Another Costs Agreement Cancelled – [2015] WASC 54

The Supreme Court of WA has cancelled another costs agreement on the grounds of unreasonableness. The decision is Portuguese Cultural and Welfare Centre v Talbot Olivier Pty Ltd [2015] WASC 54.

I am a member of the Costs Committee of the Law Society of WA. Decisions relating to legal costs and the cancelling of costs agreements are of particular interest to me.

The Decision

To give a short background to the decision, the Portuguese Cultural and Welfare Centre was an unincorporated association which operated a community radio station. Mr and Mrs Moleirinho were husband and wife and involved in the running of the Association. They signed three costs agreements on behalf of the Association and also gave guarantees in relation to the payment of fees.

Been January and March 2008, the Australian Communications and Media Authority (ACMA) were considering refusing to renew the licence required by the Association to continue to operate the radio station.

The Association engaged Talbot Olivier to act for them.  The Association, Mr Moleirinho and Mrs Moleirinho entered into three costs agreements with Talbot Olivier.

The first costs agreement was entered into after the ACMA had expressed a preliminary view that the licence would be cancelled. The second costs agreement was made around 13 March 2008 after the ACMA decided to cancel the licence. The third costs agreement was entered into on 20 March 2008 after a resolution was passed by the Association to seek a review of the ACMA’s decision and despite receiving advice the previous day not to seek a review.

The application for review had to be filed by 20 March 2008.

The Applications to Cancel the Costs Agreements

Proceedings were originally commenced by the Association, Mr Moleirinho and Mrs Moleirinho to cancel all three costs agreements. Those applications were dismissed by Hall J: Portuguese Cultural and Welfare Centre v Talbot Olivier Pty Ltd [2013] WASC 91.

After a partially successful appeal, Mr and Mrs Moleirinho’s application in respect of the third costs agreement only, was remitted to be re-determined by the general division.

In the particular circumstances of this case, Corboy J cancelled the third costs agreement. His Honour did not rely on any one particular aspect of the agreement itself or any one particular circumstance preceding the entry into the costs agreement. Rather, his Honour concluded that the sum of all of the circumstances justified the costs agreement being cancelled.

In short, the third costs agreement was cancelled by reason of a combination of:

  1. the advice in relation to the review application was only delivered on 19 March 2008, being the day before the review had to be filed;
  2. the third costs agreement provided for some work which was already covered by the second costs agreement, namely the preparation and filing of the review application;
  3. the third costs agreement was received by Mr Moleirinho during the afternoon of 20 March 2008, meaning that only a very short amount of time was available to consider the costs agreement;
  4. Mr Moleirinho understood, perhaps wrongly, that Talbot Olivier would not file the review application until the costs agreement had been signed;
  5. the filing of the application for review could have occurred under the terms of the second costs agreement;
  6. Mr Moleirinho signed the costs agreement on behalf of his then absent wife; at the suggestion of the lawyer; and
  7. Mr Moleirinho was not given any advice to seek independent advice on the costs agreement.

Comment: Applications to cancel a costs agreement are on the rise. Solicitors should take great care when entering into costs agreements with clients to avoid a subsequent application seeking to cancel their costs agreement. I accept instructions in this area. Contact me by email or by using this link.

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