Turner v Mitchells Solicitors and Business Advisers Qld [2011] QDC 61

"A law practice may give a person an interim bill covering part only of the legal services the law practice was retained to provide."

[3] The term "interim bill" is not defined either in s 300 or in the Schedule of the Act, but it seems to me that the terms of subsection 333(1) provided an effective definition: it is a bill covering part only of the legal services the law practice was retained to provide. That contemplates that there was a retainer in place, and that under it the law practice was to provide particular legal services. Obviously the question of what legal services the law practice was retained to provide is a question of fact. The matter may be quite straightforward, or there may be some complexity about it. For example, there may be a costs agreement which contemplates that certain work will be done, but the client may subsequently request the law practice to undertake further legal services. The matter may be defined with considerable precision or very vaguely.

[4] In the present case it was submitted on behalf of the respondent that the legal services that it was retained to provide fell into three categories: first, the provision of advice in relation to a dispute; second, the making of an application to set aside a default judgment of the Magistrates Court; and third, the conduct of proceedings in the Commercial and Consumer Tribunal, subsequently QCAT. It was common ground that the retainer was terminated prior to the conclusion of those proceedings.

[5] In these circumstances, it seems to me that, once there was a retainer under which the respondent was to provide legal services in the form of the conduct of the proceedings in the tribunal, bills provided for a part of the work done to that end would necessarily be interim bills within the terms of s 333; to put the matter another way, in my opinion the applicants are within time in respect of all of the work done pursuant to the retainer to provide legal services in the form of the conduct of the proceedings in the tribunal.

[6] In terms of the earlier work, the costs agreement actually provides in Item 3 of the Schedule, as a summary of the work to be done: "to advise with respect to a building contract dispute, including options and remedies." An estimate of professional costs was given, although it was said that the fees would be altered in the event that the dispute escalates and litigation ensues. On the face of it, however, was simply a retainer to provide legal services in the form of advice. The respondent said that such advice was provided by a letter, and the effect of the respondent's material is that the following day the first of the bills referred to in the application was sent; on 28 May 2002 a letter which looks very like a letter stating that nothing further is required at that stage was sent, together with an additional bill for what was said to be additional work after the bill of 10 May.[1]

[7] There was a further attendance in which advice was given on 7 October, and that was followed by a letter on 21 October, which confirmed that their involvement in the matter, i.e. the dispute with the builder "is on hold as you have retained directly the services of National Building Solutions. ... We await your further instructions ... we confirm we will take no further steps until expressly instructed by you. We take this opportunity of enclosing our interim memorandum of account for work completed."

[8] It may be that the use of the term "interim" for that memorandum of account was not appropriate, since it is not at all clear that at that stage there were legal services that the law practice was retained to provide which had not already been provided. There may have been an expectation that at some point in the future further legal services would be required in relation to the same dispute, but on the face of it at that stage there were no further legal services that the law practice was retained to provide, so this was not an interim bill, at least for the purposes of s 333(1).

[9] It seems that the initiative in litigation was taken by the other party to the dispute, who obtained a default judgment against the applicants. According to the respondent, on or about 30 June 2003 the applicants gave instructions to seek to have the default judgment set aside,[2] something which was achieved by an order made by the consent of the parties which provided for the matter to be transferred to the Queensland Building Tribunal. The applicants concede that thereafter for about six months the respondent's "involvement with our building dispute was on hold."[3] There was further contact with the respondent in February 2004.[4]

[10] On 1 March 2004 the respondent was seeking instructions in relation to making an application to the Tribunal;[5] it follows that at that stage there was no retainer to pursue such an application. Advice was given by the respondent to the applicant, and that was confirmed by a letter of 19 March 2004 which demonstrated that at that stage the respondent was not retained to provide legal services in relation to the proceeding in the tribunal. A further letter of 14 April 2004 set out the history of the matter and noted that someone else was retained to make an application to the Tribunal and that they were not retained to provide advice.[6] That appears to confirm that at that stage the respondent had no instructions to provide any legal services. There was a further conference with one of the applicants on 28 April 2004, followed by a letter confirming a recommendation that they be instructed to brief counsel to settle the application and in due course to appear at the mediation or hearing.[7] Evidently those instructions were forthcoming, and counsel was briefed before the proceedings were commenced. The applicant said there was much delay in sourcing and briefing a suitable barrister: para 17.

[11] In the event, the matter went to the Commercial and Consumer Tribunal, where it was necessary for new proceedings to be started. An application to that tribunal was filed on 4 August 2005. Thereafter they were said to have proceeded "at a somewhat leisurely speed" until they came to a halt when the counsel retained was appointed as a Federal Magistrate. It seems to have taken about nine months to select a replacement. The matter was not resolved by the tribunal until a judgment on 23 December 2010, following a hearing over five days in August 2010.

[12] The Act does not define the concept of "retainer"; at common law this was simply the term for a contract for the employment of the solicitor by the client.[8] The concept implies that the retainer will be one to do something, commonly to do something fairly specific.[9] If a client has retained a solicitor, the solicitor becomes the agent of the client and so able to bind the client as against third parties within the limits of his authority.[10] Hence, if a client retains a solicitor to engage in litigation, steps taken by the solicitor in the litigation are treated as taken by the client; but if a client has not retained a solicitor to undertake litigation and the solicitor does do so on behalf of the client, the proceedings will be unauthorised unless subsequently ratified by the party on whose behalf the solicitor was apparently acting.[11] It follows that one way of testing whether there was a retainer to take proceedings against the other party to the dispute is to consider whether the solicitor would have been entitled to commence a proceeding in a court or tribunal without further instructions to that effect from the client.[12]

[13] There is also what is sometimes referred to as a general retainer, where a lawyer is retained to do any legal work which may be required of the lawyer from time to time. There will commonly be a fee, perhaps a nominal fee, payable to the lawyer for the general retainer, with the lawyer being able to charge appropriate fees in respect of any particular legal work required. That, however, is not the sort of retainer which is relevant for the interpretation of s 333. The wording of that section indicates that what is relevant there is a retainer to provide legal services.

[14] At common law such a retainer was regarded as an entire contract, so that there was no right to remuneration until the particular legal services had been completed.[13] At common law whether a contract was entire was a matter of construction of the contract,[14] so that even a contract which would be prima facie entire could make provision for interim payment of consideration, and it is commonplace for agreements between solicitors and clients to make such provision, at least when those agreements are in writing. For practical purposes, therefore, an interim bill is one that could not be given at common law unless there was an express provision to that effect in the contract of retainer. It follows that it was not necessary for there to be legislation to permit a lawyer to charge an interim bill, that is to say a bill for part only of the legal services the lawyer was retained to provide; that could be achieved by an express agreement to that effect.

[15] It may be, however, that the legislature thought that there was a necessity for such legislation: the explanatory note to the bill which became the 2007 Act says in relation to Clause 333: "Clause 333 provides that law practice may give interim bills covering a part of the legal services that have been provided."[15] Even if translated into English, this does not throw much light on the situation, and indeed does not match the wording in the clause because an interim bill operates by reference to the services the lawyer was retained to provide, not the services that have been provided. This may, therefore, be another example where the explanatory note does not assist in the interpretation of the section.[16]

[16] With regard to the interpretation of s 333(2) I am unaware of any previous decision on this point in Queensland.[17] I was told, however, that there are conflicting decisions in New South Wales and Victoria as to the interpretation of the equivalent provisions of the legislation in those states, which are not materially different. In Retemu Pty Ltd v Ryan (NSW District Court, Coorey DCJ, 4300/08 and 4301/08, 16/4/10, unreported) it was held that the effect of the New South Wales equivalent[18] was that all interim bills could be assessed at the time of the final bill, so that so long as the application for an assessment was within the time limit by reference to the final bill, the legal costs covered by interim bills could also be assessed. His Honour accepted that the existence of a continuing relationship during the performance of the legal services the practice was retained to provide could have been disrupted had there been a challenge to an interim bill, and that accordingly the client may be reluctant to challenge an interim bill because that would prejudice the conduct of, for example, ongoing litigation.[19] It also appeared that subsection (2) had little function if the section was only concerned with permitting interim bills to be delivered, and that the section worded in this way was consistent with the New South Wales equivalent of s 335. It was also practical and useful to have all of the work that had been done under the retainer scrutinised at the same time.

[17] That decision was not followed by an Associate Justice in Victoria in Dromana Estate Ltd v Wilmoth Field Warne [2010] VSC 308, where it was held that the time limits in the Victorian equivalent of s 335(5) applied to an interim bill and a final bill, and that the section imposing the time limits took priority over, or was not subject to, the Victorian equivalent of s 333(2).[20] The reasoning was essentially that the term "bill" in s 335(5) was applicable to cover both an interim bill and a final bill in s 333, and that the disclosure obligations relating to bills to be found earlier in the Act did not make provision for advising of the existence of assessing interim bills at the time of assessment of the final bill. It was said that s 333(2) did still have work to do, but was subject to the application to review each of the bills being filed within 12 months of the bill being received, even though in practice this might be only a small opportunity and confer a small right. Overall, it was said that the equivalent of s 333(2) was "subject to the overarching effect of" the equivalent of s 335(5). It was said that if that had not been the intention, the word "final" would have been inserted in the latter section.

[18] I do not find the reasoning of the Victorian decision persuasive. Subsection (2) permits the costs to be assessed at two different times. An assessment under Division 7 is initiated by an application, so it contemplates that an application may be made at the two different times. Unless this has the effect of overriding the limitation in s 335(5), there would be no point to the section. The effect of the Victorian decision is that the application can only be made at the former time, that is, within 12 months of the interim bill, and can be made when a final bill is delivered only if the final bill is also delivered within that 12 months. That plainly can be done anyway, and in my view the effect of the interpretation adopted in Victoria is that s 333(2) would have no work to do. Such an interpretation should be avoided.

[19] There is also the consideration that the reference to two different times is not strictly speaking a reference in the alternative; the concluding clause, which logically must only operate by reference to the second preceding alternative time, permits assessment at the time of the final bill whether or not the interim bill has previously been assessed. In other words, the subsection expressly provides that the legal costs covered by an interim bill can be assessed twice. That may seem at first glance a startling proposition, but when one stands back a little from the minutiae of the statute and considers the practicalities of the situation, the idea is not so startling.

[20] The common law treated a retainer of a solicitor as prima facie an entire contract for the practical reason that it was a contract to do something, the full benefit of which was really only going to accrue to the client once it had been completed. Costs assessed under Division 7 have to be assessed under s 341, which involves a consideration of some matters which are likely to be easier to apply by reference to the legal costs of a complete performance of legal work than by the examination of a particular part of the work in isolation. For example, in the case where s 341(1)(c) applies, it would be best for the fairness and reasonableness of the amount of legal costs in relation to the work to be assessed by reference to all of the work performed under the retainer, rather than by reference to some particular piece of the work viewed in isolation. Looked at in the abstract, the idea that there ought to be an assessment at one time of the whole of the work done, under what would at common law be regarded as an entire contract, is I think the best way to perform an assessment of legal costs, in the interests of protecting the client, which is the basic purpose of these provisions.[21]

[21] I also think, with respect, that there is considerable force in the practical observation of Coorey DCJ that the position of the client in relation to the continuing performance of legal services under a retainer may well be prejudiced if there is a dispute in relation to an interim bill. In consumer protection legislation such as this, rights to seek assessment ought not to be interpreted in a way which will restrict the protection available to a consumer, if two views are fairly open. This principle favours the interpretation in New South Wales, because it looks at the practical considerations of piecemeal assessment of the costs: it is likely to disrupt the continuing lawyer-client relationship.

[22] There is also the practical consideration that, for a lay client, whether there is a need for assessment of the costs associated with particular legal services may not be readily appreciated early on in the performance of those legal services. For example, if an estimate is given of $30,000 to perform the legal services, the first few bills of about $5,000 might not excite any particular suspicion of overcharging, which may arise only once the bills exceed $30,000, and may well crystallise if for example a final bill of say $20,000 is delivered on top of interim bills totalling $35,000. In such a situation, a client may reasonably conclude that there has been overcharging all the way along. It would be unsurprising if the legislature would wish to confer on a client in such a situation a right to have all of the bills assessed.

[23] The argument based on the disclosure obligations can be easily dealt with: the Act does not require disclosure in any particular terms, what it requires is that such rights of review as the Act creates be disclosed to the client. Section 308(1)(i) requires disclosure simply of the existence of costs assessment under Division 7 as an avenue under the Act in the event of a dispute in relation to the costs. Paragraph (j) refers to any time limits that apply but does not specify what time limits have to be stated. Obviously a reference to s 335(5) would satisfy that requirement; the solicitor is not being asked to write a dissertation upon the operation of the legislation insofar as it might impact on the application of the time limit. Accordingly, I do not think that there is any need specifically to disclose the operation of s 333(2) in relation to the application of the time limit.

[24] There is also the consideration that careful examination of Division 6 and Division 7 reveals a number of incongruities in relation to the drafting and interrelationship of these provisions. Section 330 permits a bill to be in the form of a lump sum bill or an itemised bill. If the reasoning adopted in Victoria in relation to the interpretation of s 335(5), that "bill" includes an interim bill or a final bill, is applied, "bill" logically also includes a lump sum bill or an itemised bill. Does that mean that if a lump sum bill is delivered the 12 months period begins to run for the purposes of s 335(5)? Given that the whole point of requiring an itemised bill is to obtain a bill stating how the costs charged are made up in a way which would allow those costs to be assessed under Division 7, as appears from the definition in s 300,[22] it would be odd if time began to run from the lump sum bill. Perhaps the answer is that time for each of the bills runs from when each of them is delivered, but it is unlikely that anyone is going to apply for an assessment of the lump sum bill without requiring an itemised bill also to be delivered. My present point, however, is that the legislature did not indicate what the solution is to this problem.

[25] Indeed, s 335 (and, for that matter, s 336) does not speak in terms of the assessment of any particular bill, but simply of the assessment of the whole or any part of "legal costs". The reason for this is that the section contemplates that there may be an application in circumstances where the costs have been paid without any bill having been given: subsection (5)(b). Accordingly, an assessment of the costs may well have to take place by reference to a bill which comes into existence only because one is ordered to be produced by the solicitor so that it can be assessed. The position is different for s 337, a curiously worded section. Subsection (1) operates only by reference to legal costs to which a bill given by a law practice under Division 6 relates, although the section then goes on to say that there can be a costs assessment if the costs have been paid without a bill: subsection (2). Indeed, it goes on to say the same thing twice, since subsection (3) seems to cover exactly the same ground but in different words. So, s 337 permits an application for assessment to be made by a law practice that has given a bill, but the application can be made without a bill if the costs have been paid. The time limit here is 30 days from the giving of a bill or a request for payment, or payment of the costs if neither a bill was given nor a request was made. So if a bill has been given, the law practice has 30 days and can apply for the assessment of the costs to which the bill relates. If the costs are paid without a bill or a request for payment, the law practice has 30 days from payment to make an application, though it is not at all clear what it is that is to be assessed in such circumstances; how can it be determined to what the payment relates in the absence of a bill? But at least the statute permits this to be done. What if there was a request for payment, but no bill? Time begins to run under (4)(a), but since neither subsections (2) nor (3) apply, no application can be made under subsection (1) in the absence of a bill. If a bill is not given within 30 days of the request for payment, the law practice is out of time, and there appears to be no power to extend the time under s 337(4). That appears to be the case whether or not the costs are paid, since subsection (4)(b) will not apply in that situation. All the law practice can do is hope that someone else makes a costs application relating to the same legal costs, so as to activate subsection (4)(c).

[26] The point of this exercise is to suggest that it does not appear that a great deal of intellectual rigor has been applied to the formulation of the time limitation provisions in this division, or indeed its provisions generally. The problem may arise because the Act is a local adaptation of an agreed national model for what was supposed to be a standard national legislation.

[27] In my opinion s 333(2) means what it says: if there is an interim bill, then the legal costs which it covers may be assessed at the time of the interim bill or at the time of the final bill. Accordingly, the client may apply under s 335 for an assessment at either time, and will be subject to the applicable limitation at either time. An application in respect of the legal costs covered only by the interim bill will have to be made within 12 months after that bill was given or request for payment made or the costs were paid, but if the legal costs are to be assessed at the time of the final bill, then the application must be made within 12 months of the final bill. It follows that if an application is made within 12 months of the final bill, the legal cost which may be assessed under s 335(1) include (or at least may include) all of the legal costs subject to any interim bill which was part only of the legal services the law practice was retained to provide, even though those costs are not included in the "final bill". For practical purposes, the section preserves the rights that would have been available to obtain assessment if the lawyer could only charge on the basis that the retainer was an entire contract. I agree with and follow the reasoning in Rotemu Pty Ltd, but not the reasoning in Dromana Estate Ltd.

[28] The applicants deposed to not terminating or breaking the retainer of the respondent after the consent order was made in the Magistrates Court,[23] but this I think is not the point: if there is a retainer to do further work, the issue may be whether it was terminated or broken, but if the work the solicitors have been retained to perform has been completed, the issue is whether there is a retainer to do further work. There is no evidence that after the consent order was obtained in the Magistrates Court there was a retainer to do any further work until February 2004. There is in the letter of 14 April 2004 some discussion of what had happened previously, which is consistent with my analysis, except that it speaks of the retainer being suspended or modified. In a sense, perhaps, that may be appropriate if one uses the term "retainer" in a broader sense of the relationship between the client and the solicitor, but what matters for the purposes of the Legal Profession Act, and particularly s 333, is a retainer to provide legal services. This letter confirms that there were significant periods prior to the letter when there were no legal services that he respondent was retained to provide, and indeed that that was the situation at the time when that letter was written.

[29] There can be a situation where a costs agreement can be entered into to cover particular legal work, and any other legal work which the solicitor is instructed to carry out.[24] If the particular legal work is then completed, and there have been no further instructions, then the legal services the solicitor is retained to provide have been performed. If a bill is sent at that point it is a final bill, and it does not become an interim bill simply because at some later stage further instructions are given for additional legal services to be provided to which the earlier costs agreement also applies.[25] In my opinion it is important to apply s 333 according to its terms, and not by reference to extraneous considerations, such as whether the legal work is undertaken under a single costs agreement or multiple costs agreements. In any case, it may be a nice point whether in the circumstances I have outlined the later instructions to perform additional legal services amount to a variation of the earlier costs agreement, or a new agreement which incorporates the terms of the earlier costs agreement. Section 333 operates by reference to the legal services the law practice is retained to provide. It is possible for the scope of those services to be expanded before the services previously sought have been all provided, in which case the opportunity to deliver a final bill will have been postponed; but if the legal services sought have been provided, the fact that later additional legal services are sought does not in my opinion produce the same result.

[30] It seems to me that the other matters raised in the affidavit of Mrs Turner are more in the nature of criticism of the way in which the legal services were provided by the respondent. The respondent's material was therefore consistent with the analysis put forward in the submissions on behalf of the respondent.

[31] It follows in my opinion that the applicants are entitled to have assessed the last bill delivered by the respondents, and all other bills delivered after the retainer to carry on the proceeding in the Commercial and Consumer Tribunal; effectively, after 28 April 2004. Those other bills can be regarded as interim bills for the purposes of s 333, and the application is therefore within time. However, on the face of it the application, so far as it related to any earlier bill, is out of time.

[32] The question then arises as to whether the power to extend time should be exercised in favour of the applicants. Under s 335(6) there is a discretion to deal with the application made out of time after considering the reasons for delay. In the circumstances, therefore, it would appear to be necessary for the applicants to show, in respect of those bills, that there is some good reason why they should be exempted from the general prohibition imposed by subsection (5). Although the solicitor for the applicant sought an extension of time in relation to any bills for which an extension of time was necessary, no particular explanation was advanced on behalf of the applicants as to the reasons for the delay. The applicant's material does speak as if they took the view that the retainer was continuous, but in circumstances where there were on any view of the matter long periods where there was no additional work which the solicitors had instructions to carry out and which had not been carried out, this was obviously not a case where, in respect of those periods at least, a desire not to interfere with an ongoing relationship provided an explanation for a failure to challenge bills in a more timely way.

[33] On the face of it, the applicants could have challenged the earlier bills in the early part of 2004, and simply chose not to do so. No other explanation is given in their material. In these circumstances, I do not consider that there is any material providing any reason for the delay in making the application in relation to the earlier bills, and I do not consider that the applicants have shown that there is any good reason to exercise in their favour the discretion conferred by subsection (6), or for exempting them from the prohibition which prima facie applies under subsection (5). I therefore will not extend time.

[34] The applicants are, however, entitled to have the costs in the more recent bills, which in fact comprise the bulk of the bills rendered by the respondent, assessed under the Act. I shall deliver these reasons, and then relist the matter so that appropriate directions can be given under UCPR r 743G.

[1] There was some further advice in a letter of 17 May: Affidavit of Turner, Exhibit JET1.

[2] They wrote that day to the solicitors for the builder: Affidavit of Turner, Exhibit JET2. They then filed an application to the Magistrates Court: Exhibit JET3.

[3] Ibid, para 8. It follows that they had no retainer to perform further legal services.

[9] Saffron Walden Second Benefit Building Society v Rayner (1880) 14 Ch D 406 at 409, 415.

[10] Cordery on Solicitors, 8th Ed 1988 p 76. This applies only in respect of the particular business the solicitor is retained to do: Saffron Walden (supra).

[11] Danish Mercantile Co Ltd v Beaumont [1951] Ch 680.

[12] As in Wray v Kemp (1884) 26 Ch D 169.

[14] Purcell v Bacon [1914] HCA 86; (1914) 19 CLR 241 at 249.

[16] The explanatory note for s 335 is even briefer, and makes no reference to the existence of a time limit, let alone its operation.

[17] I mentioned the matter in Bannerot v Waddington [2008] QDC 332, but the point was not contested there and I did not give it any particular consideration.

[18] Legal Profession Act 2004 s 334.

[19] Or, I suppose, a conveyancing task in respect of a contract where time was of the essence.

[20] Legal Profession Act 2004 s 3.4.37.

[21] The idea that interim bills can be assessed together with a final bill has been around for a long time: Re Romer & Haslam [1893] 2 QB 286.

[22] See Vitovello v Russell & Co Solicitors [2009] QDC 249; Clayton Utz Lawyers v P&W Enterprises Pty Ltd [2011] QDC 5.

[24] See JH Milner & Son v Percy Bilson Ltd [1966] 1 WLR 1582.

[25] Re Romer & Haslam [1893] 2 QB 286.