Schedule 3—Costs disclosure and adjudication
Part 1—Preliminary
In this Schedule—
adjudication means an adjudication of legal costs under Part 7;
barrister means a legal practitioner who practises the profession of the law
solely as a barrister;
business day means a day other than a Saturday, a Sunday or a public holiday;
client includes a person to whom or for whom legal services are provided;
conditional costs agreement means a costs agreement that provides that the
payment of some or all of the legal costs is conditional on the successful
outcome of the matter to which those costs relate, as referred to in
clause 25, but does not include a costs agreement to the extent to which
clause 27(1) applies;
costs agreement means an agreement about the payment of legal costs;
itemised bill means a bill that specifies in detail how the legal costs are
made up;
law practice includes—
(a) an
Australian-registered foreign lawyer who practises foreign law on the
foreign lawyer's own account; and
(b) a
partnership consisting of 1 or more Australian-registered
foreign lawyers or 1 or more Australian legal practitioners, or
both;
legal costs means amounts that a person has been or may be charged by, or is
or may become liable to pay, a law practice for the provision of
legal services including disbursements but not including interest;
legal services means work done, or business transacted, in the ordinary course
of practising the profession of the law;
litigious matter means a matter that involves, or is likely to involve, the
issue or defence of proceedings in a court or tribunal;
Note—
A matter is a litigious matter when proceedings are initiated or at any stage
when proceedings are likely.
lump sum bill means a bill that describes the legal services to which it
relates and specifies the total amount of the legal costs;
public authority means an authority or body (whether a body corporate or not)
established or incorporated for a public purpose by a law of a jurisdiction or
of the Commonwealth, and includes a body corporate incorporated under a law of
a jurisdiction or of the Commonwealth in which a jurisdiction or the
Commonwealth has a controlling interest;
scale of costs means a scale of costs of a court or tribunal of this State;
sophisticated client means a client to whom, because of clause 13(1)(c)
or (d), disclosure under clause 10 or 11(1) is or was not required;
third party payer —see clause 2;
uplift fee means additional legal costs (excluding disbursements) payable
under a costs agreement on the successful outcome of the matter to which the
agreement relates.
2—Terms relating to third party payers
(1) For the purposes
of this Schedule—
(a) a
person is a third party payer , in relation to a client of a law practice, if
the person is not the client and—
(i)
is under a legal obligation to pay all or any part of the
legal costs for legal services provided to the client; or
(ii)
being under that obligation, has already paid all or a
part of those legal costs; and
(b) a
third party payer is an associated third party payer if the legal obligation
referred to in paragraph (a) is owed to the law practice, whether or not
it is also owed to the client or another person; and
(c) a
third party payer is a non-associated third party payer if the legal
obligation referred to in paragraph (a) is owed to the client or another
person but not the law practice.
(2) The legal
obligation referred to in subclause (1) can arise by or under contract or
legislation or otherwise.
(3) A law practice
that retains another law practice on behalf of a client is not on that account
a third party payer in relation to that client.
Part 2—Application of Schedule
3—Application of Schedule—first instructions rule
This Schedule applies to a matter if the client first instructs the law
practice in relation to the matter in this State.
4—Schedule also applies by agreement or at client's election
(1) This Schedule
applies to a matter if—
(a)
either—
(i)
this Schedule does not currently apply to the matter; or
(ii)
it is not possible to determine the jurisdiction in which
the client first instructs the law practice in relation to the matter; and
(b)
either—
(i)
the legal services are or will be provided wholly or
primarily in this State; or
(ii)
the matter has a substantial connection with this State,
or both; and
(i)
the client accepts, in writing or by other conduct, a
written offer to enter into an agreement under subclause (2)(a) in
respect of the matter; or
(ii)
the client gives a notification under
sublause (2)(b) in respect of the matter.
(2) For the purposes
of subclause (1)(c), the client may—
(a)
accept, in writing or by other conduct, a written offer that complies with
subclause (3) to enter into an agreement with the law practice that this
Schedule is to apply to the matter; or
(b)
notify the law practice in writing that the client requires this Schedule to
apply to the matter.
(3) An offer referred
to in subclause (2)(a) must clearly state—
(a) that
it is an offer to enter into an agreement that this Schedule is to apply to
the matter; and
(b) that
the client may accept it in writing or by other conduct; and
(c) the
type of conduct that will constitute acceptance.
(4) A notification has
no effect for the purposes of subclause (2)(b) if it is given after the
period of 28 days after the law practice discloses to the client (under a
corresponding law) information about the client's right to make a notification
of that kind, but nothing in this subclause prevents an agreement referred to
in subclause (2)(a) from coming into effect at any time.
(1) This clause
applies if this Schedule applies to a matter by the operation of clause 3
or 4.
(2) This Schedule
ceases to apply to the matter if—
(a)
either—
(i)
the legal services are or will be provided wholly or
primarily in another jurisdiction; or
(ii)
the matter has a substantial connection with another
jurisdiction,
or both; and
(b)
either—
(i)
the client enters, under the corresponding law of the
other jurisdiction, into an agreement with the law practice that the
corresponding provisions of the corresponding law apply to the matter; or
(ii)
the client notifies, under the corresponding law of the
other jurisdiction (and within the time allowed by the corresponding law), the
law practice in writing that the client requires the corresponding provisions
of the corresponding law to apply to the matter.
(3) Nothing in this
clause prevents the application of this Schedule to the matter by means of a
later agreement or notification under clause 4.
6—First instructions to law practice
A client first instructs a law practice in relation to a matter in a
particular jurisdiction if the law practice first receives instructions from
or on behalf of the client in relation to the matter in that jurisdiction,
whether in person or by post, telephone, fax, email or other form of
communication.
7—Substantial connection of matter with State
The regulations may prescribe the circumstances in which, or the rules to be
used to determine whether, a matter has or does not have a substantial
connection with this State for the purposes of this Schedule.
8—Application of different laws
(1) This clause
applies if this Schedule applies to a matter for a period and a
corresponding law applies for another period.
(2) If this Schedule
applied to a matter for a period and a corresponding law applies to the matter
afterwards, this Schedule continues to apply in respect of legal costs (if
any) incurred while this Schedule applied to the matter.
(3) If a
corresponding law applied to a matter for a period and this Schedule applies
to the matter afterwards, this Schedule does not apply in respect of
legal costs (if any) incurred while the corresponding law applied to the
matter, so long as the corresponding law continues to apply in respect of
those costs.
(a) the
client may enter into a written agreement with the law practice that the
adjudication of costs provisions of this Schedule are to apply in respect of
all legal costs incurred in relation to the matter, and Part 7
accordingly applies in respect of those legal costs; or
(b) if
the client enters into a written agreement with the law practice that the
adjudication of costs provisions of a corresponding law are to apply in
respect of all legal costs incurred in relation to the matter, Part 7
accordingly does not apply in respect of those legal costs.
(5) A written
agreement referred to in subclause (4) need not be signed by the client
but, in that case, the client's acceptance must be communicated to the
law practice by fax, email or some other written form.
(6) If a
corresponding law applied to a matter for a period and this Schedule applies
to the matter afterwards, this Schedule does not require disclosure of any
matters to the extent that they have already been disclosed under a
corresponding law.
(7) This clause has
effect despite any other provisions of this Schedule.
Part 3—Costs disclosure
9—Disclosure not required by barrister
Disclosure to a client under this Part is not required to be made by a
barrister engaged for the purposes of the client's matter.
10—Disclosure of costs to clients
(1) A law practice
must disclose to a client in accordance with this Part—
(a) the
basis on which legal costs will be calculated, including whether a scale of
costs, or a recommendation as to the calculation of barristers' costs, applies
to any of the legal costs; and
(b) if
the law practice will not be calculating legal costs in accordance with an
applicable scale of costs—that another law practice may calculate
legal costs in accordance with the scale; and
(i)
negotiate a costs agreement with the law practice; and
(ii)
receive a bill from the law practice; and
(iii)
request an itemised bill after receipt of a lump sum
bill; and
(iv)
be notified under clause 17 of any substantial
change to the matters disclosed under this clause; and
(d) an
estimate of the total legal costs if reasonably practicable or, if that is not
reasonably practicable, a range of estimates of the total legal costs and an
explanation of the major variables that will affect the calculation of those
costs; and
(e)
details of the intervals (if any) at which the client will be billed; and
(f) the
rate of interest (if any) that the law practice charges on overdue
legal costs, whether that rate is a specific rate of interest or is a
benchmark rate of interest (as referred to in subclause (2)); and
(g) if
the matter is a litigious matter, an estimate of—
(i)
the range of costs that may be recovered if the client is
successful in the litigation; and
(ii)
the range of costs the client may be ordered to pay if
the client is unsuccessful; and
(h) the
client's right to progress reports in accordance with clause 19; and
(i)
details of the person whom the client may contact to
discuss the legal costs; and
(j) the
following avenues that are open to the client in the event of a dispute in
relation to legal costs:
(i)
raising the matter with the practice;
(ii)
adjudication of costs under Part 7;
(iii)
the setting aside of a costs agreement under
clause 30;
(iv)
if the client believes there has been
overcharging—making a complaint to the Commissioner; and
(k) any
time limits that apply to the taking of any action referred to in
paragraph (j); and
(l) that
the law of this State applies to legal costs in relation to the matter; and
(m)
information about the client's right—
(i)
to accept under a corresponding law a written offer to
enter into an agreement with the law practice that the corresponding
provisions of the corresponding law apply to the matter; or
(ii)
to notify under a corresponding law (and within the time
allowed by the corresponding law) the law practice in writing that the client
requires the corresponding provisions of the corresponding law to apply to the
matter.
(2) For the purposes
of subclause (1)(f), a benchmark rate of interest is a rate of interest
for the time being equal to or calculated by reference to a rate of interest
that is specified or determined from time to time by an ADI or another body or
organisation, or by or under other legislation, and that is publicly
available.
(3) The regulations
may make provision for or with respect to the use of benchmark rates of
interest, and in particular for or with respect to permitting, regulating or
preventing the use of particular benchmark rates or particular kinds of
benchmark rates.
(4) For the purposes
of subclause (1)(g), the disclosure must include—
(a) a
statement that an order by a court for the payment of costs in favour of the
client will not necessarily cover the whole of the client's legal costs; and
(b) if
applicable, a statement that disbursements may be payable by the client even
if the client enters a conditional costs agreement.
(5) A law practice is
taken to have complied with the requirement to disclose the details referred
to in subclause (1)(c)(i) to (iii), (h), (j), (k) and (m) if it provides
a written statement in or to the effect of a form prescribed by the
regulations for the purposes of this subclause at the same time as the other
details are disclosed as required by this clause.
(6) A form prescribed
for the purposes of subclause (5) may, instead of itself containing
details of the kind referred to in that subclause, refer to publicly
accessible sources of information (such as an Internet website) from which
those details can be obtained.
(7) The regulations
may—
(a)
require the Society to develop a statement of the relevant details and to
revise it as necessary to keep it up to date; and
(b)
require the Society to make the statement publicly available in the prescribed
manner.
11—Disclosure if another law practice is to be retained
(1) If a law practice
intends to retain another law practice on behalf of the client, the first
law practice must disclose to the client the details specified in
clause 10(1)(a), (d) and (e) in relation to the other law practice, in
addition to any information required to be disclosed to the client under
clause 10.
(2) A law practice
retained or to be retained on behalf of a client by another law practice is
not required to make disclosure to the client under clause 10, but must
disclose to the other law practice the information necessary for the other law
practice to comply with subclause (1).
(3) This clause does
not apply if the first law practice ceases to act for the client in the matter
when the other law practice is retained.
12—Timing of disclosure to client
(1) Disclosure under
clause 10 must be made in writing before, or as soon as practicable
after, the law practice is retained in the matter.
(2) Disclosure under
clause 11(1) must be made in writing before, or as soon as practicable
after, the other law practice is retained.
(3) Disclosure made to
a person before the law practice is retained in a matter is taken to be
disclosure to the person as a client for the purposes of clauses 10 and
11.
13—Exceptions to requirement for disclosure
(1) Disclosure under
clause 10 or 11(1) is not required to be made in any of the following
circumstances:
(a) if
the total legal costs in the matter, excluding disbursements, are not likely
to exceed $1 500 (exclusive of GST) or the prescribed amount (whichever
is higher);
(i)
the client has received 1 or more disclosures under
clause 10 or 11(1) from the law practice in the previous 12 months;
and
(ii)
the client has agreed in writing to waive the right to
disclosure; and
(iii)
a principal of the law practice decides on reasonable
grounds that, having regard to the nature of the previous disclosures and the
relevant circumstances, the further disclosure is not warranted;
(i)
a law practice or a legal practitioner; or
(ii)
a public company, a subsidiary of a public company, a
large proprietary company, a foreign company, a subsidiary of a foreign
company or a registered Australian body (each within the meaning of the
Corporations Act 2001 of the Commonwealth); or
(iii)
a financial services licensee (within the meaning of that
Act); or
(iv)
a liquidator, administrator or receiver (as respectively
referred to in that Act); or
(v)
a partnership that carries on the business of providing
professional services if the partnership consists of more than 20 members
or if the partnership would be a large proprietary company (within the meaning
of that Act) if it were a company; or
(vi)
a proprietary company (within the meaning of that Act)
formed for the purpose of carrying out a joint venture, if any shareholder of
the company is a person to whom disclosure of costs is not required; or
(vii)
an unincorporated group of participants in a joint
venture, if any member of the group is a person to whom disclosure of costs is
not required and if any other members of the group who are not such persons
have indicated that they waive their right to disclosure; or
(viii)
a Minister of the Crown in right of a jurisdiction or the
Commonwealth acting in his or her capacity as such, or a government department
or public authority of a jurisdiction or the Commonwealth;
(d) if
the legal costs or the basis on which they will be calculated have or has been
agreed as a result of a tender process;
(e) if
the client will not be required to pay the legal costs or they will not
otherwise be recovered by the law practice;
Note—
For instance, disclosure would not be required where the law practice acts in
the matter on a pro bono basis.
(f) in
any circumstances prescribed by the regulations.
(2) Despite
subclause (1)(a), if a law practice becomes aware that the total
legal costs are likely to exceed $1 500 (exclusive of GST) or the
prescribed amount (whichever is higher), the law practice must disclose the
matters in clause 10 or 11 (as the case requires) to the client as soon
as practicable.
(3) A law practice
must ensure that a written record of a principal's decision that further
disclosure is not warranted as mentioned in subclause (1)(b) is made and
kept with the files relating to the matter concerned.
(4) The reaching of a
decision referred to in subclause (3) otherwise than on reasonable
grounds is capable of constituting unsatisfactory professional conduct or
professional misconduct on the part of the principal.
(5) Nothing in this
clause affects or takes away from any client's right—
(a) to
progress reports in accordance with clause 19; or
(b) to
obtain reasonable information from the law practice in relation to any of the
matters specified in clause 10; or
(c) to
negotiate a costs agreement with a law practice and to obtain a bill from the
law practice.
14—Additional disclosure—settlement of litigious matters
(1) If a law practice
negotiates the settlement of a litigious matter on behalf of a client, the
law practice must disclose to the client, before the settlement is
agreed—
(a) a
reasonable estimate of the amount of legal costs payable by the client if the
matter is settled (including any legal costs of another party that the client
is to pay); and
(b) a
reasonable estimate of any contributions towards those costs likely to be
received from another party.
(2) A law practice
retained on behalf of a client by another law practice is not required to make
a disclosure to the client under subclause (1), if the other law practice
makes the disclosure to the client before the settlement is executed.
15—Additional disclosure—uplift fees
(1) A law practice
must, before entering into a costs agreement that involves an uplift
fee—
(a)
provide the client with—
(i)
an estimate of the total legal costs the client would be
likely to incur if the agreement did not involve an uplift fee; or
(ii)
if it is not reasonably practicable to provide an
estimate of the total legal costs—a range of estimates of the total
legal costs the client would be likely to incur if the agreement did not
involve an uplift fee and an explanation of the major variables that would
affect the calculation of those costs; and
(b)
disclose to the client in writing—
(i)
the uplift fee (or the basis of the calculation of the
uplift fee); and
(ii)
the reasons why the uplift fee is warranted.
(2) A law practice is
not required to make a disclosure under subclause (1) to a sophisticated
client.
(1) Written
disclosures under this Part—
(a) must
be expressed in clear plain language; and
(b) may
be in a language other than English if the client is more familiar with that
language.
(2) If the
law practice is aware that the client is unable to read, the law practice must
arrange for the information required to be given to a client under this Part
to be conveyed orally to the client in addition to providing the written
disclosure.
17—Ongoing obligation to disclose
A law practice must, in writing, disclose to a client any substantial change
to anything included in a disclosure already made under this Part as soon as
is reasonably practicable after the law practice becomes aware of that change.
18—Effect of failure to disclose
(1) If a law practice
does not disclose to a client or an associated third party payer anything
required by this Part to be disclosed, the client or associated third party
payer need not pay the legal costs unless they have been adjudicated under
Part 7.
(2) A law practice
that does not disclose to a client or an associated third party payer anything
required by this Part to be disclosed may not maintain proceedings against the
client or associated third party payer (as the case may be) for the recovery
of legal costs unless the costs have been adjudicated under Part 7.
(3) If a law practice
does not disclose to a client or an associated third party payer anything
required by this Part to be disclosed and the client or associated third party
payer has entered a costs agreement with the law practice, the client or
associated third party payer may also apply under clause 30 for the costs
agreement to be set aside.
(4) If a law practice
does not disclose to a client or an associated third party payer anything
required by this Part to be disclosed, then, on an adjudication of the
relevant legal costs, the amount of the costs may be reduced by an amount
considered by the Supreme Court to be proportionate to the seriousness of the
failure to disclose.
(5) If a law practice
retains another law practice on behalf of a client and the first law practice
fails to disclose something to the client solely because the retained
law practice failed to disclose relevant information to the first law practice
as required by clause 11(2), then subclauses (1) to (4)—
(a) do
not apply to the legal costs owing to the first law practice on account of
legal services provided by it, to the extent that the non-disclosure by the
first law practice was caused by the failure of the retained law practice to
disclose the relevant information; and
(b) do
apply to the legal costs owing to the retained law practice.
(6) In a matter
involving both a client and an associated third party payer where disclosure
has been made to 1 of them but not the other—
(a)
subclause (1) does not affect the liability of the one to whom disclosure
was made to pay the legal costs; and
(b)
subclause (2) does not prevent proceedings being maintained against the
one to whom the disclosure was made for the recovery of those legal costs.
(7) Failure by a
law practice to comply with this Part is capable of constituting
unsatisfactory professional conduct or professional misconduct on the part of
any legal practitioner or Australian-registered foreign lawyer involved in the
failure.
(1) A law practice
must give a client, on reasonable request—
(a) a
written report of the progress of the matter in which the law practice is
retained; and
(b) a
written report of the legal costs incurred by the client to date, or since the
last bill (if any), in the matter.
(2) A law practice may
charge a client a reasonable amount for a report under subclause (1)(a)
but must not charge a client for a report under subclause (1)(b).
(3) A law practice
retained on behalf of a client by another law practice is not required to give
a report to the client under subclause (1), but must disclose to the
other law practice any information necessary for the other law practice to
comply with that subclause.
(4) Subclause (3)
does not apply if the other law practice ceases to act for the client in the
matter when the law practice is retained.
20—Disclosures to associated third party payers
(1) If a law practice
is required to make a disclosure to a client of the law practice under this
Part, the law practice must, in accordance with subclauses (2) and (3),
also make the same disclosure to any associated third party payer for the
client, but only to the extent that the details or matters disclosed are
relevant to the associated third party payer and relate to costs that are
payable by the associated third party payer in respect of legal services
provided to the client.
(2) A disclosure under
subclause (1) must be made in writing—
(a) at
the time the disclosure to the client is required under this Part; or
(b) if
the law practice only afterwards becomes aware of the legal obligation of the
associated third party payer to pay legal costs of the client—as soon as
practicable after the law practice became aware of the obligation.
(3) Clause 16
applies to a disclosure to an associated third party payer under
subclause (1) in the same way as it applies to a client.
(4) An associated
third party payer for a client of a law practice has the same right as the
client to obtain reports under clause 19(1)(b) of legal costs incurred by
the client, but only to the extent that the costs are payable by the
associated third party payer in respect of legal services provided to the
client, and the law practice must comply with that clause accordingly.
Part 4—Legal costs generally
21—Recovery of legal costs
Legal costs are recoverable—
(a)
under a costs agreement made in accordance with Part 5 or the
corresponding provisions of a corresponding law; or
(b) if
paragraph (a) does not apply, in accordance with an applicable scale of
costs or any applicable recommendations as to the calculation of barristers'
costs; or
(c) if
neither paragraph (a) nor (b) applies, according to the fair and
reasonable value of the legal services provided.
22—Security for legal costs
A law practice may take reasonable security from a client for legal costs
(including security for the payment of interest on unpaid legal costs) and may
refuse or cease to act for a client who does not provide reasonable security.
23—Interest on unpaid legal costs
(1) A law practice may
charge interest on unpaid legal costs if the costs are unpaid 30 days or
more after the practice has given a bill for the costs in accordance with this
Schedule.
(2) A law practice may
also charge interest on unpaid legal costs in accordance with a costs
agreement.
(3) A law practice
must not charge interest under subclause (1) or (2) on unpaid legal costs
unless the bill for those costs contains a statement that interest is payable
and of the rate of interest.
(4) A law practice may
not charge interest under this clause or under a costs agreement at a rate
that exceeds the rate prescribed by the regulations.
Part 5—Costs agreements
(1) A costs agreement
may be made—
(a)
between a client and a law practice retained by the client; or
(b)
between a client and a law practice retained on behalf of the client by
another law practice; or
(c)
between a law practice and another law practice that retained that
law practice on behalf of a client; or
(d)
between a law practice and an associated third party payer.
(2) A costs agreement
must be written or evidenced in writing.
(3) A costs agreement
may consist of a written offer in accordance with subclause (4) that is
accepted in writing or by other conduct.
Note—
Acceptance by other conduct is not permitted for conditional costs
agreements—see clause 25.
(4) The offer must
clearly state—
(a) that
it is an offer to enter into a costs agreement; and
(b) that
the offer can be accepted in writing or by other conduct; and
(c) the
type of conduct that will constitute acceptance.
(5) Except as provided
by clause 51, a costs agreement cannot provide that the legal costs to
which it relates are not subject to adjudication of costs under Part 7.
Note—
If it attempts to do so, the costs agreement will be void—see
clause 29(1).
(6) A reference in
clause 30 and in prescribed provisions of this Schedule to a client is,
in relation to a costs agreement that is entered into between a law practice
and an associated third party payer as referred to in subclause (1)(d)
and to which a client of the law practice is not a party, a reference to the
associated third party payer.
25—Conditional costs agreements
(1) A costs agreement
may provide that the payment of some or all of the legal costs is conditional
on the successful outcome of the matter to which those costs relate.
(2) A conditional
costs agreement may relate to any matter, except—
(a) a
criminal matter; or
(b) a
matter that relates to or involves child protection, custody or guardianship
or adoption; or
(c)
proceedings under any of the following Acts of the Commonwealth:
(i)
the Family Law Act 1975 ;
(iii)
the Child Support (Assessment) Act 1989 ; or
(d) any
other matter of a kind prescribed by regulation.
(3) A conditional
costs agreement—
(a) must
set out the circumstances that constitute the successful outcome of the matter
to which it relates; and
(b) may
provide for disbursements to be paid irrespective of the outcome of the
matter; and
(i)
in writing; and
(ii)
in clear plain language; and
(iii)
signed by the client; and
(d) must
contain a statement that the client has been informed of the client's right to
seek independent legal advice before entering into the agreement; and
(e) must
contain a cooling-off period of not less than 5 clear business days
during which the client, by written notice, may terminate the agreement.
(4)
Subclause (3)(c)(iii), (d) and (e) do not apply to a conditional costs
agreement made under clause 24(1)(c).
(5)
Subclause (3)(c)(iii), (d) and (e) do not apply to a conditional costs
agreement made with a sophisticated client.
(6) If a client
terminates an agreement within the period referred to in
subclause (3)(e), the law practice—
(a) may
recover only those legal costs in respect of legal services performed for the
client before that termination that were performed on the instructions of the
client and with the client's knowledge that the legal services would be
performed during that period; and
(b)
without affecting the generality of paragraph (a), may not recover the
uplift fee (if any).
26—Conditional costs agreements involving uplift fees
(1) Subject to
subclause (1a), a conditional costs agreement may provide for the payment
of an uplift fee.
(1a)
Subclause (1) does not apply to a conditional costs agreement relating to
proceedings under the Migration Act 1958 of the Commonwealth.
(2) The basis of
calculation of the uplift fee must be separately identified in the agreement.
(3) The agreement must
contain an estimate of the uplift fee or, if that is not reasonably
practicable—
(a) a
range of estimates of the uplift fee; and
(b) an
explanation of the major variables that will affect the calculation of the
uplift fee.
(4) If a conditional
costs agreement relates to a litigious matter—
(a) the
agreement must not provide for the payment of an uplift fee unless the risk of
the claim failing, and of the client having to meet his or her own costs, is
significant; and
(b) the
uplift fee must not exceed 25% of the legal costs (excluding disbursements)
otherwise payable.
(5) A law practice
must not enter into a costs agreement in contravention of this clause.
Maximum penalty: $50 000.
27—Contingency fees are prohibited
(1) A law practice
must not enter into a costs agreement under which the amount payable to the
law practice, or any part of that amount, is calculated by reference to the
amount of any award or settlement or the value of any property that may be
recovered in any proceedings to which the agreement relates.
Maximum penalty: $50 000.
(2) Subclause (1)
does not apply to the extent that the costs agreement adopts an applicable
scale of costs.
Subject to this Part and Part 7, a costs agreement may be enforced in the
same way as any other contract.
29—Certain costs agreements are void
(1) A costs agreement
that contravenes, or is entered into in contravention of, any provision of
this Part is void.
(2) Subject to this
clause and Part 7, legal costs under a void costs agreement are
recoverable as set out in clause 21(b) or (c).
(3) However, a law
practice is not entitled to recover any amount in excess of the amount that
the law practice would have been entitled to recover if the costs agreement
had not been void and must repay any excess amount received.
(4) A law practice
that has entered into a costs agreement in contravention of clause 26 is
not entitled to recover the whole or any part of the uplift fee and must repay
the amount received in respect of the uplift fee to the person from whom it
was received.
(5) A law practice
that has entered into a costs agreement in contravention of clause 27 is
not entitled to recover any amount in respect of the provision of
legal services in the matter to which the costs agreement related and must
repay any amount received in respect of those services to the person from whom
it was received.
(6) If a law practice
does not repay an amount required by subclause (3), (4) or (5) to be
repaid, the person entitled to be repaid may recover the amount from the
law practice as a debt in a court of competent jurisdiction.
30—Setting aside costs agreements
(1) On application by
a client, the Supreme Court may order that a costs agreement be set aside if
satisfied that the agreement is not fair and reasonable.
(2) In determining
whether or not a costs agreement is fair and reasonable, and without limiting
the matters to which the Supreme Court can have regard, the Court may have
regard to any or all of the following matters:
(a)
whether the client was induced to enter into the agreement by the fraud or
misrepresentation of the law practice or of any representative of the
law practice;
(b)
whether any legal practitioner or Australian-registered foreign lawyer acting
on behalf of the law practice has been found guilty of unsatisfactory
professional conduct or professional misconduct in relation to the provision
of legal services to which the agreement relates;
(c)
whether the law practice failed to make any of the disclosures required under
Part 3;
(d) the
circumstances and the conduct of the parties before and when the agreement was
made;
(e) the
circumstances and the conduct of the parties in the matters after the
agreement was made;
(f)
whether and how the agreement addresses the effect on costs of matters and
changed circumstances that might foreseeably arise and affect the extent and
nature of legal services provided under the agreement;
(g)
whether and how billing under the agreement addresses changed circumstances
affecting the extent and nature of legal services provided under the
agreement.
(3) The Supreme Court
may adjourn the hearing of an application under this clause pending the
completion of any investigation or determination of any charge in relation to
the conduct of any legal practitioner or Australian-registered foreign lawyer.
(4) If the Supreme
Court orders that a costs agreement be set aside, it may make an order in
relation to the payment of legal costs the subject of the agreement.
(5) In making an order
under subclause (4)—
(a) the
Supreme Court must apply the applicable scale of costs (if any) and any
applicable recommendations as to the calculation of barristers' costs; or
(b) if
there is no applicable scale of costs or recommendations—the Court must
determine the fair and reasonable legal costs in relation to the work to which
the agreement related, taking into account—
(i)
the seriousness of the conduct of the law practice or any
legal practitioner or Australian-registered foreign lawyer acting on its
behalf; and
(ii)
whether or not it was reasonable to carry out the work;
and
(iii)
whether or not the work was carried out in a reasonable
manner.
(6) In making an order
under subclause (4), the Supreme Court may not order the payment of an
amount in excess of the amount that the law practice would have been entitled
to recover if the costs agreement had not been set aside.
(7) For the purposes
of subclause (5), the Supreme Court may have regard to any or all of the
following matters:
(a)
whether the law practice and any legal practitioner or
Australian-registered foreign lawyer acting on its behalf complied with any
relevant legislation or legal profession rules;
(b) any
disclosures made by the law practice under Part 3, or the failure to make
any disclosures required under that Part;
(c) any
relevant advertisement as to—
(i)
the law practice's costs; or
(ii)
the skills of the law practice or of any
legal practitioner or Australian-registered foreign lawyer acting on its
behalf;
(d) the
skill, labour and responsibility displayed on the part of the
legal practitioner or Australian-registered foreign lawyer responsible for the
matter;
(e) the
retainer and whether the work done was within the scope of the retainer;
(f) the
complexity, novelty or difficulty of the matter;
(g) the
quality of the work done;
(h) the
place where, and circumstances in which, the work was done;
(i)
the time within which the work was required to be done;
(j) any
other relevant matter.
(8) The Supreme Court
may determine whether or not a costs agreement exists.
(9) The Supreme Court
may order the payment of the costs of and incidental to an application under
this clause.
(10) In this
clause—
client means a person to whom or for whom legal services are or have been
provided.
Part 6—Billing
31—Legal costs cannot be recovered unless bill has been served
(1) A law practice
must not commence legal proceedings to recover legal costs from a person until
at least 30 days after the law practice has given a bill to the person in
accordance with clauses 32 and 33.
(2) A court of
competent jurisdiction may make an order authorising a law practice to
commence legal proceedings against a person sooner if satisfied that—
(a) the
law practice has given a bill to the person in accordance with clauses 32
and 33; and
(b) the
person is about to leave this State.
(3) A court or
tribunal before which any proceedings are brought in contravention of
subclause (1) must stay those proceedings on the application of a party,
or on its own initiative.
(4) This clause
applies whether or not the legal costs are the subject of a costs agreement.
(1) A bill may be in
the form of a lump sum bill or an itemised bill.
(2) A bill must be
signed on behalf of a law practice by a legal practitioner or an employee of
the law practice authorised by a principal of the law practice to sign bills.
(3) It is sufficient
compliance with subclause (2) if a letter signed on behalf of a
law practice by a legal practitioner or an employee of the law practice
authorised by a principal of the law practice to sign bills is attached to, or
enclosed with, the bill.
(4) If an employee of
a law practice who is authorised by a principal of the practice to sign bills
on behalf of the practice signs a bill or a letter attached to, or enclosed
with, a bill, the bill or letter will be taken to have been signed by the
principal.
(5) A bill is to be
given to a person in accordance with section 95D.
33—Notification of client's rights
(1) A bill must
include or be accompanied by a written statement setting out—
(a) the
following avenues that are open to the client in the event of a dispute in
relation to legal costs:
(i)
raising the matter with the law practice;
(ii)
adjudication of costs by the Supreme Court under
Part 7;
(iii)
the setting aside of a costs agreement under
clause 30;
(iv)
if the client believes there has been
overcharging—making a complaint to the Commissioner; and
(b) if
the bill is not an itemised bill—the law practice's obligation to
provide an itemised bill on request by the client; and
(c) any
time limits that apply to the taking of any action referred to in
paragraph (a).
Note—
These matters will already have been disclosed under clause 10(1).
(2) Subclause (1)
does not apply in relation to a sophisticated client.
(3) A law practice is
taken to have complied with the requirement to provide the written statement
referred to in subclause (1) if it provides a written statement in or to
the effect of a form prescribed by the regulations for the purposes of this
subclause.
(4) A form prescribed
for the purposes of subclause (3) may, instead of itself containing
details of the kind referred to in that subclause, refer to publicly
accessible sources of information (such as an Internet website) from which
those details can be obtained.
(5) The regulations
may—
(a)
require the Society to develop a statement of the relevant details and to
revise it as necessary to keep it up to date; and
(b)
require the Society to make the statement publicly available in the prescribed
manner.
(1) If a bill that is
not an itemised bill is given by a law practice, any person who is entitled to
apply for an adjudication of the legal costs to which the bill relates may
request the law practice to give the person an itemised bill.
(2) The law practice
must comply with the request within 21 days after the date on which the
request is made.
(3) If the person
making the request is liable to pay only a part of the legal costs to which
the bill relates, the request for an itemised bill may only be made in
relation to those costs that the person is liable to pay.
(4) Subject to
subclause (5), a law practice must not commence legal proceedings to
recover legal costs from a person who has been given a lump sum bill until at
least 30 days after the date on which the person is given the bill.
(5) If the person
makes a request for an itemised bill in accordance with this clause, the law
practice must not commence legal proceedings to recover the legal costs from
the person until at least 30 days after complying with the request.
(6) A law practice is
not entitled to charge a person for the preparation of an itemised bill
requested under this clause.
(7) Section 95D
applies to the giving of an itemised bill under this clause.
(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 adjudicated under Part 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 adjudicated or paid.
Part 7—Adjudication of costs
In this Part—
client means a person to whom or for whom legal services are or have been
provided.
37—Application by clients or third party payers for adjudication of
costs
(1) The Supreme Court
may—
(a) on
the application of a client for an adjudication of the whole or any part of
legal costs; or
(b) on
the application of a third party payer for an adjudication of the whole or any
part of legal costs payable by the third party payer,
adjudicate and settle the bill for those costs.
(2) An application for
an adjudication of costs may be made even if the legal costs have been wholly
or partly paid.
(3) If any legal costs
have been paid without a bill, the client or third party payer may
nevertheless apply for an adjudication.
(4) An application by
a client or third party payer for an adjudication of costs under this clause
must be made within 6 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 was made.
(5) However, an
application that is made out of time, otherwise than by—
(a) a
sophisticated client; or
(b) a
third party payer who would be a sophisticated client if the third party payer
were a client of the law practice concerned,
may be dealt with by the Supreme Court if the Court, on application by the
client or third party payer who made the application for adjudication,
determines, after having regard to the delay and the reasons for the delay,
that it is just and fair for the application for adjudication to be dealt with
after the 6 month period.
(6) If the third party
payer is a non-associated third party payer, the law practice must provide the
third party payer, on the written request of the third party payer, with
sufficient information to allow the third party payer to consider making, and
if thought fit to make, an application for an adjudication of costs under this
clause.
(7) If there is an
associated third party payer for a client of a law practice—
(a)
nothing in this clause prevents—
(i)
the client from making 1 or more applications for
adjudication under this clause in relation to costs for which the client is
solely liable; and
(ii)
the associated third party payer from making 1 or more
applications for adjudication under this clause in relation to costs for which
the associated third party payer is solely liable,
and those applications may be made by them at the same time or at different
times and may be dealt with jointly or separately; and
(b) the
client or the associated third party payer—
(i)
may participate in the adjudication of costs process
where the other of them makes an application for adjudication under this
clause in relation to costs for which they are both liable; and
(ii)
is taken to be a party to the adjudication and is bound
by the adjudication; and
(c) the
law practice is taken to be a party to the adjudication and is bound by the
adjudication.
(8) If there is a
non-associated third party payer for a client of a law practice—
(a)
nothing in this clause prevents—
(i)
the client from making 1 or more applications for
adjudication under this clause in relation to costs for which the client is
liable; and
(ii)
the non-associated third party payer from making 1 or
more applications for adjudication under this clause in relation to costs for
which the non-associated third party payer is liable,
and those applications may be made by them at the same time or at different
times but must be dealt with separately; and
(b) the
client—
(i)
may participate in the adjudication of costs process
where the non-associated third party payer makes an application for
adjudication under this clause in relation to the legal costs for which the
non-associated third party payer is liable; and
(ii)
is taken to be a party to the adjudication and is bound
by the adjudication; and
(c)
despite any other provision of this Part, the adjudication of the costs
payable by the non-associated third party payer does not affect the amount of
legal costs payable by the client to the law practice.
(9) In this
clause—
client includes the following:
(a) an
executor or administrator of a client;
(b) a
trustee of the estate of a client;
third party payer includes the following:
(a) an
executor or administrator of a third party payer;
(b) a
trustee of the estate of a third party payer.
38—Application for adjudication by law practice retaining another law
practice
(1) If a law practice
retains another law practice to act on behalf of a client, the
law practice—
(a) may
apply to the Supreme Court; and
(b) if
instructed to do so by the client or third party payer (if any)—must
apply to the Supreme Court,
for an adjudication of the whole or any part of the legal costs to which a
bill given by the other law practice in accordance with Part 6 relates.
(2) If any legal costs
have been paid without a bill, the law practice may nevertheless apply for an
adjudication.
(3) An application for
an adjudication of costs may be made even if the legal costs have been wholly
or partly paid.
(4) An application
under this clause must be made within 60 days after—
(a) the
bill was given or the request for payment was made; or
(b) the
costs were paid if neither a bill was given nor a request was made; or
(c) in
the case of an application made on the instructions of a client or third party
payer—within 60 days of the day on which the client or third party
payer was given notification in writing of the legal costs to which the bill
relates.
(5) An application
cannot be made under this clause if—
(a)
there is a costs agreement between the client and the other law practice; and
(b) the
bill given by the other law practice is in accordance with the terms of the
costs agreement.
39—Application for adjudication of costs by law practice giving bill
(1) A law practice
that has given a bill in accordance with Part 6 may apply to the Supreme
Court for an adjudication of the whole or any part of the legal costs to which
the bill relates.
(2) If any legal costs
have been paid without a bill, the law practice may nevertheless apply for an
adjudication.
(3) An application for
an adjudication of costs may be made even if the legal costs have been wholly
or partly paid.
(4) An application may
not be made under this clause unless at least 30 days have passed
since—
(a) the
bill was given or the request for payment was made; or
(b) the
costs were paid if neither a bill was given nor a request was made; or
(c) an
application has been made under this Part by another person in respect of the
legal costs.
40—Application may be dismissed
The Supreme Court may summarily dismiss an application for an adjudication of
costs that it considers frivolous or vexatious.
41—Power of Supreme Court on application for adjudication
(1) The Supreme
Court's power to adjudicate and settle a bill (but no other power of the Court
under this clause) may, subject to any rule, order or direction of the Court,
be exercised by the Registrar of the Court.
(2) Subject to the
rules of the Supreme Court, an appeal lies to a Master against a decision of
the Registrar pursuant to subclause (1).
(3) If an application
for adjudication of legal costs has been made in accordance with this Part,
the Supreme Court may—
(a)
restrain a person claiming to be entitled to the costs from commencing an
action for recovery of the costs; or
(b) stay
any proceedings for recovery of the costs.
(4) The Supreme Court
may, on adjudication of a bill under this Part—
(a)
order the refund of any amount overpaid; or
(b) if
the proceedings have been instituted by the person seeking recovery of the
costs—order payment of legal costs in accordance with the adjudicated
bill.
42—Commissioner may institute proceedings
The Commissioner may institute proceedings for the adjudication of legal costs
under clause 37 and must institute such proceedings if ordered to do so
by the Tribunal.
43—Court may order plaintiff to apply for adjudication
Any court in which proceedings for the recovery of legal costs have been
instituted may order the plaintiff to apply to have the legal costs
adjudicated in accordance with this Part, and may adjourn the proceedings
until the adjudication has been completed.
44—Consequences of application
If an application for an adjudication of costs is made in accordance with this
Part—
(a) a
party to the adjudication cannot be required to pay money into court on
account of the legal costs the subject of the application; and
(b) any
proceedings to recover the legal costs that may have been commenced by the
law practice are stayed until the adjudication has been completed; and
(c) the
law practice must not commence any proceedings to recover the legal costs
until the adjudication has been completed.
45—Persons to be notified of application
(1) The Supreme Court
may cause a copy of an application for adjudication of legal costs to be given
to any law practice or client concerned or any other person whom the Court
thinks it appropriate to notify.
(2) A person who is
notified by the Supreme Court under subclause (1)—
(a) is
entitled to participate in the adjudication process; and
(b) is
taken to be a party to the adjudication; and
(c) if
the Court so determines, is bound by the adjudication.
(1) In conducting an
adjudication of legal costs, the Supreme Court must—
(a)
consider—
(i)
whether or not it was reasonable to carry out the work to
which the legal costs relate; and
(ii)
whether or not the work was carried out in a reasonable
manner; and
(iii)
the fairness and reasonableness of the amount of
legal costs in relation to the work, except to the extent that clause 47
or 48 applies to any disputed costs; and
(b) if
the legal costs have been the subject of a complaint to the Commissioner of
overcharging—have regard to any recommendation made by the Commissioner
that the charges be reduced or an amount refunded to the client.
(2) In considering
what is a fair and reasonable amount of legal costs, the Supreme Court may
have regard to any or all of the following matters:
(a)
whether the law practice and any legal practitioner or
Australian-registered foreign lawyer acting on its behalf has complied with
the law;
(b) any
disclosures made by the law practice under Part 3;
(c) any
relevant advertisement as to—
(i)
the law practice's costs; or
(ii)
the skills of the law practice or of any
legal practitioner or Australian-registered foreign lawyer acting on its
behalf;
(d) the
skill, labour and responsibility displayed on the part of the
legal practitioner or Australian-registered foreign lawyer responsible for the
matter;
(e) the
retainer and whether the work done was within the scope of the retainer;
(f) the
complexity, novelty or difficulty of the matter;
(g) the
quality of the work done;
(h) the
place where, and circumstances in which, the legal services were provided;
(i)
the time within which the work was required to be done;
(j) any
other relevant matter.
(3) In conducting an
adjudication of legal costs payable by a non-associated third party payer, the
Supreme Court must also consider whether it is fair and reasonable in the
circumstances for the non-associated third party payer to be charged the
amount claimed.
47—Adjudication of costs by reference to costs agreement
(1) The Supreme Court
must adjudicate the amount of any disputed costs that are subject to a costs
agreement by reference to the provisions of the costs agreement if—
(a) a
relevant provision of the costs agreement specifies the amount, or a rate or
other means for calculating the amount, of the costs; and
(b) the
agreement has not been set aside under clause 30,
unless the Court is satisfied—
(c) that
the agreement does not comply in a material respect with any applicable
disclosure requirements of Part 3; or
(d) that
Part 5 precludes the law practice concerned from recovering the amount of
the costs; or
(e) that
the parties otherwise agree.
(2) The Supreme Court
is not required to initiate an examination of the matters referred to in
subclause (1)(c) and (d).
48—Adjudication of costs by reference to scale of costs
The Supreme Court must adjudicate the amount of any disputed costs that are
subject to a scale of costs by reference to the scale.
(1) The Supreme Court
must determine the costs of an adjudication of costs.
(2) Unless the Supreme
Court otherwise orders, the law practice to which the legal costs are payable
or were paid must pay the costs of the adjudication if—
(a) on
the adjudication the legal costs are reduced by 15% or more; or
(b) the
Court is satisfied that the law practice failed to comply with Part 3.
(3) Unless the Supreme
Court otherwise orders, if the law practice is not, under subclause (2),
liable to pay the costs of the adjudication, the costs of the adjudication
must be paid by the applicant for the adjudication.
(4) However, if an
application for an adjudication of costs is made following the making of a
determination by the Commissioner in relation to the costs under
section 77N, the applicant is required to pay the costs of the
adjudication unless the Supreme Court orders otherwise.
(5) In determining
whether to make an order under subclause (4), the Supreme Court must have
regard to the extent (if any) to which the result of the adjudication is more
favourable for the applicant than the Commissioner's determination.
50—Referral for disciplinary action
(1) If, on an
adjudication, the Supreme Court considers that the legal costs charged by a
law practice are grossly excessive, the Court must refer the matter to the
Commissioner to consider whether disciplinary action should be taken.
(2) If the Supreme
Court considers that an adjudication raises any other matter that may amount
to unsatisfactory professional conduct or professional misconduct on the part
of a legal practitioner or Australian-registered foreign lawyer, the Court may
refer the matter to the Commissioner or a corresponding authority to consider
whether disciplinary action should be taken.
51—Contracting out of Part by sophisticated clients
A sophisticated client of a law practice, or an associated third party payer
who would be a sophisticated client if the third party payer were a client of
the law practice concerned, may contract out of this Part (but no such
contract affects the Commissioner's power to institute proceedings for the
adjudication of legal costs under clause 42).
Part 8—Miscellaneous
52—Application of Schedule to incorporated legal practices
The regulations may provide that specified provisions of this Schedule do not
apply to incorporated legal practices, or to specified classes of
incorporated legal practices, or apply to them with specified modifications.
53—Imputed acts, omissions or knowledge
For the purposes of this Schedule—
(a)
anything done or omitted by, to or in relation to—
(i)
a legal practitioner; or
(ii)
an Australian-registered foreign lawyer (except for the
purposes of clause 26(4) or for the purposes of any provision of this
Schedule prescribed by the regulations for the purposes of this clause),
in the course of acting on behalf of a law practice is taken to have been done
or omitted by, to or in relation to the law practice; and
(b)
without limiting paragraph (a), the law practice is taken to become or be
aware of, or to have a belief as to, any matter if—
(i)
a legal practitioner; or
(ii)
an Australian-registered foreign lawyer (except for the
purposes of clause 26(4) or for the purposes of any provision of this
Schedule prescribed by the regulations for the purposes of this clause),
becomes or is aware of, or has a belief as to, the matter in the course of
acting on behalf of the law practice.