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Can an incorporated legal practice recover its own costs?
The Victorian Supreme Court has passed down a ruling on whether an incorporated legal practice can recover professional costs from representing themselves.
Naomi Neilson
In the judgement of Guneser v Aitken Partners, his honour Justice Cameron Macaulay ruled that an incorporated legal practice that acted for itself in court proceedings was not entitled to recover its professional costs.
Aitken Partners, an incorporated legal practice, had succeeded on a taxation of costs initiated by its former client. They then succeeded on a review of that taxation by the costs judge and on appeal from the cost judge’s decision to the trial division.
On its review, the costs judge set aside the costs registrars’ decision to award Aitken Partners its full professional costs and distribution costs. Similarly, the judge allowed Aitken Partners’ costs appeal to the trial division. However, the question before Justice Macauley was whether the costs judge was correct in those respects.
In determining the judgement, Justice Macauley adopted the principles in Bell Lawyers Pty Ltd v Pentelow (2019) and United Petroleum Australia Pty Ltd (2020).
In Bell Lawyers, the High Court decided that what was known as the Chorley exception to the rule that self-represented litigants could not recover the value of their time spent in litigation did not form part of the common law of Australia.
In United Petroleum, the Victorian Court of Appeal, applying Bell Lawyers, held that a law firm trading as a partnership was precluded from recovering professional costs for the work of its employee solicitors after it had acted for itself in litigation.
“Both decisions acknowledged that the abolition of the Chorley exception did not affect the continued entitlement of in-house lawyers employed by government departments or companies from recovering their professional costs when successfully acting in litigation on behalf of their employer,” the summary added.
“But neither Bell Lawyers nor United Petroleum determined the entitlement of an incorporated legal practice to recover professional costs when acting successfully for itself in litigation, whether by its principal or its employed solicitors.”
Justice Macauley rejected Aitken Partners’ argument that an incorporated practice should be seen as analogous to an in-house lawyer for a government agency or a company and confirmed the decision of the costs judge.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
You can email Naomi at:
