Le v Brydens Lawyers Pty Limited

Supreme Court of NSW|2017-02-16|Before: Schmidt J, Mr P

Solicitors: Gajic Lawyers (Plaintiff) Brydens Lawyers Pty Limited (Defendant) File Number(s): 2016/199623 Publication restriction: None

Judgment

In 2005, Mr Le was seriously injured at work when he was struck by a forklift. He was represented by Brydens Lawyers when he later brought proceedings against his employer in the District Court. In May 2013, Levy DCJ awarded him considerable damages. An appeal brought by his employer was later settled.
The orders Mr Le sought in his summons, requiring Brydens to produce its files to his current legal representatives were not finally pressed, Mr Le not challenging evidence led for Brydens that his files have been lost. What he did press, over Brydens' objections, was an order that Brydens provide him with an itemised bill for the work it performed, as well as leave to permit him to pursue an assessment of its costs, out of time.

Issues

There is no issue as to the fiduciary nature of the relationship which exists between a solicitor and a client; the Court's inherent and statutory powers to order a solicitor to provide a client with a bill of costs; or to grant leave to pursue a costs assessment after the time prescribed by the Legal Profession Uniform Law (NSW) and its predecessors has expired.
The purpose of such powers were discussed by Moffitt P in Zizza v Seymour [1976] 2 NSWLR 135 at 139: "… to make the client, or person to be charged, properly aware of, and have time to consider, the amount of the solicitor's charges. He is then better able to make decisions as to payment of the bill, or having it taxed."
In issue is, however, the proper construction of relevant provisions of the Legal Profession Act 2004 (NSW) and whether the discretions there granted would be exercised in Mr Le's favour.
The proper construction of those provisions has already been considered in Mackowiak v Hagipantelis; Bickhoff v Hagipantelis [2015] NSWSC 1087. Mr Hagipantelis is the principal of Brydens. Even though Mr Hagipantelis did not appeal or otherwise challenge that judgment, Brydens did not abide by what was there decided as to the statutory obligation to provide a client such as Mr Le with an itemised bill.
In these proceedings, Brydens challenges the correctness of the conclusions which Garling J reached in Mackowiak as to the obligations which s 332A of the Legal Profession Act 2004 imposed upon legal practitioners to whom it applied.

The evidence

Mr Le is a native Vietnamese speaker. He relied on affidavits to which are annexed relevant documents, one sworn by him and others by Mr Andrew Le, the solicitor who represented him after he instructed Gajic Lawyers in 2014; Ms Misitano, who now represents him; and Mr Duc, an interpreter who assisted him after he became concerned about Brydens' costs. Only Mr Duc was required for cross-examination. The other evidence was unchallenged and thus must be accepted.
Brydens relied on affidavits sworn by Ms Villar, a solicitor employed by Brydens, who deposed to the searches made for Mr Le's files, which were lost after they were returned to Brydens in December 2014. No evidence was given by Mr Hagipantelis. Mr Le's case was that the Court would draw the inference that Mr Hagipantelis' evidence would not have assisted Brydens' case: Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8.

Jones v Dunkel inferences must be drawn

The principles in Jones v Dunkel are concerned with a party's unexplained failure to give evidence or call a witness, where it would be natural for that evidence to be led, or where the party might reasonably be expected to lead that evidence. Their operation was explained in RHG Mortgage Limited v Rosario Ianni [2015] NSWCA 56 at [75] - [96]. The three relevant considerations are: first, that the missing witness would be expected to be called by one party rather than the other; secondly, that this evidence would elucidate a particular matter; and thirdly, that the absence is unexplained.
When those conditions are satisfied, the inference that the evidence would not have helped the party's case may be drawn and used in two ways. First, in deciding whether to accept any other evidence given, whether for or against that party, which relates to a matter about which the person not called could have given evidence. Secondly, in deciding whether or not to draw inferences of fact which are open, about matters that person could have given evidence about.
It was not suggested that Mr Hagipantelis did not have relevant evidence to give. He plainly could have given evidence in relation to matters of the kind about which he gave evidence in Mackowiak. No explanation was given for his absence. In the result, I am satisfied that an inference must be drawn that the evidence which Mr Hagipantelis could have given about what was in issue in Mr Le's case, would not have assisted Brydens' case.

The circumstances in which the request for an itemised bill was made and these proceedings came to be commenced

There was finally no dispute as to the relevant facts.
Mr Le first instructed Brydens in 2006. Proceedings were commenced in the District Court in 2007. His case was heard on 9 October 2012, 28 February 2013 and 1 March 2013. Orders were made in his favour in May 2013. It was only on 4 June 2013 however, that Mr Le entered a "conditional cost agreement" between solicitor and client under the Motor Accidents Compensation Act 1999 (NSW). It contained an express provision in relation to the retention of Mr Le's files.
The agreement also provided in clause 2 "Costs" - that when payable, costs would only be charged "for the successful outcome of the work", subject to clause 14 "Termination of the agreement". The order already made in favour of Mr Le was for a sum in excess of $1 million. It was common ground that this figure included a considerable sum, in excess of $500,000, which had to be repaid by Mr Le to the workers' compensation insurer. The settlement later reached on the appeal resulted in only a modest reduction in the sum which was left in his hands.
On 26 June 2013, the employer filed a notice of intention to appeal Levy DCJ's judgment. By consent, it was then ordered that Mr Le be paid $650,000 and the employer continue to pay him weekly workers compensation, until resolution of the appeal.
The $650,000 was paid to Brydens on 12 July 2013. On 19 July, Brydens forwarded $345,311.78 to Mr Le, together with a cash statement and memorandum of costs and disbursements totalling $304,688.72. Brydens then also transferred $221,379.03 from its trust account to its office account. Brydens' letter of 19 July 2013, which accompanied the bill, advised: "We have received the Insurer's cheque in part payment of the Judgment monies pursuant to the order for a stay of the proceedings until such time as the Appeal has been heard. This has unable to attend to our final accounting for having acted on your behalf in the proceedings to date and same is attached* comprising our Tax Invoice, Cash Statement and cheque in accordance therewith. As You are of course aware that if the Defendant does not proceed with the Appeal then the balance of the Judgement monies will become immediately due and payable together with interest. In addition, the Defendant is obliged to pay a contribution towards your costs of these proceedings. These costs as between party/party and usually amount to about two thirds of the actual cost as incurred. • Should the Defendant not proceed with its Appeal then we will of course negotiate with the Defendant Solicitors at that time for the recovery of these costs. In the event that the Defendant proceeds with its Appeal then same is likely to be heard in the first half of the New Year. We will keep you informed. We do take this opportunity however to thank you for your instructions to date."
The memorandum contained advice in small print to the effect that: "Notice • The Legal Profession Act 2004 (NSW) and Legal Profession Amendment Act 2006 require that the following advice be given: • Interest may be charged at the rate prescribed by Regulation 110A of the Legal Profession Regulation 2005 (being the Cash Rate Target specified from time to time by the Reserve Bank of Australia, Increased by 2%), on any bill of costs which remains unpaid after 30 days. • You may apply to have this bill of costs assessed under Division 11 of Part 3.2 of the Legal Profession Act 2004. Any such application should be made to the Manager, Costs Assessment, Supreme Court within 12 months after this bill has been given to you. You may also apply under section 336 of that Act to have a costs dispute mediated where the amount in dispute is less than $10,000. Referral to mediation is not permitted after an application for assessment has been accepted by the Manager, Costs Assessment. • You may apply under section 328 of that Act to set aside any costs agreement, or a provision of a costs agreement entered into between us on the basis that it is not fair and reasonable. • If a lump sum bill is given to you, you have the right to ask for an itemised bill. An itemised bill might include items of costs not taken into account in the lump sum bill thereby increasing costs. If an itemised bill is required, I reserve my right to rely on the itemised bill as my final bill. Legal Profession Regulation 2005 - cl.88 • Subject to any costs disclosure document furnished by me and/or any costs agreement with me (the terms of which shall prevail in any event), unless you object, any money held on your behalf in trust/controlled money account/s may be withdrawn and applied for or towards payment of this memorandum of account/bill at the expiration of 7 days."
It is relevant to note that this advice did not inform Mr Le of Brydens' view that any request for an itemised bill had to be made within 12 months.
On 1 March 2014, Mr Le wrote to Brydens, with Mr Duc's assistance. He there raised concerns about the carriage of his matter and advice he had received about a proposed settlement. In order to make an informed decision about the offer, he asked to be informed of the workers' compensation payback amount and the clear amount he would receive, after repayment of that amount and payment of costs he had already paid and anticipated costs which he would receive under the motor vehicle accident regime. He also asked for documents including the court's determination which he had earlier requested, but had not received.
On 7 July 2014, Mr Le instructed Gajic Lawyers to act for him and on 19 August, consent orders were made which settled the appeal. Mr Andrew Le's unchallenged evidence was that when initially instructed, he was primarily concerned with obtaining the files for the purpose of the appeal, understanding that all of Brydens' costs had been paid out of the moneys received from the insurer, but not that they had all been transferred into its office account. He only became aware of that in September.
On 4 September 2014, Gajic Lawyers wrote to Brydens requesting it to provide Mr Le an itemised bill, advising: "Heatcraft Pty Ltd is to pay our client's costs of the District Court proceedings as agreed or assessed. The solicitors for the defendant/appellant have indicated that our client's costs are disputed and be referred for costs assessment. Accordingly, we request that you provide our office will[sic] your itemised bill of costs in respect of both the District Court proceedings and Appeal proceedings in the Supreme Court, Court of Appeal, within 14 days."
In October 2014, a bill in assessable form was requested. Neither were provided. Correspondence ensued with Mr Hagipantelis, not all of which it is necessary to refer to. Much of it was terse.
In March 2015, Gajic Lawyers notified the manager of the Court's costs assessment unit about Brydens' refusal to provide an itemised bill and Mr Le's intention to file an application for assessment. On 17 July, the manager advised that Mr Le would have to make an application to the Court for leave under s 350 of the Legal Profession Act 2004 and that Brydens' refusal to comply with the requirements of s 332A could be raised with the Office of the Legal Services Commissioner.
Even after Garling J's judgment in Mackowiak was delivered in August 2015, Brydens failed to give Mr Le an itemised bill.
These proceedings were commenced in July 2016.

The parties' cases

Mr Le relied on the conclusions reached in Mackowiak to submit that Brydens had failed to abide by the statutory obligation imposed by s 332A of the Legal Profession Act 2004 to provide him with the itemised bill he had requested and that in the circumstances, where costs orders had been made in his favour in the District Court and his employer's appeal had been settled as it was, the Court would exercise its discretion to give him leave to pursue an application for assessment of the costs, out of time.
Brydens' case was that at the time Mr Le first requested an itemised bill it had no statutory obligation to provide one and that in all of the circumstances the Court would not exercise its discretion to require that one be provided. Nor would the Court permit Mr Le to pursue an assessment out of time.
In written submissions Brydens relied, amongst other things, on:

What was asserted to be the level of Mr Le's ability to understand, speak and write in English;
An assertion that when he instructed Gajic Lawyers in July 2014, he well understood what his rights were;
That the work then being undertaken in relation to the employer's appeal had not contained their ability to consider the issue of obtaining an itemised bill;
That the applicable time limits were then well known and that the proper course was for Gajic Lawyers to have prepared a bill in assessable form from the files then in its possession, so that Mr Le could recover party/party costs from the employer;
That the circumstances bore no relationship to those considered in Mackowiak;
That no explanation for the delay in instituting these proceedings had been provided;
That Brydens could not now locate Mr Le's files; and
That in the result, the Court's discretion should not be exercised in Mr Le's favour.

Was Brydens obliged to give Mr Le an itemised bill given the proper construction of the Legal Profession Act 2004?

I am satisfied that despite the views which Mr Hagipantelis continued to hold even after the judgment in Mackowiak was delivered, s 332A obliged Brydens to give Mr Le the itemised bill he was entitled to request, as Mr Le did in September 2014.

The making and refusal of the request

At the time the request was made, Brydens' files were with Gajic Lawyers. Even after they were returned in December 2014, Brydens refused to provide Mr Le either with the itemised bill he first requested, or as had been requested in October 2014, a memorandum of costs and disbursements in assessable form.
Whatever might have been Brydens' obligations in relation to the second request, a matter which need not be resolved in order to determine the issue of what Brydens' obligations under s 332A were, Mr Le's case that his September request had triggered the obligations imposed on Brydens by s 332A must be accepted.
That Brydens accepted this, at least at one point, in relation to the work it had undertaken on the appeal, is apparent from a request made in a letter of 12 November 2014, in which Brydens sought clarification of what Mr Le was seeking and the return of Mr Le's files "to enable preparation of an itemised bill". The files were then returned, but the requested bill was never provided.

The proper construction of the Legal Profession Act 2004

Brydens contended that the right to request an itemised bill under s 332A was subject to the 12 month limitation period imposed by s 350 on the making of an application for a costs assessment. That construction faces a number of difficulties, not the least that of the kind discussed in Thompson v Goold & Co [1910] AC 409 at 420, where it was observed that: "It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do".
Section 332A does not expressly impose any limitation period. In this statutory scheme, it is difficult to see the necessity for a 12 month limitation period on a request made under that section for an itemised bill.
As recently discussed in State of New South Wales v Avery (2016) 92 NSWLR 141; [2016] NSWCA 147 at [49] the approach to the proper construction of Div 9 of Pt 3.2 "Costs disclosure and assessment" of the Legal Profession Act 2004 is that stated in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 at [69] - [71], [78]: "[69] The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined 'by reference to the language of the instrument viewed as a whole'. In Commissioner for Railways (NSW) v Agalianos [20] , Dixon CJ pointed out that 'the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed'. Thus, the process of construction must always begin by examining the context of the provision that is being construed. [70] A legislative instrument must be construed on a prima facie basis that its provisions are intended to give effect to harmonious goals. Where conflict appears to arise from the language of particular provisions, the conflict must be alleviated, so far as possible, by adjusting the meaning of the competing provisions to achieve that result which will best give effect to the purpose and language of those provisions while maintaining the unity of all the statutory provisions. Reconciling conflicting provisions will often require the court 'to determine which is the leading provision and which the subordinate provision, and which must give way to the other'. Only by determining the hierarchy of the provisions will it be possible in many cases to give each provision the meaning which best gives effect to its purpose and language while maintaining the unity of the statutory scheme. [71] Furthermore, a court construing a statutory provision must strive to give meaning to every word of the provision. … [78] … [T]he duty of a court is to give the words of a statutory provision the meaning that the legislature is taken to have intended them to have. Ordinarily, that meaning (the legal meaning) will correspond with the grammatical meaning of the provision. But not always. The context of the words, the consequences of a literal or grammatical construction, the purpose of the statute or the canons of construction may require the words of a legislative provision to be read in a way that does not correspond with the literal or grammatical meaning." [Some citations omitted.]
The purpose of this statutory scheme is expressly specified in s 3, which provides: "3 Purposes The purposes of this Act are as follows: (a) to provide for the regulation of legal practice in this jurisdiction in the interests of the administration of justice and for the protection of clients of law practices and the public generally, (b) to facilitate the regulation of legal practice on a national basis across State and Territory borders."
The purposes of the costs provisions of the Act are specified in s 301, which provides: "301 Purposes The purposes of this Part are as follows: (a) to provide for law practices to make disclosures to clients regarding legal costs, (b) to regulate the making of costs agreements in respect of legal services, including conditional costs agreements, (c) to regulate the billing of costs for legal services, (d) to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements."
Consistently with these purposes, s 332 permits a lawyer to give a client either a lump sum or an itemised bill. Section 332A, however, permits certain persons, including clients such as Mr Le, to request that an itemised bill be provided. Unlike other provisions made in Part 3.2 "Costs disclosure and assessment", there is no time limit imposed in the section for the making of such a request.
Section 332A provides: "332A Request for itemised bill (1) If a bill is given by a law practice in the form of a lump sum bill, any person who is entitled to apply for an assessment of the legal costs to which the bill relates may request the law practice to give the person an itemised bill. (2) The law practice must comply with the request within 21 days after the date on which the request is made. (3) If the person making the request is liable to pay only a part of the legal costs to which the bill relates, the request for an itemised bill may only be made in relation to those costs that the person is liable to pay. (4) Subject to subsection (5), a law practice must not commence legal proceedings to recover legal costs from a person who has been given a lump sum bill until at least 30 days after the date on which the person is given the bill. (5) If the person makes a request for an itemised bill in accordance with this section, the law practice must not commence legal proceedings to recover the legal costs from the person until at least 30 days after complying with the request. (6) A law practice is not entitled to charge a person for the preparation of an itemised bill requested under this section. (7) Section 332 (2), (5) and (6) apply to the giving of an itemised bill under this section."
An "itemised bill" is defined in s 302(1) to mean "a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed under Division 11". Section 363 specifies as to such an assessment: "363 Criteria for costs assessment (1) In conducting an assessment of legal costs, the costs assessor must consider: (a) whether or not it was reasonable to carry out the work to which the legal costs relate, and (b) whether or not the work was carried out in a reasonable manner, and (c) the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 361 or 362 applies to any disputed costs. (2) In considering what is a fair and reasonable amount of legal costs, the costs assessor may have regard to any or all of the following matters: (a) whether the law practice and any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf complied with any relevant legislation or legal profession rules, (b) any disclosures made by the law practice under Division 3 (Costs disclosure), (c) any relevant advertisement as to: (i) the law practice's costs, or (ii) the skills of the law practice or of any Australian legal practitioner or Australian-registered foreign lawyer acting on its behalf, (d) (Repealed) (e) the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian-registered foreign lawyer responsible for the matter, (f) the retainer and whether the work done was within the scope of the retainer, (g) the complexity, novelty or difficulty of the matter, (h) the quality of the work done, (i) the place where, and circumstances in which, the legal services were provided, (j) the time within which the work was required to be done, (k) any other relevant matter."
In this statutory scheme, s 332A is undoubtedly a beneficial provision which must, accordingly, be construed in favour of those who are intended to benefit from the rights they are thereby given: see Isaacs J in Bull v Attorney-General (NSW) (1913) 17 CLR 370 at 384; [1913] HCA 60 and the discussion in Pearce and Geddes, Statutory Interpretation in Australia, (8th ed, 2014, Lexis Nexis) at [9.2]-[9.4].
As a matter of statutory construction, it is difficult to see that the unfettered right given by s 332A is to be properly confined by reading in a 12 month limitation period. Even where a gap has been unintentionally left in a statute, it is for the legislature and not the courts to fill that gap: see Parramatta City Council v Brickworks Ltd (1972) 128 CLR 1 at 12; [1972] HCA 21.
In Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 at 302, McHugh JA (as his Honour then was) identified the three conditions which must exist, before words are read into a statute as being: "First, the court must know the mischief with which the Act was dealing. Secondly, the court must be satisfied that by inadvertence Parliament has overlooked an eventuality which must be dealt with if the purpose of the Act is to be achieved. Thirdly, the court must be able to state with certainty what words Parliament would have used to overcome the omission if its attention had been drawn to the defect."
That approach was followed in R v Young (1999) 46 NSWLR 681 at 687-8; [1999] NSWCCA 166 and later cases.
In the case of s 332A, the mischief to which the section was addressed is apparent, namely the lack of information provided about the work performed for which the costs are rendered, when a lump sum bill is provided by a legal practitioner. Its purpose is to protect clients.
Further light is shed on the purpose of the section, when consideration is given to the predecessor to the 2004 Act, the Legal Profession Act 1987 (NSW), which did not contain a provision such as s 332A. Section 193 in the 1987 Act provided that the regulations could make provision for the form and particulars to be included in bills of costs. What was required to be provided by regulation 22A of the Legal Profession Regulation 1994 was: "22A Particulars in bill of costs (1) For the purposes of section 193 (1) of the Act, the following particulars are to be included in a bill of costs: (a) A description of the legal service provided. (b) The total amount of the costs charged. (c) Any intended claim for interest under section 190 of the Act if the costs are not paid (including the rate of interest). (d) The work done in providing the legal service. (e) The period over which that work was done. (f) The identity of the persons who did that work (including the position of the persons eg partner, associate). (g) The basis on which the costs have been calculated and charged (whether on a lump sum basis, an hourly rate basis, an item of work basis, a part of proceedings basis or other basis). (h) The facts relied on to justify the costs charged by reference to the above, the practitioner's skill, labour and responsibility, the complexity, novelty or difficulty of the matter, the quality of the work done or any other relevant matter. (2) However, the particulars referred to in subclause (1) (d)-(h) need not be included in the bill of costs if: (a) the total amount of costs charged is the amount, or an amount calculated on the basis, set out in a costs agreement for the legal service made under Division 3 of Part 11 of the Act or disclosed in accordance with Division 2 of that Part, and (b) the bill of costs refers to the relevant costs agreement or disclosure document. (3) A bill of costs may comprise more than 1 document."
This was a considerably different obligation to that introduced by the enactment of s 332A on 1 July 2007. That section granted a new right to those entitled to make a request for an itemised bill and introduced a new obligation on legal practitioners to provide a bill which provided specific detail as to how the legal costs were made up, "in a way that would allow them to be assessed".
That in enacting s 332A, Parliament overlooked an eventuality which "must be dealt with in the section" if the purpose of the 2004 Act was to be achieved, namely by the imposition of a time limit on the right to seek an itemised bill, is not apparent. To the contrary, the imposition of a 12 month time limit on making a request for such an itemised bill is not a provision of obvious necessity.
In coming to that conclusion, it is necessary to take into account the consequences of giving the 2004 Act the construction for which the parties respectively contend: see Public Transport Commission (NSW) v J Murray-More (NSW) Pty Ltd (1975) 132 CLR 336 at 350; [1975] HCA 28, where Gibbs J observed that "where two meanings are open … it is proper to adopt that meaning that will avoid consequences that appear irrational and unjust".
In construing s 332A, attention must of course be given to s 350, given that s 332A(1) gives the right to request an itemised bill to "any person who is entitled to apply for an assessment of the legal costs to which the bill relates". Those persons are identified in s 350. It provides: "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. (2) A third party payer may apply to a costs assessor for an assessment of the whole or any part of legal costs payable by the third party payer. (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. (6) 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, an application for a costs assessment under this section. (7) If there is an associated third party payer for a client of a law practice: (a) nothing in this section prevents: (i) the client from making one or more applications for assessment under this section in relation to costs for which the client is solely liable, and (ii) the associated third party payer from making one or more applications for assessment under this section in relation to costs for which the associated third party payer is solely liable, and those 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 an application for assessment under this section 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 (c) the law practice: (i) must participate in the costs assessment process where an application is made under this section by the associated third party payer in the same way as the practice must participate in the process where an application is made under this section by a client, and (ii) is taken to be a party to the assessment and is bound by the assessment. (8) If there is a non-associated third party payer for a client of a law practice: (a) nothing in this section prevents: (i) the client from making one or more applications for assessment under this section in relation to costs for which the client is liable, and (ii) the non-associated third party payer from making one or more applications for assessment under this section 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 (b) the client: (i) may participate in the costs assessment process where the non-associated third party payer makes an application under this section in relation to the legal costs for which the non-associated third party payer is liable, and (ii) is taken to be a party to the assessment and is bound by the assessment, and (c) the law practice: (i) must participate in the costs assessment process, and (ii) is taken to be a party to the assessment, 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. (9) In this section: client includes the following: (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."
The term a "third party payer" is defined inclusively. It is not confined to those involved in litigation and it includes persons to whom the lawyer does not owe a legal obligation, but who has a legal relationship with the client, such as a litigation funder (see Mackowiak at [128] - [129]).
Section 728, which appears in Chapter 8 "General provisions" is also relevant. It relevantly provides: "728 Supreme Court may order delivery up of documents etc (1) On the application of a client of a law practice, the Supreme Court may order the law practice: (a) to give to the client a bill of costs in respect of any legal services provided by the law practice, and (b) to give to the client, on such conditions as the Supreme Court may determine, such of the client's documents as are held by the law practice in relation to those services. (2) Subsection (1) does not affect the provisions of Division 11 of Part 3.2 with respect to the assessment of costs. (3) This section does not apply to the client of a law practice retained on the client's behalf by another law practice. … "
In construing these provisions it must not be overlooked that even if an application for costs assessment is not made within 12 months, in the circumstances specified in s 350(5) leave to pursue the application may be given by the Court. It follows that the right to request an itemised bill under s 332A, being exercisable after such leave is given, accords entirely with the operation of this legislative scheme.
That is but one obvious circumstance in which a client may need to request an itemised bill more than 12 months after a lump sum bill has been rendered and paid.
Others include circumstances where a concern that a lump sum bill was excessive arises only after 12 months. That situation could arise, for example, when interim lump sum bills have been rendered during commercial transactions and a concern about excessive billing does not arise until after 12 months following the rendering of the first or subsequent bills, but before the transaction is complete. Section 334 permits such interim bills to be assessed at the time of the final bill, even where that is more than 12 months after it has been rendered and paid. The right then to seek an itemised bill under s 332A, also clearly accords with the statutory scheme.
In litigation, a concern which leads to an itemised bill being requested may additionally arise when a costs order is made in favour of the client. An itemised bill may then also be needed in respect of interim lump sum bills rendered and paid more than 12 months previously, so that either an agreement as to the costs may be reached, or an assessment pursued.
However, on Brydens' approach to the construction of s 332A there would be no obligation to provide an itemised bill if more than 12 months had elapsed, even in cases where leave to pursue an out of time costs assessment was given under s 350(5). Such a construction seems quite contrary to what was intended by this statutory scheme.
Another consideration which also supports the conclusion that the construction for which Brydens contended cannot be accepted, is that "third party payers", defined as that term is to include executors, administrator and trustees of the estate of a third party payer, are also given the right to request an itemised bill. Such "third party payers" may not come within the statutory definition before the expiry of 12 months from the time a particular bill was rendered or paid. The right to request an itemised bill in their cases would be rendered nugatory, if the limitation period in s 332A for which Brydens contends was accepted.
In construing s 332A, it is also relevant to take into account that its successor, s 187 of the current Uniform Law, imposes a time limit on the making of a request for an itemised bill of "30 days after the date on which the legal costs become payable": Legal Profession Uniform Law (NSW), s 187(3). The introduction of that time limit, which would appear to give rise to various practical problems which it is not here necessary to discuss, supports the conclusion that there was no time limit for requesting an itemised bill imposed by s 332A of the 2004 Act.
It should also finally be noted that in some cases, where no time period has been specified in a statute for the doing of an act, a requirement that it be done within a reasonable time has been implied: see for example Koon Wing Lau v Calwell (1949) 80 CLR 533 at 573-4; [1949] HCA 65.
Neither party contended for such a construction, but were it to be adopted, in all of the circumstances I have earlier discussed, I would be satisfied that the September 2014 request for an itemised bill was made within a reasonable time.
It is also relevant to take into account that the conclusion which I have reached, that the right given by s 332A was not constrained by any time limit, is supported by conclusions which have been reached in a number of earlier cases.
In Dale v Firth [2012] NSWSC 1, McCallum J concluded at [12] that "the legislature is likely to have intended in s 332A that there should be a bare right to information as to the work undertaken by a solicitor, even if that information would not give rise to any remedy." At [17], her Honour also found that "the legislature intended, by the inclusion of the power under s 728, that this Court would have power to grant a variety of remedies including the specific remedy of making an order in the event of failure to comply with a request properly made under s 332A. That is consistent with the remedial and protective objects of the Act."
In Brown v Firth [2013] NSWSC 677, Hall J held at [96] that the limitation period provided in s 350(4) and the requirement for leave of the Court to dispense with that limitation period under s 350(5) did not preclude the exercise of the right to obtain an itemised bill under s 332A when the limitation period to make an application for a costs assessment had expired. His Honour found at [98] that: "… s 728 is, quite necessarily, a mechanism in the LPA to make available a number of remedies to parties and specifically, to remedy a refusal by a legal practitioner to comply with a request under s 332A. It is the discretionary nature of the power of the Court to make an order under s 728 that acts as the qualification to s 332A (rather than s 350) and ensures that a legal practitioner is not unduly prejudiced or oppressed."
Brydens relied on what was observed in Firth v Yang [2014] NSWCA 92, where in March 2014, Macfarlan and Ward JJA refused an application for leave to appeal Hall J's judgment, the itemised bill having already been provided as his Honour had ordered. In those circumstances, their Honours observed at [2] - [3]: "[2] In exercising his discretion under s 728, the primary judge took into account non-compliance by Mr Firth with an earlier request by Mr Yang under s 332A of the Legal Profession Act for an itemised bill. His Honour considered that Mr Firth had been obliged to comply with that request notwithstanding that it was made more than 12 months after Mr Firth provided a lump sum bill to Mr Yang. His Honour rejected Mr Firth's arguments that a client's right under s 332A to request an itemised bill only exists if a client has an entitlement under s 350 of the Act to have the bill assessed and that Mr Yang did not have such a right because 12 months had passed since the delivery of the lump sum bill and Mr Yang had not obtained an order from the Supreme Court under s 350(5) of the Act permitting the application to be dealt with after the expiration of the 12 month period. [3] Section 332A, which gives a right to itemisation of a lump sum bill, clearly cross-refers to s 350 because the right is given to a person "who is entitled to apply for an assessment of the legal costs to which the bill relates". However the extent of the role s 350 plays in relation to s 332A is a matter for argument. In particular, there is a question, relevant here, of whether the time limitations in s 350 restrict the right given by s 332A."
The question of whether the time limitations in s 350 restricted the right given to clients by s 332A arose again for consideration in Mackowiak. Mr Hagipantelis was a party to those proceedings and was bound by the result.
Garling J there also concluded that the Legal Profession Act 2004 imposed no time limit on a client making a request of a lawyer for an itemised bill under s 332A. Orders were thus made in favour of two of Brydens' other clients, even though, like Mr Le, they had not made their applications under s 350 for costs assessment within the 12 months provided for such applications. His Honour was satisfied that the circumstances in both those cases were such that the Court's discretion should be exercised in their favour.
In reaching his conclusions, Garling J considered the contractual nature of the relationship between a client and a solicitor, as well as its fiduciary nature; the obligations which flow therefrom; and the resulting remedies available to clients at law and equity, in respect of any overcharging (see Mackowiak at [104] to [113]). His Honour also observed at [127] that: "a client may use an itemised bill of costs for entirely proper and legitimate reasons other than to engage in the assessment process".
Uses there identified included a client who wishes to consider or pursue proceedings for breach of contract or of a fiduciary obligation; or one who wishes to be assured that the solicitor has included all relevant items in the lump sum bill, so that financial decisions with respect to the proceeds of litigation can be made (see Mackowiak at [125] - [126]).
In reaching the conclusion that the 12 month limitation period in s 350 did not prevent a client requesting an itemised bill in accordance with s 332A after that 12 month period, his Honour was swayed by considerations which included that an application for an assessment made even after the 12 month period provided by s 350 was valid (unless made by 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). In that event, an application could be made to this Court under s 350 by the costs assessor, or the client or third party payer who had made the application for assessment, for leave to pursue the application out of time.
For my part, I agree with the conclusions which McCallum J, Hall J and Garling J each reached as to the proper construction of these provisions of the 2004 Act. Section 332A is not only concerned with the provision of an itemised bill for the purpose of a costs assessment. It is a general right in relation to billing. In that regard, it is relevant to consider that the section appears in Division 7 "Billing" of Part 3.2 "Costs disclosure and assessment", not Division 11 "Costs Assessment" of Part 3.2.
It is also relevant to take into account that neither s 350 nor s 332A, empowered the Court to order a legal practice to provide an itemised bill, when one was sought outside the 12 month limitation period for which Brydens contended.
It was s 728, appearing in Chapter 8 "General provisions", which empowered the Court to order that a bill be provided. Understandably, that section did not contemplate that there was any time limit imposed on a client seeking an itemised bill, given that costs assessment was not the only purpose for which an itemised bill might be sought. Nor did it even impose a time limit on a client approaching the Court for an order that a legal practitioner provide such a bill.
The conclusion that the Legislature intended that there be no limitation period imposed by the 2004 Act on the making of a s 332A request for an itemised bill seems to me inescapable, when its provisions are considered in light of those now in force under the Uniform Law, which came into operation on 1 July 2015. Its provisions reveal that the balance between the rights and obligations established by the 2004 Act was different to that established in 2015 by the enactment of the Uniform Law.
In 2014, Brydens refused to comply with its statutory obligation to provide the itemised bill Mr Le had requested, an unfettered right given to him by s 332A of the 2004 Act.
It persisted with that refusal contrary to the obligations then imposed upon it by s 332A. The question which remains is whether the Court's power to make the order Mr Le sought should be exercised in his favour.

The Court's discretion must be exercised

I am satisfied that justice demands that the order Mr Le seeks be made.
Contrary to the case advanced for Brydens, I consider that it is relevant to take into account all of Brydens' conduct following receipt of Mr Le's request in September 2014. It was not in issue that after the judgment in Mackowiak to which Mr Hagipantelis was a party was given, it being neither appealed or otherwise challenged, still Mr Le was not provided with an itemised bill. That was despite the decision having settled the question of the proper construction of s 332A of the 2004 Act.
For Brydens it was argued, however, that Garling J's judgment and its response should not be given any "factual weight", because while the judgment had "legal persuasiveness", it had no "evidentiary value". Further, that its failure to appeal that judgment was "of no relevance at all".
Amongst the difficulties with these submissions is that there was no factual issue as to Brydens' response to Mr Le's request, including after the question of the proper construction of s 332A had been resolved in Mackowiak. That explains why no objection to the use sought to be made of the judgment was taken under s 91 of the Evidence Act 1995 (NSW), it not being relied on "to prove the existence of a fact that was in issue in that proceeding".
On its face, Brydens' persistent refusal to provide Mr Le with the itemised bill he had requested, even after the question of the proper construction of s 332A was resolved in Mackowiak, involved a contravention of the 2004 Act. "Contravene" was defined in s 4 of that Act to include "fail to comply with". In the context of s 138 of the Evidence Act 1995, where the word is not defined, it was considered by French CJ in Parker v Comptroller-General of Customs (2009) 83 ALJR 494; [2009] HCA 7 at [30] to include: "disobedience of a command expressed in a rule of law which may be statutory or non-statutory. It involves doing that which is forbidden by law or failing to do that which is required by law to be done.
Section 498(1)(a) of the 2004 Act specified that conduct capable of being unsatisfactory professional conduct or professional misconduct, as defined in s 496 and s 497, includes "conduct consisting of a contravention of this Act, the regulations or the legal profession rules". In cases such as Council of the Law Society of NSW v Pizzinga [2012] NSWADT 211 and Legal Services Commissioner v King [2013] QCAT 260, failures to provide an itemised bill when requested has led to findings of such misconduct. Those considerations all weigh in favour of the Court's discretion being exercised in favour of Mr Le.
Brydens relied on the difficulties it would face in now providing the bill, given that it has lost Mr Le's files, to resist the orders sought.
It was in November 2014 that Mr Hagipantelis asked for the return of the files. They were provided in December. Not only did Brydens then have a statutory obligation to retain the files, but a contractual one. Under the costs agreement that it had entered with Mr Le (only after judgment was given in his favour in the District Court), it was expressly agreed: "15. Retention of your documents We will on completion of the Work, retain any papers to which you are entitled, but leave in our possession (except documents deposited in safe custody) for no more than seven (7) years and on the undertaking that we have your authority to destroy the file seven years after the date of the final bill rendered by us in this matter- The following fees and charges will be payable for the retention and retrieval of documents: (a) file storage charges: $150 plus GST (b) file retrieval charges: $95 plus GST"
This requirement took effect when the files were returned to Brydens in December 2014.
Brydens relied on the evidence of Ms Villar, now a solicitor in Brydens' employ, who was the paralegal assisting the solicitor with carriage of Mr Le's matters from September 2012 to March 2013, that the files cannot now be found. Her evidence was not challenged by Mr Le and accordingly, must be accepted.
That evidence certainly did not establish that when Garling J gave his judgment in August 2015, that Brydens did not have, or could not have retrieved Mr Le's files. The appeal file had been sent to Blue Ribbon Legal in January 2015 for preparation of an itemised bill, but still none was provided.
Ms Villar described the searches she had undertaken to locate the files, given the systems maintained at Brydens for storage and archiving of files. In a second affidavit sworn in February 2017, Ms Villar explained the LEAP software system Brydens utilises for preparation of all documents with respect to its cases and the copies of Mr Le's file documents therein stored. Physical file notes are not maintained there, nor are documents such as those received from Mr Le, witnesses and other parties, including pleadings, reports and subpoenas or court documents.
What this evidence did not deal with was, as was submitted for Mr Le, that many of these documents are obtainable from Court files, witnesses, other parties, those who responded to subpoenas and Mr Le himself. Blue Ribbon Legal is also likely to have relevant information which is accessible to Brydens.
The evidence establishes that Brydens' problems are not the result of Mr Le's actions. It is Brydens' own actions which have resulted in it being in the difficult position in which it finds itself, unable to meet its obligations to Mr Le to maintain his files and facing undoubted difficulty in now complying with its obligations under s 332A, in circumstances when Mr Le still requires an itemised bill.
In all of those circumstances, I am well satisfied that despite the difficulties confronting Brydens, the balance must sway in favour of the Court's discretion being exercised to make the order Mr Le seeks, that being what the dictates of justice require in the circumstances which have arisen to be considered.

Costs assessment: should the discretion to permit an out of time assessment be exercised in favour of Mr Le?

In the circumstances I have discussed, I am also satisfied that the leave which Mr Le seeks must also be granted.
In Mackowiak, where Mr Hagipantelis did give evidence, Garling J also exercised the Court's s 350(5) discretion in favour of the plaintiffs, taking into account matters such as: 1. The time which had elapsed since the bill was provided; 2. The view that "a lump sum tax invoice is by its nature opaque. It is almost impossible for a lay person, unskilled in the area of legal costs and inexperienced as to what is or is not a fair charge, to realise that the sum charged by the solicitors is, or is not, fair and reasonable. Adding the notice at the bottom of the tax invoice in a smaller font, and in a way which is less than easily readable and complex, does not, in my opinion, constitute adequately notifying the client of their rights and entitlements" (at [140]); 3. The clients had instructed another solicitor within a reasonable time after hearing of his ability to challenge a bill (at [142]); 4. The appropriateness of the steps pursued by that solicitor in the respective circumstances (see at [143] to [145]); 5. The existence of the files, there being no evidence to suggest that a full bill of costs could not be provided and the absence of specific prejudice(see at [146] and [147]); 6. The grounds attached to the application for a costs assessment which suggested that, if established, there may be substance in the plaintiff's submissions that an outcome substantively in favour of the plaintiff could be achieved (see at [148]); and 7. His Honour's view that "it is generally in the public interest that, where an apparent issue of substance is raised with respect to the costs of a solicitor, that solicitor ought be required to justify those costs by the provision of an itemised bill, and by that itemised bill being submitted to the assessment process" (at [152]).
The circumstances which arise for consideration in this case are different, but similar considerations arise, including in relation to his Honour's observations at [140], with which I agree.
The extent of Mr Le's command of English was irrelevant to Brydens' refusal to provide the itemised bill, given its statutory obligation. I accept that is not, however, irrelevant to the question of whether the leave he now seeks under s 350 should be granted.
A real difficulty for Brydens' case is that Mr Le's evidence as to his limited command of English and that it was not until he instructed Gajic Lawyers that he became aware of his right to challenge Brydens' bill and of the existence of time limits for the exercise of that right, was finally not challenged. While Mr Duc was cross-examined, his evidence that earlier he had assisted Mr Le with the preparation of the letter he sent to Brydens in March 2014, must also be accepted.
Brydens was obliged by s 332A of the 2004 Act to give Mr Le an itemised bill within 21 days of the request made on his behalf on 4 September 2014. He had instructed Gajic Lawyers in a timely way. His solicitors had pursued his request for the itemised bill soon after the appeal was settled and the question of the costs order made in Mr Le's favour had to be resolved with the employer. Once the unchallenged judgment in Mackowiak was given in August 2015, there could no longer have been any question for Brydens, that it had no right to continue refusing Mr Le's request, notwithstanding that it no longer acted for him, or that he proposed to rely on its itemised bill in pursuit of the costs which the employer had been ordered to pay.
Mr Le was concerned about incurring further legal costs, but in the face of Brydens' continued refusal to give him an itemised bill, even despite what was decided in Mackowiak, he was, as was his evidence, finally left with no alternative but to pursue these proceedings.
Notwithstanding that these proceedings were not commenced until July 2016, there was no evidence that this delay caused Brydens any further prejudice, in addition to that caused by its loss of Mr Le's files.
In all of those circumstances, when the nature of Mr Le's command of English and the difficulties that posed for him are considered together with the nature and result of the proceedings he brought in the District Court; the length of the hearing; the time that the costs agreement was entered; the amount of the fees charged and the circumstances in which Brydens transferred its costs to its office account; the pursuit and settlement of the employer's appeal and the circumstances in which Mr Le came to engage Gajic Lawyers; and Brydens' persistent refusal, in breach of its statutory obligation, to provide Mr Le an itemised bill even after judgment was given in Mackowiak, I am satisfied that the order sought to permit an out of time costs assessment must be made.

Costs

The usual order is that costs follow the event, which in this case would be an order that Brydens bear Mr Le's costs, as agreed or assessed.
Unless the parties approach within 14 days to be heard, that will be the Court's order.

Transitional Provisions

The parties did not address the effect of the transitional provisions of the Uniform Law relating to costs. Relevantly, clause 18(1)(b) in Schedule 4 "Savings and transitional provisions" of the Uniform Law provides that "the provisions of the old legislation relating to legal costs (other than provisions prescribed by the local regulations) continue to apply to a matter if the client first instructed the law practice in the matter before the commencement day" (emphasis added). Clause 18(1)(a) in Schedule 4 provides that "Part 4.3 of this Law applies to a matter if the client first instructs the law practice on or after the commencement day".
As Mr Le first instructed Brydens in 2006, before the commencement day of the Uniform Law on 1 July 2015, clause 18(1)(b) requires the issues lying between the parties to be dealt with by order made under the 2004 Act.

Orders

For the reasons given, I order: 1. Under s 728(1)(a) of the Legal Profession Act 2004 (NSW) that the defendant gives the plaintiff a bill of costs in itemised form in respect of the legal services provided to the plaintiff within 42 days of the date of this order; 2. Under s 350(5) of the Legal Profession Act 2004 (NSW), that it is just and fair for the plaintiff's application for assessment filed on 15 July 2015 (NSWSC matter number 2016/199623) be dealt with by a costs assessor, notwithstanding the expiration of a 12 month period; and 3. The defendant pay the plaintiff's costs of these proceedings, unless the parties approach to be heard within 14 days.

Amendments 06 March 2017 - [44] - "McHugh J" amended to "McHugh JA (as his Honour then was)" [51] - first sentence - "332" amended to "332A" [68] - "limited provided" amended to "provided" DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 March 2017

Legal Profession Act 2004(NSW)

Legal Profession Act 1987(NSW)

Act, the Legal Profession Act 1987(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (16 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (25)

Cited By (3)