Queensland Law Society

McLaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305

McLaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305

Catchwords

Costs agreements – fair and reasonable – estimate – disclosure under the Legal Profession Act.

Executive summary

Ms M, the applicant, filed an originating application seeking an order that a costs agreement entered into between her and Wiltshire Lawyers, the respondent, be set aside on the basis the agreement was not fair or reasonable. The Court was ultimately satisfied that the agreement was not fair or reasonable and ordered the agreement be set aside.

Background

The applicant engaged a firm of solicitors to represent her in a property dispute in the Family Court of Australia. She became dissatisfied by what she regarded as their excessive fees and sought different representation. The applicant then engaged the respondent who provided her with a disclosure statement and a costs agreement, which she executed. The respondent then acted for her in a mediation and performed other work before she fell out with the respondent over the level of their fees.

The applicant subsequently filed an originating application seeking, inter alia, an order that the costs agreement between the applicant and the respondent be set aside pursuant to s 328(1) of the Legal Profession Act 2007 (Qld). She contended that the costs agreement was not fair or reasonable because:

a)    she was induced to enter into the costs agreement by the misrepresentation of the respondent;[1]

b)    the respondent failed to make any of the disclosures required under the LPA;[2] and

c)     the respondent should have paid for a costs assessment undertaken at the request of the applicant.[3]

Issues

The main issues for consideration by the Court were whether

  1. It was inappropriate for the respondent to charge the applicant for a costs assessment?
  2. The applicant was induced to enter into the costs agreement by a misrepresentation of the respondent?
  3. The respondent failed to make requisite disclosure under the LPA?

Issues considered

Prior to consideration of the issues, the Court emphasised that the broad position of what is ‘fair or reasonable’ under s 328 of the LPA, put simply, that a lawyer is not, in his or her relations with the client, to make a gain at the expense of the client, beyond an amount that is just and fair for professional remuneration that the lawyer is entitled to receive for work done.[4]

With respect to the first issue, the Court considered three clauses in the costs agreement that effectively vested in the respondent a discretion to have its work assessed and to then issue a bill to the applicant in accordance with that assessment. The Court emphasised that the assessment of the work was not something which needed to be done for the purposes of any litigation or other work desired to be done by the applicant,[5] and the clauses had the effect of passing to the client a cost which the client should not have been required to pay.[6] Ultimately, the clauses allowed the solicitor to escape the cost of preparing a bill and to transfer that cost to the client. The Court held that it was a piece of ‘contractual legerdemain’ which placed the solicitor in a position of advantage with respect to the client and should have been bought to the client’s attention.[7]

The Court noted there was no suggestions by the respondent that the clauses, or their effect, were brought to the attention of the applicant. On this point, the respondent submitted that it was sufficient that the client was given the documents in writing, the respondent told the applicant to read them, the documents would be the basis upon which the firm would act, and if the applicant had any questions she should ask the respondent. Ultimately, the Court concluded that there was no evidence the respondent explained or sought to explain the effect of the clauses to the applicant.[8]

In the absence of any explanation to the client and in the absence of any acceptance by the client in light of such an explanation, the Court found the clauses rendered the costs agreement unreasonable.[9]

With respect to the second issue, the Court did not find that the applicant was induced to enter into the costs agreement.[10]

With respect to the third issue, the applicant complained about two of the estimates given by the respondent. The first was an estimate of $1,500 to $10,000 for the preparation and attendance of mediation or settlement, and the second was an estimate of $10,000 to $250,000 for the attendance at first mention / interim hearing to trial. The applicant submitted that the estimate for the mediation was significantly in error and the respondent failed to provide timely notice of a substantial increase to the estimate. The applicant further submitted that the estimate for the first mention / interim hearing to trial tells her nothing of use and does not comply with the LPA.

The Court noted that for the purposes of the LPA, an estimate is a judgment as to the sum which is likely to be incurred for the matter or for a particular step in the matter. It is not a quotation. It is an approximation which is based upon a number of matters which will change according to the type of legal issue involved.[11] The Court did not regard the difference between the mediation estimate and final fee as demonstrating a breach of the requirements of the LPA. It held that some of the work which was done for the mediation would have been work which would have been done in any event for other aspects for the case, therefore, it could not be said the charge was excessive for the mediation.[12] The Court then accepted that, while the respondent did not have much information on which to proceed with the estimate for first mention / interim hearing to trial, it seems the boilerplate nature of the clauses in the costs agreement led to the provision of an estimate which did not provide any guidance to the applicant. It followed that the Court found the respondent did not make disclosures to the extent required by the LPA.[13]

Ultimately, the Court was satisfied that the costs agreement was not fair or reasonable, and therefore ordered the agreement be set aside.[14]

 

Liam O'Shaughnessy

Ethics Clerk

As approved by Grace van Baarle, Manager, Ethics Solicitor, QLS Ethics and Practice Centre



[1] Legal Profession Act 2007 (Qld) s 328(2)(a).

[2] Ibid s 328(2)(c).

[3] Ibid s 328(2)(e).

[4] McClaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305, [25], citing Tyrell v Bank of London (1862) 11 ER 934.

[5] McClaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305, [28].

[6] Ibid [35].

[7] Ibid [38].

[8] Ibid [27].

[9] McClaren v Wiltshire Lawyers Pty Ltd [2019] QSC 305, [39].

[10] Ibid [47].

[11] Ibid [50].

[12] Ibid [58].

[13] Ibid [63].

[14] Ibid [64].