Solicitors:
In person (Applicant)
Watts McCray Lawyers (Defendant)
File Number(s): 2015/29722
[2]
Judgment
By summons filed 30 January 2015 the Plaintiff seeks, pursuant to s 350 subs (5) of the Legal Profession Act 2004 (NSW), an extension of time within which to apply for an assessment of legal costs claimed by her former solicitors, the Defendants. In support of her application, the Plaintiff has sworn and read two affidavits, one of 30 January 2015 and one of 2 April 2015.
Since 2010 the Plaintiff has been party to litigation with her former husband in the Family Court at Sydney. In October 2011 she engaged the Defendants to act for her in those proceedings. The Plaintiff signed a costs agreement with the Defendants dated 13 October 2011.
On 20 June 2012 the Plaintiff wrote an email to senior counsel who had been retained by the Defendants to advise and represent the Plaintiff in the Family Court. In that email the Plaintiff complained about the Defendants' performance of their retainer. On 21 June 2012 Mr Frakes, a partner of the firm, signed a notice of ceasing to act. This was delivered to the Plaintiff and filed in the Family Court. The reason for ceasing to act is not stated in the document but a letter of 29 April 2014 from the Legal Services Commissioner to the Plaintiff retrospectively attributed the event to the Plaintiff having "lost confidence in their services". That appears to be borne out by the Commissioner's letter, which recounts a number of complaints the Plaintiff made in early 2014 about the firm's work for her. The Commissioner found those complaints to be unfounded.
On 4 July 2012 the Defendants rendered to the Plaintiff an invoice for fees and disbursements for work carried out between 4 May 2012 and 20 June 2012. The total was $43,138.50. Against this, $18,637.16 was transferred from trust and applied. The balance payable on the invoice was therefore $24,501.34. There had been seven earlier invoices, rendered approximately monthly from early November 2011. All of these earlier invoices had been paid in full, as they were rendered, from funds which the Defendants held in trust.
By an email of 25 June 2012 the Plaintiff complained to the Defendants at length and in detail about their work in connection with her Family Court proceedings and requested "an audit" (implicitly, of fees charged). The Defendants' managing partner Mr McCray replied by letter of 10 August 2012. The reply concluded as follows:
"We confirm that we have provided you with itemised bills for all work billed to date. A complete history of the work we have undertaken on your behalf forms part of those accounts. We note your request for a refund of moneys.
It is not clear what you are seeking in this regard; ie a complete refund or something else? Again, it is not correct to say that we did not meet with you at any time during the period October 2011 to May 2012.
If there are any specific items on our bills provided to you to date which you wish us to review or in relation to which you have any concerns then please advise us accordingly as soon as practicably possible so that we may consider any particular issues you may have in that regard and attempt to address those for you."
Between 15 August 2012 and 6 September 2012 the Plaintiff sent eleven emails to Messrs Frakes and Iuliano, two of the solicitors in the Defendants' firm who had performed work for the Plaintiff. These emails made complaints about the solicitors' work, asserted that the Defendants owed the Plaintiff a refund, sought compensation and sought release of the Plaintiff's files to a new solicitor, Mr Gideon Super.
The Defendants' response to these emails was by two letters. The first, of 22 August 2012, conveyed that the Plaintiff's file would be released to her new solicitor only on payment of the Defendants' outstanding fees. The second, of 7 September 2012, included the following paragraphs:
"We refer to our itemised tax invoices which show what you have been charged for and show the respective funds that were transferred from our trust account in accordance with the provisions of our costs agreement with you.
…
On a without prejudice (sic) could you please let us know what proposal you would like us to consider so that it can be put to the Partners of this Firm for consideration. We draw your attention to our letter of 22 August 2012 and confirm that we maintain our lien over your file and are prepared to release your file on the basis set out in that letter."
On 9 September 2012 the Plaintiff sent an email to Mr Iuliano challenging a number of items on the invoice of 4 July 2012 as well as items from earlier fully paid invoices. This is the only document before me which identifies challenged entries on the Defendants' invoices or the grounds of challenge. It is not apparent from the evidence whether the matters raised in the 9 September 2012 email remain the items and grounds which would be agitated on an assessment of costs, should an extension of time be granted pursuant to the present application.
On an application such as this, it would not be appropriate for the Court to evaluate the grounds of challenge to items in a bill as if the assessment were being carried out. However, it would be relevant to take into account, if it were the case, evidence that showed manifestly and readily provable overcharging in significant amounts. That might well be a factor in favour of an applicant, relevant to the fairness and justice of extending time. But that is not this case.
On the face of the Plaintiff's email of 9 September 2012, the comments made upon such items as she identified are contestable queries at best which may well be answerable by the Defendants. For example, the Plaintiff complained that the amount of time spent reviewing the husband's disclosure of documents in the Family Court from 1 May to 4 May 2012 was excessive. She alleged that there was duplication of an item for solicitor's attendance at one conference on 8 May 2012. In fact this appears to have been a case of separate charges for each of two attendees. The Plaintiff also complained about charges for the drafting, "producing" and redrafting of a statement from 21 May to 23 May 2012 - and so on.
I have reviewed all of the items challenged in this email of 9 September 2012. I do not find manifest error or probability of error in any of them. Further, many of the items referred to in the email were on invoices which had been paid from trust, without complaint from the Plaintiff, before the Defendants ceased to act and before they sent their final bill. That in itself indicates that there was no patent error in the items on those earlier accounts.
Mr Iuliano initially responded to this email of 9 September 2012 on the same day. The response included the following:
"As requested in my letter to you of 7 September 2012, on a without prejudice basis; Is there a proposal you wish to put so that I can put that to the Partners for their consideration ?"
Mr Iuliano wrote a further email in response to the Plaintiff's of 9 September 2012 on 19 September 2012. It appears from this that Mr Iuliano's addition of the items identified by the Plaintiff which related to the final invoice (4 July 2012) resulted in a figure of $6,045.50. Mr Iuliano wrote:
"I note, however, that in your email of 9 September 2012, you query a number of items totalling $6,045.50. Are they the only items you query? I ask this because in your previous emails you have alleged that we owe you a refund, a position which we have totally rejected, and in that regard I refer to our previous emails to you.
Please let me know whether your dispute with us is limited to the items you have detailed in your email of 9 September 2012, totalling $6,045.50, as this will have a bearing on any proposal that may ultimately go to the Partners. I am not suggesting that we will reduce our tax invoices by that amount, I am seeking to clarify what your dispute is about and the quantum of that dispute.
In any event, as you have retained Mr Super, we assume that you have discussed this with Mr Super. It would greatly assist if any future communications on this issue occurs between us and Mr Super."
So far as the evidence shows, the Plaintiff did not take up either the invitation to clarify the range and detail of her dispute concerning the Defendants' invoices (in particular concerning the amount unpaid on the last one rendered) or the invitation to involve her new solicitor in resolving the fee dispute.
On 5 October 2012 Mr Frakes of the Defendant firm wrote yet a further response to Ms Wong's email of 19 September, which included the following:
"On 19 September 2012, we sought clarification from you as to whether your dispute was limited to the items referred to in Item 9 above [a reference to the amounts totalling $6,045.50 which Mr Iuliano had noted from the Plaintiff's September email] so that we could ascertain the ambit of your dispute with us. You have not responded to that request.
We are, and have been, prepared to meet with you to discuss a possible resolution of this dispute so that your files can be released to whoever you direct, however before we embark on such a course, it would be of great assistance if you could advise whether your dispute with us is limited to the amount and the items referred to in Item 9 above.
If that is the case then could you please pay us the sum of $18,456.34 as soon as practicably possible in full and final settlement of the items that that amount is referable to.
As to the items referred to in Item 9 could you please advise on what basis you challenge each of those items and what quantum do you allege should be attributed to each item, should you be successful in your challenge of these items.
Once we have been provided with the information requested, then we will know what the subject matter of any proposed meeting will be and we will then be able to meet with you in a genuine attempt to finally resolve this issue.
If your dispute is not limited to the items referred to in Item 9 above then could please advise [sic] what items you seek to challenge and the basis on which you challenge each, together with the quantum you allege should be attributed to each item should your challenge be successful."
So far as the evidence shows, the Plaintiff has never answered or responded to this further invitation of 5 October 2012.
On 22 and 25 February 2013 the Plaintiff again sought delivery of her file to her new solicitor Mr Super. She was reminded by a letter of 26 February 2013 from the Defendants that they would not release the file until the $24,501.34 owing on the invoice of 4 July 2012 had been paid.
The evidence does not reveal any further communication between the Plaintiff and the Defendants over the next twelve months. On 25 February 2014 Mr McCray referred the outstanding balance of the 4 July 2012 invoice to a debt collection agency. On 5 March 2014 solicitors for that agency wrote to the Plaintiff demanding immediate payment.
On some date between 5 March 2014 and late April 2014 the Plaintiff made complaint to the Office of the Legal Services Commissioner. The substance of this complaint is identified in the letter from the Commissioner to the Plaintiff of 29 April 2014, to which I have already referred.
On 14 April 2014 the Plaintiff lodged with the Manager, Costs Assessment - a statutory officer under the Legal Profession Act - her application for assessment pursuant to s 350 sub-s (1). The Manager responded on 11 August 2014 by letter, pointing out that "the latest invoice/bill you have applied to have assessed is dated 4 July 2012", that the application should have been made within twelve months (s 350 sub-s (4)) and that it was therefore out of time. This letter informed the Plaintiff of the power of the Court to extend the time limit. More than five months passed before the Plaintiff filed her summons, on 30 January of this year, seeking the extension.
Subsection (5) of s 350 is in the following terms:
"(5) However, an application that is made out of time, otherwise than by:
(a) a sophisticated client, or
(b) a third party payer who would be a sophisticated client if the third party payer were a client of the law practice concerned,
may be dealt with by the costs assessor if the Supreme Court, on application by the costs assessor or the client or third party payer who made the application for assessment, determines, after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12-month period."
By reference to the statutory definition the Plaintiff is not a "sophisticated client"; the Defendants have not suggested otherwise. Hence the Plaintiff is entitled to have her present application considered according to the test of whether "after having regard to the delay and the reasons for the delay, it is just and fair for the application for assessment to be dealt with after the 12-month period".
The statutory twelve months, dating from the Defendant's last invoice, expired on 3 July 2013. I infer that the Plaintiff had considered the invoices carefully by no later than one month after receiving the invoice dated 4 July 2012. That appears to follow from the circumstance that she objected to the invoices in her correspondence of August and September 2012.
The Defendants' responses during August, September and October 2012 to the Plaintiff's complaints about their charges, as quoted earlier in these reasons, were reasonable and constructive. Their invitation to the Plaintiff to particularise and quantify her objections with a view to discussing and resolving them were ignored.
From when the Plaintiff entered into her costs agreement with the Defendants on 13 October 2011, she had been on notice that she could apply for costs to be assessed within twelve months if she was dissatisfied with the fees rendered by the Defendants. This was stated on the Form 2 pursuant to cl 109A of the Legal Profession Regulation 2005, which was attached to the costs agreement.
Further, the invoices themselves bore a notation at the end of each of them in the following terms:
"Your rights in relation to legal costs
The following avenues are available to you if you are not happy with this bill:
● Requesting an itemised bill
● Discussing your concerns with us
● Having our costs assessed
● Applying to set aside our costs agreement.
There may be other avenues available in your State or Territory (such as mediation). For more information about your rights, please read the facts sheet titled "Your Right to Challenge Legal Costs". You can ask us for a copy, or obtain it from your local law society or law institute (or download it from their website)."
That notation was in accordance with cl 111A of the Regulation.
The fact that the Plaintiff did not attempt to take any step towards advancing or resolving her objections to the Defendants' invoices (in particular, did not respond to their requests that she particularise and define her concerns) leads me to infer that she simply chose, at least within the first twelve months after the last of the invoices had been rendered, to let them lie. Enquiry of the Law Society, the Legal Services Commissioner or the Court would readily have answered any questions she might have had about the assessment process. She had retained a new solicitor from the end of June 2012, Mr Gideon Super, whom she nominated to the Defendants to be the recipient of her file. Mr Super could have explained to the Plaintiff, if she wished to pursue it, what would be involved in assessment and what she would need to do.
From all the circumstances I conclude that her failure to apply for assessment within the time limited did not come about through ignorance of the process or of the time limit but through choice. It was a choice not to do anything at all about the invoices from September 2012 until pressure for payment increased. The Plaintiff was not cross-examined on her affidavits but I raised with her in argument that she appeared to have chosen not to do anything about progressing her points of disputation with the Defendants' charges and she accepted that characterisation.
On 24 November 2012 the Plaintiff suffered a fall in which she fractured her right ankle and tore the lateral ligaments to her left ankle. The Plaintiff said from the bar table that she understands the injury to her left ankle was still more serious, involving an undiagnosed fracture. The precise extent of the injuries is not material. Rather, the important fact is what impact they had upon her. She was hospitalised for a few days in late November 2012, during which the right ankle fracture was fixed with a plate and screws. On discharge, she was unable to bear weight on the right ankle for six weeks. She has told the Court, again from the bar table, that in fact she was wheelchair-bound until February 2013, at which time one of the screws in the right ankle was removed. I proceed to assess the effect of her disabilities on the basis that this longer period of immobilisation is the fact.
The Plaintiff's temporary disablement and recuperation does not contribute to explaining or justifying her delay in making an application for assessment of costs. She was evidently well able to communicate by email. She did not need to be mobile to attend to the fee dispute. It does not appear that her period of restricted movement would have inhibited her from making the application for assessment if she had desired to do so.
By early February she was out of her wheelchair. Even after she was prompted by the Defendants' letter of 26 February 2013 (declining to transfer her file until their outstanding fees were paid) she did not apply for assessment nor respond to the solicitors nor engage with them to particularise her complaints, to put them in a position to evaluate those complaints or to discuss them with her.
The Plaintiff tendered a report of a clinical psychologist, concerning her circumstances in late 2010 and in 2011 (Exhibit A). This material does not establish that her state of psychological wellbeing since 4 July 2012 has been compromised in any way relevant to the failure to apply for assessment within time.
The Plaintiff has deposed that she had the care of dependent children at relevant times. An email written by the Plaintiff to an officer of the New South Wales Police on 21 September 2011 records that her older daughter completed her Higher School Certificate in 2011. The Plaintiff has stated from the bar table that her younger daughter was still in school in 2012 and only completed her Higher School Certificate in 2014. The Plaintiff has also referred to her ongoing Family Court proceedings as a matter which occupied her attention during the period in which time expired for her to apply for assessment. But having regard to what would be involved in making the application, none of these additional distractions, responsibilities, activities or personal circumstances of the Plaintiff provides any justification for having allowed the twelve months to go past.
Although the Defendants did not take further steps to recover the debt in the year from February 2013 to February 2014, there is no suggestion in the evidence that this was by agreement with the Plaintiff or that she was lulled by the forbearance. She just accepted and acquiesced in the delay of recovery action. Only the debt collection letter of 5 March 2014 motivated the Plaintiff to make the complaint to the Office of the Legal Services Commissioner which has earlier been referred to. It prompted her also, as I infer from the temporal connection, to apply to this Court on 14 April 2014 for an assessment. Even after the Plaintiff was informed by the Manager, Costs Assessment of the need to apply for extension (by the letter of 11 August 2014) again she did not act until the debt recovery process moved closer, with the service upon her in mid January 2015 of a statement of claim issued out of the Local Court.
The balance of the Defendants' last invoice has now been outstanding for nearly three years. I take into account that the Defendants have not shown that any particular prejudice would be occasioned if the extension of time should be granted, only the inherent prejudice of having the amount of their invoices unresolved three years after issue and for some further time during assessment. Of course recovery of the debt would be deferred further if the extension were granted.
In all of these circumstances, it does not appear to me that it would be just and fair for the application for assessment to be dealt with after the expiry of the twelve month period. Accordingly, the orders of the Court are:
The summons is dismissed.
The Plaintiff is to pay the Defendants' costs of the proceedings.
[3]
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Decision last updated: 29 June 2015