By Charlotte Morson -
Snapshot
- Ordinarily, a solicitor who has not disclosed costs to a client, as required by the Uniform Law, may not commence proceedings to recover those costs until after the costs have been assessed, or a costs dispute is determined by the local regulatory authority.
- However, the NSWCA has decided a party who recovers party/party costs on the basis it is liable for solicitor-billed costs cannot resile from that position later, even if the solicitor has not disclosed those costs.
- A solicitor who has not disclosed costs to the client may be able to recover otherwise statute-barred costs in these circumstances.
In the determination of costs payable to a party (costs applicant), pursuant to a costs order in NSW, the costs applicant must establish they are liable to pay the costs they are seeking to recover. These costs do not need to have been paid, but there should be evidence of liability in the form of either a costs agreement or invoice.
An issue can arise where a costs applicant recovers costs billed by its solicitor from another party to proceedings, pursuant to a party/party determination in a costs assessment, but then disputes the solicitor’s bill on a solicitor/client basis. An even more complex issue can arise where the solicitor would otherwise be statute barred from recovering those unpaid fees by reason of the operation of the Legal Profession Uniform Law (NSW) (‘Uniform Law’) in circumstances where the solicitor has failed to disclose.
Pursuant to the Uniform Law, solicitors have an obligation to provide disclosure to clients in respect of legal costs. The disclosure requirements are set out at section 174 of the Uniform Law, and include providing the client with the basis on which legal costs will be calculated (for example, on an hourly basis and applicable rate, or a fixed fee basis), and an estimate of the total legal costs. It also includes the provision of certain information in respect of the client’s rights.
A recent judgment handed down in the NSW Court of Appeal, Rahme v Kekatos Lawyers Pty Ltd [2024] NSWCA 31 (‘Rahme’), gives guidance to practitioners (and costs assessors) on the ramifications for a party who puts forward a submission that it is liable for certain costs, but later seeks to withdraw that submission by refusing to pay the costs to its solicitor.
