Woman wins cut in $6,000 legal costs
A woman ordered to pay more than $6,000 in legal costs has had the fee reduced after the court found she had not been adequately warned about rising costs.
While Myrna Hill had been ordered to pay lawyer Michael Smith $6,206 in legal fees in Magistrates’ Court, she argued that the fees ballooned after she received an estimate of $1,500.
According to a ruling by Chief Justice Ian Kawaley, the dispute related to a legal case between Ms Hill and her condominium association over an alleged failure to maintain her property.
As part of the case, she enlisted lawyer Michael Smith to represent her at a cost of $600 an hour. The total legal fees at the conclusion of the trial reached $10,341.53, but Ms Hill only paid $2,175, alleging that she had been overcharged.
Mr Smith sought the unpaid fees through the civil courts, which found largely in his favour, awarding him $6,206.27 out of the remaining $7,781.27 claimed.
The magistrate found that the $600 hourly rate had been agreed upon by both parties and that the appellant had not complained, despite receiving bills, until the respondent sued to recover the outstanding amounts.
However, Mr Justice Kawaley wrote that no finding was made on the core complaints by Ms Hill that she had been given an estimate of $1,500 and that the fees were disproportionate and unreasonable given that the claim was worth only $5,000.
According to evidence presented during the hearing, in January 2014, Ms Hill e-mailed Mr Smith’s firm requesting an estimate “total for the legal expense” on the case.
The firm responded stating: “Please be advised that Michael Smith estimates the costs for preparation and interview with Paul Harshaw to be approximately 2.5 hours at $600 per hour provided the interview does not extend into a period of more than two hours.”
Mr Justice Kawaley wrote that the e-mails showed a clear misunderstanding between the parties. He said documents also showed that this was not a case in which Ms Hill wanted to press forward regardless of the expense and that she had made steps to “stop the haemorrhaging of legal costs”.
“A clear picture eventually emerges from the evidential mist of a demanding client with unrealistic expectations about how easy it was to negotiate a settlement against a company which was willing to advance a robust defence to her claim,” the Chief Justice wrote.
“The appellant was represented by a lawyer motivated to achieve a successful outcome and seemingly focused more on the result that on protecting himself against subsequent complaints of excessive billing. This is a quandary that any lawyer who has represented emotionally driven clients of limited means in ‘small-money’ cases recognises only too well.”
Mr Kawaley wrote that the original estimate was “meaningless” by the end of January and that Mr Smith should have warned Ms Hill that she was facing much higher costs.
“The omission which occurred on the respondent’s part was an understandable error of judgment made by a lawyer who was otherwise acting quite properly and clearly had his client’s best interests at heart,” he wrote.
“The difference may seem small in lawyer’s terms but is far from trivial from the perspective of a client with limited means who initially commenced her own compensation claim as a litigant in person.”
As such, he found that a “substantial miscarriage of justice” had been carried out by the Magistrates’ Court ruling, and that it was unreasonable to bill Ms Hill more than twice the original estimate without warning her of the sharply escalating costs.
“I accordingly allow the appeal and vary the judgment in favour of the respondent by reducing the amount awarded from $6,206.27 to $4,781.27,” he concluded.
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