2022 Contentious Business Determinations

By Clare Thompson SC Chair, Legal Costs Committee

Eight new contentious business costs determinations have been made by the Legal Costs Committee. They have all been published in the Government Gazette and came into effect on 1 July 2022.

These determinations apply to all litigation in all State Courts and the State Administrative Tribunal, unless you have entered into a valid costs agreement with your client. You should remember that it is unlawful to contract out of the determinations for some types of legal work.

The new determinations are the result of reviews undertaken by the Legal Costs Committee of the contentious business determinations which commenced operation on 1 July 2020.1 They are the last determinations to be made under the Legal Profession Act 2008.

The major items arising from the 2022 reviews are:

a general rate increase of about 5%, the first across the board increase since 2014;

increasing the allowances for pleadings; changes to discovery and inspection; an additional 10 hours for preparation of case; and lifting of certain limits for work done in historical child sexual abuse matters.

The review process

The Legal Costs Committee is required to review each determination it makes within 2 years of it being published. The Committee’s practice for many years has been to review contentious business determinations in even numbered years and non-contentious determinations in odd numbered years.

In undertaking its reviews, the Committee seeks submissions from the legal profession including the Courts, Law Society of WA, WA Bar Association, Criminal Lawyers Association, Family Lawyers, and from the general public. In November last year the Committee wrote to many legal organisations seeking submissions. We also published an advertisement in the West Australian, and on our own website and on the Supreme Court, SAT and Family Court of WA websites.

In February 2022, the Committee held a seminar with members of the Law Society to discuss issues with the determinations and found this to be a very useful and insightful forum. We were particularly interested in hearing of practitioners’ experiences of COVID-19 measures and the impact on their business costs.

The Committee also held meetings with practitioners who undertake historical child sexual abuse cases, so as to gain a clearer insight into the work required to bring this type of claim to a conclusion. We are indebted to the practitioners who met with us and assisted in our enquiries so that we were able to gain an informed insight into the work they do.

As always, the notes in the first several pages of the determinations form part of the determination and should be read in conjunction with the various tables or scales. The notes explain in more detail how various items in the scale work and how charges are to be calculated, as well as providing some background on why changes are made.

General increase

2022 is the first year since 2014 that the Committee has decided to implement a general increase across all categories of practitioner and all items of the scales. There were a number of factors we took into account in reaching this decision. These included :

the fact that there had been no general increase for so long; the CPI increases in the year to March 2022;

the unforeseen costs incurred in running legal practices occasioned by the COVID-19 pandemic including purchase of technology, equipment necessary to work from home, training and health and welfare costs; and

labour shortages, which will likely lead to an increase in wages in the next period, particularly for support staff.

Whilst the general rise was calculated on the basis of a 5% increase, the actual change in each individual rate in the determinations varies from this because of the application of the policy of having rates which are divisible by 11, so as to account for the GST component. This means that some rates are rounded up and some are rounded down.

There is also a variation in the increases in different categories of practitioner, in particular, we have increased Counsel rates by proportionally more than Senior Counsel and Senior Practitioner rates, so as to continue closing the gap between Counsel rates and these other rates. This is discussed further in the following pages.

The following tables set out the changes over the past five reviews since 2014 of the rate changes over time.

Supreme, District and Family Court hourly rates inclusive of GST

2014 2016 2018 2020 2022

Senior Counsel 671 682 682 682 693

Counsel 385 396 418 451 473

Senior Practitioner 473 484 495 495 506

Junior Practitioner 330 341 352 352 374

Restricted Practitioner2 n/a 297 297 297 319

Clerk/paralegal 231 231 231 231 242

It is important to keep in mind that the increases are intended to cover the increased administrative costs associated with practicing law in Western Australia, including for example, the cost of providing COVID safe practices, including RATs, masks, sanitiser and additional cleaning. The Committee is of the view these types of items should not be charged as disbursements to clients. 2014 2016 2018 2020 2022

Senior Counsel 528 539 539 539 550

Counsel 319 330 341 363 385

Senior Practitioner 396 407 418 418 429

Junior Practitioner 297 308 319 319 341

Restricted Practitioner n/a 231 231 231 242

Clerk/paralegal 143 154 154 154 165

Absolute and percentage increases in practitioner categories over the period 2014 to 2022:

Supreme, District and Family Courts Magistrates Court and SAT

Senior Counsel $22 3.27% $22 4%

Counsel $88 22.85% $66 20.69%

Senior Practitioner $33 3.43% $33 8.33%

Junior Practitioner $44 13.33% $44 14.81%

Restricted Practitioner3 $22 7.4% $11 4.76%

Clerk/paralegal $11 4.76% $22 15.38%

Counsel fees

The Committee has been working to reduce the gaps between Counsel and Senior Counsel, and between Counsel and Senior Practitioner, over the past three reviews. This has been done in direct response to concerns raised with the Committee regarding the relative levels of the rates, particularly the gap between Counsel and Senior Practitioner.

The table below sets out the changes in the relative rates of Senior Counsel, Counsel and Senior Practitioner over the past three reviews, and compares these to 2014. It shows that since the Committee consciously started closing the gaps, this has been able to be achieved without substantial disruption to the scheme of the determinations. The rates for Counsel have historically always been lower than for Senior Practitioner and substantially lower than for Senior Counsel. The Committee’s view has been, and remains, that the cost of practice is lower for barristers than those in the amalgam and hence there is proper reason for the differential in the rates between Senior Practitioner and Counsel.

It is clear that the changes made to rates over the past several reviews have led to a gradual and disproportionate increase in Counsel rates, which has been a deliberate policy of the Committee so as to address concerns raised by the profession.

In making these changes the Committee was mindful of the fact that, regardless of who does a court appearance, all court appearances by a lawyer in the amalgam or independent counsel at the bar, other than Senior Counsel, are to be charged at a maximum of the Counsel rate, which is lower than the Senior Practitioner rate. If a lawyer who appears in fact charges less than the Counsel rate, e.g. if they are a Junior Practitioner, they cannot “up-grade” to a higher rate under the Determination. If a lawyer wants to contract out of this limitation imposed by the Determination, the Committee’s view is that it must be specifically and clearly disclosed in a costs agreement .4

The Committee has continued with its policy of narrowing the gaps for the third straight review, however it is of the view that the relativities between the more senior levels of practitioner are now probably about right.

Counsel as a % of Senior Counsel

Counsel as a % of Senior Practitioner Supreme, District and Family Courts Magistrates Court and SAT 2014 2018 2020 2022 2014 2018 2020 2022

57.38 61.29 66.13 68.25 60.42 63.27 67.35 70.00

81.4 84.4 91.12 93.48 80.55 81.57 86.84 89.74

This year sees two changes in the pleadings’ items, Items 1 and 3 of Table B, in the Supreme and District Courts Determination. The first change is to increase the time permitted for a statement of claim, defence or counterclaim from 10 to 12 hours. This increase is in recognition of the fact that pleadings have become more complex over the past 20 or more years. 2022 is the first time since 1996 that there has been an increase in the number of hours allowed for a pleading. The second change is to introduce a new item 1(d), which adds an additional hour of time for each additional defendant against whom a separate case is pleaded and separate relief claimed. This item is not claimable if the defendants’ interests are co-extensive, e.g. if they are all the partners of a partnership being sued for negligence, or all the mortgagors of land in a claim for possession by a lender, or if they are all the owners of land in a claim under section 126 Property Law Act. In these examples there is no requirement for a separate case to be pleaded against each separate defendant, so the additional work allowed for by item 1(d) does not arise. The additional costs associated with having a separate defendant named in the action is already reflected in item 1(b). Similarly, no separate allowance has been made for pleading separate defences for different defendants. This is because if the defendants’ interests are not co-extensive, they could not properly be represented by the same lawyer, and so each separate defence filed by a separate lawyer would itself come under item 3. If the interests of the defendants are coextensive, there is no additional cost associated with the pleading of the defence. Discovery and inspection

Discovery and inspection practices have dramatically changed in the years since automated document management systems became common. The use of email and the development of the Cloud have also had dramatic impacts on the sheer volume of documents considered for discovery purposes in most litigation. The Committee is conscious of these developments and of the efforts the courts have made to limit excesses in discovery. Keeping in mind the high use of electronic document management tools, plus the fact that discovery and inspection on the whole remains work done by the most junior lawyers, graduates and paralegals, the Committee decided to provide that these items should be recoverable at no more than Junior Practitioner rates, but on the basis of an amount that is reasonable in the circumstances. This is not an invitation to treat discovery and inspection as a profit centre or as a means of recouping investments in document technology, but it will reduce the need for special costs orders in larger litigation and should result in more realistic assessments in other litigation. It remains a requirement for practitioners to explain and justify their claims under items 7 and 8 to a taxing officer if the costs cannot be agreed. This requires you to justify that the claim is reasonable. The mere fact that a large amount of time was spent, or a large number of documents were discovered, does not of itself mean that the fees charged or claimed were reasonable. It is worthwhile keeping in mind the use of the word “reasonable”. This is deliberate and speaks of proportionality5 as well as the level of experience of the person undertaking the work, the real issues in question, and the use of technology. For example, it is not reasonable to spend 100 hours doing discovery for a $1,000,000 claim with only 1 or 2 real issues. There is a lot of case law on reasonableness in respect to costs; you should be familiar with it and be careful.

Preparation of case

In recognition of the increased complexity of litigation, the maximum allowance for item 19, preparation of case, formerly known as getting up, has been increased from 120 hours to 130 hours. The amount was increased to 120 hours in 2010, up from 100 hours which had been the maximum allowance since 1996. The increase reflects changes in litigation practice since this item was last increased including the growth of the Commercial and Managed Cases List, civil e-trials and other initiatives which have increased work for practitioners in preparing cases for trial. The Committee is also mindful of the need to reduce satellite litigation around costs, including applications for special costs orders. An increase from 120 to 130 hours will go some way to reducing those applications, particularly in cases where the threshold of “unusual difficulty, complexity or importance” in section 280 of the Legal Profession Act, which is retained in the Uniform Law, may not be reached and there is no basis to seek an indemnity order. Historical child sexual abuse claims

In July 2018 changes to the Civil Liability Act commenced which removed the limitation period on claims for child sexual abuse. This was in direct response to recommendation 85 of the Royal Commission into Institutional Responses to Child Sexual Abuse. As part of the changes, the Civil Liability Act provides that legal practitioners may charge no more than the amounts permitted in a relevant determination made by the Committee. Similar restrictions apply to claims made under the Motor Vehicle (Third Party Insurance) Act 1943. Given that the changes to permit historic child sexual abuse claims have now been in place for over 3 years, the Committee sought submissions on whether any special measures should be considered to account for any additional or special work required to run these types of cases. The Committee received very helpful submissions from Australian Lawyers Alliance and legal practitioners working in the area, which led the Committee to remove some of the limits in items 18, 19 and 22 of the Supreme and District Court Determination. The Committee accepts that there are particular issues with these types of claims which mean that they are more complex than regular personal injuries claims to prepare. In particular, the events underlying the claim are often a very long time ago and involve multiple defendants, the events are deeply traumatic, so that particular care and attention is required in taking instructions from clients and in proofing them, causation in these cases poses particular challenges especially when the abuse suffered is multi factorial, and the damage suffered by the plaintiff is unlike the damage suffered in more typical personal injuries cases. Given that the Parliament has limited the right of lawyers to contract out of the Determination in these matters, the Committee has decided that the upper limit in some items should be removed to enable lawyers working in this area to receive more appropriate remuneration for the considerable work they do. Whilst the submission was made to us that market forces operate to ensure there are sufficient lawyers doing this work, that rather misses the point. The changes recognise the additional burden that every lawyer working in this field shoulders. Alignment with Federal Court costs scales

A submission was made to the Committee that we should consider moving to a model that is similar to or in alignment with the Federal Court of Australia scale. The Committee looked at this proposal in some detail and ultimately decided not to take that path. There are numerous differences between the approaches of the two jurisdictions to costs. These include:

the WA Determinations are, in the main, event based, meaning they relate to specific identifiable steps in the standard civil litigation process, whereas the Federal Court scales are activity based, focusing on activities lawyers do like reading, writing and document management; the Federal Court scale explicitly recognises 6 minute units, the WA

Determinations expressly state that they are not intended to be calculated in 6 minute units; in the Federal Court documents produced are charged for at a rate per 100 words, a practice which was abandoned some years ago in the

WA Determinations as it was felt it encouraged prolixity and padding; the Federal Court scales include a wide range of hourly rates chargeable by different levels of counsel, e.g. the range for Senior Counsel is $425-$740 per hour, but there are no similar rates for practitioners in the amalgam, where the bulk of litigation work is done. Putting aside these structural differences, there is a fundamental philosophical difference in the approach to costs taken by the Federal Court and the Committee. The Committee has as its guiding principle that the Determinations are a consumer protection mechanism, designed to provide for reasonable costs, in the absence of an effective costs agreement. This is not the basis on which the Federal Court scales are set. The desirability of maintaining a consumer protection mechanism for legal consumers in this State was reinforced by the continuation of the Legal Costs Committee and its role in making legal costs determinations under the newly established Uniform Laws scheme which came into effect on 1 July 2022. In making a submission to the 2021 Joint Costs Advisory Committee, the Law Council of Australia made the submission that the 2021 inquiry provides an opportunity to ensure that parties awarded costs are, as much as possible, not out of pocket following resolution of their legal matter in a federal court.6 This submission reflects the view that is taken by the Law Council of Australia of the role of the Federal Court scales, being, in effect, to ensure that cost recovery by a successful party is as close as possible to indemnification of a successful party’s costs by the unsuccessful party. This is an entirely different focus to the way in which the WA Determinations are approached.7 The WA Determinations also play a key role in the regulation of the profession in this State by providing maximum rates chargeable by a lawyer to their client, unless an effective costs agreement is in place. In some areas of the law, e.g. historic child sex abuse and motor vehicle claims, they are the absolute maximum rates which may be charged because lawyers cannot contract out of the Determinations. They are frequently referred to in consideration of whether a legal practitioner has overcharged for their services even in circumstances where there is an enforceable costs agreement. The Determinations play an important benchmark role, they are the independently determined reasonable rates, something that a consumer of legal services can consider when agreeing to enter into a costs agreement. The Federal Court scales do not play the same role and do not come from the perspective of consumer protection. Uniform Law

The commencement of the Uniform Law will make a number of changes to the Legal Costs Committee. The most significant of the changes is the requirement that the Committee have at least 1 civil litigation lawyer and 1 commercial lawyer, i.e. nonlitigation lawyer, amongst its membership. In preparation for this, Craig McKie was appointed to the Committee for a 3 year term commencing on 1 January 2022. This change was made as a result of a request from the Committee which was concerned to ensure that there was sufficient breadth of knowledge on the Committee. Craig joins us, along with two new nonlawyer members, accountant and academic Annette Morgan from Curtin University and Greg Rickie, a retired public servant. Check out the profiles of all the members on our webpage. We are particularly grateful to our retiring committee members Angela Gaffney, an accountant who served on the committee since the mid 1990s, Marcus Cocker, who served on the Committee for over 15 years, and Brendan Ashdown, a legal member between 2016 and 2021. The committee membership remains at 6, comprising 3 lawyers and 3 non-lawyers of whom 1 must be an accountant. We have been fortunate to have excellent community members with wide ranging experience and skills who bring important insights to the work we do. Our legal members should properly reflect the breadth of practice of the legal profession: non-contentious work, civil litigation, family law, and criminal law are all significant areas of practice the Determinations cover. Another change arising from the new Act is that we will no longer publish advertisements for our reviews in the West Australian newspaper. Instead, advertisements will be published on our website and on other appropriate websites. We were delighted that in doing the 2022 review we were able to advertise on the Supreme Court and Family Court websites and the SAT website. We will also continue to engage with the legal profession through the various representative bodies, including the Law Society of WA, the WA Bar Association and other relevant bodies. We are also happy to receive submissions from practitioners at any time. Publication of the Determinations

The Determinations are no longer available on the State Government’s Legislation webpage. This change was made without consultation with the Committee, and apparently as a result of the Legislation page now being administered by Parliamentary Counsel, rather than by the Government Printer. The Committee understands the frustration and inconvenience arising from the change. We publish the Determinations in the Government Gazette towards the end of June, or otherwise when changes are made, and we publish them on the Committee’s website, along with all the superseded ones, so that the full history is available there. Some Determinations are also available in the commercially available loose-leaf services. New website

The Committee launched its new website in late 2021. Copies of all Determinations, including superseded ones dating back as far as 1996, are available on it under the “publications” heading. The new website provides much more information, in more accessible and more easily searchable format, and can be easily and quickly updated. We can be found at https://www.wa.gov. au/organisation/legal-costs-committee.

End Notes

1 With the exception of the Legal Profession (Magistrates Court) (Civil) Determination (No. 2) 2020, which commenced on 1 November 2020. 2 This rate was first introduced in the 2016 reviews. 3 Comparison between 2016 and 2022 4 The recent NSW case of Todorovska v Brydens Lawyers

Pty Ltd [2022] NSWCA 47 is an excellent illustration of poor costs disclosure and very pertinent given the change in the regulation of the profession brought about by WA’s entry into the Uniform Law scheme. 5 See RSC Orders 1 rule 4B and Order 66 6 Law Council of Australia submission to the 2021

Inquiry into Legal Practitioners’ Scales of Costs at para [2] 7 Notably the Law Council submission appeared to have no WA input at all