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Costs — Costs agreements — Whether agreements should be set aside on grounds
of unfairness and unreasonableness — Whether legal practitioner estopped from
claiming costs in excess of assertion as to estimated total costs at settlement
conference — Family Law Rules 1984 O 38 rr 8A, 26 — Accrued jurisdiction
— Dispute over agreement compromising costs under original costs agreement
— Whether dispute over second agreement within accrued jurisdiction of Family
Court — Relevant principles.
MG v WJG [2005] FamCA 1381, (2005) 34 Fam LR 612, 18 November 2005
Family Court of Australia before Benjamin J
The applicant wife disputed the costs and disbursements claimed by the respondent
legal practitioner for work undertaken by him as solicitor acting for her in a property
dispute. She sought orders setting aside both the original costs agreement made on
10 June 2003, and a second agreement made on 10 March 2004 (compromising a claim
for costs under the first agreement), on the basis that the agreements were not fair and
reasonable, and that she had been fraudulently induced to enter those agreements. She
also sought an order that the legal practitioner’s costs and disbursements be capped at
$100,000, in accordance with an oral agreement which she claimed was made in the
course of a property settlement conference on 2 September 2005, which led to the wife
agreeing to settle her claim.
Part 5
SIGNIFICANT JUDGMENTS
Evidence was also given of an assertion by the legal practitioner to Guest J at that
conference that the wife’s overall costs including counsel’s fees to that time totalled
$175,000. (Counsel’s fees at that time amounted to $94,710, but were subsequently
reduced by counsel at W’s request to $70,000.)
Held: Set aside the first agreement refused but making orders setting aside the second
agreement, and declaring that the respondent was estopped from claiming more than
$80,290 for his costs and disbursements.
1. In relation to the first costs agreement, there was no issue as to the formal validity of
the agreement, nor had there been evidence of undue influence, misrepresentation
or fraud in respect of the agreement. The wife was advised of her entitlement to
obtain independent legal advice at the relevant time and chose not to do so.
2. Applying the relevant objective test, the agreement appeared to be fair and
reasonable, taking into account circumstances surrounding the formation of the
agreement including the experience of the legal practitioner, the complexity of the
wife’s property matter and the fact that the wife had tested the legal market prior to
retaining the legal practitioner. There was accordingly no basis for setting aside the
first costs agreement. McInnes v Twigg (1993) FLC 92-345; Weiss v Barker Gosling (1993)
FLC 92-399 applied.
Family Court of Australia Annual Report 2005–2006 87