MAMMOTH INVESTMENTS PTY LTD -v- DONALDSON [2021] WASC 175 (2 June 2021)

1. Pursuant to section 37 of the Supreme Court Act 1935 (WA), and further and alternatively, Order 66 rule 1 of the Rules of the Supreme Court 1971, the defendant:

2.1. pay all of the costs incurred by the plaintiffs so that the plaintiffs are completely indemnified by the defendant for their costs; alternatively,

2.2. pay the plaintiffs costs, to be taxed if not agreed, and without reference to the upper limits in the scale of costs allowable under the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2020 (WA) or the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018 (WA), as applicable; alternatively,

2.3. pay the plaintiffs costs, to be taxed if not agreed, on a party basis.

1. The parties were agreed the plaintiffs' application raised two issues. First, did the plaintiffs have standing to make the application. Second, if they did have standing, had the defendant provided itemised bills of costs. The relevant facts were not in dispute. A concise summary is found in pars 4 to 6 of the plaintiffs' submissions. These paragraphs read as follows:
   1. For the financial years ended 30 June 2019 and 30 June 2020, the defendant was admitted to the legal profession under the LPA or a corresponding law, held a current local practising certificate and engaged in legal practice on his own account as a barrister.4 Therefore, he was a law practice under the LPA.
   2. For the financial years ended 30 June 2019 and 30 June 2020, the partnership trading as Hotchkin Hanly was a partnership consisting only of persons admitted to the legal profession under the LPA. Therefore, it was a law practice under the LPA.
   3. On or about 29 May 2019, Hotchkin Hanly and the defendant entered into a costs agreement pursuant to section 282(1)(c) of the LPA for the defendant acting as senior counsel for the plaintiffs, as client, as parties in Supreme Court proceedings CIV 1923 of 2016 (consolidated with CIV 2111 of 2016), being Rural Bank (A Division of Bendigo and Adelaide Bank Limited) v Mammoth Investments Pty Ltd & Ors.
2. It is also not in dispute the defendant issued four invoices between 4 September 2019 and 22 December 2019 for legal services. Copies of these invoices appear as attachments JMC2 through to JMC5 to the affidavit of John Michael Caratti sworn 14 August 2020 and filed in support of this application. Although the invoices vary slightly, each follows the same general pattern. By way of example, the invoice rendered 31 October 2019 is in the following form:

ACCOUNT WITH GRANT DONALDSON

Mammoth - Rural Bank

I enclose my tax invoice in respect of the above matter being:

For the period from 5 September 2019 to 31 October $149,380.00

Being my profession fee of $126,000.00 plus GST and Mr Sippe's fee of $9,800.00 plus GST.

Being in respect of:

• Advice on expert report - 2 days (September)
• Getting up - day (1 October)
• Getting up - 2 hours (2 October)
• Getting up - day (10 October)
• Getting up and conference - 2 hours (14 October)
• Getting up - day (17 October)
• Getting up and conference - 4 hours (18 October)
• Getting up - day (21 October)
• Getting up - day (22 October)
• Getting up - 6 hours ( 23 October)
• Getting up and attending court - day (24 October)
• Getting up - day (29 October)
• Getting up - day (30 October)
• Getting up - day (31 October)

This is a total of 11 days and 16 further hours.

In addition, I have paid the account of Mr Sippe, whose work was indispensable to the preparation of the pleadings. I attach a copy of his account. I have included this as a disbursement in my account.

Thank you for your instructions in this matter.

Regards

Grant Donaldson

1. Attached to this document, which is in the form of a covering letter, is a document headed 'Tax Invoice'. This document is as follows:

Hotchkin Hanly

First Floor, BGC Centre

28 The Esplanade

PERTH WA 6000

Attention: Michael Mistilas

Interest is payable on these legal costs if the costs are unpaid 30 days or more after this bill is given to you. I will not charge interest until I have provided written notice to your firm stating that interest will be charged if the bill is not paid. If I provide such notice interest is payable from the 30 days after the date of this bill until payment; at the rate prescribed from time to time for the purposes of s 273(4) of the Legal Profession Act 2008 (WA).

With Compliments

Grant Donaldson

1. The total amount of the four invoices is just over $800,000.
2. In his written submissions, counsel for the defendant dealt with the question of standing in a quite succinct way. He put the position as follows:
   1. The plaintiffs did not directly brief the defendant.
   2. Rather, the plaintiffs instructed Hotchkin Hanly Lawyers (Solicitors). The Solicitors instructed the defendant.
   3. The retainer (and cost agreement) was thus between the Solicitors and the defendant. This is made plain in the cost agreement between the parties dated 29 May 2019, where it is expressed to be in terms of section 282(1)(c) of the Legal Profession Act 2008 (WA) (LPA).
   4. The defendant issued his invoices to the Solicitors.
   5. Section 292 of the LPA provides that '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'.
   6. In a case of a solicitor and barrister, the solicitor - not the client - is the person entitled to apply for an assessment of the barrister's legal costs.
   7. This is because:

8.1. the legal services provided by the barrister are provided to and for the solicitor;

8.2. the solicitor's client is not a 'client' vis-à-vis the barrister. Section 295(2) of the LPA does not apply in those circumstances;

8.3. rather, in those circumstances, section 296 of the LPA applies. That section provides to the solicitor (as opposed to the solicitor's client) the right to apply for an assessment of the barrister's legal costs.

1. In this regard the defendant refers to and relies upon the decision of Associate Justice Wood in Ipex ITG Pty Ltd (in liq) v McGarvie [2011] VSC 675, [16]- [18] and the decision of Boddice J in Cupo v Anderssen Lawyers [2015] QSC 202, [34]-[43].
2. Those authorities also make clear that, if the 'client' wishes to have the barrister's costs assessed, then the client should instruct the solicitors to so apply, alternatively apply to assess the solicitor's bill insofar as the barrister's fees are included as a disbursement, being an assessment to which the barrister may be made a party by notification pursuant to section 299 of the LPA.
3. Counsel for the plaintiffs responded to these submissions by way of submissions in reply. Relevantly, these submissions read as follows:
   1. Pursuant to sub-section 295(2) of the Legal Profession Act 2008 (LPA), a 'client' may apply for an assessment of the whole or any part of a bill for legal costs.
   2. A 'client' for the purposes of sub-section 295(2), in Division 8, of Part 10, of the LPA, is a person to whom or for whom legal services are, or have been, provided.
   3. Legal services are work done, or business transacted, in the ordinary course of legal practice.
   4. In respect of the definition of 'client' for Division 8 of Part 10 of the LPA, clause 294 of the explanatory memorandum for the Legal Profession Bill 2007, (Meaning of 'client') states (emphasis added):

For the purpose of Division 8, a 'client' is a person to whom or for whom legal services are or have been provided. The notion that a client includes a person 'for whom legal services are or have been provided' is particularly relevant to the situation where one law practice (eg a solicitor) retains another (eg a barrister) on behalf of a client. This gives the client the right to apply for an assessment of the barrister's costs.

1. Further, when the Legal Profession Bill 2007 was being considered by parliament, at the committee stage, during a discussion of what is now section 296 of the LPA (Application for costs assessment by law practice retaining another law practice), the following exchange occurred (emphasis added):

Hon George Cash: On a general reading of this clause, it seems that under these provisions only a practitioner will be able to require assessment of the costs of either another law practice or a barrister's account.

Is it intended that the client should have the same right to require an assessment as the instructing law practice?

Hon Adele Farina: My understanding is that this is an additional right and is given in addition to the rights provided under clauses 295 and 296, which are the rights that rest with the client.

Hon George Cash: The client will be in a position to require the same?

1. These parliamentary proceedings and legislative instruments are referred to at footnote 13 of the plaintiffs' previous submissions. It is clear from them, and the relevant provisions of the LPA, that the Western Australian parliament intended that a client of a law practice that retains a barrister to provide legal services for the client, can seek assessment of the barrister's bills of costs, under section 295 of the LPA.
2. The position of the plaintiffs as 'client' in the context of the arrangements between the two law practices is consistent with the framework of the LPA under which a law practice engages another law practice to act on behalf of (or for) a client, and of the plaintiffs in the position of a client of the two law practices.
3. The defendant relies on the decisions of Wood AsJ in Ipex ITG Pty Ltd (in liq) v McGarvie [2011] VSC 675 at [16] - [18] and Boddice J in Cupo & anor v Anderssen Lawyers [2015] QSC 202 at [34] - [43].
4. In two previous decisions of the Victorian costs court, in the 'other matters' section of the orders, Wood AsJ said, in interpreting the Legal Profession Act 2004 (Vic) (LPA Vic), that: 'A reading of the plain words in s. 3.4.38(1)' (under which 'a client may apply... for a review of ... legal costs') 'and the definition of 'legal costs in s. 1.2.1...' (being, essentially, amounts that have or may be charged by, or which a person is or may become liable to pay to, a law practice, for legal services, including disbursements) '...to give them their natural meaning, leads to the conclusion that the only proper respondent to an application by [a client] to review disbursements of [its solicitors] is the [solicitors]. The [clients'] liability to pay is to the [solicitor] and it is the [solicitor's] responsibility to justify the disbursement in their bill on review. The [clients'] right is to review a bill of 'a law practice for the provision of legal services including disbursements' (s. l.2.1). The law practice here is the [solicitor], and the fees of the [barrister] are the disbursements in the [solicitor's] bill'.
5. In one of those decisions Wood AsJ also said that: 'It is clear from the language of s3.4.10' (which relates to disclosure by a first law practice to a client if that first law practice intends to retain another law practice on behalf of a client) that the client 'is to be characterized as the 'client' in circumstances where a solicitor engages a barrister on their behalf in the conventional way'.
6. In Ipex ITG Pty Ltd (in liq) v McGarvie, in support of his finding that a client of a solicitor who retains counsel has no standing to review counsel fees with counsel named as the respondent, Wood AsJ said that: 'A review of counsel fees initiated by the client where the respondent is the counsel, cannot determine the liability of the client to the solicitors, as the counsel/respondent is not privy to the extent of compliance in relation to disclosure by the solicitors... In any event, the review cannot determine the liability between client and counsel as there is no direct liability or contractual arrangements between them...there are real problems arising from these scenarios...the [clients] have no standing to review counsel fees with counsel named as the respondent'. Comments have been made regarding the potentially disadvantageous nature of this interpretation of the LPA Vic for solicitors that retain counsel for clients.
7. Wood AsJ , in that case, exercised his discretion to order, under provisions mirrored in the LPA, that Counsel be notified of and become party to the assessment between the solicitor and its client, and be bound by the result, so that that proceeding would determine the liability of both the client and the solicitors for counsel's fees.
8. These decisions of Wood AsJ are inconsistent with the statutory position in Western Australia (reflected above), and they do not refer to the equivalent definition of 'client' contained in the LPA Vic (sub-section 3.4.38), to the definition of 'client' referred to at paragraph 3 above, or the importance of that definition in the context of the LPA, or at all.
9. In Cupo & Anor v Anderssen Lawyers, Boddice J considered whether an application was improperly constituted because it applied for an assessment, relevantly, of invoices issued by a law practice which retained a barrister, but only named the law practice as respondent.
10. In reaching the conclusion that Legal Profession Act 2007 (Qld) (LPA QLD) clearly envisages an ability to include in an assessment of costs between a client and a law practice, costs rendered to the client by, relevantly, a barrister, who had been retained by the law practice, Boddice J said that the decision in Ipex ITG Pty Ltd (in liq) v McGarvie 'does not support a contrary conclusion.'
11. In discussing the issue being considered in Ipex ITG Pty Ltd (in liq) v McGarvie, (i.e. whether the client could seek an assessment of counsel's legal costs in an application which only named counsel as respondent), the findings of Wood AsJ, and the conclusions reached by Wood AsJ, Boddice J said that the decision of Wood AsJ 'expressly recognises that a client who has no direct contractual arrangement with Counsel can seek to review Counsel's fees as part of an application by the client for an assessment of the solicitor's bill, which includes Counsel's fees.'
12. Boddice J did not make any finding about whether a client had standing under the provisions of the LPA QLD, or any corresponding legislation, to seek an assessment of bills issued by a barrister retained by a lawyer acting on behalf of the client.
13. During the course of his oral submissions, counsel for the plaintiff effectively repeated his written submissions, although he did deal with the points he had raised in some more detail. Counsel for the defendant undertook a rather more detailed textual and contextual analysis of the relevant provisions of the Legal Profession Act 2008 (WA) (LPA). Counsel approached the analysis in the following way.
14. Part 10 of the LPA deals with 'costs disclosure and assessment'. Section 261(2) of the LPA is in the following terms:

A law practice retained or to be retained on behalf of a client by another law practice is not required to make disclosure to the client under section 260, but must disclose to the other law practice the information necessary for the other law practice to comply with subsection (1).

1. Counsel noted this subsection made a clear distinction between disclosure by 'the other law practice' and disclosure by 'the first law practice' to the client. The section shows a clear disconnect between what must be disclosed to whom.
2. Part 10 div 8 of the LPA is headed 'Costs assessment'. 'Client' is defined to mean 'a person to whom or for whom legal services are or have been provided'. That definition of 'client' is specific to div 8. The definition of 'client' in s 3 'includes a person to whom or for whom legal services are provided'. So the definition provided in div 8 is an exhaustive definition rather than an inclusive definition.
3. In s 3 there appears the following definition:

Legal costs means 'amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services including disbursements but not including interest'.

1. Section 252, which is found in pt 10 div 1, defines the term 'bill' to mean 'a bill of costs for providing legal services'. In the same section, 'costs agreement' is defined to mean 'an agreement about the payment of legal costs'. 'Costs assessment' means 'an assessment of legal costs under Division 8'. 'Lump sum bill' means 'a bill that describes the legal services to which it relates and specifies the total amount of legal costs'. Counsel acknowledged that the tax invoices rendered by the defendant would properly be regarded as a lump sum bill. His point was that the bill was itemised by the attached letter. I will come back to this aspect of the matter. To complete the picture, there is a definition of 'sophisticated client' which is defined to mean 'a client to whom, because of s 263(2)(c) or (d), disclosure under s 260 or s 261(1) is or was not required'.
2. Moving then to s 282, that section is found in pt 10 div 6 which is headed 'Costs agreements'. Section 282(1) anticipates four different types of contractual arrangement. Barristers would fall within sub‑paragraphs (b) and (c). In the former case, as I put to counsel during the course of his submissions, if a client wished to place a barrister on a retainer it may be there would be a direct relationship between a client and the barrister where the law practice acted effectively as an agent. But the more usual situation is sub‑paragraph (c). The law practice engages the barrister directly - that is to say, the contractual arrangement is between the two law practices. Of course, the barrister is acting for the client and all parties are aware that is the case. But the contractual relationship is between the two law practices.
3. To make good his proposition that, in this case, there was a contract between the defendant and the plaintiffs' law firm, counsel for the defendant referred to attachment JMC1 to Mr Caratti's affidavit. That is a letter from the defendant to the plaintiffs' solicitors. Paragraph 1 of the letter reads as follows:

My retainer is with your firm. This is an agreement in the form of s. 282(1)(c) of the Legal Profession Act 2008, not s.282(1)(b) of the Legal Profession Act 2008.

1. Counsel then referred to s 282(5) which is in the following terms:

Except as provided in section 309, a costs agreement cannot provide that the legal costs to which it relates are not subject to costs assessment under Division 8.

1. Section 309 deals with contracting out of the Division by sophisticated clients.
2. Counsel then moved on to s 292, pausing only to mention that pursuant to s 291(2) does not require notification of client's rights to a sophisticated client. Relevantly, s 292, which is headed 'Request for itemised bill' reads as follows:

(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.

1. Counsel noted these two subsections comprise three constituent parts. First, a lump sum bill is given by a law practice. In this instance, the lump sum bill was given by the defendant to the plaintiffs' solicitors. Second, it is the plaintiffs' solicitors - the party to whom the lump sum bill is delivered - which is entitled to apply for an assessment. Third, the law practice must comply with the request within 21 days of the request being made by the party to whom the bill is delivered. In the circumstances of this case, it was the plaintiffs' solicitors - and only the plaintiffs' solicitors - who could request an itemised bill. Counsel's interpretation of this section was, he submitted, further enhanced by the provisions of s 292(5). That section reads as follows:

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.

1. Counsel submitted if sub‑paragraphs (1) and (2) permitted the plaintiffs to request an itemised bill then the defendant would never be in a position to commence proceedings under sub‑paragraph (5). The lump sum bill had not been served on the plaintiffs. That meant no request could be made by the plaintiffs and accordingly no action could be taken.
2. Counsel noted, pursuant to s 295(2), 'a client' could apply to a taxing officer for assessment of costs. Counsel pointed out there was no costs agreement as between the plaintiffs and the defendant. That section necessarily meant that it was open to the instructing solicitors but no one else to seek a costs assessment. Counsel then referred to s 296, which is headed 'Application for costs assessment by law practice retaining another law practice'. Counsel made the point this section made it plain any costs assessment is between the two law firms and by implication at least, specifically excludes the prospect of the client seeking a taxation of the barrister's bill.
3. Counsel noted that while it may not be open to the plaintiffs to directly challenge the defendant's bill, they are not entirely shut out in relation to a costs assessment. He referred to s 299 which is in the following terms:

(1) An applicant for a costs assessment must cause a copy of the application to be given to any law practice or client concerned or any other person whom the taxing officer thinks it is appropriate to notify.

(2) A person who is notified by the applicant under subsection (1) -

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

(b) is to be taken to be a party to the costs assessment; and

(c) if the taxing officer so determines, is bound by the costs assessment.

1. The way that section operates is as follows. Provided 12 months had not expired since the law practice rendered its bill to the plaintiffs (and when this matter was first heard that period had not expired) it was open for the plaintiffs to seek an assessment of their solicitor's account. They could also seek to assess the disbursements and the plaintiffs' solicitors could in that way draw in the defendant. But that has got nothing to do with the orders which are sought in this case. But at least it shows the plaintiffs are not without some form of remedy.
2. In the end, there was a stark contrast between the plaintiffs' approach and the defendant's approach to this issue. The plaintiffs' approach might be described as purposive. That is to say, drawing upon the quote from the parliamentary proceedings, the plaintiffs attempted to construe the LPA in such a way as to allow a client (the plaintiffs) to have the defendant's (barrister's) fees assessed. On the other hand, counsel for the defendant took a literal approach. By examining the particular sections of the legislation, he sought to demonstrate the framework of the LPA did nothing more than restate the classic position of a barrister/solicitor/client relationship.
3. Both parties examined in some detail the decisions of Associate Justice Wood in Ipex ITG Pty Ltd (in liq) v McGarvie [2011] VSC 675 and Boddice J in Cupo v Anderssen Lawyers [2015] QSC 202. Neither decision is directly on point although both seem to favour the defendant's interpretation of the LPA. But this is one of those cases where it is necessary to look at the legislative scheme and give effect to that scheme. Adopting that approach I am satisfied the defendant's view prevails. The scheme of the LPA reserves to the solicitors engaging a barrister the right to seek an assessment of the barrister's costs. It may be that the solicitors would take that step at the behest of their client. But the legislation does not, by its terms, provide to the client a means of directly challenging the barrister's costs.
4. Accordingly, the plaintiffs do not have standing to bring this application and it will be dismissed.
5. Having reached that conclusion it is not, strictly speaking, necessary for me to determine whether or not the defendant has provided itemised bills. Both parties relied upon the decision of the Victorian Court of Appeal in Piper Alderman v Smoel [2017] VSCA 42. The court said, relevantly:
   1. The question here is whether Piper Alderman is bound by the tax invoices it has rendered. To recap, s 3.4.43(2) of the LPA provided:

If, before giving an itemised bill the law practice had previously given a lump sum bill, on a costs review the law practice is not bound by the amount and matters stated in the lump sum bill.

with 'itemised bill' defined in s 3.4.2 of the LPA to mean 'a bill that specifies in detail how the legal costs are made up in a way that would allow them to be reviewed under Division 7' and 'lump sum bill' defined to mean 'a bill that describes the legal services to which it relates and specifies the total amount of the legal costs.'

1. The text of s 3.4.43(2) and the definition of 'itemised bill' direct attention to the ability to use a bill for the purposes of a costs review. True it is that some of the authorities which focus on the need for sufficient detail in a bill to enable the recipient to make a decision as to the reasonableness of the charges, whether to have the bill taxed and to take advice in that regard may therefore, at first blush, seem to miss the mark for the purposes of the LPA definitions. Moreover, some of those authorities speak in these terms when they are dealing with lump sum, rather than detailed or itemised bills for taxation. However, little turns on this as a bill must at least satisfy that test if the bill is in a form that may be reviewed under Div 7. Given the statutory language in the LPA, it is perhaps better to express as an overarching requirement for an itemised bill that it include sufficient detail so that, if the bill proceeded to a review, the parties would have enough information to understand what work has been charged for, the amount charged for the work performed, whether any particular charge is sustainable and to make submissions to the judicial officer presiding in the Costs Court. To give that more content however, it is necessary to look to the context and purpose of the provisions.

1. In addition, whether the bill has sufficient detail to enable it to be reviewed cannot be assessed in a vacuum. The knowledge of the recipient about the context in which the charges were made is relevant. One would expect the recipient to have some knowledge (at least at a high level) of the work that was required. So, for example, in a litigious matter, one would expect the bill recipient to know (in addition to other things) that discovery was a task that had to be performed; the names of the partners, associates and lawyers working on the matter; and the name of the law practice acting for the opponent. In this case, the New Trustees would be expected to know about the underlying proceeding for which Piper Alderman provided legal services to the former trustees and they would also be expected to have sufficient information about the legal work that was required. Although they may not have detailed information about all of the instructions that were given to Piper Alderman (for example, verbal instructions that were not recorded in writing), as New Trustees, it would be expected that they would have a sufficient amount of information gained from written correspondence to the Superannuation Fund to proceed with the review.
2. As noted by counsel for the defendant, what is decisive in this case is that the defendant, as barrister, was rendering accounts to a solicitor for work in which the solicitor was intimately involved. The solicitor is a sophisticated client. Furthermore, it was not entirely clear from the plaintiffs' counsel just what would have satisfied his interpretation of the phrase 'itemised bill'. He acknowledged it would not have involved the defendant producing time sheets. Just what more needed to be provided remained unclear. In my view, the itemised bills in this case were sufficient and if it were the case that the plaintiffs had standing I would not have ordered any further itemised bills be provided.
3. After this matter was heard, but prior to the delivery of judgment, the parties filed a consent order allowing for the filing of further evidence and submissions. The matter was then set down for a further oral hearing. The essential feature of the defendant's submissions related to the fact the plaintiffs' solicitors, subsequent to the hearing, indicated the plaintiffs intended to apply for an assessment of their solicitor's costs. It was the defendant's position that, in doing so, they were effectively admitting there was sufficient itemisation of the defendant's accounts to allow an assessment to be made.
4. While it is not strictly necessary for me to deal with this issue, I am not satisfied the actions of the plaintiffs amount to an admission. As counsel for the plaintiffs noted, the time limit was running and if an application for an assessment was not made within the 12‑month time limit there might well be objections if an extension of time was sought. I accept in applying for the assessment, the plaintiffs were behaving in a prudent and appropriate fashion and no adverse inference can be drawn from their actions.
5. On publication of these reasons the parties ought agree a minute of orders. My preliminary view is that costs should follow the event and the plaintiffs should pay the defendant's costs. Any party who takes a different view should file submissions within seven days.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.