Foundas v Wright Lawyers P/L

Judgment

HER HONOUR: On 17 March 2020 the Court heard an application brought by the plaintiff for leave to apply out of time to the Manager of the Supreme Court Costs Assessment Scheme for an assessment of legal costs. The defendant, very fairly, did not oppose leave being granted, and an order was made as sought by the plaintiff.
In the particular circumstances of the matter, the defendant sought its costs of the application, an application opposed by the plaintiff. The plaintiff, who was unrepresented, believed herself disadvantaged in responding to the application, and was permitted to file written submissions on that aspect of the matter.
The following orders were made on 17 March 2020: 1. Grant leave to the plaintiff to apply out of time to the Manager, Costs Assessment for an assessment of the whole of the legal costs invoiced by Wright Lawyers Pty Ltd, such application for assessment to be made by 4pm on 20 March 2020; 2. Reasons reserved pending determination of defendant's application for costs; 3. Plaintiff to file and serve, by email, any written submissions with respect to the defendant's application for costs, by 4pm on 31 March 2020; 4. Question of costs to be determined on the papers.
This judgment provides the Courts reasons for the grant of leave to the plaintiff, and deals with the determination of the application for costs.

The Evidence

The evidence provided to the Court is relatively sparse, despite the lengthy history of the dispute over legal costs.
The plaintiff read her affidavit of 23 October 2019. In it, she deposed that: I seek an extension of time for my Cost Assessment to proceed that is before the Local court in Penrith with case number 2016/00274893. […] I seek this extension of time as my application is before the Costs Assessors Supreme Court NSW. […] It has taken this long as there was confusion in the beginning. I have attempted to get Costs assessed but told that the Lawyer in question deals with that and also advise [sic] from the Office of the Legal Services Commissioner which confused me even more. After that I have not heard from Wright Lawyers P/L for some time.
It is evidence relied upon by the defendant that provides an account of the background to the application necessary to understand the plaintiff's case, and her evidence.
In his affidavit of 17 February 2020 Dean Wright, solicitor director of the defendant firm, produced a number of documents, including his earlier affidavit of 21 May 2019, produced for Local Court proceedings, from which a chronology of the matter can be gleaned.
In September 2014 the plaintiff instructed the defendant firm to advise and act for her in a dispute with her brother over two Sydney properties. She signed a standard costs agreement with her solicitor on 22 September 2014. At cl 7.1, the costs agreement contained information as to the plaintiff's rights under the Legal Profession Act 2004 (NSW) ("the LP Act"), in the event of a dispute as to the legal costs incurred.
The plaintiff also executed a costs agreement with counsel who was to be briefed in the matter, on 22 September 2014. On the first page of that agreement a statement of the plaintiff's rights in relation to counsel's fees was set out, including her right to: Apply for the costs to be assessed within 12 months if you are unhappy with my costs.
The defendant and counsel subsequently undertook work for the plaintiff directed to the resolution of the dispute between Mrs Foundas and her brother. It is clear from some of the material relied upon by the defendant that the plaintiff was unhappy with the advice that she received from her lawyers, and rejected it. The dispute with her brother remained unresolved.
On 20 November 2014 an itemised tax invoice for $17,398.76, not including counsel's fees, was issued to the plaintiff by the defendant. The invoice on its face provided advice as to the client's rights if unhappy with the fees claimed.
On 24 February 2015 a further itemised tax invoice (for $8206.28) was issued by the defendant to the plaintiff. Again, the invoice included information as to the costs assessment process available to the plaintiff if she disputed the costs.
On 24 April 2015 the defendant issued a further itemised invoice to the plaintiff (for $5174.40) which contained the same advice as to the availability of a process for costs assessment.
On 19 May 2015 the plaintiff's husband submitted a complaint to Office of the Legal Services Commissioner about the work done for the plaintiff by the defendant and counsel, and the cost of that work.
A month later, on 17 June 2015, the complaint was dismissed by the Legal Services Commissioner ("LSC" or "the Commissioner") as without foundation. The letter sent to the plaintiff's husband by the LSC provided advice as to the operation of the Supreme Court Costs Assessment Scheme, together with a Fact Sheet concerning the process for seeking a costs assessment. The twelve month time limitation for the submission of a request for costs assessment that applied by operation of s 350(4) of the LP Act was specifically referred to by the Commissioner.
On 10 June 2015, following receipt of advice from the defendant that the plaintiff had "cut communication" with her legal advisers, counsel issued his invoice, for $17,805.
A fortnight later, on 24 June 2015, the defendant terminated the agreement with the plaintiff and issued three invoices, being counsel's invoice and two from the defendant, consolidating all outstanding legal fees, payable within 14 days.
The following day the plaintiff's husband made a further complaint on the plaintiff's behalf to the OLSC concerning the defendant. The complaint also expressed dissatisfaction with the Commissioner's rejection of the first complaint.
On 1 July 2015 the plaintiff sent an email to the defendant, asking the defendant to "forward and lodge a detailed bill of costs to the Supreme Court for assessment by a [sic] independent court".
On 3 July 2015 the LSC responded to the plaintiff's second complaint, sending a letter to Mr Foundas declining to re-open the OLSC file. The Commissioner reiterated his earlier advice as to the procedure for seeking an assessment of legal costs, warning, Bear in mind that applications must be filed within 12 months of receiving the bill.
The defendant also wrote to the plaintiff, on 9 July 2015, with similar advice as to the process for seeking an assessment of costs. The defendant reminded the plaintiff that his invoices and that of counsel were "immediately due and payable". The correspondence suggested, If you are unwilling to pay please make application to the Supreme Court to have them assessed and I encourage you to do so. Go to the website of SCNSW or go into the registry at Queen square Sydney to obtain the form.
There followed a repeat of the information endorsed on the earlier invoices as to the plaintiff's "rights in relation to legal costs", including having the costs assessed, and a referral to a Fact Sheet on the topic.
On 1 July and again on 13 July 2015 the plaintiff sent an email to the defendant saying "I have requested you to go to the Supreme Court and submit your bill of costs to them for assessment". The defendant responded on 14 July 2015 pointing out clearly that "if you do not pay it is your responsibility to apply for cost assessment". The defendant also referred to the prospect of issuing a Statement of Claim if necessary.
Ultimately, that was the course taken when the plaintiff neither paid the outstanding invoices, nor applied for a costs assessment. On 10 November 2016 the defendant obtained a default judgment from Penrith Local Court against the plaintiff for the unpaid legal costs. Attempts to recover the monies were unsuccessful and, on 11 March 2019, the plaintiff obtained a stay of enforcement pending her motion to set aside the default judgment.
The default judgment was set aside on 3 April 2019.
Proceedings continued before the Local Court at Penrith, where they remained outstanding as at the date of the hearing of the plaintiff's Motion before this Court. The Local Court was prepared to adjourn the proceedings before it, pending resolution of the question of leave to the plaintiff to file a costs assessment application out of time.
On 14 August 2019 the plaintiff filed an application for costs assessment, significantly out of time, bearing in mind the 12 month limitation on such applications. She was advised on 5 September 2019 by the Manager of Costs Assessment that her application was out of time, and the leave of the Supreme Court was required to apply out of time for a costs assessment. The plaintiff thereafter filed a Summons, on 20 November 2019, seeking the following relief: 1. An extension of time to lodge a Cost Assessment for the Costs of Wrights Lawyers P/L; 2. This claim has been submitted out of time. 3. Costs to be costs in the cause.
Ultimately, only order 3 was the subject of argument before me because of the generous concession made by the defendant, giving consent to the Court to grant an extension of time to the plaintiff.
Pointing to the decision of Forgione v Ashurst Australia [2016] NSWSC 1314 per Button J at [28] - [29], the defendant submitted that, when considering the public resources required to resolve the issue of the unpaid legal costs, it was preferable to allow the plaintiff to have her costs assessed, rather than to proceed in the Local Court with debt recovery action. The latter would require a busy Local Court Magistrate to embark upon a detailed and time consuming analysis of the reasonableness or otherwise of the costs claimed by the defendant; the latter would permit the issue to be determined by an expert costs assessor with experience in the area, to whom the task would be relatively straightforward.
Although it was not without some misgivings, given the extreme delay by the plaintiff in seeking the costs assessment, on the basis of the defendant's concession I made an order granting leave to the plaintiff to file a costs assessment application out of time.
The question as to the costs of the hearing of the Summons before me had next to be resolved.
The plaintiff asked that the Court order the costs of the proceedings be costs in the cause. The defendant sought an order for costs in its favour.
The defendant submitted that it had been put to the trouble and expense of answering the plaintiff's Summons, through no fault of its own, and in circumstances where it had provided advice to the plaintiff on a number of occasions in 2015 as to the process that she needed to initiate to have the disputed costs assessed. Further, although it had been necessary for Supreme Court proceedings to be held because of the extreme delay by the plaintiff in filing the application for costs, the defendant had done all it could to streamline that process including, significantly, conceding that the Court should grant leave, thus considerably shortening the proceedings. Since the fault is with the plaintiff, the defendant argued that the costs of the proceedings should be the plaintiff's costs.
The defendant referred the Court to Holt v Wynter (2000) 49 NSWLR 128 at 147 [121] where Sheller JA said, In relation to costs ordinarily a successful applicant, who has allowed him or herself to get out of time, should pay the costs of the application unless the respondent's opposition was wholly unreasonable.
Although costs ordinarily follow the event, it was submitted that, in the particular circumstances of this case, where the plaintiff allowed herself to get significantly out of time, and the defendant's conduct has been reasonable, the Court has a discretion to award costs in favour of the defendant. The decision of Eastbury v Genea [2015] NSWSC 198 per Hall J at [28] was cited.
Mr Foundas, whilst acknowledging the almost five year delay, argued that the plaintiff had done all she could to have her costs assessed, and they had both been very busy dealing with the defendant's attempts in the courts to recover the unpaid legal costs. He also observed that he and his wife had incurred costs themselves.
The plaintiff herself complained that she was not able to "produce cases" to "convince" the Court, and it was unfair to her to expect her to address the Court on costs. Ultimately, the plaintiff was given until 4pm on 31 March 2020 to file and serve written submissions on the question of costs.
On the afternoon of 31 March 2020 the plaintiff applied (by e-mail to my Associate) for further time in which to make her submissions, saying that she had been "inundated with the Judgement handed down by Justice White of the Appeals Court on Tuesday 24th March 2020". I declined to extend the time in which the plaintiff could file submissions, taking the view that ample time had been allowed to the plaintiff, and a line had to be drawn under the matter.
I have had regard to all of those matters raised by Mr and Mrs Foundas before me, but have decided that the defendant should have its costs of the Summons.
Determination of the question of costs is inextricably linked to the merits of the plaintiff's application for an extension of time in which to have legal costs assessed. That application had no intrinsic merit at all in my view.
It is clear from the evidence that the plaintiff was advised, by more than one source on more than one occasion, in 2014 and 2015 that if she disputed the costs invoiced to her by her lawyers, there was a straightforward procedure that could be followed to have the costs assessed professionally. The plaintiff was given written information about how to access this process, including by an entirely independent person and agency, the Legal Services Commissioner and his Office. The defendant both advised and even encouraged the plaintiff to apply to have the costs assessed. The plaintiff was given clear advice as to the twelve month time limit that applied to the costs assessment process, and ignored it.
Whilst the relevant legislative scheme allows for an extension of time, the plaintiff's circumstances are such that, but for the defendant's concession, I would not have granted the extension here sought.
Section 350 of the LP Act is the relevant provision. Although the Act was repealed from 1 July 2015 the invoices in question were issued prior to the replacement of the Act with the Legal Profession Uniform Law. Section 350 of the LP Act is relevantly in these terms: 350 Application by client or third party payers for costs assessment (1) A client may apply to the Manager, Costs Assessment for an assessment of the whole or any part of legal costs. … (3) An application for a costs assessment may be made even if the legal costs have been wholly or partly paid. (3A) If any legal costs have been paid without a bill, the client or third party payer may nevertheless apply for a costs assessment. (4) An application by a client or third party payer for a costs assessment under this section 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. (5) 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.
The delay here is exceptional being in the order of four and a half years. There is no satisfactory explanation given by the plaintiff for such an extraordinary delay. In her affidavit she said only that there was "confusion in the beginning", and that she had been "told that the Lawyer in question deals with" the costs assessment process, and "also advise [sic] from the Office of the Legal Services Commissioner which confused me even more".
Although I accept that the plaintiff may well have been "confused in the beginning", as many people are who find themselves dealing with legal matters without the benefit of a lawyer, the advice from the defendant and from the LSC could not have been more straightforward. I did not take the plaintiff to be a litigant without personal resources; despite her request for assistance from her husband she seemed to be able to make points assertively, and to follow the proceedings before me. It must have been clear to the plaintiff by at least July 2015, after having been told in plain terms by both the LSC and the defendant, that it was her responsibility to apply to have the legal costs assessed. Nevertheless, nothing was done.
Even if one accepts that the plaintiff did not understand the plain English advice given to her in 2014 and 2015 ("if you do not pay it is your responsibility to apply for costs assessment"), there is nothing in her affidavit to explain why she did nothing about the costs assessment between 2015, when she received information about the process, and 2019, when she was compelled by Local Court proceedings to take some action.
On the evidence adduced by the plaintiff there is no basis to conclude that it was "just and fair" to extend the time for seeking a costs assessment by five years, except insofar as that order might contribute to the resolution of a dispute too long outstanding, to the defendant's costs.
The only feature that otherwise militated in favour of granting the extension was that referred to by Button J in Forgione v Ashhurst Australia, that fewer public resources would be spent in the costs being assessed by an experienced assessor, than if a Local Court Magistrate was obliged to hear the case and endeavour to assess the reasonableness of the costs. It was the defendant who pointed to that consideration, in consenting to an order for leave being granted to permit the costs to be assessed out of time.
On my observations, the defendant has been more than reasonable in these proceedings; there is no reason why it should be burdened by legal costs generated by the plaintiff's unreasonable delay.
I propose to award the costs of the summons in favour of the defendant on an ordinary basis.

At a glance

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Judgment (5 paragraphs)

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Legislation Cited (1)

Cases Cited (3)

Cited By (1)