Costly business … Bill me properly … In and out of time … Just and fair … Better late than never … Clients drag itemised bills out of personal injury law shop … Opaqueness of billing … Precious details in small print … Delay in seeking cost assessments not fatal … Kate Lilly on the case
THE NSW Supreme Court has compelled Brydens Lawyers to provide itemised bills to two former clients – several years after the fact.
Robert Mackowiak and Anne Bickhoff came to Brydens separately, after suffering workplace injuries.
Once the proceedings concluded, both plaintiffs were unpleasantly surprised by the firm’s take-out.
Justice Peter Garling has ordered Brydens to provide an itemised bill of costs to each plaintiff within 42 days.
Although both applications fell outside the 12-month statutory time period, HH found an extension could be granted where it was “just and fair” to do so.
Robert Mackowiak
Brydens commenced proceedings on Mackowiak’s behalf in July 2009. The following year, Mackowaik attended a mediation, during which Brydens recommended that he accept a settlement of $230,000.
The following conversation took place:
In August, Mackowaik received a tax invoice from Brydens, which included a general description of the legal work. The final sum of costs deducted was $71,249.24. The invoice informed Mackowaik of his right to have the costs assessed, however this appeared in “much smaller print” beneath the signature block, and Mackowaik didn’t read it.
Accordingly, the client did not become aware until September 2012 of his right to have the costs assessed. Around this time, he retained Geoffrey Adelstein of Diamond Conway Solicitors and instructed him to obtain his file from Brydens.
Bryden complied – but certain documents, including the costs disclosure and cost agreement, were found to be missing.
In July 2013, Adelstein informed Brydens that he would be commencing proceedings if the documents didn’t turn-up. The firm responded the following day:
“This is all becoming very tiresome.
You and your client know that your client had 12 months from the date of the tax invoice in which to request an itemised bill of costs. Your client chose not to. That time has now lapsed, and in the absence of a court order, there is no legal obligation to provide same now …
As to the question of costs, it is indeed a novel suggestion that I would have to pay costs of any application that your client may bring. It is your client who chose to allow time to lapse. It is your client that will be seeking the indulgence of the court to extend time by a period of about 2 years.
Having prosecuted an application or two for an extension of time on behalf of my clients, I am aware that the courts generally will order the party seeking the extension of time, successful or not, to pay the costs of the application. If I understand it correctly, what you are saying is that unless I agree to provide an itemised bill of costs, in circumstances where I have no legal obligation to do so, and your client seeks the indulgence of the court to extend time to require provision of same, then I will have to pay the costs of that application?
Please desist in communicating with me or commence proceedings.”
Anne Bickoff
Brydens brought a successful workers’ comp claim on Bickhoff’s behalf in August 2008. During the proceedings, Brydens informed her that she might also have a common law claim. At the settlement in June 2010, Bickhoff was informed that Brydens “could not give her an estimate of her costs at that stage, but that it would do so shortly”.
In August, a lump sum of $82,000 was claimed for Brydens’ costs, as well as a list of disbursements totalling $62,286.69. An endorsement appeared, in small print, on the final page of the tax invoice. No one at Brydens drew it to Bickhoff’s attention when she signed the document and provided her bank details.
In her affidavit, Bickhoff said:
” … the legal costs and disbursements seemed very high to me. Nonetheless, I accepted that the defendants were experts in their field and I believed at that time that that must be a reasonable amount for their fees and so I did not challenge it …”
Bickhoff didn’t realise she could challenge the bill until March 2012. Her new solicitor requested an itemised bill the following month. Brydens initially agreed to the request, but seemed to encounter significant delays. In November, Brydens wrote to Adelstein, who was now acting for Bickhoff. The letter read:
“It seems to us that the legislation clearly provides that your client is out of time for the purpose of demanding an itemised bill, and is out of time with regard to the lodgement of any application for an assessment of costs.
If you say we are wrong in that regard, then we would be obliged to hear from you, and perhaps you could bring to our attention the relevant provisions of the legislation upon which you rely and any precedent decisions that assists …”
In February 2013, Brydens provided Adelstein with a copy of Bickhoff’s costs agreement, which was undated and witnessed by a solicitor whose signature was undecipherable. Further correspondence ensued about whether Bickhoff was entitled to a costs assessment. Brydens maintained she was out of time.
Mackowiak and Bickhoff filed applications in the Supreme Court on February 28, 2014 – well out of time. Both sought an assessment of costs and a declaration setting aside their costs agreements as being not fair, just or reasonable under s.328 of the Legal Profession Act, 2004.
Argument centred on three provisions of the LPA 2004 (now repealed):
The plaintiffs submitted the requirement in s.350 (that an application “must be made within 12 months”) was “merely directory and not obligatory”.
Secondly, they pointed that s.332A had previously been characterised “a bare right to information as to the work undertaken by a solicitor, even if that information would not give rise to any remedy” (per McCallum J in Dale v Firth).
Finally, it was argued that s.728 gave the court a discretionary power to order a bill, regardless of whether a request had been made under s.332A, and regardless of whether the 12-month time period had expired.
Brydens suggested that s.728 should be considered alongside the restrictions in ss.332A and 350. Unsurprisingly, they took issue with the characterisation of s.350 as “merely directory”.
Instead, the firm reasoned it would not be just and fair to permit an assessment out of time, as this would be “unduly onerous” on the solicitor.
“To [extend time] would have the effect of imposing the very injustice and unfairness on the legal practitioner which the time limit and the test for its enlargement seek to avoid. If the solicitor were required to provide an itemised bill in anticipation of the court declaring it ‘fair and just’ the practical effect of the requirement and limitation would be destroyed.”
In the Supreme Court, Garling was not particularly amenable this argument.
First, he observed that s.728 was “a stand-alone power which provides this court with the discretion to order a lawyer to give their client a bill of costs in respect of any legal services provided”.
Turning to ss.332A and 350, HH found:
“If the application is made after the expiry of the 12 month period, the costs assessment process may be dealt with by the costs assessor, provided that the applicant is not a sophisticated client and provided that this court, having regard to the delay and the reasons for the delay, determines that it is just and fair that the application be dealt with.
It is not insignificant that the legislation provides for this court to determine it is fair and just to proceed upon application by the costs assessor.”
Garling accepted that neither of the plaintiffs had felt they were in a position to question Brydens’ costs at the time the invoices were provided. HH went on to observe that a lump sum tax invoice “is by its nature opaque”.
He held:
“It is almost impossible for a lay person, unskilled in the area of legal costs and inexperienced as to what is or is not a fair charge, to realise that the sum charged by the solicitors is, or is not, fair and reasonable. Adding the notice at the bottom of the tax invoice in a smaller font, and in a way which is less than easily readable and complex, does not, in my opinion, constitute adequately notifying the client of their rights and entitlements.”
Garling acknowledged there had been some delay on the part of the plaintiffs in bringing their applications for a costs assessment. Nonetheless, he found that “such a delay is not an unreasonable one in the circumstances”.
Furthermore:
“To put something into ‘fine print’ is to minimize its significance and to invite the client to ignore it. That is not sufficient, in my opinion, to put a client on notice of their rights under the Act in such a way that any later application ought be viewed unfavourably on the part of delay occasioned by a client not coming to know of their rights or entitlements to challenge a bill.”
HH concluded the delay was insufficient to preclude the court from exercising its discretion. Finally he observed:
“There is a public interest of the kind I have previously discussed in allowing the assessment process to take place, and in requiring the defendants to provide an itemised bill.”
Brydens were ordered to pay the plaintiffs’ costs.