Johnson, Marija --- "Notes on legal costs: Interstate litigation" [1997] LawIJV 17; (1997) 71(1) The Law Institute Journal 46

• Notes on legal costs- Interstate litigation
• Interstate law
• Solicitor and client costs
• Preparation of a party and party bill of costs

Notes on legal costs- Interstate litigation

The following are some matters for consideration when a client instructs a Victorian solicitor in relation to inter-state litigation.

Interstate law

If the Victorian solicitor is considering conducting the litigation, he or she must comply with the applicable law in that jurisdiction. Generally the law will require that the solicitor be admitted to practice and hold a current practising certificate in the relevant jurisdiction. There may be penalties for unauthorised practice, e.g. a fine, imprisonment and a prohibition against recovery of costs against the client.

If the Victorian solicitor is not authorised to practise in the interstate jurisdiction, he or she must appoint a solicitor who can act in the jurisdiction. The interstate solicitor then becomes the principal solicitor who has the conduct of the action and is responsible to the court. The interstate solicitor must not be merely a post box for the Victorian solicitor as this would be a fraud on the legislation: see Irving v Sanger (1889) 5 TLR 171 and TNT Bulkships Ltd v Hopkins (1989) 1 NTR 1.

Solicitor and client costs

If the Victorian solicitor sues the client to recover costs and those costs relate to work in another state in which the solicitor was unqualified or uncertificated, a court will not enforce the contract although a claim based on a quantum meruit may be made: see Re O'Connor's Bills of Costs (1993) 1 Qd R 423.

If the Victorian solicitor has instructed a qualified solicitor in the other state, the Victorian solicitor should do only that work which is reasonable for him or her to do. The Victorian solicitor can only charge costs which are considered to be reasonably incurred and of reasonable amount. See the judgment of Diplock J in McCullie v Butler [1962] 2 QB 309 at 314 in relation to the taxation of costs of the action payable out of the legal aid fund. The client instructed Scottish solicitors who then instructed English solicitors in relation to the conduct of the action in England:

"Then there is another large item .. . in which they (the unqualified Scottish solicitors) claim `for very considerable time expended in the study and consideration of the issue and matters which arise from time to time, and the evidence of fact, medical evidence and the law involved', a law which so far as they were concerned was foreign law. It is quite evident, therefore, that there are a number of items in that account which are quite inappropriate to the proper position of the Scottish solicitors in this case, namely, as professional agents doing in Scotland on the instructions of the English solicitors those things which were reasonable and necessary to be done in Scotland for the preparation of the case."

If costs are to be incurred which may be considered unreasonable, the solicitor should warn the client that unusual expenses will be incurred that may not be recovered on a party and party taxation and obtain the client's consent to those expenses: see Bluth v Fanshaw (1882) 10 QBD 207 and Supreme Court Rules 0.63.61.

Preparation of a party and party bill of costs

Party and party costs are an indemnity: Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403. The successful party is able to re-cover from the unsuccessful party appropriate costs which the successful party has paid or is liable to pay: see TNT Bulkships Ltd v Hopkins (above).

If the successful party is not liable to pay costs to his or her solicitor, there is nothing for the successful party to indemnify for. For example, the client may not be liable to pay the Victorian solicitor if the Victorian solicitor did work as an unqualified person or as an uncertificated solicitor in another state. See Halsburg's Laws of England, 4th ed, 1995, vol 44 para 62 and footnote 10:

"The successful party to any litigation cannot recover any costs or disbursements from the opposite party if the solicitor acting for him was uncertificated, although the steps taken by the uncertificated solicitor on his client's behalf are not invalid."

"The same principle applies even though the uncertificated solicitor who was really acting used the name of a certificated solicitor: Irving v Sanger (1888) 58 LJQB 64 DC affd (1889) 5 TLR 171, CA."

See also TNT Bulkships Ltd v Hopkins (above).

The interstate solicitor who is the principal solicitor on record and who has the conduct of the action will pre-pare a bill of costs in accordance with the relevant interstate scale or method of charging which reflects the work undertaken and the responsibility assumed by the interstate solicitor. If the Victorian solicitor has prepared court documents, they can only be prepared as a clerk for the interstate solicitor and under the supervision of the interstate solicitor. They must appear in the interstate's solicitor's bill of costs. The Victorian solicitor's charges will be included as a disbursement in the interstate solicitor's bill of costs. The Victorian solicitor's bill will contain all the work which is necessary and reasonable for that solicitor to have done. Work should not be included which must be performed only by a solicitor qualified in the interstate jurisdiction: see McCullie v Butler (above).

The recent case of Elders Trustee and Executor Co Ltd (unreported, 16 May 1996, NT Court of Appeal, Gallop, Kearney and Thomas JJ) confirms that only fees properly incurred and reason-able are recoverable. It is important to remember that the interstate solicitor is the principal solicitor and the Victorian solicitor is the agent.

Please direct inquiries to Marija Johnson, LIV Costing Service on [phone] between 2-5pm, Monday to Friday. General information about costing is given during the above hours as a free service to members.

MARIJA JOHNSON

Manager, LIV Costing Service