Pascoe Legal - Costs Lawyers

Family Law Practitioners - Recent Decision on costs in Family Law Proceedings noting the distinction of principles between Family Law and other Commercial Law matters in the context of Calderbanks. The case of Roydon & Roydon [2024] FedFamC1A 105 concerned an appeal by the appellant husband against an indemnity costs order made in family law proceedings. The decision usefully states the general principles applicable to costs in family law matters while highlighting the importance of ensuring that offers of compromise are carefully framed to readily enable a comparison to final orders.   On an additional note, the Court stated that in proceedings under the Family Law Act 1975 (Cth) the law relating to costs differs from the usual rules that apply to civil litigation. As the ordinary outcome in family law proceedings is no order for costs, obtaining an outcome equal to or better than an offer is a weighty factor in favour of a “party and party” costs order [103]. The Court also noted at [104] that the Full Court has repeatedly emphasized that an indemnity costs order should only be made in ‘exceptional cases’.   The Court referred to the examples of the conduct required to support an indemnity costs order as set out by Sheppard J in Colgate Palmolive Co and Another v Cussons Pty Ltd. However, at [107] the Court cautioned that those remarks need to be seen in context noting “the proceedings before Sheppard J concerned commercial litigation where, unlike family law proceedings, costs ordinarily follow the event. In family law cases, the usual rule is there are no orders for costs. This practical difference between costs rules for commercial litigation compared to family litigation is particularly important when considering whether a failure to accept an offer is “imprudent”, and thereby justifies an indemnity costs order, rather than a situation where it was not reasonable to have rejected an offer, leading to a party and party costs order.”

The Bell Decision and the "Lack of Uniformity regarding the ability of an Incorporated Legal Practice to Recover Legal Fees if Acting for Itself........" It is no surprise that since the Bell v Pentelow decision was handed down in 2019, there has been a raft of litigation in relation to possible legal firm structures that may not fall foul of the Bell decision by recovering its own legal fees for acting for itself. In the recent decision by the Full Court of the Federal Court, an incorporated legal practice, as part of its submissions, advanced the argument (at paragraph [24]) that the size of the incorporated legal practice (comprising of three directors and three shareholders) distinguishes it from the 'sole director and sole shareholder' incorporated practice and therefore, would not fall foul of the Bell decision. The Full Court of the Federal Court rejected that submission and held (at [24]) that the acceptance of such submission would undermine Bell and would create an artificial distinction based on the size of a legal practice. Accordingly, the Full Court held that the incorporated legal practice could only recover its 'outlays' incurred in the proceedings (such as filing fees etc) and its costs of external counsel. It is important to also note that the High Court has recently granted special leave in Birketu Pty Ltd v Atanaskovic [2024] HCASL 117 which may further assist in clarifying the position with regard to Bell in the future.

What happens to an Associated Third Party Payer's liability to pay legal fees under a costs agreement that is declared 'void' under the LPUL? A decision delivered late last week by the Supreme Court of NSW has provided clarity not only in relation to the ATPP question, but also arguably other terms under a costs agreement. In this case, an Associated Third Party Payer (ATPP) appealed a decision by a Review Board which held that he remained liable for a law practice's 'fair and reasonable' legal costs in excess of $300,000 notwithstanding the costs agreement (which contained the ATPP clause) being 'void' for costs disclosure deficiencies to the client (a company). In this regard, the Court dismissed the Appeal and at [88] determined that the proper construction of the word “void” under the LPUL does not mean that the costs agreement ceases to exist, but only that the legal effect or consequence of the costs agreement is denied for a purpose consistent with Part 4.3 of the LPUL. Part 4.3 purposes being the quantification of legal costs, including the fair and reasonable amount payable, disclosure to the client and how the legal costs are to be quantified. Therefore, this provides some clarity that if there are other terms in a costs agreement that do not relate to the purposes of Part 4.3 above, then those terms may arguably still survive the 'void' costs agreement.

Importance of the Correct Scale with Costs Disclosure With the new financial year in swing, it is an opportune time to ensure your firm’s compliance obligations under the LPUL continue to be met. In particular, with recent case law that has been handed down in WA, and the implementation of a number of new scales as at 1 July 2024, this extends to ensuring every practitioner in your firm is aware (when undertaking costs disclosure) of the correct Scale that applies to not only differing practice areas, but also the correct Scale year. Pascoe Legal now offers a service to consider a firm’s specific practice areas and provide a handy table of the current Scales that apply to the practice’s specific work to ensure the correct Scale is utilised in any costs disclosure. Please contact us if you would like more information on this service.

Written Costs Disclosure Obligations under the LPUL On 26 June 2024, DCJ Cole of the District Court of NSW delivered a decision on written costs disclosure under the LPUL and practitioners' obligations with regard to the same. In this matter, the law practice's costs agreement was found to be 'void' and the legal costs amounting to $115,000 were not required to be paid by the client until an assessment had been undertaken. This is due to the practitioner's reliance upon conversations that had occured with the client, which her Honour found that, if accepted, was still in breach of the requirement under section 174 for costs disclosure to be in writing. Further, there are helpful commments in relation to the objectives of the LPUL (particularly to section 3(d) and the empowerment of clients to make informed choices about legal services and the costs involved), in addition to the positive obligation on a law practice to ensure the client's 'consent and understanding' threshold is met.

A raft of new legal costs determinations take effect from 1 July 2024.   This includes the Legal Profession (Supreme and District Courts) (Contentious Business) Report 2024. The main changes in the new determination are: i)  the hourly rates for all fees earners have increased; ii)  removal of item 38 (claims under the Motor Vehicle (Third Party Insurance) Act 1943) ; iii) removal of item 39 (work performed effecting a settlement under s92(f) Workers’ Compensation and Injury Management Act 1981) iv) item 11 (Motions and originating process) now includes a specific allowance for attendance on a reserved decision v) item 16 (offers of compromise) now includes a specific reference to “Calderbank” offers vi)  in item 12 which relates to proceedings under the Family Provision Act 1972, the limit on attendance at mediation and informal conferences prior to the commencement of proceedings has been removed and replaced with a per hour allowance. The link to the 2024 Scale is below ⬇

What is an 'Itemised Bill'? On 24 June 2024, the Supreme Court delivered a decision that considers the requirements of an itemised bill under the Legal Profession Act 2008 (WA)(LPA). This is relevant for law practices in relation to ensuring compliance with the statutory requirements as it may, inter alia, affect a law practice’s ability to commence recovery proceedings for legal costs.   Although the case concerned the provisions of the LPA, it remains relevant under the Legal Profession Uniform Law (WA) (LPUL). The definition of ‘itemised bill’ under both statutory regimes is largely the same. Under the LPA, an “itemised bill” means a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed under Division 8” while under the LPUL an"itemised bill” means “a bill that specifies in detail how the legal costs are made up in a way so as to allow costs to be assessed”. While the Court noted in this application that it was not concerned with reaching a conclusion in the abstract, as to what a properly ‘itemised bill’ would contain in the circumstances of this case, the Court usefully referred [at 24] to case law and judicial comments on the issue noting that the requirements for an itemised bill is always context specific and that regard must be had to all of the circumstances in determining whether a particular descriptor is sufficient. Those circumstances will include the expected knowledge of the recipient of the bill, including the instructing solicitors. 

Decision delivered yesterday which is a timely reminder to practitioners to ensure compliance with their costs disclosure obligations to clients. While this was a determination made pursuant to the LPA, the LPUL as it applies in WA can be more detrimental in its effect. While the consequences as a result of any lack of costs disclosure under the LPA proceeds down a discretionary path of the Court, the LPUL is more stringent and voids the costs agreement. In this case, her Honour found that there were a number of breaches of the costs disclosure requirements of the LPA, and the effect was to render the costs agreement not fair or reasonable. This included the failure to comply with section 260(1), in particular the disclosure upon which the legal costs will be calculated, including the failure to indicate the applicable Scale to the subject matter and the prospect of recovery of costs. However, it is to be borne in mind that there were other factors which played a part in the Court excercising its discretion to set aside the costs agreement, including: - the vulnerability of the client in a complicated family law dispute; - the lack of explanation on the part of the law practice as to the consequences of entering into the costs agreement (as opposed to the Scale) - lack of information contained in the invoices; - the long intervals between rendering invoices to the client; and - the lack of ongoing updates to the legal costs.

Pascoe Legal is proud to be a sponsor of this upcoming CPD in Bali. With more than 200 attendees already booked in, it is looking to be another great event by Piddington! 🌺 🌴 🦋

Recent case delivered by the Federal Court of Australia where a party liable for party/party costs (the Paying Party) raised as a primary argument that because the party in whose favour costs were ordered (the Receiving Party) had not complied with the main disclosure requirement in s174 of the Legal Profession Uniform Law (NSW) (UL), s178 of the UL was enlivened such that the Receiving Party was not liable to pay its solicitors and any claim by the Receiving Party for its costs contravened the indemnity principle.   Relevantly, the Court noted and commented as follows: “Even if the lawyers did not comply with s174 of the Uniform Law, non-compliance does not have the effect of preventing lawyers from recovering their taxed costs.” (paragraph 5)   “Even if the disclosure obligations were contravened and the costs agreeements are void, that does not mean that there was no liabilty to pay legal costs.” (paragraph 36)   The consequences of s178 meant that the Receiving party was not required to pay the legal costs until they were assessed. It did not mean that the client party to the agreement is not liable for any costs and therefore the party against whom a costs order is made is not liable either (paragraph 40).   The Court adopted the view that matters to do with the circumstances of entering into a costs agreement and making disclosure are matters to be considered in a law practice/client assessment and have no relevance in an ordered costs assessment (paragraphs 38 and 39).   The Court found that the Paying Party was a “non associated third party payer” within the meaning of that term in the UL because the Paying Party was not a client of the law practice in question and, as a result of the costs order made against the Paying Party, was under a legal obligation to the Receiving Party (and not its lawyers) to pay its legal costs. The relevance of this was that s178 specifically provides that if the cost disclosure obligations are contravened, the “client” or an “associated third party payer” is not required to pay the legal costs until they have been assessed.