Barrister suing solicitors to recover unpaid fees despite lapse of 12 month period to seek assessment

Ramsay v Gatland [2022] NSWSC 1514.

Perhaps little known to the Bar is that under the Legal Profession Act 2007 (Qld) – like its interstate analogues – provision is made for the briefed (and contracting) barrister, not just to sue for fees – ss 319, 329 – but also to seek an assessment of the fees as costs incurred – ss 326, 327.

Application for and making of assessment, however, in some circumstances, might be argued, at least by a solicitor, on the facts, to preclude the barrister recovering fees. 

Understandably, given the conventional good relationship between the Bar and the solicitors’ profession, such disputes rarely arise.  They did so arise in Ramsay v Gatland, a decision of Schmidt AJ of the Supreme Court of New South Wales, obviously decided in respect of the NSW legislation. 

“Those approaches are consistent with the conclusion I have reached, that the statutory scheme is not intended to have the draconian outcome for which Ms Ramsay and Mr Conolly contended”

Analogous provisions to those under consideration in Ramsay exist in Queensland.  The costs involved in the case were $38,358.48, including interest.  No doubt the costs of the parties, at first instance and on appeal to the Supreme Court, greatly exceeded that.

The court wrote (NSW s 194 being the analogue of Qld s 329;  NSW s 198 being the analogue of Qld s 337):

[1]  Ms Ramsay and Mr Conolly appeal a decision of the Local Court concerning a dispute over unpaid costs which Ms Gatland, a barrister, claimed they were liable to pay to her, they being the partners of the firm A R Conolly & Co which had retained her to act in various matters in which costs agreements had been entered.

[2]  Various alleged legal errors are advanced as to the proper construction of s 73 of the Legal Profession Uniform Law Application Act 2014 (NSW) and the operation of the statutory scheme, which it is claimed precluded the Local Court from making orders in Ms Gatland’s favour in relation to the disputed costs, despite the applications for costs assessment having been made out of time and the costs, as a result, not assessed.

…

[4]  There were eight invoices in respect of which Ms Gatland made applications for her unpaid costs to be assessed under the Application Act and the Legal Profession Uniform Law 2014 (NSW). In the case of three of them, in the Bespoke and Bartlett matters, it was found that her applications had been made out of time. Contrary to the case Ms Ramsay and Mr Conolly advanced, Atkinson LCM took the view that this did not preclude Ms Gatland pursuing her claim for their payment in the Local Court.

[5]  Atkinson LCM did not accept that costs determinations to which s 73 of the Application Act applied had been made in respect of any of the three out of time invoices. In the case of the Bartlett invoice by the Manager, Costs Assessment and in the case of the two Bespoke invoices, by a review panel. Nor that the result of Ms Gatland’s out of times applications was that s 73 prohibited pursuit of the proceedings brought in the Local Court for payment of those invoices.

…

[8]  There was no issue that:

1. Ms Gatland issued one invoice in the Bartlett matter in 2016 and her 2018 application for costs assessment of that invoice was rejected by the Manager, Costs Assessment as being out of time. She did not challenge this rejection of her application;
2. the two invoices which Ms Gatland issued in the Bespoke matter had also been issued more than 12 months before she made her costs assessment application in 2018. But despite this they were accepted by the Manager, Costs Assessment, even though no application to have time extended had been made by Ms Ramsay or Mr Conolly;
3. instead Ms Ramsay and Mr Conolly contended before the costs assessor that the costs could not be assessed, the applications having been made out of time. That depended on the construction of s 198(3) of the Uniform Law. The costs assessor concluded that s 198(3) did not prevent those two invoices being assessed, with the result that the certificate of determination issued assessed the costs claimed under both out of time invoices, as well as five other invoices brought within time;
4. that conclusion was then successfully challenged by Ms Ramsay and Mr Conolly before a review panel. It concluded that the two invoices were out of time and so could not be assessed, but it agreed with the costs assessor’s assessment of the other five invoices;
5. the review panel’s certificate thus reflected its assessment of the costs of the five invoices where Ms Gatland had brought her application within time, the calculation of which the review panel explained in the reasons given, by deducting from the amount the costs assessor had arrived at, the sums assessed in relation to the two out of time invoices;
6. neither Ms Ramsay and Mr Conolly nor Ms Gatland appealed the review panel’s decisions and when Ms Gatland brought her proceedings in relation to the out of time invoices in the Local Court, they did not seek to have those invoices assessed; and
7. Atkinson LCM concluded that in all the circumstances Ms Gatland was entitled to pursue her contractual claim for payment of the three out of time invoices.

…

[38]  Section 73 of the Application Act provides:

A costs determination is binding on all parties and no appeal or other assessment lies in respect of the determination, except as provided by this Part.

…

[84]  Section 194 of the Uniform Law regulates when legal proceedings to recover legal costs may be brought, providing:

194 Restriction on commencing proceedings to recover legal cost

1. A law practice must not commence legal proceedings to recover legal costs from a person unless a bill has been given for the legal costs and the bill complies with the requirements of this Law and the Uniform Rules.
2. A law practice must not commence legal proceedings to recover legal costs from a person who has been given a bill until—(a) where the legal costs are the subject of a costs dispute before the designated local regulatory authority — the authority has closed or resolved the dispute; and(b) at least 30 days after the later of—
   • (i) the date on which the person is given the bill; or
   • (ii) the date on which the person receives an itemised bill following a request made in accordance with section 187.

“Neither the Application Act nor the Uniform Law contemplate that when an application for costs assessment cannot be received, entertained or made because the 12-month limitation period has passed, that a party to a costs agreement who has been provided with legal services is thereby relieved from the contractual obligation to pay for those services”

[85]  There was no suggestion in this case that there was any such costs dispute in relation to the three invoices in issue. Rather, what was disputed on assessment was whether Ms Gatland’s applications for costs assessment had been made within the 12 month limitation period imposed by s 198 of the Uniform Law and in the Local Court, whether the proceedings were available to be pursued, given the proper construction of s 73 of the Application Act.

[86]  There is no conflict between ss 73 and 194, given what they respectively regulate, which also accords with what is provided in s 198(7). It precludes commencement of legal proceedings only if an application for costs assessment has been made and then “until the costs assessment has been completed”. It is relevant that commencement of such proceedings does not depend on a costs determination or certificate having been issued. That reflects that not all decisions which bring an assessment application to an end involve such a determination, including in the case of out of time applications.

[87]  It follows that the proceedings Ms Gatland commenced in the Local Court after the review panel issued its determination and certificate were brought in accordance with requirements of ss 194 and 198.

[88]  That conclusion accords with what was decided in Gilles, where the provisions of predecessor legislative schemes arose for consideration.

[89]  In Gilles, both recovery proceedings and an application for costs assessment had been brought by a law practice. In issue was whether s 331 of the Legal Profession Act 2004 (NSW) or s 192 of the Legal Profession Act 1987 (NSW), applied. Those provisions, like s 194 of the Uniform Law, also precluded a law practice pursuing proceedings for the recovery of costs unless at least 30 days had passed since a bill for those costs had been given to the client.

[90]  In the 1987 Legal Profession Act, however, there was no explicit prohibition upon the commencement of recovery action once 30 days had passed, even if an application for costs assessment had been made and the assessment had not been completed. But s 355(b) of the 2004 Legal Profession Act precluded a law practice from commencing or maintaining any proceedings to recover such legal costs, until the costs assessment had been completed. Section 198(7) of the Uniform Law does not preclude the maintenance of such proceedings if already commenced.

[91]  It was concluded in Gilles v Palmer [2017] NSWCA 320 that in the circumstances it was the provisions of the 1987 Legal Profession Act which applied, with the result that the recovery proceedings brought in the District Court were not precluded.

[92]  There consideration was also given to whether leave to appeal should be given, in circumstances where, if the District Court proceedings were reinstated, recovery of the legal costs could proceed without barrier under s 198(7) of the Uniform Law, even while the application for costs assessment was on foot. Leave to appeal was granted, Barrett JA observing at [45] that the costs assessment process “is, first and foremost, a means of quantifying the amount properly payable to a lawyer.”

[93]  Thus the view taken was that while the 1987 Legal Profession Act did not preclude legal action for the recovery of costs while the cost assessment process was in progress, because the result of both an action for recovery and the assessment process itself was a judgment of the court, in the latter case, a deemed judgment being created by filing of the costs assessor’s certificate, “the appropriate course is likely to be that one process is stayed pending the outcome of the other so that the possibility of inconsistent judgments is avoided”: at [45].

[94]  Barratt JA’s approach in Gilles was consistent with that taken in Branson v Tucker [2012] NSWCA 310 where the 2004 Legal Profession Act also arose to be considered, there in circumstances where another barrister was seeking to recover costs from a solicitor. His Honour explained the purpose of the costs assessment system which the current statutory regime continues, in terms apposite to what is here in issue:

1. the costs assessment process is no more than a means of quantification made available to the billing practitioner and the person billed, which they may resort to it if they chose, the objective being to provide an efficient method of objective quantification by experienced practitioners; to protect those upon whom lawyers impose charges; and to regulate the conduct of lawyers: at [127];
2. if advantage is taken of the procedure, the simple procedural step of filing the costs assessor’s certificate in a court registry will be translated into a deemed judgment debt which will supersede or satisfy the parties’ contractual entitlement, so that there is no longer any possibility of an action in contract to recover the lawyer’s fees: at [128];
3. if there is, for any reason, no quantification by means of the statutory assessment process, the costs can be dealt with in the same way as any other contractual claim: at [129]; and
4. the mere existence of the statutory assessment process does not preclude the deployment of the court’s general jurisdiction in relation to costs. It is only when the statutory mechanism has been put into operation and has resulted in quantification, that the statutory mechanism has a bearing on the determination of the recoverable amount: at [131].

[95]  Those approaches are consistent with the conclusion I have reached, that the statutory scheme is not intended to have the draconian outcome for which Ms Ramsay and Mr Conolly contended.

[96]  Namely, that an application for assessment of legal costs, even when brought out of time so that the costs cannot be assessed in accordance with the statutory regime and then recovered by way of a deemed judgment created by the filing of the costs assessor’s certificate, has the result that the costs also cannot be pursued by way of proceedings brought in the normal way, as s 194 of the Uniform Law provides for.

[97]  Such a conclusion would be inconsistent with the statutory objective of proportionate regulation of the legal profession, depriving practitioners as it would of any payment for the work they had performed. That is not what the legislative scheme contemplates or provides for.

…

“I am thus satisfied that Atkinson LCM was correct in concluding that Ms Gatland was not prevented by s 73 of the Application Act from seeking to recover her unpaid costs under the three disputed out of time invoices in the Local Court”

The evidence

[98]  In evidence is:

1. the three out of time invoices;
2. the 28 November 2018 letter from the Manager, Costs Assessment in relation to the disputed Bartlett invoice, advising Ms Gatland that her application was out of time and thus could not proceed to costs assessment. Further, that it could not be referred to a costs assessor, given the provisions of s 198(4) of the Uniform Law, which did not permit a law practice to seek an extension, with the result that steps would be taken to close the file;
3. the costs assessor’s February 2019 certificate of determination of the two Bespoke invoices, together with the statement of reasons which explained why the costs assessor concluded that the application had been made within time. There is no suggestion in the Local Court or on this appeal, that the costs assessor was correct in those conclusions; and
4. the review panel’s April 2020 certificate of determination and its statement of reasons for having concluded that the application in relation to the disputed invoices had been made outside the time limit imposed by s 198 of the Uniform Law. That certificate thus reflected only the costs of the other five invoices which the review panel agreed had been correctly assessed by the costs assessor. There was no suggestion on this appeal, that the review panel was wrong in its decision.

The statutory regime did not preclude Ms Gatland’s application to the Local Court

[99]  On this evidence, given the statutory scheme I have explained, the case advanced for Ms Ramsay and Mr Conolly that both the letter from the Manager, Costs Assessment refusing to accept the Bartlett application and the review panel’s certificate in relation to the Bespoke application, evidenced a costs determination to which s 73 of the Application Act attaches, cannot be accepted.

[100]  The evidence establishes that the out of time applications Ms Gatland made in relation to the Bespoke invoice and the two Bartlett invoices could neither result in either an assessment of those costs conducted under the statutory regime, or a costs determination to which s 73 of the Application Act applied.

[101]  It also establishes that no costs determination or certificate which evidenced such a determination was brought into existence in relation to the Bespoke invoice. That is because the Manager, Costs Assessment did not have or purport to exercise the statutory function of undertaking a costs assessment, making a costs determination, or issuing a certificate evidencing such a determination.

[102]  In the case of the Bartlett invoices the evidence establishes that the review panel disagreed with the conclusion which the costs assessor reached on the question of whether the application in respect of those invoices had been made within time. The result was that the review panel set aside the costs assessor’s determination and substituted its own. In doing so, because it concluded that the application had been brought out of time, it did not assess those costs in accordance with the statutory regime. The result was that its costs determination and the certificate which evidenced it, was confined to the assessment of the application which Ms Gatland made within time, in respect of the other five Bartlett invoices.

[103]  There was thus also no costs determination in relation to the out of time Bartlett invoices nor any certificate which evidenced such a determination brought into existence, to which s 73 could attach.

[104]  I am thus satisfied that Atkinson LCM was correct in concluding that Ms Gatland was not prevented by s 73 of the Application Act from seeking to recover her unpaid costs under the three disputed out of time invoices in the Local Court. Those proceedings were within the legislative contemplation, given the provisions of ss 194 and 198 of the Uniform Law and not precluded by s 73 of the Application Act.

[105]  Neither the Application Act nor the Uniform Law contemplate that when an application for costs assessment cannot be received, entertained or made because the 12 month limitation period has passed, that a party to a costs agreement who has been provided with legal services is thereby relieved from the contractual obligation to pay for those services.

[106]  Instead, what the statutory regime contemplates in such a case is that the client even then may make an application, out of time, to have those costs assessed. If recovery proceedings have been brought in a court and such leave is sought and given, that may result in a stay of those proceedings while the costs assessment is undertaken. But Ms Ramsay and Mr Conolly did not make such an application and so Ms Gatland was entitled to pursue the Local Court proceedings as she did.

[107]  The legislative scheme permitted such recovery of the unpaid costs to be pursued by Ms Gatland against Ms Ramsay and Mr Conolly.

(emphasis added)