Redundancy and the redistribution of duties
Under the Fair Work Act 2009 (Cth) (the Act), a business cannot simply make an employee redundant without cause. The redundancy must be genuine and the employer must comply with their obligations under the Act and any employment agreement. In assessing whether a redundancy is genuine regard is to be had to section 389 under which there are three general criteria:
- The employer must no longer require the employee’s job to be performed by anyone because of changes in operational requirements;
- The employer must comply with any consultation obligations it has under a modern award or enterprise agreement; and
- Redeployment within the employer’s business or an associated entity must not be reasonable in the circumstances.
An example of the assessment of redundancy procedures by the Fair Work Commission (FWC) is the case of Broudou v Eurolinx Pty Ltd [2019] FWC 4469. In this case a Technical Service Manager challenged his redundancy alleging that it was an unfair dismissal on the basis that the redundancy was not genuine. The employee claimed that given duties of his role still existed within the business, as demonstrated by the redistribution of tasks to other employees, there could be no redundancy.
The employer responded that the redundancy was a result of a downturn in business, a 15% reduction in sales and a 15.7% reduction in service activity, which necessitated a reorganisation of the business. As a result, the employee’s duties were distributed amongst four other employees rendering the technical service manager role redundant. The basis for this decision was nothing more than ensuring the sustainability of the business in face of the commercial challenges.
Deputy President Boyce held that section 389 is not concerned with whether duties survive, rather it is concerned with whether the job performed by the employee exists. Whilst a job is “a collection of functions, duties and responsibilities entrusted, as part of the scheme of the employers’ organisation, to a particular employee”, where a redistribution results in no continuing need for someone to perform a job, that job will not be required by the employer.
The Deputy President stated:
“The law more-or-less permits an employer to structure their business as they see fit. In this instance, the Fair Work Commission can take no recourse against what is clearly within the bounds of managerial discretion.”
On this basis, and in the absence of evidence that the employer did not comply with any obligations regarding redundancy or that there were reasonable redeployment or retrenchment options, the Deputy President concluded that the redundancy was genuine.
Court rejects bankrupt’s international travel request
A recent decision of the Federal Circuit Court has refused a bankrupt’s application to travel overseas after the bankrupt demonstrated total disregard for the obligations arising under his bankruptcy status.
On 28 November 2019, Sher Khan made an application under section 27 of the Bankruptcy Act seeking review of a decision by the trustee which prohibited him from travelling overseas. In doing so, Mr Khan gave evidence that he wished to travel abroad and that he had done so previously.
The trustee submitted that Mr Khan’s application was refused because his conduct had been inconsistent with his obligations as a bankrupt. In this respect, Mr Khan had failed to disclose information pertaining to proceedings that were underway in New Zealand in respect of his assets and in which he had claimed $3 million. Further, Mr Khan had treated a charity as if it were his own funds.
In deciding the case, the court was particularly concerned by the fact that in the New Zealand proceedings, Mr Khan had supplied an affidavit in which he claimed that he was not bankrupt. Accordingly, Judge Street concluded that Mr Khan’s false affidavit demonstrated that he had no understanding of his obligations as a bankrupt.
Ultimately, his Honour held that it was not appropriate to permit a grant of leave to the applicant to travel overseas. This was on account of the concerns expressed by the trustee and Mr Khan’s apparent lack of understanding surrounding his bankruptcy status and his subsequent obligations.
Mind Your Language
In the recent case of Boris v Metcash Trading Limited T/A Metcash [2019] FWC 3993, the Fair Work Commission assessed an unfair dismissal claim by an employee who claimed that his swearing in a formal meeting was “conversational swearing”, effectively that when he did swear in conversations it was not directed at anyone and that the workplace was one where “people use intemperate language and tensions.”
The employee was a part-time store person for Metcash working 20 hours and was dismissed for serious misconduct; namely his conduct at a meeting regarding a confrontation he had with a supervisor several days earlier.
The employee had failed to comply with a supervisor’s instruction to attend a debrief meeting later that day. The employee recorded this instruction despite the supervisor’s instruction not to, claiming that the recording was done to demonstrate requests for advanced notice and time to arrange a representative to attend. Evidence from other Metcash staff provided that there was historical antagonism between the employee and this supervisor.
In accordance with the wishes of the employee the performance review was held several days later. In arranging this meeting, the supervisor texted the employee and called him three times on his day off without leaving a message.
Metcash claimed the employee was aggressive, intimidating and his discourse was laden with expletives, at one point saying to his supervisor: “Under no circumstances are you to contact me out of work hours for any reason whatsoever. If you ever harass me out of work hours again, I will tell you exactly what I think of you and your mother.” This conduct in conjunction with the prior confrontation and poor behaviour were used as the basis for termination.
At the hearing the employee admitted to the swearing and making the reference to the supervisor’s mother. The employee however submitted that the swearing was not directed at anyone and that the workplace was one that permitted swearing. The employee further submitted that the reference to the supervisor’s mother was borne of frustration with the supervisor’s conduct toward him. The employee admitted that while his language and comments warranted censure and discipline, this did not constitute a sound reason for dismissal in light of all the case facts.
Deputy President Beaumont noted that:
“Apparently, ‘conversational swearing’ appears to be dialogue punctuated by the occasional or perhaps often cited profanity … I assume that the reference to ‘conversational’ is because the offensive words are buffered by a tone and voice volume that would otherwise be considered ‘conversational’. Hence, to speculate, such profanities become accepted part of the meeting vernacular because they are couched in such a way.”
However, this argument was rejected:
“I do not accept that ‘conversational swearing’ … is acceptable conduct in a meeting where conduct issues are being discussed, or allegations are being traversed, or a person has been asked to show cause. Whether that person is the employee against whom allegations are made, or the person facilitating or running the meeting, makes no difference.”
On this basis, the employee’s conduct was held to be in breach of the Metcash Code of Conduct which constituted a valid reason for dismissal.
In the contrasting case of Matthews v San Remo Fisherman’s Co Operative [2019] FWC 4877, the FWC did not find that swearing by an employee during a confrontation with a general manager was aggressive, abusive, or enough to constitute a valid dismissal.
In that case the employee, a pelican feeder, had been approached by the Co-Op general manager on several occasions to request details about revenue raised from badge sales by a separate entity known as the Pelican Research Group, of which the employee was a member. The employee denied these requests each time until he was asked a similar question by a visitor. The employee subsequently confronted the general manager concerned that this was a set up.
During the confrontation the employee said to the general manager “what you did was very f***ing disrespectful”, to which the general manager replied that it was “effing offensive that you would make such an accusation”. The employee was subsequently dismissed by email due to his refusal to disclose information about the badge sale, his offensive accusation toward the general manager and his conduct in swearing at the general manager.
Commissioner Gregory was not satisfied any of the above reasons constituted a valid reason for dismissal. On the point of the employee’s swearing, the Commissioner found that the employee’s language was used in frustration and not directed with any aggression or threat, and it was in the context of a robust discussion between employees who otherwise had a good relationship. In addition, Commissioner Gregory held that there was little distinction between the terms “f***ing” and “effing” and that it was simply an exercise in hair splitting to suggest that the general manager’s language was somehow more restrained or differing in intent.
From these cases we can see that the general workplace culture, as well as the relationship between employees and/or employers and the context of any conversation, will determine what is and isn’t acceptable conduct. Notwithstanding this, it is very apparent that abusive or threatening language is wholly unacceptable and will not be accepted in any circumstances.
Whilst swearing may be an aspect of certain workplace cultures, it does not excuse inappropriate or abusive swearing directed at others and is a valid reason for dismissal as concluded by the Fair Work Commission (FWC) in Pridham and Rose v Viterra Operations Pty Ltd T/A Viterra [2019] FWC 1018.
10 tips for effective settlement agreements
When parties to a dispute reach a compromise, it is important that the terms of the compromise are recorded in writing and that the settlement agreement is binding.
A settlement agreement recognises that the parties to a dispute have formulated a resolution and signals the end of the dispute. The agreement may be entered into at any time before a proceeding commences, and if proceedings have commenced, at any time before judgment is handed down.
Important Considerations
In drafting a settlement agreement, it is important to have regard to some key considerations:
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- The agreement should clearly state the terms of settlement;
- The agreement should clearly state and identify the parties to the agreement, to ensure the person executing the agreement has authority to execute. This is particularly so where a party is a company or a Trustee of a trust;
- Any conditions to the settlement that are required to be met prior to either payment of the settlement sum or the proceedings being discontinued;
- The timing of the payment of a settlement sum and also the consequences of non-payment;
- Where a settlement sum is being paid, tax implications may arise and need to be considered;
- Generally settlement agreements include a unilateral release of claims from both parties and it should state the extent of the releases given;
- If proceedings are on foot, the settlement agreement should include clear terms on the discontinuance of the proceedings including whether there will be any order as to costs;
- The agreement should be clear on which party is bearing the cost of preparing the agreement. Generally, each party bears their own costs;
- Commonly, settlement agreements include an obligation that the parties must keep the terms of the agreement confidential, except for limited disclosure purposes;
- The settlement agreement should contain a term with respect to the governing law of the agreement should a dispute/breach arise.
Effective Settlement Negotiations
Here at JCL, we strive to understand our client’s needs and provide the best overall solution. We encourage mediation and compromise. If the parties to a dispute can reach a compromise and avoid the costs, time, and stress of having to go to court, this is always the best result. All parties should feel comfortable with the outcome however, compromise is based on give and take.
Settlement negotiations can be daunting and overwhelming. Here are some practical tips for effective settlement negotiations.
Before entering into settlement negotiations:
- Have an understanding of the outcome you or your client are hoping to accomplish. What is the most optimistic result that realistically could be achieved? Also importantly, what is your “bottom line”. Identifying these two positions will give you a direction and focus and will enable you to negotiate towards a specific goal;
- Be prepared. Know your case;
- Take into consideration the interests and goals of the other party and what outcome they are trying to achieve. This will assist in negotiating a resolution.
During settlement negotiations:
- Do not get personal. Focus on resolving the problem;
- Ask questions and understand the other party’s position. There may be valid reasons limiting the other side’s ability to reach an agreement. There may be other issues hindering a resolution which once known, can be discussed and resolved;
- Explore alternatives to a monetary only resolution;
- Do not leave the room until the agreement is recorded in writing. You will likely not have enough time to prepare a settlement agreement, but have the parties sign a document that sets out the general terms that have been agreed.
Are Queensland roads safer as from 1 February 2020? Probably not!
Under stricter penalties introduced from 1 February 2020, Queensland drivers caught illegally using a mobile phone while driving will receive a $1000 fine and 4 demerit points. Keeping in mind that drivers on an open licence receive a sanction after accumulating 12 demerit points within a 3-year period and all other licence types after accumulating just 4 demerit points, the penalties are significant. But will the changes work to make our roads safer or will they simply raise more revenue?
Relevantly, section 300 of the Transport Operations (Road Use Management – Road Rules) Regulation Queensland provides:
‘Holding’, although not defined in the Act, is ordinarily defined as gripping or grasping. Presumably wearing a watch with phone capabilities will not be ‘holding’ but tapping the watch might be.
Accordingly, the way in which the legislation is drafted suggests that conduct will not be illegal unless the driver has physically picked up, and is holding the phone in their hand.
It could be argued that placing a phone in a dash mount, and tapping the screen to accept calls or change music, would not be in breach of the law but it could be. Similarly, despite subsection 2(b), placing a phone on the passenger seat or in the driver’s lap, and reading a text message would not appear to constitute a breach unless the driver picked up the phone to read it.
On the contrary, if you enter a drive through and use your iPhone to pay for your meal with Apple Pay, you would appear to have broken these laws upon picking up your phone.
It is submitted that the law, as it is currently drafted, is therefore ineffective in achieving its objective of ensuring safer roads. There is no doubt that a person taking their eyes off the road to read a text message, even with both hands on the wheel, is far more dangerous than one who has pulled up at a drive through and opted to tap their phone, rather than credit card, on the eftpos machine. But what of a person who takes their eyes off the road to change the radio or even adjust their air-conditioning? That is not an offence but might have the same effect.
Drivers do get distracted whilst driving but laws cannot be enacted which will prevent all distractions. It is clearly appropriate to introduce a law to punish inappropriate use of mobile devices, as we all too often see people texting while driving. However, the penalties seem too harsh, particularly when there are similar distractions that cannot be avoided. Before introducing these laws, the government ought to have first considered drafting the legislation to redact the requirement that the driver must be holding the device. The provision is unnecessarily restrictive and provides limited further protection to Queensland’s drivers. Instead, in implementing more carefully considered legislation, regard ought to be had to the practical consequences of the law.
Legal professional privilege doesn’t apply where privileged material obtained by unauthorised means
Legal professional privilege (LPP) is a fundamental aspect of the lawyer-client relationship. The purpose of the privilege is to protect the confidential character of communications or documents created when a client seeks legal advice. The scope of applicability has been well defined for some time, however a recent case before the High Court has provided further guidance as to whether LPP can be enforced as a cause of action.
The case of Glencore International AG v Commissioner of Taxation [2019] HCA 26 concerned global mining group Glencore which had obtained legal advice from a firm based in Bermuda in relation to a restructure of its Australian operations. The documents created as a result were stolen from the firm’s electronic file management system and provided to the International Consortium of Investigative Journalists. These documents, amongst many others, formed what was known as the “Paradise Papers”. The Commissioner of Taxation subsequently came into possession of a copy of these documents.
Upon discovering the Commissioner’s possession of the documents, Glencore asserted LPP and requested the Commissioner return the documents and provide an undertaking that they would not be referred to or relied upon. The Commissioner declined these requests. Glencore subsequently brought proceedings seeking:
- An injunction in equity restraining the use of the documents; and
- An order for the return of the documents.
The Commissioner argued LPP did not extend to an actionable right by Glencore to bring proceedings for injunctive relief. Alternatively, the Commissioner argued he was not refrained from using the documents and was entitled and obliged by section 166 of the Income Tax Assessment Act 1936 (Cth) to use the documents in his possession. The matter was settled on the first basis and it was unnecessary to consider the alternative argument.
The High Court unanimously dismissed Glencore’s claim. The High Court acknowledged that while LPP is an important immunity it is not a legal right on which a cause of action can be based. In effect, LPP is a shield not a sword.
Despite this, a party may be able to rely upon LPP when seeking an injunction to restrain a breach of an obligation of confidentiality. This line of argument was not open to Glencore as the documents were already in the public domain as a result of the leak. This does give rise to the unfortunate inference that stolen documents may in some cases be admissible in court. The High Court acknowledged this inconsistency but did not address how this would be remedied. This will likely be reconciled with reference to established laws of evidence; however, it remains a live issue for now.
AFSA launches online lodgements
In an effort to simplify the process of applying for bankruptcy, the Australian Financial Security Authority have combined the Statement of Affairs and Debtor’s petition forms and moved the service online.
Under the move, which commenced 2 January 2020, an individual seeking to apply for bankruptcy or needing to file their statement of affairs following a sequestration order, will need to do so via the free online portal. In doing so, applicants will need to complete the new Statement of Affairs form which features simplified language and fewer questions than its predecessor.
In unveiling Bankruptcy Online, AFSA has noted that while individuals may continue to have a registered trustee manage their bankruptcy, they cannot have the registered trustee submit an application on their behalf. However, the portal will allow individuals to upload the trustee’s signed consent form to submit with their application. If the application is accepted, AFSA will then appoint the trustee to the administration and notify them in accordance with existing practices.
Despite encouraging the use of Bankruptcy Online and warning that applicants will no longer be able to submit the former Debtor’s Petition and Statement of Affairs forms, AFSA has assured individuals that those without internet access may request that a paper version of the new form be posted to them.
Director reprimanded for failing to comply with PAYGW obligations
In the matter of Deputy Commission of Taxation v Thomas Wilson [2018] NSWDC 302, the New South Wales District Court found against a company director for failing to comply with his duties. In doing so, Mahoney SC DCJ refused to mitigate on the basis of the director’s ‘difficult’ co-directors, asserting that there is no reprieve available to directors who fail to uphold their obligations.
In April 2015, Global Piling Contractors Pty Ltd was incorporated, with Mr Wilson, Mr Wheatley and Mrs Wheatley appointed as directors. Mr Wilson and Mr Wheatley each owned a 50% share in the company.
According to Mr Wilson, it was agreed at the time of incorporation that the directors were not employees of the company and thus would not receive salaries. Rather, they would draw money by way of dividends. In fact, the company was to have no employees, but would instead engage the services of contractors as required.
However, in 2015 the company withheld monies due to the Deputy Commissioner of Taxation on two occasions, before lodging Business Activity Statements which identified two amounts withheld for PAYG tax on employee salaries. The PAYG tax was never paid. Accordingly, in February 2016, Mr Wilson was issued with a Director Penalty Notice (DPN) for failing to remit PAYGW to the value of $111,798 to the ATO.
At trial, Mr Wilson submitted that from the time of incorporation until he received the DPN, he believed the company had systems in place to ensure it complied with its taxation obligations and remitted all amounts due to the ATO. He asserted that he thought those sums would be limited to GST and upon receiving the DPN, he did not understand that the amounts claimed were on account of taxes withheld by the company for wages paid to employees.
Moreover, Mr Wilson submitted that upon receiving the DPN, he phoned Mrs Wheatley who informed him that the amounts claimed in the DPN were on account of taxes withheld from wages paid to workers and not remitted to the ATO. Mr Wilson was also informed that Mr Wheatley had been hiring employees, rather than engaging contractors - a decision which he submitted he had not previously been made aware of. Further, Mr Wilson was informed that both Mr and Mrs Wheatley had also received a DPN and that ATB Partners would be engaged to formulate a payment plan with the ATO.
On 22 February 2016, at Mr Wilson’s request, a meeting of the company was held to discuss the outstanding taxation liability and the company’s ability to pay it. With no involvement in the day-to-day running of the company, and concerned that the company was insolvent, Mr Wilson was apprehensive about his exposure as a Director under the DPN. He subsequently moved a resolution that the company enter into voluntary administration. However, Mr and Mrs Wheatley contended that the company was simply experiencing a ‘temporary lack of liquidity’, and consequently dismissed the motion. They also rejected a secondary resolution by Mr Wilson that the directors convene a general meeting of the members of the company for the purpose of appointing a liquidator.
Mr Wilson subsequently sought legal advice on how to put the company into administration or cause the company to be wound up to avoid liability under the DPN. Mr Wilson was informed that he alone could not put the company into the administration, and that in order to avoid liability under the DPN, the company would need to pay its outstanding taxation liabilities. Mr Wilson was also advised that he could apply to the court for a winding up order but that it would be a difficult process and that by the time an application was heard in court, the time for compliance with the DPN would likely have expired.
In August 2016, Mr and Mrs Wheatley agreed to appoint an administrator, who the court subsequently appointed as a liquidator.
In September 2018, the matter was brought before Mahoney DCJ, with the Deputy Commissioner of Taxation alleging that pursuant to section 255-45 of the Taxation Administration Act, it had a prima facie entitlement to the debt due by virtue of an evidentiary certificate. However, Mr Wilson relied on the statutory defence under s 269-35. Accordingly, the court was required to determine whether Mr Wilson had taken “all steps which were reasonable, having regard to the circumstances of which the defendant, acting reasonably, knew or ought to have known, to ensure that the directors complied with the section.”
Having considered the test in Saunig, the court held that the Mr Wilson had failed to take all reasonable steps, concluding that he “failed to inform himself of the way in which the company was being managed and operated.” In doing so, Mahoney DCJ held that Mr Wilson ought to have known that the company was incurring a tax liability by way of PAYGW. His Honour also concluded that there were further steps available to Mr Wilson, including calling another meeting to persuade his co-directors to appoint an administrator or to have brought an application for leave to wind up the company. Mr Wilson was therefore ordered to pay the debt in the amount of $111,798 plus interest, pursuant to section 100 of the Civil Procedure Act 2005.
Ultimately, this case serves as a warning to other directors that they cannot claim ignorance to satisfy the objective test and absolve their duties as a director.
Federal Court sets aside statutory demand in respect of unpaid legal costs issued during the period in which costs may be assessed
The recent Federal Court of Australia decision of Rusca Bros Services Pty Ltd v Dlaw Pty Ltd, in the matter of Rusca Bros Services Pty Ltd (No 2) [2019] FCA 1865 serves as a timely reminder that a statutory demand may be at risk of being set aside when issued in circumstances where a statutory period for assessment of costs comprising the debt claimed has not yet expired.
Background
Rucsa Bros Services Pty Ltd (Rusca) engaged Dlaw Pty Ltd trading as Doyles Construction Lawyers (Doyles) to act on their behalf in a dispute with Lendlease Building Pty Ltd (Lendlease) connected with construction works at RAAF Tindal in the Northern Territory in about September or October 2017.
Throughout the course of the retainer, Doyles rendered invoices to Rusca totalling $500,529.79. Rusca paid a total of approximately $300,000 to Doyles between about October 2017 and about March 2018.
In April 2018 a director of Rusca sent an email to Mr Doyle of Doyles expressing surprise at the size of the recent invoice given the significant fees already paid to that point and stating that Rusca would need to go through each of the bills to ensure that they were reasonable.
On 8 May 2018, Rusca requested that Doyles provide it with an itemised invoice for all of the bills rendered by Doyles to Rusca. By section 187(3) of the Legal Profession Uniform Law (NSW) (LPUL) Doyles were required to provide the itemised bill within 21 days of the request. The equivalent provision in Queensland, secion 332 of the Legal Profession Act 2007, provides that a firm must provide an itemised bill within 30 days of such a request.
Also on 8 May 2018, Rusca received a statutory demand from Doyles dated 7 May 2018 seeking payment of a total sum of $191,022.15 being the unpaid balances of 3 invoices issued in February, March and April 2018 less funds held in trust.
On 25 May 2018, Rusca filed an application to assess the costs charged to it by Doyles over the course of the retainer.
As at the date of the hearing, whilst the costs assessor had completed his assessment of the costs, his fees had not been paid and neither Rusca nor Doyles had taken steps to obtain the costs assessor’s Costs Determination (the equivalent of a certificate of assessment in Queensland).
Statutory Demand
Rusca applied under sections 459H and 459J of the Corporations Act 2001 (the CA) to set the statutory demand aside.
The grounds relied upon included, relevantly:
- as the legal costs comprising the debt the subject of the Demand were the subject of an assessment application, there was a statutory prohibition on proceedings to recover the costs and the debt the subject of the Demand was not presently due and payable; and
- Doyles had failed to give an adequate estimate of total legal costs at the commencement of the retainer and as a result, was not permitted to commence or maintain proceedings for recovery of its costs until the costs had first been assessed. This also constituted a statutory prohibition on proceedings to recover the costs and for this reason as well, the debt the subject of the Demand was not presently due and payable
In ordering that the Demand be dismissed, Markovic J referred to section 198(7) of the LPUL. That section provides that once an application for costs assessment has been made:
the law practice must not commence any proceedings to recover legal costs until the costs assessment has been completed.
There are similar provisions in other jurisdictions in Australia. The Queensland equivalent is section 338 of the Legal Profession Act 2007 (LPA), which is identical to section 198(7) of the LPUL save that a law practice may commence proceedings with the leave of the court.
Her Honour cited authority to the effect that:
if a statute prohibits commencement of proceedings to recover a debt, then so long as the statutory prohibition remains in place the debt is not “due and payable” and consequently cannot found a statutory demand.[8]
Her Honour held that:
the statutory prohibition in s 198(7) means that the debt the subject of the Demand can no longer be said to be immediately “due and payable” as required by s 459E of the Act. This is because the debt the subject of the Demand cannot presently be enforced by action by the commencement of any proceeding for recovery. That is so even if the Demand was served prior to the commencement of the Assessment Application. While the debt might have been due and payable at the time of service of the Demand because there was no prohibition on the commencement of a proceeding for recovery at that time, that status changed as soon as the Assessment Application was filed.[9]
After determining that the costs assessment application was not complete because the Costs Determination had not been obtained, in the result her Honour held that:
the Assessment Application is not complete. As that is the case, it follows that Doyles is precluded by s 198 of the LPUL from taking steps to recover its costs and, in those circumstances, the debt the subject of the Demand is not due and payable and the Demand should be set aside pursuant to s 459J(1)(b) of the Act.
Other grounds relied upon
Her Honour also dealt briefly with other grounds relied upon by Rusca in order to set aside the Demand, including, relevantly, the contention that Doyles had failed to provide a proper estimate of legal costs at the commencement of the retainer.
Her Honour held that Doyles had failed to give sufficient costs disclosure (noting that the estimate given at the outset ultimately comprised 2% of the total costs billed) and that by operation of section 178 of the LPUL, Doyles could not commence or maintain proceedings to recover the legal costs until they had been assessed, with the result that the costs the subject of the Demand would not be payable until they had been assessed.
There are also equivalents to section 178 of the LPUL in other Australian jurisdictions. The equivalent provision in Queensland is section 316 of the LPA, which provides that a client “need not pay the legal costs unless they have been assessed” in circumstances where adequate disclosure has not been made.
Conclusion
The key takeaways for practitioners from the decision are:
- If a client files a competent application for costs assessment after a statutory demand has been issued in respect of unpaid legal costs, the statutory demand is liable to be set aside pursuant to section 459J(1)(a) of the CA on the basis that the costs the subject of the statutory demand are not “due and payable” until the costs assessment process is complete.In Queensland, a client may apply for assessment of costs without leave within 12 months of receiving the final bill or request for payment, so the period of risk extends for at least that length of time; and
- A court may be prepared to in effect ‘look behind’ a statutory demand issued in respect of unpaid legal costs to determine whether adequate disclosure has been made for the purposes of the applicable statutory regime and if it determines that it has not, the statutory demand may be set aside as a result.
