Last week we looked at Cost Provisions in the Legal Profession Act (2004) and the Legal Profession Uniform Law (2015). Where solicitors seek to use the time limits as a defence, judges in the Supreme Court and District Court of NSW and Victoria invariably ignore the time limits and find in favour of the clients. Every matter can be a potential cost dispute regardless of when the matter concluded.
The following cases provide some examples where prescribed time limits have been open to interpretation.
Le -V- Brydens Lawyers Pty Ltd (2017) NSWSC 180 & Le -V- Brydens Lawyers Pty Ltd (no. 2) (2017) NSWSC 445
The Plaintiff Le, was seriously injured at work in 2005. Mr Le instructed Brydens in 2006 and they commenced proceedings in the District Court in 2007.
The matter was heard by Levy DCJ who gave judgement in favour of the Plaintiff. The Defendants appealed but ultimately the matter settled for $650,000
inclusive of costs in June 2013. In October 2014 a bill in assessable form was requested by the Plaintiff (client). The solicitor refused as the 12-month
time period had expired.
The matter was heard in the Supreme Court to resolve the issue as to whether the solicitor was obliged to provide an itemised bill out of time.
Her Honour Schmidt J found in favour of the Plaintiff, Le, concluding that the combined sections of the LPA (2204), viz (ss 323A, 350 & 728) gave the
Supreme Court the authority to order the solicitor to provide the itemised bill. Her Honour then ordered Brydens to pay the costs on an indemnity basis.
Lukic -V- DeLuca Leonard (2017) NSWSC 814, Lukic -V- DeLuca Leonard (no. 2) (2017) NSWSC 814 & Lukic -V- DeLuca Leonard (2017) (no. 3) NSWSC 1074
The solicitor, De Luca – Leonard, received instructions from Lukic in May 2010 to pursue a worker’s compensation case resulting from alleged bullying in
the workplace. A costs agreement was signed on 14th March 2011. The client Lukic was assessed at 60% WPI entitling her to pursue a claim for work injury
damages. At a formal mediation on 2 April 2014 the matter was successfully settled for $300,000 inclusive of costs and exclusive of payments already
made. The solicitor rendered a lump sum bill of $74,000 for costs and disbursements on 22nd April 2014.
In 2016, the client instructed new solicitors, alleged an overpayment of $55,025, and demanded the recovery and an itemised bill of costs. The solicitor
did not provide an itemised bill as the 12-month period had expired. His Honour Mr Justice Harrison considered ss332A and s728 LPA (2004) in determining
whether the solicitor should present an itemised bill of costs notwithstanding the time factors. The Court ordered that the solicitor was to provide
the client a bill of costs in itemised form of costs and disbursements.
The Court considered the defence raised by the solicitor to have been a “hopeless case”, (page 6 of the judgement) and his Honour went on further to say,
“I am not prepared to agree with Counsel’s submission that Ms De Luca-Leonard’s defence of the claim was conducted in good faith.” In short, the court
considered that the solicitor had no prospect of success and the solicitor was ordered to pay costs on an indemnity basis.
Bruce-V-Magee trading as Armstrong Legal (2017) NSWSC 1687
The Plaintiff client in these proceedings sought to have bills of costs issued by the defendant solicitor assessed out of time. After the conclusion of
the Plaintiff’s case and before going into evidence the solicitor conceded to the relief sought but resisted an order for costs. The Court ordered
the defendant solicitor was required to pay two-thirds of the client Plaintiff’s costs. Her Honour McCallum J in her reasoning indicated that additional
costs could have been prevented if the solicitor had consented to the assessment of the bills from the outset. Essentially, this signals that solicitors
should disregard the time period for assessment and have the costs assessed.
Victorian Legal Services Commissioner – 19th December 2016 (Commissioner Determination, inadequate Costs Disclosure)
The Victorian Legal Services Commissioner dealt with this matter were the issue was whether the lawyer was able to refuse to provide an itemised bill which
was requested outside the 30-day time limits prescribed by s.187(2) (LPUL).
The commissioner stated, “At my request, an Itemised Bill has since been provided to the complainant by the Respondent’s lawyer.” The fact is of course,
that pursuant to s.284 UPUL 2014, if the commissioner requests that the bill be provided, it must be provided.
Bennie -V-Grace (2018) NSWDC 229
The defendant solicitor Mr Grace provided legal services to the Plaintiff, Mr Bennie, from 1999 to 2009 when he represented Bennie in a dispute with the
State of NSW. The Plaintiff was a Police Officer who informed on another police officer who was engaged in criminal activities. In the 2009 proceedings
the Plaintiff was awarded $2,236,408.00 plus costs from Hulme J. Mr Grace received costs and disbursements and Mr Bennie sought to have the costs assessed.
In 2015 the costs and disbursements were assessed to be $1,534,234.59 and Mr Grace was required to repay $181,141.00. In 2018, the NSW District Court
was called upon to resolve the issue as to whether Mr Bennie was out of time pursuant to section 63 Limitation Act NSW (1969). The Court held
that the solicitors defence should fail and Mr Grace was ordered to repay $187,452.34 plus interest plus costs.
The legislative provisions and the case law suggest that whilst time limits exist in relation to Bills of Costs and Costs Assessments, the lawyer is still
at risk of having an adverse order for indemnity costs made.
The most significant strategy to protect a law practice from such exposure is with insurance. Costs Cover provides an unlimited retro-cover option which
gives solicitors and barristers the ability to outsource the defence and costs of responding to an assessment, especially those which are made out
In the event of an adverse determination, the Costs Cover policy will respond to ease the financial burden of repaying those professional fees already
received and the legal costs incurred in defending the assessment process.