Cost Law Commentary

Challenges to Practitioner client costs

On 9 November 2012, two decisions were handed down in relation to the rights of a client to challenge a lawyer’s bill of costs.  In the Victorian Supreme Court Garde J delivered judgment in Collection Point Pty Ltd v Cornwalls Lawyers [2012] VSC 492, and in Queensland the Court of Appeal handed down judgment in Challen v Golder Associates Pty Ltd [2012] QCA 307.  Both addressed the time frame in which a client could challenge a lawyer’s bill. Prior to the Collection Point decision, in Victoria a client had 12 months from the date of each bill in which to issue an application for assessment[1].  A client other than a sophisticated client could apply for an extension of time in which to issue an application.

Dromana considered whether s 3.4.37(2) of the Legal Profession Act allowed a review under s 3.4.38, of interim bills which had been given more than 12 months prior to the lodgement of an application for review, where the application itself was filed within 12 months of the final bill.  Wood AsJ found that the section did not allow a review of bills which had been issued more than 12 month prior to the filing of the application.

In NSW and Queensland, a number of District Court decisions considering provisions equivalent to s 3.4.37 were contrary to Dromana.  Collection Point and Challen put the matter to bed, and now an application for review filed within 12 months of a final bill allows review of all interim bills rendered.  This potentially is significantly detrimental to a lawyer, as in a matter which has been conducted over a number of years, a client can wait until 11 months and 29 days until after the matter is concluded to challenge all bills rendered over the entire life of a file.  In particular, Garde J considered the Consumer Protection nature of the legislation, where ambiguities are to be construed liberally in favour of the person to be protected, and the application of the principle that a grant of power to a court should not be construed as subject to a limitation which does not appear in the words of the grant.

Challen rejected Dromana and preferred the approach in Retemu[2] and Turner[3]It also considered the nature of a final bill, rejecting the finding of the primary judge that the final bill is the last in time.  The Court characterised a final bill as the last bill rendered for the legal services for which the law firm was retained.  The terms of the costs agreement help define the retainer.  In the particular matter, the lawyer had not rendered a bill for services rendered during the two months before the client terminated the retainer.  More than 12 months had elapsed without this final bill being delivered, and in those circumstances, the Court was prepared to find that the last bill was the final bill.

Challen is also of interest in that it considered what constitutes an “itemised bill”.  The Court found that relevant factors in consideration of whether the bills were sufficiently itemised were:

  • That the client had an in-house counsel who was generally the person liaising with the law firm
  • The level of detail in time ledgers annexed to the bills.
  • The limited number of objections taken to the bills, and the lack of explanation in affidavit material about the reasons the client was seeking more detailed bills.

[1] Dromana Estate Ltd v Wilmoth Field & Warne [2010] VSC 308

[2] Retemu Pty Ltd v Ryan (NSW District Court, Coorey DCJ, 4300/08 and 4301/08, 16/4/10, unreported)

[3] Turner v Mitchells Solicitors [2011] QDC 61