Considerations in seeking an extension of time for costs assessment | Articles

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Considerations in seeking an extension of time for costs assessment | Articles

by Dipal Prasad

BACKGROUND
In the legal landscape, section 198 of the Legal Profession Uniform Law (LPUL) governs the provisions for clients, third-party payers, and law practices seeking a costs assessment. Typically, such applications should be made within 12 months of receiving a bill or making a payment. However, there are circumstances where an extension of time can be sought if it is deemed just and fair.

Section 198(4) of the LPUL allows for an application for costs assessment to be made after the 12-month period if it is just and fair to do so. This provision ensures that parties are not unduly prejudiced by strict adherence to the timeframe. The criteria for granting an extension of time and the circumstances in which extensions are granted are demonstrated by some relevant cases.

Rohowskyj v Tomyn & Co [2015] VSC 511

In this case, His Honour Justice John Dixon provided the following list of factors the Court should consider in determining whether a particular situation is just and fair for the purpose of warranting an extension of time : -

1. The period of the delay;
2. The reasons for the delay;
3. Whether it is just and fair, having regard to –

• whether the costs assessment would be futile;
• The extent of any prejudice to the respondent; and
• Consideration of the right of one party to seek an assessment against the right of the other party to have the assessment conducted in the statutory period.

Judge Dixon suggested that a party opposing the extension must offer some good reason “beyond unmeritorious reliance on the strict terms of the statute” . Thus, an objection to oppose an extension application merely because it was made out of time is inadequate.

Gallin v SC Lawyers Pty Ltd [2020] VSC 80

In this case Macaulay J dismissed an application under s198(4), following a delay of about 29-months. When applying the test to ascertain whether it is just and fair for the application to be dealt with after the 12-month period, Macaulay J gave due regard to the delay and reasons for the delay .

Despite accepting that a lay person’s ignorance of their rights is a factor to consider in favour of explaining some delay, it carried little weight as the Applicant had been informed of her rights from the outset. Furthermore, his Honour averred that while financial hardship is not in itself a justification to seek or be granted a more lenient taxation of costs, the distractedness suffered due to years of the plaintiff’s family law battle, along with her underlying family problems, and her apparent perilous financial predicament did have some bearing on His Honour’s discretion.

In essence, when counter-balancing the Applicant’s reasons for the delay against the firm’s commercial entitlement to be paid fees for professional services rendered in a reasonably timely way, Macaulay J held that it was not just and fair for the Applicant to pursue a taxation of the Respondent’s costs 29-months outside the prescribed 12-month period.

Lin v WJ Legal (Aust) Pty Ltd [2023] VSC 52

In this case, Justice Dixon allowed an application under s198(4) where a client was out of time by more than 2 years, as a result of difficulties obtaining legal advice during the COVID-19 lockdowns, ongoing commitments in other litigation, and a limited understanding by the client of his rights and obligations.

His Honour took into account the client’s limited English, the fact that the client had misunderstood the process, and the fact there was:

“no evidence…that clearly establishes that [the client] had, no matter what explanation he may have received from others and bearing in mind the language barriers, a full understanding of what was required of him in order to effectively challenge the bill of costs. Indeed, [the client] submitted that it was not really until 9 June 2022 that he was clearly aware of his rights and proceeded to exercise them promptly thereafter.”

In those circumstances, although His Honour did not regard this as a ‘particularly good’ explanation, and possibly even ‘weak’, he accepted that it was nonetheless an explanation which met the legislative requirements of s198(4). His Honour then considered competing prejudices, finding that the fact a solicitor must “face a belated contest of his entitlement to fees before the Costs Court … is not relevant prejudice”.

Relevant prejudice would include matters such as loss of a key witness, loss of documents or other circumstances which did not arise.

Upon consideration of the reasons cited by the Applicant for the delay, his Honour found that the Respondent failed to offer any circumstance demonstrating any relevant substantive prejudice.

The learned Judge cited the following as other relevant considerations :-

1. whether the client was aware of the right to seek a costs assessment;
2. whether there was evidence to suggesting the bill may be excessive;
3. whether the client has paid the bill without demur;
4. the lawyer’s reasons for opposing the assessment, it being important that, as an officer of the court, the lawyer is seen to act honestly, ethically and with proper motives, not merely to prevent the assessment of a bill taking place; and
5. the lawyer’s conduct in dealing with the contest of the bill - for example, an unjustified reluctance to provide an itemised bill or a serious delay in providing one may tip the scales in favour of allowing an application for assessment out of time.

Lin provides a valuable insight into the criteria the courts use in determining whether the test of just and fair for an application in terms of section 198(4), has been met.

Conclusion

Understanding the circumstances under which an extension of time for costs assessment can be granted is vital. Failure to do so may lead to a client incurring unnecessary costs of seeking an extension, and losing, and having to pay the lawyer’s costs of defending an application for extension.

 

Dipal Prasad is Director of Law in Check, specialising in representing clients in solicitor–client costs disputes. She is also a court-appointed costs assessor (Qld). Law in Check has offices in Victoria, NSW and Queensland. PHONE 1800 529 462 EMAIL dipal@lawincheck.com.au WEBSITE https://www.lawincheck.com.au.