possible nor appropriate for me to attempt to determine the force of that complaint for the purpose of the present application. It is, I think, enough to observe that one of the purposes of Part 3.2 of the Legal Profession Act 2004 is to provide a mechanism for the assessment of legal costs (see s 301(d)). It is a premise of those provisions that disputes may arise between legal practitioners and their clients as to the reasonableness of the cost of legal services and that it is for the common good to have a statutory process for the independent assessment of those costs. In those circumstances, I do not think it should be a prerequisite for the grant of an extension of time to establish that the assessment is likely to produce a reduction of the amount of costs claimed. 27 The defendants submit that the delay of nearly four years which has occurred since the conduct complained of renders it difficult for them to deal with Mr Ciaglia's complaints other than in general terms. The strength of that complaint is reinforced by the fact that the solicitor who had day to day conduct of Mr Ciaglia's proceedings appears to have left the defendant firm. I have given careful thought to that issue. The passage of time will often generate some forensic prejudice. It is for that reason that time limits are imposed, and that consideration must be given due regard. On the other hand, legal practitioners are well versed in the need to keep written records of legal services provided. Costs are generally assessed on the strength of those records rather than on people's recollections. 28 The critical consideration in the present case, in my view, is the fact that Mr Ciaglia undertook to pay the whole of the amount claimed by the defendants on the strength of an understanding that they, in turn, would not exercise their lien. He needed the file in order to instruct his new solicitors. If that had remained the common understanding of the parties, it may have been more difficult for Mr Ciaglia to succeed on the present application. 29 However, the defendants abandoned the benefit of that agreement when they commenced proceedings in the Local Court without awaiting a response to their letter dated 3 September 2008. They do not appear to have attempted to contact Brydens before taking that step. Their conduct from that point, including exercising a lien over the blue folder, was inconsistent with the agreement earlier reached. In my view, Mr Ciaglia was entitled in those circumstances to consider himself no longer bound by his previous commitment to pay the whole sum invoiced to him. 30 By the time the amended statement of claim was filed in the Local Court, however, the time for an application under Division 11 had expired. Until that point, there was no occasion for an assessment because both parties were proceeding on an agreed basis. As I have indicated, I accept Mr Ciaglia's explanation for the delay after that time. In my view, those reasons warrant some relaxation of the time limitation in the statute. 31 In those circumstances, I am satisfied that it is just and fair for Mr Ciaglia's application for assessment to be dealt with out of time. I make the order sought in the summons filed 16 February 2010. Since Mr Ciaglia represented himself, there should be no order as to the costs of the proceedings. **********

Ciaglia v Beilby Poulden Costello Pty Ltd

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