Cupo & anor v Anderssen Lawyers [2015] QSC 202

[1] BODDICE J: On 28 August 2014, Paolo Cupo and Rosa Cupo (Applicants) applied for an order for the assessment of invoices issued for legal costs and disbursements between 10 April 2008 and 25 February 2014 (costs assessment application). A schedule of the relevant invoices was attached as Schedule A (the Schedule) to the application.

[2] The application named a partnership, Anderssen Lawyers (First Respondent) as the Respondent. The Applicants retained the First Respondent in 2008 to act on their behalf in relation to a land resumption. That entity ceased to exist from 30 June 2011.

[3] On 1 July 2011 an incorporated legal practice, Anderssen Lawyers Pty Ltd (Second Respondent), became the successor to the First Respondent. The Applicants retained the Second Respondent to act on their behalf in the resumption. That entity was joined as the Second respondent to the application by order made 19 March 2015.

[4] Initially, the application related to 126 invoices issued by the Respondents and other entities, including a barrister, Grant Allan. In the course of the hearing, the Applicants prepared an amended schedule, removing reliance upon invoices from entities other than the respondents and Mr Allan. As a consequence, there are now only 84 invoices the subject of the application.

[5] It is not in dispute on the application that the Applicants retained the Respondents, or that the Respondents retained Mr Allan to act on behalf of the Applicants. At issue is whether the application is properly brought, whether it complies with the statutory requirements, and whether, in any event, it is appropriate to make the orders sought.

[6] On 7 March 2008, pursuant to the Acquisition of Land Act 1967 (Qld), the Chief Executive of the Department of Transport and Main Roads issued four Taking of Land Notices for two adjoining blocks of land owned by the Applicants. The Applicants retained the First Respondent to act as their solicitors in relation to the resumption. Upon the incorporation of the Second Respondent, it was retained to act as the Applicants' solicitors in relation to the resumption.

[7] On 10 December 2008, the Applicants lodged a claim for compensation in respect of the resumption. The Applicants lodged an amended claim on 30 September 2011. On 20 March 2012, the Applicants applied to the Land Court for an order for compensation in respect of the resumption. A trial of the resumption compensation application was heard over 11 days (17 - 21 June 2013, 28 - 31 October 2013 and 18 February 2014).

[8] The Respondents retained Mr Allan to act on the Applicants' behalf in relation to the hearing of the resumption compensation application. Mr Allan provided the Respondent with cost estimates on 3 September 2010, 28 February 2011, 12 March 2012, 13 July 2012, 7 November 2012, 17 September 2013 and 14 November 2013.

[9] The Respondents also engaged firms expert in property valuation, town planning, traffic consulting and costs consulting. On or about 26 April 2013, the Second Respondent advised the Applicants they would have to engage the experts directly. After that date, the Applicants directly engaged three expert firms. However, the Second Respondent was still responsible for liaising with, issuing directions to, issuing instructions to, and dealing with, these firms.

[10] At times, the Respondents would include charges for counsel's fees or expert's fees in its invoices as disbursements; at other times, the Respondents would forward the invoices for counsel's fees or experts' fees to the Applicants for payment. Even after the Applicants engaged expert firms directly, those firms received instructions from, and forwarded their invoices to, the Second Respondent, not the Applicants.

[11] Judgment in the resumption compensation application was delivered on 14 May 2014. The Applicants were awarded $1,250,000.00 in compensation for the value of the land taken and $22,408.48 in costs attributable to disturbance.[1]

[12] On 18 March 2008, the Applicants signed both an initial disclosure statement and an initial costs agreement with the First Respondent. Information as to the hourly rates of the First Respondent's staff was included as Table A of the initial costs agreement. Information as to other charges payable by the Applicants was included as Table B of the initial costs agreement.

[13] The initial agreement provided for the First Respondent to act on the Applicants' behalf in relation to the resumption, both by advising on it and, if necessary, instituting an appeal against the resumption to the Land Court of Queensland. The First Respondent estimated the Applicants' legal costs at $10,000.00 to $20,000.00, plus any applicable charges from Table B and any disbursements. If the matter proceeded to trial, the First Respondent estimated the Applicants' total legal costs at $40,000.00 to $60,000.00.

[14] After signing the initial agreement, the Applicants received six "revised disclosure statements" from the Respondents, which had the effect of expanding the scope of work and increasing the Applicants' estimated legal fees. A summary of the effects of each revised disclosure statement is set out below:

Yes, including work in relation to the resumption compensation application

Yes, to $80,000.00 to $100,000.00, plus applicable charges from Table B and any disbursements

Yes, to $260,000.00, plus applicable charges from Table B and any disbursements

Yes, to $302,000.00, plus applicable charges from Table B and any disbursements

Yes, including work in relation to instructing counsel in relation to a five-day hearing of the resumption compensation application

No, commitment to a $302,000.00 cap on legal costs, plus applicable charges from Table B and any disbursements

Yes, including work in relation to instructing counsel in relation to a four-day continuation of the hearing of the resumption compensation application

Yes, to $299,000.00 (excluding GST), plus applicable charges from Table B and any disbursements

Yes, including work in relation to instructing counsel in a one-day continuation of the resumption compensation application

Yes, to $306,600.00 (excluding GST), plus applicable charges from Table B and any disbursements

[15] Between April 2008 and February 2014, the Applicants paid the Respondents approximately $1,040,000.00. Mr Allan received $419,661.00. The Applicants contend the Respondents charged the Applicant excessive fees, engaged in excessive and/or unnecessary work, and failed to instruct the experts in a cost-effective way. The Applicants further contend the Respondents and Mr Allan duplicated work, the work conducted on the matter, and the fees charged to the Applicants, were excessive in comparison to the amount of compensation awarded to the Applicants; and the Respondents failed to discharge the retainer agreement with the due care and skill expected of a solicitor in the circumstances.[2]

[16] The Respondents' response to the Applicants' costs assessment application was fivefold.

[17] First, the Applicants' costs assessment application was improperly constituted, as it sought recovery from multiple law practices but only named a single law practice as Respondent. The Schedule included invoices issued by the First Respondent, the Second Respondent, Mr Allan, KPMG Tax Lawyers Pty Ltd, and QICS Law Pty Ltd. The invoices issued by the First and Second Respondents comprised a minority of the invoices included in the Schedules.

[18] Second, and interconnected with the first submission, the Applicants' costs assessment application was improperly constituted, in that it sought recovery of costs which were not of a legal character and invoices which were not issued by law practices. Some of those invoices were issued by suppliers of goods and services who the Applicant engaged prior to retaining the Respondents, and some of the "disbursements" were not disbursements made by the Respondents; they were payments made directly by the Applicants to the third parties. If the Applicants sought to recover payments made to those third parties, the Applicants were required to commence proceedings against those third parties directly, rather than against the Respondents.

[19] Third, proper notice of the Applicants' costs assessment application had not been given, as the application was only served on the First Respondent and not on the other law practices whose invoices were included in the Schedule. Until the Applicants' costs assessment application was amended to join the other law practices, and notice was given to each of those practices in accordance with the Uniform Civil Procedure Rules 1999 (Qld) the application could not proceed further.

[20] Fourth, despite the files concerned being "extensive",[3] and despite that material being provided to the Applicants' current solicitors by 5 June 2014, the costs assessment application was "unduly brief",[4] inadequately particularised and based on the sworn affidavit of the Applicants' solicitor, rather than the Applicants themselves.

[21] Fifth, the costs assessment application was out of time, having been brought more than twelve months after the invoices were issued or the costs were paid. The first invoice from the First Respondent was issued in April 2008; the application for costs assessment was filed in August 2014, more than six years later. By the date of the costs assessment application, the First Respondent had been dissolved, its affairs had been wound up, and its records were no longer conveniently accessible. Further, its successor, the Second Respondent, had agreed with the Applicants to cap further fees payable in the matter, and further substantial reductions in fees agreed.

[22] The Applicants submitted the joinder of the other law practices was unnecessary, and not required by the legislative scheme (although the Applicants sought an order joining the Second Respondent as the successor law practice to the First Respondent). Relatedly, the Applicants sought an order the Respondent provide itemised bills for invoices delivered in the period up to September 2009, so that the Applicants could provide better particulars of the bases for the costs assessment application. The Applicant submitted that without information as to which person performed the work billed, or the length of time spent in performance of it, the Applicants could not reasonably assess the legitimacy of bills totalling more than $40,000.00.

[23] The Applicants further submitted notice did not have to be given to the other law practices, as they were not law practices to whom the Applicant paid legal costs. The invoices, containing Mr Allan's fees, were all forwarded by the Respondents, and the Respondents were the law practices to which the Applicants paid legal costs.

[24] Finally, the Applicants accepted the application had been made out of time, but submitted the application could still be dealt with by either a court or a costs assessor giving leave if, after considering the reasons for the delay, it was appropriate to deal with the application.

[25] The Applicants' submissions are made on the basis that they were the client of both the Respondents, and Mr Allan, as the counsel engaged by the Respondent to act on behalf of the Applicant. The Applicants submit they are not a "sophisticated client" (there is no contention that either the Applicant or the Respondent was a third party payer for the purpose of the Act); such that the Court is to consider the reasons for the delay and then decide whether it, and potentially also a costs assessor, should deal with the costs assessment application.

[26] Mr Allan submitted there were two separate contractual relationships: first, between the Applicants and the Respondents, and second, between the Respondents and himself. In the first contractual relationship, the Applicants were the Respondents' clients; in the second contractual relationship, the Respondents were Mr Allan's client. There was no contractual relationship between him and the Applicants. Mr Allan did not accept the Applicants were properly characterised as his clients.

[27] Although Mr Allan accepted the Applicants were entitled to challenge the invoices he had issued, insofar as his fees were part of the legal costs the Applicants paid to the Respondents, the costs assessment application was strictly between the Applicants and the Respondents. If the costs assessment application was successful, and the assessment resulted in a reduction of the fees payable to Mr Allan, any such reduction would be borne by the Respondent. As Mr Allan had no contractual relationship with the Applicants he could not be bound to an assessment, even if a costs assessor decided his fees should be reduced. Accordingly, there was no utility in Mr Allan being made a party.

[28] Mr Allan's submissions are made on the basis that the Respondent, not the Applicants, was his "client" for the purposes of the Act. Mr Allan further submits the Respondent was a "sophisticated client", such that any costs assessment application made out of time cannot be considered by either a court or a costs assessor.

[29] The first issue is whether the application is improperly constituted because it applies for an assessment of invoices issued by several law practices, but only names the Respondents. This issue has been partially resolved by the order of 19 March 2015 that the Second Respondent be added as Second Respondent.

[30] The second issue is whether the Applicants' costs assessment application is improperly constituted, in that it seeks recovery of legal costs paid directly by the Applicants to third parties. It is contended the Applicants must commence proceedings against those third parties directly, rather than against the Respondents.

[31] The third issue is whether proper notice of the Applicants' costs assessment application has been given, as the application was only served on the First Respondent and not on the other law practices whose invoices were included in the Schedule. A related issue is if proper notice of the Applicants' costs assessment application has not been given, should leave be given to the Applicants to amend the costs assessment application to join the other law practices.

[32] The fourth issue is whether the application complies with the requirements of Rule 743A of the Uniform Civil Procedure Rules 1999 and, if not, whether it ought to be dismissed.

[33] The fifth issue is whether, given that the application is out of time, the application should still be heard, and if so, whether it ought to be dismissed on discretionary grounds.

[34] Relevantly, the Legal Profession Act provides:

client means a person to whom or for whom legal services are

1. Application by clients or third party payers for costs assessment

(1) A client may apply for an assessment of the whole or any part of legal costs.

(2) A third party payer may apply for an assessment of the whole or any part of legal costs payable by the third party payer.

(3) The costs application may be made even if the legal costs have been wholly or partly paid.

(4) If any legal costs have been paid without a bill, the client or third party payer may nevertheless make the costs application.

(5) A costs application by a client or a third party payer must be made within 12 months after -

(a) the bill was given, or the request for payment was made, to the client or third party payer; or

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

(6) However, a costs application made out of time, otherwise than by any of the following, may be dealt with by a costs assessor or a court if, under the Uniform Civil Procedure Rules, the assessor or the court decides to deal with it after considering the reasons for delay -

(b) a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned.

(7) If the third party payer is a non-associated third party payer, the law practice must provide the third party payer, on the written request of the third party payer, with sufficient information to allow the third party payer to consider making, and if thought fit to make, a costs application.

(8) If there is an associated third party payer for a client of a law practice -

(i) the client from making 1 or more costs applications in relation to costs for which the client is solely liable; and

(ii) the associated third party payer from making 1 or more costs applications in relation to costs for which the associated third party payer is solely liable;

and those costs applications may be made by them at the same time or at different times and may be dealt with jointly or separately; and

(b) the client or the associated third party payer-

(i) may participate in the costs assessment process where the other of them makes a costs application in relation to costs for which they are both liable; and

(ii) is taken to be a party to the assessment and is bound by the assessment; and

(i) must participate in the costs assessment process if a costs application is made under subsection (2) by the associated third party payer in the same way as the law practice must participate in the process if an application is made under subsection (1) by a client; and

(ii) is taken to be a party to the assessment and is bound by the costs assessment.

(9) If there is a non-associated third party payer for a client of a law practice-

(i) the client from making 1 or more costs applications in relation to costs for which the client is liable; and

(ii) the non-associated third party payer from making 1 or more costs applications in relation to costs for which the non-associated third party payer is liable;

and those applications may be made by them at the same time or at different times but must be dealt with separately; and

(i) may participate in the costs assessment process if the non-associated third party payer makes a costs application under subsection (2) in relation to the legal costs for which the non-associated third party is liable; and

(ii) is taken to be a party to the assessment and is bound by the assessment; and

(i) must participate in the costs assessment process; and

(d) despite any other provision of this division, the assessment of the costs payable by the non-associated third party payer does not affect the amount of legal costs payable by the client to the law practice.

(10) Subject to this section, a costs application under subsection (1) or (2) must be made in the way provided under the Uniform Civil Procedure Rules.

(a) an executor or administrator of a client;

(b) a trustee of the estate of a client.

third party payer includes the following**-**

(a) an executor or administrator of a third party payer;

(b) a trustee of the estate of a third party payer.

(1) The applicant for a costs assessment must, under the Uniform Civil Procedure Rules, give notice of the costs application to any other person the applicant knows is 1 of the following -

(a) a law practice to whom the legal costs have been paid or are payable;

(b) the law practice that retained a law practice to whom the legal costs have been paid or are payable;

(2) A person given notice of the costs application under subsection (1) -

(a) is entitled to participate in the costs assessment process;

(c) if the costs assessor so decides, is bound by the assessment."

[35] Part 3.4 of the Legal Profession Act (Act) contains a legislative scheme for the disclosure by law practices of legal costs, and the assessment of those costs. One of the primary purposes of that scheme is to provide a mechanism for the assessment of legal costs.[5]

[36] The Act specifically recognises that an assessment of legal costs can occur in a variety of circumstances. First, at the request of the client or a third party payer. Second, at the request of a law practice retaining another law practice. Third, at the request of a law practice who has provided the bill to the client.

[37] The first scenario pertains to the situation in which a client of a law practice applies for an assessment of legal costs rendered to the client by the law practice. That assessment can include any disbursements included in those legal costs. The second scenario pertains to the situation in which a law practice engages another law practice, and the first law practice applies for an assessment of the legal costs rendered by the second law practice. The third scenario pertains to the situation in which the law practice itself wishes to obtain an assessment of its own legal costs. That scenario is important having regard to the strictures placed upon the recovery of legal costs in Division 6 of Part 3.4 of the Act.

[38] The present application relates to the first scenario. The Applicants, having retained the Respondents, seek to assess the whole of the legal costs rendered as part of that retainer. Those legal costs include disbursements on account of fees rendered by Mr Allan as the Counsel retained by the Respondents to act on behalf of the Applicants.

[39] Under this scenario, there is no requirement for the Applicants to name Mr Allan as a Respondent. Section 339 of the Act provides that the Applicants must give notice of the costs application to Mr Allan, who is then entitled to participate in the costs assessment process and is then to be a party to that assessment. That section further provides that Mr Allan is bound by the assessment "if the costs assessor so decides".

[40] Under this scenario, it is irrelevant whether there is a contractual relationship between the Applicants and Mr Allan. The Act clearly envisages under the first scenario an ability to include in an assessment of costs between a client and a law practice costs rendered to the client by other law practices which had been retained by the first law practice.

[41] The decision in Ipex ITG Pty Ltd (In Liquidation) v McGarvie[6] does not support a contrary conclusion. The issue being considered in Ipex was whether the client could seek an assessment of Counsel's legal costs in an application which named Counsel as Respondent, not the law practice which had retained Counsel to act on behalf of the client. Associate Justice Wood found the client had no standing to review Counsel's fees in that application. Such a review could not determine liability between client and Counsel as there was no direct reliability or contractual arrangements between them.

[42] However, in so concluding, Associate Justice Wood expressly noted that the conclusion the Applicants had no standing to review Counsel's fees related to an application "with Counsel named as the Respondent".[7] His Honour further observed:

"This is why there is a separate section in the Act for solicitors to review Counsel's fees (within 60 days in s 3.4.39) and a separate section for the client to review the solicitor's bill which includes Counsel's fees (within 12 months in s 3.4.38)."[8]

[43] The decision in Ipex expressly recognises that a client who has no direct contractual arrangement with Counsel can seek to review Counsel's fees as part of an application by the client for an assessment of the solicitor's bill, which includes Counsel's fees. The conclusions reached by Associate Justice Wood in Ipex included that the application naming Counsel as Respondent be struck out as Counsel was not the appropriate Respondent; the appropriate Respondent for the review of Counsel's fees was the solicitor who had been named in the second proceedings. The orders included a requirement that a copy of the relevant application be given to Counsel and that Counsel be bound by the review.

[44] The invoices rendered by Mr Allan were on occasions included as disbursements in the bills rendered by the Respondents. On other occasions, copies of those invoices were annexed to the bills rendered by the Respondents but not mentioned within the actual bill. It was clear, however, that they were being included for the purposes of the Applicants paying those fees.

[45] The material relied upon in the application establishes that the Respondents retained Mr Allan to act in the resumption proceeding on behalf of the Applicants. The Respondents provided instructions to Mr Allan in relation to that retainer on the Applicants' behalf. The invoices rendered by Mr Allan related to the retainer entered into by him with the Respondents to act on the Applicants' behalf.

[46] In those circumstances, Mr Allan's invoices are properly to be considered in any assessment of the invoices issued by the Respondents to the Applicants. It does not matter whether those costs were formally recorded as disbursements in a bill forwarded by the Respondent or were sent by the inclusion of accompanying invoices from Mr Allan. They constitute amounts the Respondents sought payment for from the Applicants.

[47] Mr Allan has received notice of the application, and appeared and made submissions at the hearing. A point was, however, taken as to whether the notice given to Mr Allan was notice in accordance with the formal requirements of the Act.

[48] Section 339 of the Act requires that that notice be given "under the Uniform Civil Procedure Rules". Mr Allan contended that requirement meant personal service should be effected in accordance with those Rules. I do not accept that submission. Rule 743D of those Rules requires an Applicant serve a copy of the application on any person to whom notice must be given under s 339 of the Act. That Rule does not expressly require personal service. Rule 112 of the UCPR provides that if the Rules do not require personal service, service can be effected on a number of specified bases. The notice given to Mr Allan satisfies those requirements.

[49] Rule 743A of the UCPR requires that the application for a costs assessment be accompanied by an affidavit which must state, inter alia, whether the applicant disputes or requires assessment of all or what part of the costs and, if the applicant disputes all or part of the costs, the grounds on which the applicant disputes the amount of the costs or liability to pay them.

[50] Neither Applicant has filed an affidavit. The Applicants' solicitor has, however, filed an affidavit on 28 August 2014. That affidavit asserts that the Applicants are an elderly couple who have instructed him in relation to the matters set out in the affidavit. Among those matters is the following:

"38. The Applicants dispute all of the invoices on the basis that:

(a) the Respondent charged excessive fees in the matter;

(b) the Respondent engaged in work that was excessive and/or unnecessary;

(c) the Respondent failed to instruct the experts in a way to keep the costs of the matter appropriate;

(e) the work performed on the matter, and the sums charged to the Applicants, were excessive in light of the amount of compensation ultimately available to the Applicants;

(f) the Respondent failed to discharge the retainer agreement with the due care and skill expected of a solicitor in the circumstances.

1. The Applicants apply for assessment of all of the invoices in the Schedule."

[51] Rule 743A does not expressly require that the affidavit be by the Applicant. Further, whilst the grounds upon which the Applicants dispute the invoices are general and not specific to any particular invoice, those grounds sufficiently apprise the Respondents of the basis upon which the Applicants dispute the invoices. In circumstances where the invoices are not fully itemised bills, those grounds are sufficient to satisfy the requirements of Rule 743A. Any lack of particularity can be adequately and properly met by the making of further directions.

[52] Section 335(5) of the Act provides that a costs assessment application must be made within 12 months of a bill being given to the client. The invoices for which the Applicants apply for a costs assessment were issued, at the earliest, on 10 April 2008, more than six years and four months before the costs assessment application was made, and at the latest, on 25 February 2014, more than six months before the costs assessment application was made.

[53] However, section 335(6) of the Act provides that a costs assessment application made out of time (other than by either a sophisticated client or a third-party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned) may still be dealt with by a costs assessor or by a court if, after considering the reasons for the delay, the assessor or court decides to deal with the application.

[54] Section 300 of the Act defines a "sophisticated client" as "a client to whom, because of section 311(1)(c) or (d), disclosure under section 308 or 309(1) is not or was not required." Section 311(1)(c) stipulates that, inter alia, a law practice or an Australian legal practitioner is a "sophisticated client".[9]

[55] The submission that the Applicants were not Mr Allan's clients, is not supported either by the facts of this case or the law generally. His retainer with the Respondents was to advise and appear in respect of the Applicants' matter. The effect of this finding is that the costs assessment application is not made by a sophisticated client; the Applicants do not satisfy that definition. The fact they had experience as property investors, and had children with business experience to assist them does not render them "a sophisticated client".

[64] The Applicants have leave to make application for costs assessments in relation to the invoices numbered 47, 48, 51, 52, 54, 56, 57, 58, 59, 60, 61, 63, 64, 65, 66, 67, 68, 69, 70, 72, 73, 75, 77, 78, 80, 81, 84, 86, 87, 88, 90, 93, 95, 96, 97, 98, 101, 102, 105, 106, 111, 112, 117, 118, 119, 120, 121, 123, 125 and 126 in the Amended Schedule A. The application in respect of the other invoices is dismissed.

[65] The Applicants also sought an order that the Second Respondent provide itemised bills. What further directions ought to be made are properly a matter for the determination of the costs assessor.

[66] The Respondents also sought an order that Mr Allan be bound by any assessment. Again, that is appropriately a matter for the determination of the costs assessor.

[67] I shall hear the parties as to the form of orders and costs.

[1] Cupo v The Chief Executive, Department of Transport and Main Roads [2014] QLC 19.

[2] Affidavit of Terrence John McBride, sworn 28 August 2014.

[3] Respondent's outline of submissions filed 12 December 2014, at [9].

[4] Respondent's outline of submissions filed 12 December 2014, at [9](b).

[5] Legal Profession Act 2007 (Qld) s 299.

[6] [2011] VSC 675 at [16]- [18].

[9] Legal Profession Act 2007 (Qld) s 311(1)(c)(i).