As a costs lawyer in Western Australia, I am sometimes asked whether a signature is required for a costs agreement and what criteria apply for determining if a retainer exists with a lawyer.

In this blog post, I address these questions and provide a general understanding of the subject matter.

I rely on the recent decision in Cappello v Homebuilding Pty Ltd [2022] NSWDC 725, which offers useful insights into the issue, while also referencing other relevant cases.

Is a Signature Required for a Costs Agreement?

The short answer is no, a signature is not always required for a costs agreement.

As established in Arjunan v Neighbourhood Associates No DP 285853 [2022] NSWSC 691, a costs agreement that is "unsigned but executed by conduct" is still valid.

Issues arise only when the costs agreement imposes a highly specific requirement for signing and returning the documents, as was the case in O'Neill v Wilson [2011] QSC 220.

Criteria for Determining If a Retainer Exists with a Lawyer

A retainer can exist even without a formal costs agreement, as long as there is evidence of an obligation to pay the lawyer's costs. Here are some key points to consider:

1. A strong presumption of a contract of retainer exists when a solicitor appears on the record for a party, and the party is aware of this (Halliday v SACS Group Pty Ltd [1993] HCA 13; 67 ALJR 678 at [7]).

2. Proof of a retainer can be implied from conduct (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [17]).

3. A party claiming under a party/party costs order needs only to provide enough evidence to infer that they were obliged to pay their solicitor's costs (Grundmann v Georgeson [2000] QCA 394 at [6] and [9]).

4. Courts generally accept the existence of a retainer when a solicitor has performed work on behalf of a person with their knowledge and assent, in circumstances consistent with that person being the solicitor's client (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [19]).

5. The onus of proving the absence of a retainer lies with the party who challenges its existence (Halliday v SACS Group Pty Ltd [1993] HCA 13; 67 ALJR 678 at [7]).

6. To displace the rule, a party against whom a costs order has been made (i.e. the opposing party in a party-party taxation of costs) must prove that under no circumstances does the client (their opponent, to whom they have been ordered to party-party costs) have any liability to pay costs to their solicitors (Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [20]; Davies v Taylor (No 2) [1974] AC 225).

7. In the absence of a costs agreement, a solicitor can still recover costs from a client on a "fair and reasonable" basis, under a type of statutory quantum meruit (see, by analogy, s 319 of the Legal Profession Act 2004).

Conclusion

In summary, a signature is not always required for a costs agreement, and a retainer can exist even without a formal costs agreement.
The key is to look at the conduct of the parties involved and whether there is an implied obligation to pay the lawyer's costs. It is important to be aware of these factors when dealing with costs agreements and retainers in a legal context.