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Cost Law Commentary

The Legal Profession Uniform Law: Part 4 - Cost Disputes

This is part 4  in a series reviewing the Legal Profession Uniform Law (LPUL), which is expected to take effect in Victoria and New South Wales on 1 July 2015.  The first part considers cost agreements.  The second part deals with disclosure.  The third part deals with bills of costs.

  • Cost Assessments

Where there has been a cost dispute to the LSC, a party may only subsequently make an application for a cost assessment if the LSC cannot resolve the costs dispute, or the LSC arranges for a costs assessment.[1]

The period for an application for assessment is now 12 months both for assessments by a client and by a law practice in respect of the fees of another law practice (i.e. solicitors seeking a review of counsel’s fees)[2].

An application for an extension of time may be made and is now to be dealt with by the costs assessor (i.e. taxing officer). An extension will be granted if it is just and fair, having regard to the delay and reasons for the delay.[3]

Section 97 of the Act provides that, for the purposes of s 205 (UL), a person may appeal from the decision made by the Cost Court.

Section 199(2) provides that a cost assessor must

    1. determine whether or not a valid costs agreement exists; and
    2.              determine whether legal costs are fair and reasonable and, to the extent they are not fair and reasonable, determine the amount of legal costs (if any) that are to payable.

S 201 provides that the cost assessor must give reasons, but may determine the form of the reasons. It is important to understand that the Uniform Law applies in jurisdictions where cost assessors deal with assessments on the papers, and where appeals may be limited to questions of law. In those jurisdictions, there is a considerable body of law as to the adequacy of written reasons. This is likely to be less relevant in the Victorian context where oral reasons can be given during the assessment.

The Law Practice will pay the costs of the assessment if there has been failure to make disclosure, or make disclosure in the manner required, or the costs are reduced by more than 15%, unless the costs assessor considers this is not fair and reasonable in the circumstances.[4]

  • Complaints to the Legal Services Commissioner

Section 291 gives the Commissioner jurisdiction to deal with cost disputes where the total legal costs don’t exceed $100,000 in respect of any one matter or, where the total bill equals or is more than $100,000 in respect of any one matter but the total amount in dispute is less than $10,000. The Commissioner may make a binding determination about costs where the total amount still in dispute is less than $10,000.

A complaint to the Commission must be made within 60 days after the legal costs became payable or within 30 days after delivery of an itemised bill. An extension of time can be granted if the complaint was made within four months of the 60 day/30 day period. An extension won’t be granted if the law practice has commenced proceedings in respect of the legal costs.

Section 284 (UL) allows the Commissioner to arrange an assessment of costs at the Cost Court. This application may be made outside any applicable time limit from making applications for cost assessments.

S 99 of the Act allows a party to a complaint that involves the cost dispute to apply to VCAT to determine the cost dispute if the total amount of legal costs is not more than $25,000 and parties have been informed by the Commissioner of the right to apply to VCAT under this section. Such an application must be made within 60 days of the Commissioner informing the parties of their rights. VCAT may make an order specifying the amount payable which cannot be more than $25,000. It can also make orders

  • Cautioning the practitioner,
  • requiring an apology,
  • requiring the lawyer to redo the work at no cost or waive or reduce the fees for the work,
  • requiring the lawyer to undertake training, education, counselling
  • requiring the lawyer be supervised
  • make a compensation order.

The test is what is fair and reasonable in all the circumstances.

Costs which have been the subject of a cost dispute which has been determined by VCAT may not be the subject of a cost assessment except to the extent that the regulatory authority arranges for a cost assessment under section 284.

 

[1] S 197

[2] S 198(3)

[3] S 197(4)

[4] S 204(2)

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