Citation : SMITH -v- LEWIS BLYTH & HOOPER [2013] WASC 408

File No : CIV 2390 of 2011, CIV 3315 of 2011, CIV 3316 of 2011

Costs - Costs agreements - Solicitor's failure to provide estimate of costs before costs agreement executed - Whether costs agreement unreasonable - Whether primary judge erred in the exercise of discretion to cancel an unreasonable costs agreement - Whether discretion to cancel costs agreement capable of being exercised subject to conditions - Whether court may condition exercise of discretion to cancel a costs agreement by order removing or uplifting scale limits

Legal Practice Act 2003 (WA), s 215, s 215(1), s 221, s 222(2)(a)

Legal Practitioners Act 1893 (WA), s 58ZB, s 59

Legal Profession Act 2008 (WA), s 280

Rules of the Supreme Court 1971 (WA), O 3 r 5, O 66 r 51

Respondent : George Papamihail Barristers & Solicitors

Alman v Macdonald Rudder (A Firm) [2001] WASCA 375

Alman v Macdonald Rudder [2001] WASC 65

Brown v Talbot & Olivier (1993) 9 WAR 70

Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 (S)

Cockburn Cement Ltd v The Minister for Environment (WA) [2011] WASC 260 (S)

Computer Accounting & Tax Pty Ltd v Bowen Buchbinder Vilensky [2009] WASC 171

Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124

Feaver v Smith [2008] WADC 72

House v The King [1936] HCA 40; (1936) 55 CLR 499

Jovetic v Stoddart & Co (1992) 7 WAR 208

Maas v O'Neill [2013] WASC 379 (S)

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24

Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79

Smith v Lewis Blyth & Hooper [2013] WASC 408

Snowtop Mushrooms Pty Ltd v Powley (Unreported, Full Court, 1982, Library No 4501, 14 May 1982)

Stoddart & Co v Jovetic (1993) 8 WAR 420

Walter v Buckridge [No 5] [2012] WASC 495

3 These appeals concern decisions of the learned primary judge to cancel two costs agreements entered into between the respondent (Mr Smith) and the appellant, a firm of legal practitioners, pursuant to s 222(2) of the Legal Practice Act 2003 (WA) (the Act). Her Honour's reasons appear in Smith v Lewis Blyth & Hooper [2013] WASC 408 and all references to paragraph numbers below are references to paragraph numbers in those reasons unless otherwise indicated.

(a) an agreement dated 13 March 2007 with respect to the appellant acting for Mr Smith in relation to a dispute concerning competing claims to the validity of certain wills signed by Mr Smith's mother and whether she had testamentary capacity at the time she made them (the Probate Action); and

(b) an agreement dated 26 March 2008 in relation to the appellant acting for Mr Smith in relation to a dispute over assets held in various trusts connected to his family (the Family Trust Action).

5 The first of these costs agreements will be referred to as the 'Probate Action cost agreement' and the second will be referred to as the 'Family Trust Action cost agreement'.

6 On 28 July 2011 Mr Smith commenced proceedings to set aside the costs agreements on the basis they were unreasonable pursuant to s 222 of the Act.

7 According to her Honour, the grounds upon which Mr Smith relied were, in effect:

(a) that a costs estimate had not been supplied by the appellant prior to the formation of each costs agreement [87(1)]; and

(b) that certain terms of the agreements were unreasonable [87(2) - (10)].

8 On 14 November 2013, the primary judge upheld Mr Smith's claim on the first of those grounds, and cancelled both costs agreements.

9 Section 222 of the Act provides:

(1) A costs agreement may be reviewed by the Supreme Court upon application by summons or on a reference under section 235(2).

(2) If, in the opinion of the Supreme Court, the costs agreement is unreasonable -

(a) the Supreme Court may reduce the amount payable or cancel the costs agreement; and

(b) the costs may be taxed in the ordinary way.

(3) The Supreme Court may make such order as to the costs of and relating to the review, and the proceedings on the review, as the Court thinks fit.

10 At the start of the primary judge's reasons, her Honour noted that neither party sought to adduce oral evidence or to cross-examine the deponents of the affidavits, and as there were considerable differences between the factual accounts given by the two deponents, her Honour was not able to make findings based on the disputed affidavit material [4].

11 Mr Smith was a mature man and an experienced businessman. Over the course of his business career he had instructed lawyers on numerous occasions to deal with a variety of legal issues. As a consequence, he had experience in receiving and paying lawyers' accounts [12], [111]. His experience did not, however, extend to a matter such as the Probate Action (see also [88] below).

2002 to 2005 - Mr Smith's representation by other lawyers

12 In 2002, the Probate Action was commenced and Mr Smith was named as the defendant in the action (GB 206). Mr Smith had instructed lawyers (not the appellant) to act for him in the matter and related property matters [13].

13 In November 2005, Mr Smith met with Mr Hobday, a legal practitioner employed by the appellant. Mr Hobday was an experienced practitioner of 15 years' post-admission experience. Mr Smith provided Mr Hobday with some information about a number of his then legal matters, but he did not provide instructions to the appellant to act on his behalf [14].

Mid-2006 - instructions to the appellant to take on Probate Action

14 On 6 June 2006, Mr Smith again attended Mr Hobday at the appellant's office. He told Mr Hobday that he would like Mr Hobday to advise him in relation to both the Probate Action and another matter which had arisen in relation to the appointment of trustees of certain trusts (the Appointment Action) [15]. Mr Hobday told Mr Smith that he would need a sum of $10,000 to be placed into the appellant's trust account on account of costs.

15 On 13 June 2006, Mr Hobday forwarded a retainer agreement and costs disclosure statement to Mr Smith (13 June 2006 retainer documents). The 13 June 2006 retainer documents were not in evidence before her Honour [16].

16 On 14 June 2006, Mr Smith provided Mr Hobday with $2,000 on account of costs [17].

17 Mr Hobday advised Mr Smith in relation to the Appointment Action which resulted in no immediate action being taken in respect of it [18].

18 Mr Smith told Mr Hobday that the Probate Action was listed for a 10-day trial in July 2006 and that he was unhappy with his current legal representation, both solicitors and counsel [19]. Mr Hobday then had a lengthy telephone conference call with Mr and Mrs Smith and with Mr Smith's then solicitor and counsel [19].

19 On 24 July 2006, Mr Smith paid to the appellant a further $3,000 into trust on account of costs [20]. Mr Smith instructed the appellant to apply for an adjournment of the trial of the Probate Action [21].

20 On 24 July 2006, Mr Smith's (previous) lawyers obtained leave to cease to act for Mr Smith. They were permitted to be removed from the record on the basis that Mr Smith had not paid a number of outstanding accounts or put them in funds for the trial [21].

21 On 27 July 2006, Mr Hobday appeared for Mr Smith at a hearing of the application for an adjournment. The application was opposed, but Templeman J adjourned the trial and referred the Probate Action to mediation [21].

22 On 28 July 2006, the appellant rendered Mr Smith an account. The $5,000 then held in trust was used in part payment of the account [23].

23 The appellant continued to perform legal work for Mr Smith and rendered another account on 25 August 2006, which Mr Smith paid [24].

24 Mr Hobday considered that once Mr Smith had received the 13 June 2006 retainer documents, and subsequently provided instructions, the relevant costs agreement was in place. He further said that it was to avoid doubt that Mr Smith was subsequently asked to sign the costs agreements that are the subject of the present dispute [22].

Sale of the South Perth property - December 2006

25 Mr Smith was beneficially entitled to a one-third interest in certain property at South Perth. In August 2006, he instructed the appellant to act on his behalf in relation to the sale of the property. The property was sold and settlement occurred in or about December 2006. As a result of the settlement, approximately $520,000 was paid into the appellant's trust account [25].

26 The appellant continued to act for Mr Smith in the Probate Action in the expectation that its costs would be paid out of the settlement money from the sale [25].

27 On 18 December 2006, the appellant wrote to Mr Smith advising him of outstanding legal fees totalling $22,620.05, and confirming Mr Smith's advice to take payment from the proceeds of sale [26]. The balance of funds was left in the appellant's trust account.

28 The appellant advised Mr Smith on a number of occasions that the money in trust would not earn interest and that Mr Smith should put a substantial portion of funds into an interest bearing account [27]. No such instructions eventuated [27].

29 There was some dispute as to conversations that took place between Mr Hobday and Mr Smith as to the costs of the Probate Action. Mr Hobday said that there were discussions to the effect that the 'costs would be "substantial" and were "hard to estimate''', however, he agreed that no estimate was given. Further, Mr Hobday said that he told Mr Smith that the settlement proceeds from the sale of the South Perth property would be more than enough to cover the costs of the Probate Action [28].

30 In the period 31 October 2006 to the end of February 2007, the appellant rendered over $30,000 in bills, which were paid from the moneys in trust from the sale of the South Perth property [35(1) - (3)]. Throughout this period Mr Smith continued to instruct the appellant, but did not sign and return the 13 June 2006 retainer documents.

31 On 13 March 2007, Mr Smith signed the Probate Action costs agreement. (This was not part of the 13 June 2006 retainer documents, but a new document bearing the date 23 February 2007.) At the same time he signed the costs agreement in relation to the sale of the South Perth property. Each costs agreement was, relevantly, in the same terms [29] - [31].

32 Relevantly, the Probate Action costs agreement stated that it regulated the amount of, and payment for, the whole or part or parts of any past, or future services, fees, charges and/or disbursements in respect of business done or to be done by the appellant. It stated that the signing of the agreement, the payment of $1,000 on account of fees, or the provision of instructions, would constitute acceptance by Mr Smith of the retainer (cl 11) [31].

33 The agreement stated that Mr Smith would be charged in six minute increments, or part thereof, on the basis of certain dollar hourly rates dependent on who performed the relevant work. The costs agreement provided for partners to charge between $330 and $379.50 per hour. Mr Hobday's rate was $297 per hour. Under the relevant Supreme Court Scales of Costs, the scale for a 'senior practitioner' was $363 per hour. Under the costs agreement, other solicitors could charge $253 per hour, whereas the scale rate was between $220 and $297 per hour. Under the costs agreement, clerks could charge between $110 and $150 per hour, whereas the scale figure was $176 per hour [32].

34 The agreement stated that the appellant would 'endeavour to provide ... within 14 days an estimate of costs' likely to be incurred by Mr Smith [33].

March - April 2007 - Settlement of the Probate Action

35 On 26 March 2007, Mr Smith's counsel in the Probate Action advised him to pursue a settlement [37]. On 20 April 2007, counsel confirmed this view. Counsel also advised Mr Smith that if Mr Smith continued his counterclaim there was a significant likelihood that he would be required to pay the plaintiffs' party/party costs in defending Mr Smith's counterclaim. Counsel advised Mr Smith that the plaintiffs' costs of the trial of the Probate Action (Mr Smith being the defendant) would be approximately $100,000 per week of trial for a two-week trial and that similar costs would be incurred for a week of trial preparation [38].

36 Shortly afterwards, the Probate Action was settled. The appellant continued to provide Mr Smith with advice with respect to the stamp duty implications of the settlement [39].

Bills rendered pursuant to the Probate Action costs agreement

37 Over the course of the Probate Action, the appellant rendered additional accounts with receipts indicating that they had been paid from funds held in trust from the sale of the South Perth property. The accounts totalled $109,714.51, in respect of the period of 31 October 2006 to 31 October 2007 [35].

The Family Trust action - May 2007 - December 2007

38 After the Probate Action was settled, Mr Smith advised the appellant that he intended to provide instructions to commence proceedings in relation to the Family Trust Action. However, he only provided instructions after the trustees of the family trust commenced proceedings by originating summons CIV 1961 of 2007 in late September 2007 (the originating summons proceedings) for orders that all the trust properties, including Mr Smith's long term residence, be sold. On the basis of what Mr Smith told him was the value of the family trust assets, Mr Hobday considered that Mr Smith's claim to 75% - 100% of the total value of the trust assets was worth between $12 million - $24 million. The opposing position was that Mr Smith was entitled to only 33% of the trust assets [40] - [41]. The Family Trust Action was complex and included factual matters relating to family businesses, trusts, corporations, property and equitable claims dating back to 1961. The statement of claim filed on 17 April 2008 ran to 78 pages [56].

39 A memorandum of appearance was filed on 3 October 2007, and on 17 October 2007 Mr Hobday sent a brief to an experienced junior counsel to review the originating summons.

40 On 30 October 2007, Mr Hobday sent Mr Smith a retainer agreement which stated that it related to the 'Originating Summons', and a costs disclosure document. Mr Smith did not immediately sign the agreement [42].

41 Various steps were taken with respect to the Family Trust Action between 30 October 2007 and early 2008 [43] - [46]. Mr Smith still did not sign and return the retainer agreement in relation to the Family Trust Action.

42 In early 2008, Mr Hobday noted that Mr Smith had not yet signed the retainer agreement of 30 October 2007, and asked him to do so.

43 Mr Hobday said that Mr Smith did not ask him to explain the terms of the agreement, whereas Mr Smith said that he asked Mr Hobday what his options were, to which Mr Hobday responded 'none, there is nowhere else to go. The work has been done and it needs to be paid for' [47] - [48].

44 Mr Smith knew that he could terminate instructions and seek alternative instructions at this point, as he had done this in the past with other lawyers [49].

45 Mr Smith deposed that he was not told by Mr Hobday before signing the agreement the amount of fees he might have to pay according to the agreement; the range of costs he might recover if successful or have to pay if not successful; and that Mr Hobday had obtained from counsel an estimate of their fees [53].

46 Mr Hobday deposed that he and Mr Smith had a number of discussions about costs before March 2008, and in response to the matters raised by Mr Smith, said relevantly [54]:

(2) he was unable to accurately estimate what fees would be payable as the work to be undertaken was very substantial. Mr Hobday says that before the declaratory relief proceedings were commenced he discussed with Mr Smith using the [balance of the] proceeds from the sale of the South Perth property and the funds from his mother's estate after settlement of the Probate Action to pay the legal fees and that those sums should be enough [to pay the defendant's fees];

(3) the exact amount of costs was not discussed with Mr Smith as it was not possible for him (Mr Hobday) to make any realistic estimate of the costs of the Family Trust Action;

...

(12) when the defendant obtained an estimate of counsel's fees, Mr Smith was told of it.

47 In late March 2008, Mr Smith eventually signed a costs agreement relating to the Family Trust Action - see below.

The Family Trust action costs agreement 26 March 2008

48 On 26 March 2008, Mr Smith signed and dated the retainer agreement sent on 30 October 2007. This was the Family Trust Action costs agreement. The agreement was in identical terms to the earlier two costs agreements, except that hourly rates had increased and the scope of work was different [51]. A comparison of the Family Trust Action costs agreement with the Legal Practitioners (Supreme Court) Contentious Business Determination 2008 (WA) indicates the following in respect of the period after 1 July 2008. Under the costs agreement, a partner's rate was between $363 and $395 per hour and Mr Hobday's rate was $352 per hour, whereas the scale rate was $396 per hour for a 'senior practitioner'. Under the costs agreement, a solicitor's rate would be between $275 and $355 per hour, whereas the rate for a 'junior practitioner' under the scale was $275 per hour. Clerks under the costs agreement would be charged at $165 per hour, whereas under the scale the clerk's rate was $198 per hour.

Accounts in the Family Trust Action paid by November 2008 from sale of South Perth property

49 As at November 2008, the appellant had rendered accounts in the Family Trust Action on a regular basis, and these were paid out of the moneys still held on trust from the sale of the South Perth property. These accounts were rendered at intervals in the period from 31 October 2007 to 27 November 2008, and totalled $238,600.67 [55].

50 By about October 2008, it became evident that the remaining moneys in the trust account from the sale of the South Perth property would not be sufficient to pay for the Family Trust Action [58] - [60]. There was a factual dispute between the parties as to what occurred at this point in time. Her Honour said that it was not possible to make findings on all the matters in dispute but that, on the objective evidence, she found as follows.

51 A letter was sent from the appellant to Mr Smith on 12 November 2008 which confirmed Mr Hobday's oral advice to Mr Smith that the appellant held $83,000 in trust for him but this amount was not sufficient for trial preparation or the trial of the Family Trust Action. The letter did not contain an estimate of the appellant's costs in the Family Trust Action and no estimate had been given earlier [60]. The letter confirmed that the appellant acted pursuant to the Family Trust Action costs agreement. The letter outlined an alternative arrangement for future costs [60]. This arrangement included requesting counsel to agree that upon rendering their accounts they would only be paid a total of $60,000; that on any outstanding amount they would be entitled to charge interest at an agreed rate; and that they would be paid their outstanding fees on finalisation of the Family Trust Action [60].

52 On 9 December 2008, Mr Hobday wrote to Mr Smith informing him that counsel did not agree to the terms proposed [63]. Counsel requested that sufficient money to cover their fees be put in a trust account, or that there be some commitment to put the money into the trust account by 15 January 2009, and for the money to be in the trust account by 1 February 2009 [65].

53 The letter from Mr Hobday to Mr Smith on 9 December 2008 also said that counsels' combined expected fees for the trial would be approximately $340,000 [63], and that the appellant required him to place $300,000 in trust, in addition to the $83,000 already held in trust, to meet counsels' fees and disbursements [69].

54 The primary judge found that this was the first and only time that Mr Smith was given an estimate of his legal costs in the Family Trust Action.

55 Accordingly, four months before trial and when he had already paid nearly $240,000 in costs, Mr Smith was told he had to raise another $300,000 within two months to pay counsels' newly estimated fees of $340,000, otherwise he would have no counsel at trial. He was still in the dark as to what the appellant's total costs would be [64], [66].

56 Sometime after the letter dated 9 December 2008, Mr Smith entered into a loan agreement for $400,000 with a third party to enable him to pay counsels' estimated fees and the disbursements for the Family Trust Action. The appellant acted for Mr Smith in this transaction (through a different practitioner in the firm) [70].

March - April 2009 and the settlement of the Family Trust action

57 The moneys borrowed by Mr Smith were paid into the appellant's trust account in or about March 2009 [70].

58 The Family Trust Action was listed for a four-week trial commencing on 6 April 2009. The trial commenced on that date, but on 7 April 2009 it was stood down to allow the parties to negotiate a settlement. The parties agreed on terms of settlement on 8 April 2009 [71].

59 The broad terms of settlement of the Family Trust Action were that the assets held in the family trust would be sold and the proceeds distributed with 50% going to Mr Smith and 25% to each of his brother and sister [75]. Mr Smith wished to negotiate the purchase of some of the trust assets. The appellant continued to act for Mr Smith in this respect as part of the same file. The family trust assets were later sold in a depressed market and Mr Smith was due to receive approximately $9 million as a result of the settlement [75].

60 In September 2009, Mr Smith instructed the appellant to use the moneys held in trust for payment of all outstanding legal fees and to pay the balance to him. The remaining funds held in trust, being $72,042.68, were paid to Mr Smith [76]. Thus, at this point, all outstanding accounts concerning the Family Trust Action were paid.

October 2009 - February 2010 - further instructions

61 From October 2009 - February 2010, further accounts were rendered as a result of Mr Smith instructing the appellant in relation to negotiating with the trustees, etc [77].

63 Around October 2010, Mr Smith spoke to Mr Hobday about how he had paid a lot of legal fees. Mr Hobday agreed and invited Mr Smith to put an offer in writing. Mr Smith did not make an offer [80].

64 In February 2011 Mr Hobday wrote to Mr Smith requesting full payment of all outstanding amounts [80].

March 2011 - Non-payment - Mr Smith seeks taxation

65 On 3 March 2011, Mr Hobday wrote a letter to Mr Smith. The letter referred to Mr Smith having said to Mr Hobday that he (Mr Smith) wanted the accounts taxed [81]. The letter invited Mr Smith to bring to the appellant's attention any particular items he had an issue with, and that the appellant would consider it. Otherwise, unless payment was made within seven days, proceedings would be commenced [82].

66 On 10 March 2011, Mr Smith told the appellants that he believed from previous conversations with Mr Hobday that the appellant had agreed to supply timesheets and have accounts taxed. Mr Smith deposed he was referring to all accounts, not just unpaid accounts [83]. The appellant agreed by way of letter dated 17 March 2011 to have unpaid accounts taxed [84].

67 On 25 March 2011, the appellant's bill of unpaid costs in respect of other matters covered by the Family Trust Action costs agreement was lodged for taxation. This bill was in the sum of $24,618 plus $484.50 of disbursements [85].

July 2011 to December - Application by Mr Smith under s 222

68 On 28 July 2011, Mr Smith filed the originating summons in CIV 2390 of 2011 seeking a declaration that the Family Trust Action costs agreement was unreasonable.

69 On 5 December 2011, Mr Smith filed originating summonses in CIV 3315 of 2011 and CIV 3316 of 2011, seeking similar relief in respect of the Probate Action costs agreement and the South Perth costs agreement respectively. (The primary judge dismissed Mr Smith's application in respect of the South Perth costs agreement and that matter plays no part in these appeals.)

70 The primary judge's statement of the relevant legal principles was not contested in this appeal, and may be accepted for present purposes. In outlining the principles, her Honour made the following observations.

71 The Act was repealed in 2009. It was not in issue that Mr Smith's applications were properly brought under the s 222 of the Act, by operation of s 598 and s 616 of the Legal Profession Act 2008 (WA). The parties agreed that although s 222 is not identical to its predecessor, s 59 of the Legal Practitioners Act 1893 (WA) it is to the same effect, and that the authorities in relation to that provision remain relevant to the interpretation of s 222 of the Act [6].

72 Mr Smith carried the burden of satisfying the primary judge that the particular costs agreement was unreasonable against him: Jovetic v Stoddart & Co (1992) 7 WAR 208, 220, 222; Stoddart & Co v Jovetic (1993) 8 WAR 420, 429.

73 If the court finds that a costs agreement is unreasonable, the court may, but is not obliged to, cancel the costs agreement or reduce the amount payable under it: Alman v Macdonald Rudder [2001] WASC 65 [18] which was referred to without adverse comment in Alman v Macdonald Rudder (A Firm) [2001] WASCA 375 [23].

74 Her Honour observed [9] that the circumstances in which the court may find that a costs agreement is unreasonable were summarised in Computer Accounting & Tax Pty Ltd v Bowen Buchbinder Vilensky [2009] WASC 171 (Murphy J). There it was said:

For the purposes of s 222, an agreement may be unreasonable because of the circumstances under which it came into being, or because its terms are unreasonable, or because the effect on the client is unreasonable. Consideration of whether an agreement is unreasonable or not is not confined to those three categories. Also, it may be in a given case, that, if each of the three categories is looked at in isolation, none independently leads to a conclusion of unreasonableness, however when looked at as a whole, or in combination with other circumstances, the agreement might be regarded as unreasonable. Similarly, even if in one of those three categories, the agreement appeared unreasonable, it may nevertheless be regarded as not unreasonable when all the circumstances are considered as a whole. See Jovetic v Stoddart & Co (1992) 7 WAR 208; Stoddart & Co v Jovetic (1993) 8 WAR 420; Brown v Talbot & Olivier (1993) 9 WAR 70, 75; and Duckworth v Chopra [2001] WASC 146 [29] - [30]. In relation to the first of the three categories referred to above, ie the circumstances under which the agreement came into being, particular attention is paid to the solicitor's position as a fiduciary. The solicitor is 'classically' a fiduciary to the client and, as such, owes fiduciary duties to the client: Maguire v Makaronis [1997] HCA 23; (1997) 188 CLR 449, 463. Solicitor's obligations ordinarily or at least frequently involve:

1. ensuring that the client, because of independent advice or otherwise, does not enter into an agreement with the solicitor in reliance upon the trust or confidence arising from the relationship between the solicitor and client;
2. full and frank disclosure to the client of all information known to the solicitor which the client should know;
3. if there be aspects of a contract in respect of which the solicitor may be in a position of advantage vis-à-vis the client, those must be clearly brought to the client's attention so that the client can properly decide, in an informed way, whether to enter into the contract [83] - [86]. (emphasis added)

75 In Brown v Talbot & Olivier (1993) 9 WAR 70, Ipp J outlined (77 - 78) a number of matters which 'ordinarily' should expressly be disclosed to the client before a costs agreement is entered into.

76 In Computer Accounting it was said that matters which may be taken into account in determining the content and scope of disclosure required by a practitioner included:

For example, the sophistication or business experience of the client may be relevant to the content and scope of disclosure by the solicitor: Cerini v McLeods [37]; Bradley West Clarke List v Keeman [1997] NZHC 152; [1998] ANZ ConvR 77, 79 - 80. Similarly, if the client were, for example, a solicitor himself or herself, the content and scope of disclosure would ... ordinarily be different from that required for an ordinary lay client. Also, the client's personal knowledge and experience of litigation and what it entails, and of the bases upon which solicitors commonly charge fees, and of the existence, nature and purpose of court scales in relation to fees, and of the nature and purpose of taxation of costs, and the recency and currency of the client's knowledge and experience of such matters, may, depending on all the circumstances, be relevant to a consideration of the scope and content of disclosure required in a particular case in order for the client to exercise an independent and informed judgment about whether to enter a costs agreement [95] - [96].

77 Beyond the abovementioned matters referred to by her Honour, the following additional observations may be made. Plainly, there may be some overlap between a consideration of the question of whether an agreement is unreasonable in its terms and whether it is unreasonable in its operation, as the operation of an agreement will depend upon the application of its terms to the circumstances of the case. Nevertheless, there may be cases where the court is of the view that the terms of the agreement are so egregious from the client's point of view, that irrespective of their likely application to the circumstances of the case, the agreement is unreasonable for the purposes of s 222(2) of the Act. Also, a number of apparently benign terms may in combination, upon proof of their application to the particular circumstances of the case, lead the court to conclude that the agreement is unreasonable in its effect. In Alman, Wheeler J considered that the costs agreement in that case was unreasonable in its effect where the client had proved that the costs payable under the agreement (if it were allowed to stand) would be more than double the amount of costs that would be payable to the solicitor upon the application of the relevant scale (Alman at first instance [27]; see also on appeal Alman [28]).

78 In cases where it is alleged that the agreement is unreasonable in its formation, in that it has been procured by the solicitor without due regard to his or her fiduciary obligations, even absent proof that costs under the costs agreement would exceed the costs under the scale, the court may conclude that there is at least a real risk that the agreement will have that effect. An inference to that effect may be open (subject to all the circumstances of the case) given that, ordinarily, the purpose of the solicitor obtaining a costs agreement is to obtain an entitlement which, at least to some extent, goes beyond the entitlements available to the solicitor under the relevant scale.

79 Further, s 222(2) is a remedial provision which permits the interference with common law rights (rights under a contract between solicitor and client) for the purpose of protecting the legitimate interests of the client, and for the purpose of serving the broader administration of justice. The court's discretion under s 222(2)(a) is to be exercised bearing those objects in mind.

Primary judge's reasons Probate Action costs agreement

80 The primary judge found that, with respect to the matters referred to by Ipp J in Brown, the appellant did not provide Mr Smith with an estimate of:

(1) the approximate amounts of the [appellant's] fees payable (as between solicitor and client) under the Probate Action costs agreement and the relevant scale, irrespective of Mr Smith's success in the action;

(2) the approximate amount of the [appellant's] fees (as between solicitor and client) which would be recovered on taxation under the relevant costs scale from the opposing side if Mr Smith was successful; or

(3) the approximate amount which Mr Smith would have to pay the [appellant] under the costs agreement if the litigation was successful and costs were recovered from the opposing parties [95].

The only estimate that was provided was the amount which Mr Smith would have to pay to the opposing parties if the litigation were to be unsuccessful. That estimate was given by counsel at least six months after the defendant commenced to act for Mr Smith in the Probate Action and five weeks after Mr Smith signed the Probate Action costs agreement.

The [appellant] says that it was not possible to provide an estimate of its costs in the Probate Action. Ipp J in Brown v Talbot & Olivier said if it were not reasonably possible to give estimates of these kinds then, in order to provide disclosure of the material circumstances which might influence a client in deciding whether or not to enter into an agreement entitling solicitors to depart from the statutory costs scale, disclosure should include whether there was a real risk of the costs under the proposed agreement being more 'and significantly more, if that were the case' than under the appropriate costs scale [96] - [97]. (footnotes omitted)

82 The primary judge found that the terms of the Probate Action costs agreement did not tell Mr Smith that there was a 'real risk' of the costs under the costs agreement being more than under the scale. It only advised him that they 'may' be more and that with the benefit of a costs order his recovery of costs 'may be a partial recovery only' [96] - [100].

83 Her Honour said that Mr Hobday gave certain evidence to the effect that he did not believe that there was any real risk that costs under the costs agreement would be more than costs under the scale [101]. It should be interpolated here that Mr Hobday's evidence to that effect was not in the affidavit material provided to this court in the Green Book. Also, it is not clear on what basis Mr Hobday's belief was said to be relevant. In any event her Honour discussed this evidence and concluded that there was 'no certainty' that allowances under item 32 of the scale would have covered all or most of the costs charged by the appellant in the Probate Action. (It should be noted that her Honour's observations at this point were not directed to the question of any 'uplift' to the scale. The question of 'uplift' of the scale is considered further below.)

84 Her Honour then considered the circumstances, facts and legal issues concerning the Probate Action. Her Honour said that litigation over testamentary capacity was an example of a common type of action heard and determined in the Supreme Court, and that the legal principles to be applied were well established [103]. Her Honour acknowledged the factual issues may have been complex, but nevertheless she saw 'no reason why the [appellant] could not have provided an estimate of its costs under the relevant scale and the costs agreement, well before Mr Smith signed the Probate Action costs agreement, and at least within a short period after he did so' [103]. Further, this was particularly so considering that the Probate Action had not only commenced but was due to go to trial at the time the appellant accepted instructions from Mr Smith in respect of it [103].

85 The primary judge then made the finding that the Probate Action costs agreement was unreasonable:

My finding is that the defendant should have provided an estimate of its costs prior to Mr Smith signing the Probate Action costs agreement. It was unreasonable for it not to do so and to instead undertake to 'endeavour' to provide an estimate within 14 days. In any event, the defendant did not comply with this undertaking [105].

86 In elaborating on that finding, her Honour identified a number of potential disadvantages associated with the failure to provide a costs estimate:

Except in difficult cases where it is impracticable to do so, the client should have the benefit of the estimate of legal costs prior to entering into a costs agreement. Otherwise, the client runs a substantial risk of incurring and (over) committing to payment of future costs to the practitioner without a fair idea of what those costs may be. That may result in the client instructing the practitioner to do work which the client would not have instructed to be done if the client had been aware of the estimated total cost of the proceedings. The longer the practitioner client relationship continues without an estimate being given the more difficult it may be for the client to withdraw instructions once the client either receives an estimate of costs or appreciates through other means what the costs are likely to be.

Further, without an estimate of legal costs, it is difficult for a client to exercise the right to seek independent legal advice on the nature and effect of the costs agreement or to seek a more economical legal service.

Thus, a practitioner's failure to provide an estimate of legal costs before a costs agreement is required to be signed is likely to provide an unfair advantage to the practitioner in his or her relationship with the client [106] - [108].

87 Having found that the Probate Action costs agreement was unreasonable, her Honour went on to consider whether she should, in the exercise of her discretion, grant the relief which is available under s 222(a) of the Act when the court determines that a costs agreement is unreasonable. Her Honour said [109]:

Having regard to the above matters, the Probate Action costs agreement, which was entered into without disclosure of an estimate of legal fees, is unreasonable and will invoke the exercise of one of the powers in the Act s 222(2) unless there are circumstances which affect Mr Smith's ability to exercise 'an independent and informed judgment about whether to enter a costs agreement': Computer Accounting & Tax Pty Ltd v Bowen Buchbinder Vilensky [95] - [96].

88 In this regard her Honour found, in effect, that despite Mr Smith having extensive business experience, and having instructed lawyers on numerous occasions to deal with a variety of legal issues over the course of his business career, there was nevertheless no evidence that he was familiar with the conduct of, or the amount of costs likely to be incurred in connection with, a matter such as the Probate Action [110] - [111].

89 Her Honour next addressed the question of delay. Her Honour said that she noted the following:

(1) the Probate Action costs agreement was signed on 13 March 2007;

(2) after the Probate Action costs agreement was signed eight accounts were presented and paid immediately from funds held in trust by the defendant;

(3) the Probate Action was settled in April/May 2007 and the last bill was presented on 31 October 2007;

(4) Mr Smith instructed the defendant in the Family Trust Action after he was aware of the amount of costs charged by the defendant in the Probate Action;

(5) in the latter half of 2010, Mr Smith complained to Mr Hobday about the amount of fees he had paid to the defendant;

(6) it was not until the beginning of March 2011, that Mr Smith asked for any of the defendant's bills to be taxed; and

(7) on 5 December 2011, some four years and one month after the last bill was presented, Mr Smith applied to have the Probate Action costs agreement set aside [115].

90 Mr Smith did not explicitly state his reason for the delay in commencing the applications to set aside, however the primary judge said that he 'may' have understood that the proceeds from the sale of the South Perth property would cover his legal costs in the Probate Action and Family Trust Action, and when it became apparent that that would not be the case, he commenced the proceedings to set aside the agreements [117].

91 Her Honour discussed a number of the authorities in relation to the question of delay, and expressed the view that subject to certain reservations, she would apply the principles to which those authorities referred for 'the sake of comity' [124]. The points raised by her Honour were not debated in this appeal and it is unnecessary to comment on them here. Her Honour concluded that there was no relevant prejudice arising from the delay [137]. (See also [101] - [104] below in relation to the question of an 'uplift' to the scale items.)

92 As to whether the Probate Action costs agreement should be set aside or the amount payable reduced, her Honour said:

There is insufficient evidence to enable me to determine what the defendant's costs are under the relevant scale and to reduce the amount payable to the defendant to that amount. Therefore I cancel the agreement [137].

93 The primary judge found, with respect to the Family Trust Action, that the appellant had failed to provide Mr Smith with estimates of the kind to which she had referred in relation to the Probate Action. Her Honour said that Mr Smith was only provided with an estimate as to counsels' fees, and this estimate was given on 9 December 2008, over 12 months after Mr Smith had first given instructions to Mr Hobday [139].

Given that the Family Trust Action costs agreement was not signed until 26 March 2008 (some five months after Mr Smith gave instructions to the defendant in respect of it), I am of the view that it was unreasonable for the defendant not to provide estimates of its legal costs to Mr Smith under the costs agreement and the relevant costs scale in respect of the Family Trust Action before Mr Smith signed the costs agreement. By then some $50,000 of fees had been charged and the defendant should, despite the complexity of the Family Trust Action, have had a reasonable idea of the work which was required in the action.

For the reasons which I have given in respect of the Probate Action costs agreement, I find that the failure of the defendant to include an estimate of its costs in the Family Trust Action costs agreement or to provide an estimate prior to the signing of the costs agreement was unreasonable [140] - [141].

95 The primary judge said two issues arose in relation to whether relief under s 222(2)(a) should be granted to Mr Smith in respect of the Family Trust Action costs agreement. These were delay, and the effect of Mr Smith requesting certain accounts to be taxed. The latter was considered first by her Honour, at [143] - [157], and is not in issue in this appeal.

96 With respect to delay, the primary judge said that she was not prepared to refuse relief on the basis of delay, for the same reasons articulated in relation to the Probate Action costs agreement [158]. Her Honour said she appreciated that there was some additional prejudice to the appellant arising from the delay in making the application to cancel the Family Trust Action costs agreement, insofar as Mr Smith had not paid some $24,000 of the appellant's costs. Nevertheless, she considered that this had to be balanced against the $400,000 that Mr Smith had already paid in relation to the Family Trust Action.

97 The judge found, in effect, that apart from the failure to provide a cost estimate in each case, Mr Smith had established no other basis upon which either the Probate Action costs agreement or the Family Trust Action costs agreement could be regarded as unreasonable [160]. Her Honour rejected Mr Smith's arguments to the effect that certain terms of the agreements were unreasonable [87(2) - (10)], [88], [160].

98 It appears, from her Honour's recitation of Mr Smith's allegations at [87], that Mr Smith had not asserted that either agreement was unreasonable because the effect of it on him was unreasonable. In this regard he had not positively alleged or demonstrated that the costs payable by the client under the agreement (if it were allowed to stand) would be so much greater than the costs that would be payable under the relevant scale that the court should conclude that the agreement in its effect was unreasonable (cf Alman [27]).

99 As noted earlier (at [83] above), the judge found, in effect, that there was no certainty that costs taxed in accordance with the scale would cover all or most of the costs which would be recoverable by the appellant under the Probate Action costs agreement. Her Honour's discussion of this topic in relation to the Probate Action costs agreement proceeded with reference to the potential application of item 32 of the scale. Her Honour was not there addressing the position in relation to any uplift of the scale items in respect of the Probate Action. Nor was she addressing the position with respect to the Family Trust Action.

100 Mr Hobday had given evidence in his affidavit of 27 October 2011 to the effect that the appellant suffered prejudice by Mr Smith's delay in relation to the Family Trust Action in that 'no application [had] been made to remove the scale limits in relation to the number of hours spent, particularly on getting up' (GB 131, par 124(c)). Mr Hobday did not proceed to demonstrate that had an application been made, uplift orders would have been obtained which would have had the effect of producing an amount of costs in excess of the amount which would be chargeable under the costs agreement. Moreover, Mr Hobday's evidence was not directed to the Probate Action costs agreement at all. In oral submissions, counsel for the appellant made passing reference to the question of uplift in relation to the Probate Action (ts 53 - described there as the 'Elizabeth Street Action'), but the burden of the submissions, consistent with Mr Hobday's evidence, was that the prejudice was the failure to obtain uplift orders in relation to the Family Trust Action (ts 53 - 55).

101 Nevertheless, in her reasons for judgment in relation to the Probate Action, the judge considered the appellant's submissions on the question of prejudice in connection with the failure to obtain uplift orders. Her Honour said (in the context of her reasons with respect to the Probate Action):

[T]he defendant submits, in general terms, that by the delay it has lost the opportunity to apply to the court for an order lifting the limits in the relevant costs scale as between it and Mr Smith. Mr Smith queries whether, in any event, there is power to do so between a solicitor and client. He also says that if there is such power, given the unusual circumstances, the defendant may be able to obtain an extension of time within to make such application. The defendant also says that there will be added cost and difficulty for it in preparing new bills based on the costs scale [136].

If this were an application to extend time and the onus was on Mr Smith to justify an extension of time, he would not have done so. However, this is not such a case. The six-year general limitation period for bringing an action applies to an application under s 222. Mr Smith is within that time. The defendant does not assert that the delay in bringing the application is so burdensome that a fair taxation or assessment of costs is now not possible. All the costs of the Probate Action were paid at the time the bills were rendered. So Mr Smith cannot be accused of using this process to delay paying the defendant's costs. I do not believe that the defendant will be denied any costs to which it is entitled if I cancel the Probate Action costs agreement. Having found that the Probate Action costs agreement is unreasonable and there being no evidence that the defendant has suffered any unfairness or prejudice other than what may be generally accepted as being necessarily a result of such delay, I am of the view that Mr Smith is entitled to relief under s 222 in respect of the Probate Action costs agreement. There is insufficient evidence to enable me to determine what the defendant's costs are under the relevant scale and to reduce the amount payable to the defendant to that amount. Therefore I cancel the agreement [137]. (emphasis added)

103 As noted earlier, in relation to the Family Trust Action the primary judge said that she was not prepared to refuse relief on the basis of delay for 'the reasons which I have articulated in relation to the Probate Action costs agreement' [158]. Presumably this finding was intended to incorporate, in effect, the earlier finding at [137].

104 It is evident that her Honour made no explicit finding as to whether or not the appellant had been foreclosed from applying for an order removing the scale limits by reason of Mr Smith's delay in applying to cancel the costs agreements. On one reading of her Honour's reasons, her Honour in [137] has failed to address the issue of prejudice raised by the appellant in relation to the alleged foreclosure of an opportunity to obtain uplift orders for scale items. An alternative construction of her Honour's reasons (particularly by reference to the words in emphasis in [137]) is that her Honour has impliedly found that she was not satisfied that the appellant would be precluded from seeking uplift orders if she cancelled the agreements, and that accordingly the appellant had not demonstrated prejudice in this respect. The point is considered further in [139] below.

105 It is also evident that the judge was not asked to make a specific finding, and she did not find, that certain uplift orders would have been made in the Probate Action which would inevitably have operated to produce an amount of costs in the Probate Action which exceeded the amount of costs chargeable under the costs agreement in the Probate Action.

106 Appellate review of a decision under s 222(2) of the Act to cancel a costs agreement raises two issues. The first is whether the judge has erred in considering that the costs agreement was 'unreasonable'. Whether a costs agreement is 'unreasonable' is a matter to be determined objectively having regard to all the relevant circumstances. Although it involves an objective determination, it is also essentially evaluative in nature: cf Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; (2008) 234 CLR 124 [40].

107 The second issue raises the proper exercise of discretion under s 222(2)(a) in the event that it is found that the costs agreement is 'unreasonable' within the meaning of s 222(2).

108 In respect of that latter issue, in Monteleone v The Owners of the Old Soap Factory [2007] WASCA 79, McLure JA (as her Honour then was) summarised the relevant principles as follows:

In order to succeed in an appeal from a discretionary decision an appellant must establish that the primary judge has expressly or impliedly made a material error of fact or law: House v The King [1936] HCA 40; (1936) 55 CLR 499 at 505. Failure to give adequate weight, or giving too much weight, to a relevant consideration does not give rise to a relevant error unless the failure really amounts to a failure to exercise the discretion actually entrusted to the Court: Lovell v Lovell [1950] HCA 52; (1950) 81 CLR 513 at 519.

109 Absent express error, error may be inferred if the result is plainly unjust, or unreasonable or manifestly wrong: House v The King [1936] HCA 40; (1936) 55 CLR 499, 505.

111 Ground 1 related to the Family Trust Action and alleged, in effect, that the judge erred in concluding that the Family Trust Action costs agreement was unreasonable, based solely on the finding that a costs estimate had not been provided. The appellant alleges that the failure to provide a costs estimate should not have been considered in isolation, but in the broader context of all the circumstances of the case, and that had her Honour done this, she would have concluded that the Family Trust Action costs agreement was not unreasonable within the meaning of s 222(2) of the Act.

112 Ground 2 accepts, as its premise, that the Probate Action costs agreement was unreasonable, and is in the alternative to ground 1, insofar as it assumes that the Family Trust Action costs agreement was unreasonable. The effect of ground 2 is that on the assumption that each agreement was unreasonable within the meaning of s 222(2) of the Act on the basis that in each case a costs estimate had not been provided beforehand, the judge nevertheless erred in the exercise of her discretion:

(a) in failing to consider whether Mr Smith had demonstrated any adverse costs consequences arising from the failure to provide an estimate;

(b) in not giving 'proper weight' to Mr Smith's delay; and

(c) by cancelling each agreement when no cancellation order should have been made given that there was no adverse costs consequences to Mr Smith, and, or alternatively, in all the circumstances of the case.

113 An aspect of ground 2 was the appellant's contention that the judge had failed to recognise that the appellant would have been entitled to orders in relation to the raising or removing of certain scale limits had the agreement not been entered into.

114 Ground 3 is in the alternative to ground 2. It is to the effect that the judge erred in failing to make it a condition of the cancellation order in each case that on the taxation of costs under the relevant scale, taxation should proceed without regard to the limits which would otherwise apply in relation to the statement of claim, getting up and counsel's fees. It was alleged that 'the matters to which the costs agreements related were complex and it was reasonable for any practitioner to undertake work that exceeded the time provided for in the scale for undertaking such instructions (but otherwise at scale rates) and to engage experienced counsel in the matter at usual rates'.

115 The respondent accepted that the judge had determined that both costs agreements were unreasonable solely on the basis of her finding that a costs estimate had not been provided, but contended that no error was thereby disclosed (ts 39, 43).

116 In my respectful view, the judge erred in her approach to the application of s 222(2) of the Act. The absence of the provision of a costs estimate was one matter relevant to the circumstances in which the costs agreements 'came into being' Computer Accounting [83]. However, all the circumstances in which the costs agreements came into being had to be considered. They included matters concerning the degree of sophistication and business experience of the client as at 26 March 2008: Computer Accounting [94] - [95]. Matters of that kind were relevant to the circumstances in which the agreement came into being, and were thereby relevant to the broader question of unreasonableness. They were not, as her Honour appeared to have considered [109], matters which only required consideration in connection with the exercise of discretion to grant relief once unreasonableness had been established.

117 Moreover, the circumstances in which the agreement came into existence had themselves to be considered together with all other relevant circumstances before a final evaluation could properly be made that the agreement was unreasonable, and thereby amenable to curial modification of its operation or vitiation pursuant to s 222(2)(a) of the Act.

118 Accordingly, her Honour, in effect, misapplied s 222(2) of the Act. That error would be immaterial if her Honour's conclusion that the Family Trust Action costs agreement was unreasonable was otherwise correct. However, that is not the case. On the material before her Honour, the Family Trust Action costs agreement was not unreasonable for the reasons which follow.

119 As noted above, the failure to provide a costs estimate was relevant to the formation of the agreement. In addition, the following matters, arising from the judge's findings of fact and uncontested evidence, were relevant to the formation of the agreement:

(a) in terms of his general background and experience, at all material times Mr Smith was a mature man and experienced businessman who, over the course of his business career, had instructed lawyers on numerous occasions to deal with a variety of legal issues. The specific finding to the effect that in the period up to the execution of the costs agreement in the Probate Action Mr Smith was unfamiliar with litigation of that kind and its costs, plainly did not apply to Mr Smith's knowledge and experience as at 26 March 2008;

(b) by 26 March 2008, Mr Smith had familiarity with the rates and charges of the appellant and considerable experience of the level of fees chargeable by the appellant for contested and uncontested matters at those rates. He had been instructing the appellant in the Probate Action and other matters since mid-2006, and he had first received a costs disclosure statement on about 13 June 2006;

(c) Mr Smith had access to, and took, independent legal advice, including in relation to the conduct of the Family Trust Action, from at least 7 November 2006 (GB 196 pars 40 - 41; 218);

(d) by late 2006, Mr Smith was planning with Mr Hobday the Family Trust Action which he intended to commence following the determination of the Probate Action (GB 82 pars 31, 36). Mr Hobday and Mr Smith had discussions over how the costs would be hard to estimate and would likely be very substantial (GB 112 pars 36 - 38; 114 par 46; 94 pars 16, 19);

(e) the Family Trust Action was complex and included factual matters relating to businesses, trusts, corporations and equitable claims going back to 1961, and that on Mr Smith's instructions, the trust assets in dispute were worth between $12 million and $24 million (GB 112 par 37);

(f) around October 2007, when Mr Hobday sent the retainer agreement and cost disclosure statement in the Family Trust Action to Mr Smith, Mr Hobday advised Mr Smith that an examination of the claim would involve attempting to reconstruct events over a 50 year period, and would be a very time consuming and expensive exercise (GB 118 par 68);

(g) Mr Smith responded to this advice by informing Mr Hobday that 'he was aware of this and did not care, he had millions of dollars at stake and he did not want his relatives to get away with it' (GB 118 par 68);

(h) Mr Smith knew prior to execution of the Family Trust action costs agreement that he could terminate his instructions at that point, as he had done in the past with other lawyers;

(i) the cost disclosure statement of 30 October 2007 disclosed that scale fees were legislatively prescribed to limit, in effect, the amount payable as solicitor/client costs, and that charges under the costs agreement may exceed those allowed by the scale. It also stated that it was in the interests of Mr Smith to obtain independent advice before he executed the costs agreement; and

(j) there was no evidence from Mr Smith that he was unaware that absent the costs agreement, the appellant could only charge according to scale, and the proper inference is that he was so aware.

120 Also, the potential disadvantages to the client arising from the failure to provide a costs estimate, to which the judge had drawn particular attention at [106] - [108] in her consideration of the Probate Action costs agreement (see [86] above), had no, or no substantive, application to the formation of the Family Trust Action costs agreement. On the question of whether it was practicable to provide a costs estimate for the Family Trust Action, Mr Hobday had sworn that he considered that it was not possible prior to 26 March 2008 to provide any 'realistic' costs estimate (GB 120, par 74(c)). His evidence was unchallenged by cross-examination. The judge's findings that the litigation was complex and would involve, in effect, a consideration of the conduct of various businesses, trusts, corporations and property over the period of some 50 years, would tend to provide some support for Mr Hobday's evidence. Her Honour did not explicitly reject that evidence, although she did find that by March 2008, the appellant had been acting in the matter for around five months and by then 'should' have had a reasonable idea of the work required in the action [140]. In any event, in the circumstances referred to in (f), (g) and (h) of the preceding paragraph, the potential disadvantages referred to by the judge in [106] of her reasons were more apparent than real in relation to the Family Trust Action.

121 Also, as noted in subpar (c) of [119] above, Mr Smith had access to, and took, independent legal advice in the period up to (and beyond) the entry into the Family Trust Action costs agreement. Further, there was no finding that in fact the appellant had obtained an unfair advantage over Mr Smith in their dealings in relation to the Family Trust Action costs agreement. The potential disadvantages referred to in [107] and [108] of her Honour's reasons were more theoretical than real in relation to the Family Trust Action.

122 The above matters in combination indicate that the circumstances in which the Family Trust Action costs agreement came into being were not, on the whole, unreasonable despite the absence of an estimate of costs. Alternatively, those matters, in combination with the finding that the Family Trust Action costs agreement was not unreasonable in any other respect alleged by Mr Smith, indicates that the costs agreement in the Family Trust Action was not unreasonable when all the circumstances are considered as a whole.

124 Grounds 2 and 3 raise for consideration, amongst other things, the operation of s 215(2) of the Act. It is relevant to address s 215(2), and its potential application to the making of an order under s 222(2)(a) of the Act, at the outset.

125 Provision for an uplift of the scale items is found in s 215(2) of the Act. Section 215 provides:

(1) Subject to sections 221 and 241 of this Act and section 14 of the Legal Aid Commission Act 1976 -

(a) the taxation of bills of costs of legal practitioners, as between legal practitioner and client or party and party; and

(b) any other aspect of the remuneration of legal practitioners the subject of a determination,

is regulated by a legal costs determination in force under section 210.

(2) Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed.

(3) Nothing in subsection (1) is to be construed as limiting the power of a court, a judicial officer or a taxing officer of a court to determine in any particular case before that court or judicial officer the amount of costs allowed.

(4) If a legal costs determination is in force under section 210 in respect of any business referred to in section 210(2), any other subsidiary legislation fixing or purporting to regulate the remuneration of legal practitioners in respect of that kind of business is of no force or effect.

126 It may be noted that the successor to the Act, the Legal Profession Act 2008 (WA) (2008 Act) contains a provision to the same effect as s 215 of the Act: s 280 of the 2008 Act. The predecessor to the Act, the Legal Practitioners Act 1893 (WA) (1893 Act) contained a provision similar to s 215(1) of the Act, but not s 215(2) - see s 58ZB of the 1893 Act. However, O 66 r 12 of the Rules of the Supreme Court 1971 (WA) (RSC) had provided for scale limits to be raised or removed in specified circumstances - see also in this regard Walter v Buckridge [No 5] [2012] WASC 495 [55]. Order 66 r 12 was repealed in 2007.

127 It was not in dispute in this appeal that an order may be made under s 215(2) of the Act in relation to the taxation of solicitor/client costs under the relevant scale. That proposition is consistent with the opening words of subsection (2) of s 215 read with subsection (1) of s 215, and in particular the words 'as between legal practitioner and client' in par (a) of subsection (1). There is also first instance authority (Le Miere J) to the effect that the successor to s 215(2) of the Act, s 280(2) of the 2008 Act, applies to costs as between legal practitioners and their clients: Buitendag v Ravensthorpe Nickel Operations Pty Ltd [2012] WASC 425 (S) [5]; Walter [56]. The correctness of that proposition may be accepted.

128 In oral submissions, senior counsel for the appellant contended that the court had the power to impose conditions in the exercise of its discretion to make a cancellation order under s 222(2)(a), and that in that respect the court could make what it considered to be appropriate orders under s 215(2) of the Act as a condition of cancelling a costs agreement. (The original submission that the power to impose conditions was contained in s 222(3) was abandoned.)

129 The respondent's position was that any order under s 215(2) required a distinct and separate application, and could not form part of the orders consequential upon a review of a costs agreement under s 222(2) of the Act. Counsel for the respondent, when asked whether that was really an appeal to form over substance, candidly answered in the affirmative. Counsel for the respondent also indicated that the appellant had applied, in the General Division, for orders under s 215(2) of the Act and that the appellant's application in that regard had been adjourned pending the disposition of this appeal (WB 50 par 34.01).

130 The factors to be taken into account in the exercise of the discretion entrusted to the court under s 222(2) of the Act are unconfined, save to the extent implied by the subject matter, scope and purpose of the statute: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24, 40. Conformably with the subject matter, scope and purpose of pt 13 of the Act (which contains s 215 and s 222) the court may consider that an order cancelling a costs agreement ought only be made upon appropriate allowance being made under s 215(2) for the taxation of costs under the relevant scale, and may impose a condition to that effect. Accordingly, the appellant is correct to contend that her Honour had the power to make orders under s 215(2) of the Act as a condition of the exercise of her discretion to cancel the Probate Action costs agreement.

131 The Act does not prescribe the time for making an application under s 215(2) of the Act. On the question of the time within which an application of that kind may be made, counsel for the respondent drew the court's attention to a decision of Schoombee DCJ in Feaver v Smith [2008] WADC 72. There, her Honour considered that RSC O 66 r 51 applied to an application for a special costs order under s 215(2) of the Act.

Where under these rules a party is required to obtain some special certificate for costs, there shall be deemed to be reserved to such party liberty to apply within 30 days.

133 The 30 day period referred to in O 66 r 51(2) may be the subject of an extension of time pursuant to O 3 r 5: Snowtop Mushrooms Pty Ltd v Powley (Unreported, Full Court, 1982, Library No 4501, 14 May 1982).

134 Schoombee DCJ in Feaver was dealing with an application for special costs orders as between party and party. The deemed liberty to apply in O 66 r 51(2) has, more recently, been regarded as applying to an application for special costs orders as between party and party, following what might be described as the making of ordinary costs orders against the unsuccessful party: Cockburn Cement Ltd v The Minister for Environment (WA) [2011] WASC 260 (S) [23] - [49] (Edelman J); Maas v O'Neill [2013] WASC 379 (S) [42] (Pritchard J).

135 It is unnecessary to examine the decisions referred to in the preceding paragraph. It is sufficient for present purposes to note that by its language and context, O 66 r 51(2) is not directed to orders sought as between solicitor and client under s 215(2) of the Act. Moreover, where an order is sought under s 215(2) as a condition of cancelling a costs agreement, the time for seeking the order under s 215(2) plainly cannot precede the application for cancellation.

136 In light of the conclusion reached in relation to ground 1, ground 2 is only relevant with respect to the Probate Action costs agreement.

137 Ground 2 proceeds on the basis that the judge correctly found that the Probate Action costs agreement was unreasonable within the meaning of s 222(2) of the Act. The three alleged bases of error are set out in [112] above.

138 Two preliminary observations should be made concerning ground 2. First, this ground raised the question of whether, and to what extent, her Honour made findings about whether the appellant was precluded from seeking uplift orders under s 215(2) of the Act. The judge's discussion of the uplift question is referred to in [99] - [105] above. As I have indicated, it is not entirely clear what findings, if any, her Honour made on this issue. However, on either possible construction of her Honour's reasons, no material error is disclosed.

139 Insofar as her Honour found that the appellant had not established that, by reason of Mr Smith's delay, the appellant had lost the opportunity to make an application under s 215(2), her Honour was correct. The appellant could not have obtained orders against Mr Smith under s 215(2) whilst the costs agreement remained on foot. Insofar as her Honour made no finding at all on this topic, the omission is irrelevant given that Mr Smith's delay did not prejudice the appellant in relation to any application it wished to make under s 215(2) of the Act, including an application that there be orders under s 215(2) as a condition of cancelling the costs agreement under s 222(2)(a).

140 Secondly, ground 2 alleges implicitly (the first alleged error) and explicitly (the third alleged error) that on the evidence before the judge, her Honour should have concluded that Mr Smith had suffered no adverse costs consequences as a result of the Probate Action costs agreement remaining operative, despite it being unreasonable in its formation. In an exchange with the Bench on the appeal, senior counsel for the appellant put the submission in the following way:

Colvin, Mr: In our submission we don't seek to advance it as a question of onus notwithstanding ... some of the language used in the written submissions. What we say is that on all the evidence, having regard to the failure to complain and the delay and the knowledge of [Mr Smith], then ... those factors show that there isn't a consequence for [Mr Smith] ... and, in addition, there was no evidence that came from [Mr Smith] to say that there was a consequence.

Really, what we're contending for is an inference to be drawn from all of the material that there wasn't a consequence ... for Mr Smith.

Buss JA: Well, the matter is left to inference because the appellant below didn't set out to establish that there were not any adverse consequences for Mr Smith, and, on your submissions, [Mr Smith] didn't set out to establish that there were adverse costs consequences.

Colvin, Mr: Yes (appeal ts 33 - 34).

141 As best I understood the submissions, the appellant was not contending that the appellant had positively established that it would have obtained certain orders under s 215(2) in relation to the Probate Action which would necessarily have operated to produce the result that on a taxation under the scale (with the benefit of those orders), costs would have equalled or exceeded the amount of costs chargeable under the Probate Action costs agreement. Conversely, the appellant was not contending that the appellant had positively established that the amount of costs chargeable under the Probate Action costs agreement could not exceed the amount of costs derived pursuant to a taxation of costs under the scale with the benefit of any applicable uplift orders. Rather, as I understand it, the appellant was contending more generally that the availability of uplift orders (of some, albeit unquantified, benefit to the appellant) was one circumstance which had to be taken into account together with all the other circumstances of the case, in the proper exercise of the court's discretion under s 222(2)(a) of the Act. Those circumstances included, most relevantly, Mr Smith's absence of complaint over some four years, and the absence of any demonstrable adverse costs consequences upon him. It was said that when regard is had to all the circumstances of the case, it is to be inferred that the judge's discretion miscarried in that the decision to cancel the Probate Action costs agreement was plainly unjust or unreasonable or manifestly wrong (alleged third error; appeal ts 49). Further or alternatively, the judge should have found that there were no adverse costs consequences to Mr Smith, and that this was a mandatory relevant consideration to which the judge failed to have regard (alleged first error; appeal ts 49).

142 A number of observations may be made about those submissions.

143 First, the question of whether Mr Smith suffered any adverse costs consequences as a result of the operation of the Probate Action costs agreement is a matter for objective determination. Ordinarily, it would be determined by proof (including, where appropriate, by inferential reasoning) that the amount of costs chargeable under the costs agreement could not exceed the amount of costs pursuant to a taxation of costs under the scale with the benefit of any applicable uplift orders. As I have indicated, as I understood it the appellant was not contending that the appellant had demonstrated that specific orders would have been made under s 215(2) in the Probate Action which would necessarily lead to that result. Also, the absence of complaint, albeit over a lengthy period of time, cannot be regarded as, in effect, an admission by Mr Smith that there were no adverse costs consequences flowing from the agreement. As indicated above, that is a matter for objective determination by comparing the position under the scale, with any proved applicable uplift orders, with the position under the costs agreement. Mr Smith's conduct in failing to make an earlier complaint could shed no, or no material, light on that matter. Further, whilst Mr Smith did not demonstrate that the Probate Action costs agreement operated to produce adverse costs consequences, the absence of proof of that fact did not prove the opposite fact.

144 Accordingly, on the materials before the judge, it has not been shown that her Honour erred in failing to find that there were no adverse costs consequences to Mr Smith from the operation of the Probate Action costs agreement.

145 Also, even if the appellant were correct in contending that the Probate Action costs agreement did not produce any adverse costs consequences to Mr Smith, that would be a matter relevant to the question of whether the agreement was unreasonable. If it is established that a costs agreement produces no adverse costs consequences to the client, that matter is (at least primarily) relevant to the anterior question of whether the agreement is unreasonable. In my view, it is inconsistent for the appellant to contend on the one hand that the Probate Action costs agreement produced no adverse costs consequences to Mr Smith, when on the other, the ground of appeal has, as its premise, an acceptance of the finding that the Probate Action costs agreement was unreasonable.

146 Finally, if the costs agreement was unreasonable because it was unreasonable in its formation (as is accepted here), then in the absence of evidence that its effect would be to produce a more favourable costs result to Mr Smith, and in the absence of any other factors pointing to the justice of keeping the agreement on foot in light of the evident purpose of s 222(2) (see [79] above), it could not be said that her Honour's discretion miscarried in that her decision was plainly unjust or unreasonable or manifestly wrong.

147 The first and third alleged errors have not been established.

148 The second alleged error does not raise a proper ground of appeal. Questions of weight are essentially for the primary judge. An allegation that the judge failed to give adequate weight to a relevant consideration is not a relevant error, unless the failure was tantamount to a failure to exercise the discretionary power entrusted to the court. That was not alleged, nor was it established. Her Honour examined the question of delay in some detail.

150 Again, in light of the disposition of ground 1, ground 3 only has application with respect to the Probate Action costs agreement. Ground 3 alleges, in effect, that even though (as it is accepted) the costs agreement was unreasonable in its formation because of the failure to provide a costs estimate, the judge erred in failing to make it a condition of the cancellation that on the taxation of costs under the relevant scale, the taxation should proceed without regard to the limits which would otherwise apply in relation to the statement of claim, getting up and counsel's fees.

152 First, the appellant had not made an application for orders under s 215(2) in the proceedings below. There was no error in the judge not making an order under s 215(2) when no order had been sought. Secondly, this court might make an order, if it thought appropriate, under s 215(2) in the re-exercise of the discretion under s 222(2)(a) in the event that her Honour's discretion to cancel the Probate Action costs agreement had miscarried. However, for the reasons indicated in relation to ground 2, no error has been established in that regard. Thirdly, in any event, this court has only the most fleeting acquaintance with the nature and scope of the Probate Action. There are insufficient materials upon which this court could safely exercise the discretion conferred under s 215(2) of the Act in relation to the Probate Action.

154 The appeal in CACV 137 of 2013 should be allowed.

155 The appeal in CACV 138 of 2013 should be dismissed. Given the intermingling of the facts and issues in both matters, provisionally, it would appear appropriate that there be no order as to costs in either appeal, or in relation to the Probate Action costs agreement and the Family Trust Action costs agreement in the proceedings below.