Supreme Court New South Wales Medium Neutral Citation: Lukic v de Luca-Leonard (No 2) [2017] NSWSC 841 Hearing dates: 20 & 22 June 2017 Date of orders: 23 June 2017 Decision date: 23 June 2017 Jurisdiction: Common Law Before: Harrison J Decision: (1) Order pursuant to s 728(1)(a) of the Legal Profession Act 2004 that the defendant provide to the plaintiff a bill of costs in itemised form of costs and disbursements in respect of the legal services provided by the defendant to the plaintiff in connection with the plaintiff's claim for work injury damages. (2) Reserve costs of the plaintiff's application pending final submissions. Catchwords: PRACTICE AND PROCEDURE – request for an itemised bill of costs and client file – where plaintiff is not required to provide a reason for the request – whether any discretionary considerations apply – whether the application is an abuse of process Legislation Cited: Legal Profession Act 2004 Legal Profession Uniform Law (NSW) Cases Cited: Lukic v de Luca-Leonard [2017] NSWSC 814 Yang v Stephen Paul Firth trading as Firths The Compensation Lawyers [2013] NSWSC 676 Category: Principal judgment Parties: Miroslavka Lukic (Plaintiff) Moya Regina de Luca-Leonard (Defendant) Representation: Counsel: H W M Stitt (Plaintiff) J O'Sullivan (Defendant) Solicitors: Wilson Fox Lawyers (Plaintiff) Bruce Macdonald Lawyers (Defendant) File Number(s): 2016/357460 Publication restriction: Nil Judgment 1. HIS HONOUR: I published some reasons for judgment in this matter yesterday: see Lukic v de Luca-Leonard [2017] NSWSC 814. That judgment is required reading for present purposes. In it I invited the parties to make further submissions upon the question of whether or not the provisions of the Legal Profession Uniform Law (NSW) or the Legal Profession Act 2004 applied in this case. Although the answer to that question was probably evident and uncontroversial, and possibly for that reason, neither of the parties made any submissions about it. However, having regard to the substantial and potentially significant difference between s 332A of the Legal Profession Act and s 187(2) of the Legal Profession Uniform Law I thought it best to invite specific attention to the question. Having done so, the parties agree, in my view correctly, that the 2004 Act applies to these proceedings. 2. Mr O'Sullivan of counsel also made some further submissions in elaboration of his earlier contentions on behalf of Ms de Luca-Leonard in opposition to Ms Lukic's application. I have had regard to those further submissions as well. 3. In my opinion, Ms Lukic is entitled to the order that she seeks for the provision of an itemised bill of costs. I am not prepared to order that Ms de Luca-Leonard produce her file. This is for the following reasons. 4. First, s 728 of the 2004 Act confers a wide discretion upon the Supreme Court to order a law practice to give a client a bill of costs in respect of any legal services provided by the law practice. That discretion is unqualified by the terms of the section itself. It is nevertheless a discretion that must be exercised judicially. 5. It is reasonably apparent from the correspondence referred to by me in the earlier judgment that Ms de Luca-Leonard appreciated, and on one view accepted, Ms Lukic's right to request an itemised bill of costs from her. I note that the section refers merely to "a bill of costs" but nothing turns upon that minor difference. Ms de Luca-Leonard's letters to Mr Hernandez tacitly acknowledge that Ms Lukic should be provided with the bill that she sought. Indeed, at one point Ms de Luca-Leonard provided Mr Hernandez with a time-frame within which she would do so. That offer was relevantly unqualified. 6. Secondly, none of the reasons for declining to provide Ms Lukic with an itemised bill of costs, which slowly emerged as the correspondence increased, is a proper basis for refusing to do so. As I have previously indicated, Ms Lukic is not required, as a precondition to establishing an entitlement to the bill, to provide a sound reason, or indeed any reason, for the request. Mr O'Sullivan resorted to the language of subpoenas, suggesting that Ms Lukic had no legitimate forensic purpose. He intimated that the request in effect was a stalking horse for a claim that Ms Lukic had been over-charged, or that Ms de Luca-Leonard had been negligent in settling her work injury damages claim at an under value, or in anticipation of seeking to apply for a costs assessment or to set aside the lump sum costs agreement. Whether or not Ms Lukic's motives were one or any of these things is of no particular significance. The language of s 728 is clear. 7. Thirdly, I am not satisfied that any discretionary consideration urged upon me by Ms de Luca-Leonard stands in the way of the relief that is sought. For example, delay can hardly be an issue. As recently as May 2016 Ms de Luca-Leonard was speaking in terms of providing the bill in question. It will be recalled that in her letter of 2 June 2016 Ms de Luca-Leonard said this: "After so long a time, it is not usually appropriate that I be called upon to itemise a bill of costs in the circumstances in which this matter was conducted on behalf of your clients, especially when she elected to accept a lump sum bill of costs." 1. I accept that the request for provision of the bill is inconvenient and patently annoying. However, Ms de Luca-Leonard did not then in June 2016, and does not now, say that the preparation of an itemised bill is or will be impossible, or that its preparation will impose some unreasonable hardship upon her. Indeed, if the suggestions or intimations to be found in the correspondence are taken to their logical conclusion, Ms de Luca-Leonard anticipated both that she will be shown to be entitled to a much larger amount for her legal costs and also that she proposed to, and is entitled to, pursue that difference if there is one. 2. Each party referred me to several authorities, including Yang v Stephen Paul Firth trading as Firths The Compensation Lawyers [2013] NSWSC 676. In that case Hall J dealt with a similar dispute and said this at [90]-[99]: "[90] The LPA is a statutory scheme that is intended to regulate the conduct of legal practitioners and to protect their clients and the public generally from the risks that may arise from engaging in litigation, including in particular, unexpected or excessive legal costs. [91] Part 3.2 of the LPA includes provisions to ensure that clients understand the nature and quantum of legal costs that they may be required to pay as well as mechanisms to facilitate the resolution of disputes about legal costs. [92] I have considered the provisions within Part 3.2 and in particular those contained in ss 328, 332A and 350. Section 332 allows for a law practice to provide a client with a lump sum bill. There is no dispute in this matter that the defendant provided a lump sum bill in giving the plaintiff the memorandum of costs and disbursements on 23 November 2010. [93] The plaintiff, as he was entitled to do, requested on 17 February 2012 an itemised bill which according to s 332A, a law practice "must comply" within 21 days. The defendant has failed to do so. [94] The definition of an itemised bill pursuant to s 302 directly elucidates the relationship between an itemised bill and costs assessments by providing that the form of an itemised bill is detailed in a way that would allow the legal costs to be assessed under Division 11. A detailed breakdown of legal costs in an itemised bill provides relevant information as to how the matter progressed over time and, plainly, exactly what work was undertaken by the law practice. [95] I accept the plaintiff's submission that there are 'legitimate forensic purposes' for the plaintiff to obtain an itemised bill given that the LPA expressly provides two mechanisms under ss 350 and 328 for a client to have, respectively, legal costs or a costs agreement reviewed by a costs assessor. An itemised bill is required in order for a client to make a considered decision as to whether to pursue those remedies by, inter alia, shedding light on the merits of any application that may be made to the costs assessor. [96] I note the significance placed by the defendant on the limitation period provided for in s 350(4) and the requirement for leave of the Court to dispense with that limitation period under s 350(5). However, in my view, the submission by the defendant that the plaintiff is immediately precluded from his right to obtain an itemised bill under s 332A because the limitation period to make an application for a costs assessment has expired must be rejected. [97] The defendant identified circumstances (extracted above at [54]) said to indicate that that preclusion exists. However such circumstances, for example, where the file has been destroyed or where the work was performed over many years before the request, may be regarded as discretionary factors that a Court would consider when determining whether to make an order under s 728. [98] I respectfully agree with the finding by McCallum J in Dale v Firth, supra, that s 728 is, quite necessarily, a mechanism in the LPA to make available a number of remedies to parties and specifically, to remedy a refusal by a legal practitioner to comply with a request under s 332A. It is the discretionary nature of the power of the Court to make an order under s 728 that acts as the qualification to s 332A (rather than s 350) and ensures that a legal practitioner is not unduly prejudiced or oppressed. [99] The defendant also placed significant reliance on the way in which the Court has determined applications under s 350(5), submitting that this should inform the determination under s 728. An application under s 728 is not merely an application under a separate provision under the LPA but it is in fact a different application in substance to one that is made under s 350(5). A s 728 application may be considered a step necessarily taken in order to make an application under s 350(5). However, the existence of s 350(5) does not mean that in determining whether to make an order under s 728 the Court must also determine, on a prima facie or final basis, that a client will be able to satisfy the Court in the manner prescribed in s 350(5) for an extension of time. At most, where in some cases it appears on a s 728 application that particular considerations under s 350(5) may well arise, that may be a relevant matter in the exercise of the discretion under s 728. However, the evidence in the present case cannot and has not demonstrated any such relevant considerations. As a matter of discretion, in this case, s 350(5) does not in my opinion stand in the way of the plaintiff's pursuit of the orders sought." 1. His Honour's detailed consideration and evaluation of the relevant provisions of the 2004 Act has direct application in the present case. 2. Fourthly, I do not consider that there has been an accord and satisfaction, consisting in the lump sum costs agreement between Ms Lukic and Ms de Luca-Leonard, which operates to preclude the present application. As Hall J said in Yang at [100]: "[100] As I have noted above at [68], there is no statutory warrant to limit the power of the Court to make a s 728 order where costs have been paid by a client. In that respect, the defendant's submission that the plaintiff is disentitled from receiving an itemised bill because he has paid the legal costs must be rejected. The circumstance identified by the defendant in written submissions at [2.44], namely, an undue burden upon a solicitor in complying with s 332A (such as where costs have been paid by a client, banked and declared for taxation purposes by a solicitor), are again discretionary factors that may be considered by a Court in making a determination under s 728." 1. Fifthly, I do not consider that the present application is an abuse of process. For example, Hall J said this in Yang at [105]: "[105] The documents tendered in evidence by the defendant are said to evidence an attempt by Mr Barakat to attract or solicit former clients of the defendant and to encourage them to obtain advice and commence proceedings in relation to costs paid. Even if it is accepted that the particular documents evidence such conduct, it does not follow that the plaintiff in the present case does not himself have a real or genuine interest in investigating the costs charged by and paid to the defendant by means of the orders sought in the Summons." 1. The evidence in this case reveals that Ms Lukic considered that she had been "ripped off" by Ms de Luca-Leonard. In context, that expression and Ms Lukic's concern must be taken to include her impression that the proceedings had been settled for less than their true value. However, it is also apparent that Ms Lukic, perhaps with the benefit of advice, now considers, or at least fears, that the sum she agreed to pay for legal costs was excessive. Her desire to examine that prospect is a sufficient and reasonable reason to explain the present application. 2. Ms Lukic also requires the production of her file retained by Ms de Luca-Leonard relating to the work injury damages claim, including the mediation and settlement. There is evidence that Ms de Luca-Leonard has already provided a copy of this file to solicitors that previously acted for Ms Lukic. Somewhat confusingly, however, the evidence before me suggests that Ms de Luca-Leonard still retains the file or some parts of it. There is also evidence to suggest that the file that was provided to previous solicitors was not the entirety of the file. 3. Mr O'Sullivan explained the position relating to the file in response to my inquiry when the proceedings before me commenced: "…so far as requests for the file is concerned, Mr Lukic's [sic, de Luca-Leonard's] evidence is that her file was provided to the plaintiff's sworn [sic] solicitors prior to these proceedings being commenced, attained her file again from archives and offered to make it available to the plaintiff's solicitors the giving of an undertaking that they make up any difference between costs that were payable on a lump sum basis as opposed to higher costs that might be payable on an itemized basis and that undertaking has not been forthcoming…" 1. The issue became even more clouded a little later in the proceedings. Mr O'Sullivan told me this: "Second, from the notion of oppression, my client's evidence is that she has provided everything she has got, three times already, firstly to the plaintiffs during the course of the original working through damages proceeding. Secondly to her former solicitors, Johnston Vaughan who have then passed it on to, sorry, second time after the conclusion to the plaintiff after the conclusion of the work injuries damages proceedings and third time to Johnston Vaughan. I am instructed that there are boxes and boxes of documents and if there is any dispute about that I would seek leave for oral evidence about the volume of the material. … And the proposal that is now put forward, because the plaintiff thinks there are some documents that should be amongst those boxes but aren't, my client should be put to the expense and trouble of photocopying boxes and boxes of documents." 1. Mr Stitt's response put this in context: "What troubles me your Honour we have just heard from our learned friend that there are boxes and boxes of material. My instructing solicitor has told me that he never received boxes and boxes of material. He has received a small file about 10 centimetres high. So I am troubled that there is a large amount of material that has not been provided. … It certainly does not represent boxes and boxes of stuff. If my learned friend is right in his submission, the idea that they provided the entire file is extraordinary because we just have not seen it. Your Honour, there must be a quick way through this." 1. Mr O'Sullivan responded: "HIS HONOUR: Mr O'Sullivan, you made reference to boxes and boxes. Mr Stitt says, or Mr Hernandez says, they do not have those. What was that a reference to? … O'SULLIVAN: I am told that all of the relevant documents were provided to the client as and when they arose, and if a piece of correspondence to go out my client the practice is to send a draft to the client first for approval by e mail, and that she retrieved boxes from archives and they were provided to Johnston Vaughan. How that has come to a 10 centimetre thick bundle she does not know but it would seem very strange that a claim for workers compensation damages that settled for $300,000 would yield a very thin file. It would seem far more plausible that there were more documents. It may be something has fallen through the gaps at Johnston Vaughan. I don't have an explanation for that. What my instructions are, is that firstly my client's practice was to provide the documents as and when they came into existence to the client, she then provided the documents again after the conclusion of the matter to the plaintiff, and then she retrieved them and provided them to Johnston Vaughan, and she has retrieved them from archives again now and has at all times been willing to provide them subject to the provision of undertakings so she is not sent on a long and to her an expensive exercise for what might ultimately be an exercise in futility given that the time for a costs assessment time has passed." 1. Mr Stitt had the last say: "It was put that paragraph 19.2 of Ms Lukic's affidavit talks about provision of the files. My friend said there was no challenge to that evidence. Your Honour has heard from both the bar table and evidence of Mr Hernandez in cross examination and also in his affidavit. We have not got his material so there is a challenge to, it ought not be forgotten Mr Hernandez's evidence was that he got about 10 centimetres worth of material and my learned friend on his feet said boxes and boxes. And I don't what that means, I think the Court ought to be troubled by the fact that there appears to be a discrepancy about what it is in the file." 1. Ms de Luca-Leonard's evidence at paragraph 19.2 of her affidavit, is relevantly as follows: "19.2 The plaintiff did contact me after the case was closed and said to me, Are you available to assist me again legally with another case? I have had an accident. At that time I was busy with other matters and apologised that I was not free. The plaintiff said to me, I want to thank you for all your professional help in my case against the hospital once more. And for looking after me with fees. Please we still want you to have a barbeque with us. In light of that discussion I was surprised to hear from Johnson Vaughan lawyers asking me for a copy of my files. I had given the plaintiff a complete copy of them but gave the solicitors a further copy of them. I was surprised when Mr Hernandez asked for more of the file as the files were bulky and the plaintiff had by then received 2 complete copies of them." 1. Ms de Luca-Leonard was not tested on her evidence in general or that paragraph in particular. In the circumstances I am prepared to accept that she has provided a complete copy of her file to Ms Lukic's previous lawyers but that she retains the original of that file herself. This is undoubtedly so as her indication given to Mr Hernandez in mid-2016 that she would provide an itemised bill of costs could only have been understood in the context that she retained the whole of Ms Lukic's file. The preparation of an itemised bill of costs in such a matter could not possibly have been prepared without access to such a file, especially the correspondence and files notes that it must have contained. Conclusions 1. In my opinion, Ms Lukic is entitled to an itemised bill of costs as requested. I am however satisfied that the relevant file has already been produced. Ms de Luca-Leonard, a solicitor of this Court, has given sworn evidence that that is so. It would be an obviously very serious matter if that evidence were false. I am not prepared on the material before me to conclude that it is. Costs 1. The summons seeks costs on an indemnity basis. Such an application was long ago foreshadowed in the correspondence, referred to in my earlier judgment. 2. Mr Stitt's written submissions reiterate that claim. No submissions on costs on any basis have been made by Ms de Luca-Leonard. I will refrain from making a final order as to costs until Mr O'Sullivan has had an opportunity to address the issue of costs in general and indemnity costs in particular. Orders 1. I make the following orders: 1. Order pursuant to s 728(1)(a) of the Legal Profession Act 2004 that the defendant provide to the plaintiff a bill of costs in itemised form of costs and disbursements in respect of the legal services provided by the defendant to the plaintiff in connection with the plaintiff's claim for work injury damages. 2. Reserve costs of the plaintiff's application pending final submissions. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 23 June 2017