Long form Case Note - Challen v Golder Associates Pty Ltd [2012] QCA 307

The recent decision of the Queensland Court of Appeal in Challen v Golder Associates Pty Ltd [2012] QCA 307 has confirmed that clients have 12 months from the date of the final bill in which to seek taxation. Justice Mullins, with McMurdo P and Fraser JA agreeing, approved the approach taken by McGill DCJ in Turner v Mitchells Solicitors [2011] QDC 61 where McGill considered whether an application under s.333 of the Legal Profession Act 2007 (Qld) for the assessment of costs under an interim bill at the time of the final bill is subject to the 12 month time restriction generally imposed by s.335.

Facts

The appellant was a solicitor and was formerly retained by the respondent. The retainer was in writing and comprised a client agreement dated 19 May 2006. The respondent was a 'sophisticated client' as defined by s.300 [5].

Between 5 July 2006 and 9 December 2010 the appellant delivered 27 bills of costs to the respondent. All bills were paid in full except for the bill dated 14 October 2010 and the two bills dated 9 December 2010. Each bill had attached to it a time ledger showing the nature of the work undertaken, the identity of the person who did the work, the charge out rate for that person and the number of units for that item of work [6-7].

Issues

  • Is s.333(2) subject to the time restriction imposed by s.335(5)?
  • Which is the final bill?
  • Should itemisation of the bills have been ordered?

Legislation

The definition of "itemised bill" is set out in s.300 of the Act:
"itemised bill means a bill stating, in detail, how legal costs are made up in a way that would allow the legal costs to be assessed under division 7."

Section 333 of the Act provides:

"Interim bills
(1) A law practice may give a person an interim bill covering part only of the legal services the law practice was retained to provide.
(2) Legal costs that are the subject of an interim bill may be assessed under division 7, either at the time of the interim bill or at the time of the final bill, whether or not the interim bill has previously been assessed or paid."

Section 335 of the Act provides, so far as is relevant:

“(1) A client may apply for an assessment of the whole or any part of legal costs.
......
(5) A costs application by a client or a third party payer must be made within 12 months after –
(a) the bill was given, or the request for payment was made to the client or third party payer; or
(b) the costs were paid if neither a bill was given nor a request made.”

Section 335(6) allows for a costs assessor or court to decide to deal with a costs application made out of time after considering the reasons for delay. An exception to this is a sophisticated client as defined in s.300.

Is s.333(2) subject to the time restriction imposed by s.335(5)?

Both parties made submissions by reference to Turner v Mitchells Solicitors [2011] QDC and the two conflicting decisions that were analysed in Turner: Retemu Pty Ltd v Ryan (NSW District Court, Coorey DCJ, 4300/08 and 4301/08, 16/4/10, unreported) and Dromana Estate Ltd v Wilmoth Field Warne [201] VSC 308 [25].

Retemu was concerned with s.334 of the Legal Profession Act 2004 (NSW) which is the equivalent provision to s. 333 of the LPAQ. Coorey DCJ concluded that s 334 of the New South Wales Act allows all interim bills to be assessed either at the time of the interim bill or at the time of the final bill. All that was necessary was that the application for an assessment be made within the time limit as determined by reference to the final bill [28].

A different approach was taken in Dromana, which was concerned with s 3.4.37 (equivalent to s.333 LPAQ) and 3.4.38(5) (equivalent to s.335(5) LPAQ) of the Legal Profession Act 2004 (Vic). Wood J held that the time limits in s 3.4.38(5) applied to an interim bill and a final bill, and that the section imposing time limits was not subject to s 3.4.37 [32].

Mullins J was not persuaded by the approach in Dromana. In His Honour’s view, if the approach in Dromana were followed, there would be no opportunity for the assessment of an interim bill at the time of the final bill, unless the final bill was given within 12 months of the interim bill.

Mullins J agreed with the primary judge’s conclusion that s.333(2) LPAQ allows an additional time period for the assessment of an interim bill which is within 12 months after the final bill was given. His Honour’s conclusion is consistent with the reasoning in Retemu and that of McGill DCJ in Turner:

Section 332(2) means what it says: if there is an interim bill, then the legal costs which it covers may be assessed at the time of the interim bill or at the time of the final bill. The client may apply under s.335 for an assessment at either time, and will be subject to the applicable limitation at either time. An application in respect of the legal costs covered only by the interim bill will have to be made within 12 months after that bill was given or request for payment made or costs were paid, but if the legal costs are to be assessed at the time of the final bill, then the application must be made within 12 months of the final bill. It follows that if an application is made within 12 months of the final bill, the legal cost which may be assessed under s 335(1) include all of the legal costs subject to any interim bill which was part only of the legal services the law practice was retained to provide, even though those costs are not included in the “final bill” [at 27)].

What is the final bill?

Mullins J noted that there is no definition in the Act of ‘final bill’, however the expression is used in contrast to ‘interim bill’ which is effectively defined in s.333(1) as a bill for part of the legal services that the law practice was retained to provide [44]. That suggested to His Honour that the final bill must be the last bill for the legal services that the law practice was retained to provide.

His Honour’s conclusion on the meaning of “final bill” differs from the conclusion of the primary judge that the final bill is merely the last in time. Following the interpretation of the primary judge would lead to the unsatisfactory consequence that over the course of the retainer the delivery of another bill would give rise to a new right of assessment of an interim bill under s.333(2).

Although Mullins J arrived at a different conclusion on the meaning of “final bill”, His Honour stated that it does not mean that the primary judge was wrong in concluding that the bills of 9 December 2010 were the final bills.

Should itemisation of the bills have been ordered?

Mullins J did not exercise the discretion under r 743C to order itemisation of the bills and set aside the order made to that effect for two reasons:

  • The extensive information that the respondent already had at its disposal from the detailed time ledgers that accompanied the bills; and
  • The appellant’s affidavit which dealt with the hardship that providing the itemisation of all bills would have.

Comment

The decision adds to the range of authorities which are ironing out some of the inconsistencies in the Legal Profession Act 2007 (Qld). It appears that the Queensland position regarding the interpretation of s 333 and 335 is now settled. The definition of ‘final bill’ is also clearer. We have Mullins J’s definition that final bill must be the last bill for the legal services that the law practice was retained to provide, but what if there is no retainer? If there is no Costs Agreement or if the agreement is set aside what is the ‘final bill’?

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