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$550k bill remains after failed costs bid

A former client of a Brisbane law firm is facing a bill of more than half a million dollars after failing in his bid for a costs assessment.

Nicholas Stephen Smith applied for an order under Section 335(1) of the Legal Profession Act 2007 (Qld) (LPA) in relation to a $549,923.65 bill from FCB Workplace Law (FCB).

FCB had provided legal services to Mr Smith between May 2018 and July 2021 in relation to unlawful dismissal proceedings in the Federal Circuit Court and on appeal in the Federal Court.

The District Court this month dismissed his application, after considering the reasons he gave for not making the application within the required 12 months after the bill was issued.

The court was told an initial cost disclosure had been provided to Mr Smith in May 2018, estimating a cost of $85,000 (excluding GST) for an anticipated two-day hearing in Federal Circuit Court.

The hearing was eventually conducted over six days between July and November 2019.

By September 2018, the cost estimate had increased from $85,000 to $145,000, by December 2018 to between $190,000 to $199,000, by July 2019 to between $220,145 and $232,145, by October 2019 to $289,821, and by the final costs disclosure in January 2020, to between $324,782 and $330,782.

Ultimately, Mr Smith was awarded $603,364.59 in compensation, and his former employer ordered to pay 60 per cent of his costs.

The court was told FCB then provided a costs disclosure to Mr Smith for the subsequent appeal, estimating a cost of $111,700 (excluding GST). The appeal, which was held throughout 2020, reduced the compensation to $125,461.

Mr Smith terminated FCB’s retainer in July 2021, with FCB refusing to agree to a costs assessment.

He filed his costs assessment application in February this year. The prescribed 12-month period to bring the application for the initial proceedings expired in February 2021 and for the appeal proceedings, in May or June 2022.

To explain the delay to District Court Judge Sheridan, Mr Smith pointed to continuing physical and mental ill health; divorce; not knowing the extent of the costs charged; and not wanting to jeopardise his relationship with FCB.

In her decision delivered last week, she said none of his explanations was “particularly persuasive”.

“He had various health conditions, but none of them prevented him from engaging in various actions against others nor challenging his solicitors’ invoicing and costs during the period of the retainers,” she said.

“He was obviously unafraid of jeopardising his relationship with his solicitors in doing so, and the challenges themselves show his awareness of the costs of litigation.”

Judge Sheridan also said there was insufficient evidence to back Mr Smith’s claims of excessive fees, and that “the ultimate costs have the hallmarks of being the product of proceedings which simply became expensive; not the product of overcharging”.

Mr Smith submitted that “the matter should not have ever progressed any further than the cost of preparing and sending a threatening letter of demand”, and that when costs escalated, he felt trapped and “couldn’t walk away”.

He also submitted that FCB did not explain the complexities of the matter or the potential for cost escalation.

FCB stated the various factors which resulted in the cost increase, including problems with instructions from Mr Smith, interaction with a Fair Work claim, involvement of an insurer, involvement of family lawyers, extensive submissions required as to quantum, and investigation of a potential misleading and deceptive conduct claim.

“The evidence indicates that the steps required in the proceedings expanded beyond what was originally envisaged,” Judge Sheridan said.

“It is unfortunate that this occurred and that the costs expanded with the additional steps required to bring the claim to a successful conclusion.

“The judgment amount ultimately obtained indicates that it was reasonable to prosecute the claim beyond a letter of demand.”

She said Mr Smith was aware of the 12-month limitation period for filing an cost assessment application, and the absence of legal representation did not prolong this.

“His right to have his costs assessed and the limitation on his right to do so was set out in the disclosure notice forming part of the costs agreements and also appeared at the foot of each invoice,” she said.

“He obviously read these documents and was aware of their contents given the detailed queries made by him about the cost disclosures and the invoices during the period of the retainer.”

Judge Sheridan also ordered Mr Smith pay FCB’s legal costs within 14 days.

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