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Boutique firm returns to tribunal following ‘administrative errors’
A boutique Queensland law firm has continued the fight to recover fees from a client who claimed two costs agreements he never received due to “administrative errors” meant his legal team did not comply with their disclosure obligations.
Naomi Neilson
Boutique firm Dowd Lawyers has told the Queensland Civil and Administrative Tribunal (QCAT) that despite failing to provide two costs agreement when the work had become more extensive, its client was never deprived of the opportunity to gain a fair understanding of the costs and his reaction afterwards was “inconsistent”.
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The client was facing a claim made by the Australian Taxation Office (ATO) when he approached the firm’s chief financial officer and agreed to enter into an agreement with the firm. In its initial, and only, costs agreement following this, Dowd Lawyers provided a fee estimate to the client of between $15,000 and $30,000.
The first invoice issued in November 2017 for his services requested almost $38,000 and, upon receipt of this, Mr Simons said his reaction was “one of shock as a result of what [Mr] Dowd had told me and what the [costs agreement] had said about costs”. This and all future invoices requested payment within 14 days.
In written submissions, Dowd Lawyers submitted that “Mr Simons continued to engage the respondent to work on the taxation proceedings and on new matters, even after he says he was shocked by the invoices” and that his shock was “inconsistent with his continuing to provide instructions” to the firm.
In his affidavit, the firm’s managing partner said that by late January, it had become apparent that the work was more extensive than originally considered. As a result, he said that he intended to send a further costs agreement – which would also include the client’s two companies – but this was not sent due to an “administrative error”. Until the proceedings began, he was under the impression they were.
A further costs agreement was drafted seven days later and, like the first, was not sent to the client or his companies due to the same error. In total, the client owed the firm upwards of $99,000 but paid just under $55,000 through a third-party funder, which he said he was pressured into entering an agreement by the firm.
“The question which thus arises is whether the failure to provide a further estimate of costs had the consequence that the agreement was not fair and reasonable. This may relate to the questions whether the terms of the agreement were consequently unreasonable to the client, or that the effect of the agreement on the client was consequently unreasonable,” QCAT wrote in its most recent judgement.
QCAT wrote that the client, who has been a businessman for almost 40 years, did not seek a costs agreement and while there was no obligation on him to request a costs disclosure, “in the circumstances of this case, his failure to at least enquire about the likely extent of costs is not without significance”.
The client’s application to have the first costs agreement set aside has been dismissed but QCAT has allowed all parties to file further submissions for an upcoming counter-application hearing. More to come.
The entire judgement can be read on AustLII: Simons & Ors v Dowd Lawyers Pty Ltd (No 4) [2021] QCAT 134 (21 May 2021).
