ACN 131 110 220 Pty Ltd v Lakic
[2016] VCC 725
•18 July 2016
| IN THE COUNTY COURT OF VICTORIA | Revised Not Restricted Suitable for Publication |
AT MELBOURNE
COMMERCIAL DIVISON
GENERAL LIST
Case No. CI-15-00344
| ACN 131 110 220 PTY LTD | Plaintiff |
| v. | |
| BOGDANKA LAKIC | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9-13, 16-20, 23 & 24 May 2016 | |
DATE OF JUDGMENT: | 18 July 2016 | |
CASE MAY BE CITED AS: | ACN 131 110 220 Pty Ltd v. Lakic | |
MEDIUM NEUTRAL CITATION: | [2016] VCC 725 | |
REASONS FOR JUDGMENT
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Catchwords: Legal practitioners – Costs agreement – “No win-no fee” – Whether costs agreement and disclosure statement should have been translated into the Serbian language – Whether the client breached the costs agreement by refusing to accept solicitor’s advice to settle.
Negligence – Whether solicitors breached its duty of care to client – Failure to issue proceedings in respect of other accidents, gynaecological injuries, and for home help and other services – Failure to advise that defence to Magistrates’ Court complaint should be filed – Scope of damages claimed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. McGregor of Counsel | Wisewould Mahony |
| For the Defendant | Mrs B. Lakic (in person) |
HIS HONOUR:
1Mr Sammy Bektas was, in 2009, the principal and a director of Victorian Compensation Lawyers Pty Ltd (“VCL”), now ACN 131 110 220 Pty Ltd. VCL sues to recover legal costs and disbursements and to defend a counterclaim alleging professional negligence. These matters relate to legal work carried out for Mrs Bogdanka Lakic between 2009 and 2013 arising from personal injury claims. The legal work was performed pursuant to a costs agreement entered into in early April 2009, pursuant to which VCL agreed to act for Mrs Lakic on the basis of “no win, no fee”.
2Mrs Lakic was injured in motor vehicle accidents on 15 May 2000, 26 January 2002 and 12 September 2006. Whilst VCL was acting for her:
a.it took over a County Court proceeding (CI-07-02633), commenced by Mrs Lakic’s former solicitors, Prior & Prior. The payment of that firm’s costs was secured by a caveat lodged by Prior & Prior over Mrs Lakic’s home at Lucerne Road, Ferntree Gully;
b.in the proceeding:
i.His Honour Judge Saccardo on 13 February 2012, granted Mrs Lakic leave to bring a common law proceeding in respect of her injuries against the unidentified driver involved in the accident on 15 May 2000;
ii.Her Honour Judge Kings on 22 October 2012, granted Mrs Lakic an extension of time in which to bring the proceeding in respect of the 2000 accident notwithstanding that the limitation period had expired;
c.a writ was issued by VCL in December 2012 in Supreme Court proceeding (SCI-2012-60464) pursuant to the leave granted by Judges Saccardo and Kings;
d.in January 2011, Mrs Lakic received a Magistrates’ Court complaint (A13533817) from Prior & Prior claiming $39,017.39 for legal costs incurred whilst the firm acted for her in relation to the 2000 accident;
e.judgment was entered in default of appearance on 11 February 2011. An application for a rehearing of the complaint was filed by VCL on 19 August 2011. The application was adjourned a number of times. On 23 May 2012, the application for a rehearing was refused;
f.on 11 April 2011, VCL on behalf of Mrs Lakic issued an application at VCAT against Prior & Prior seeking an order that the costs agreement with the firm dated 30 September 2005 be set aside;
g.on 6 August 2012, TAC rejected an application made on Mrs Lakic’s behalf by her general practitioner, Dr Brkic “for the TAC to pay for a new mattress, physiotherapy and hydrotherapy and domestic services” (“home help and other services claim”). VCL declined to pursue an application to VCAT to review this decision “on a no-win no-fee basis” and informed Mrs Lakic that it would only act if she deposited $10,000 into VCL’s trust account;
h.VCL filed a notice of ceasing to act for Mrs Lakic in Supreme Court proceeding (SCI-2012-60464) pursuant to leave granted by Associate Justice Daly on 24 October 2013.
3Subsequently, Mrs Lakic represented herself at the trial of Supreme Court proceeding (SCI-2012-60464). On 20 June 2014, Justice Rush delivered judgment in Mrs Lakic’s favour for total damages of $838,802.
4In this proceeding, VCL claims costs of $194,980.41 being:
a.its party-party costs and disbursements of $158,905.78 in respect of the serious injury application determined by Judge Saccardo; and
b.$51,093.45, as the solicitor-client costs incurred by VCL in the extension of time application determined by Judge Kings.
5On 30 May 2016, after I had reserved judgment in this proceeding, Justice Macaulay entered judgment for Mrs Lakic in a claim for negligence brought by her against Prior & Prior in Supreme Court proceeding (SCI-2015-00118) in the sum of $51,093.45 and interest, totalling $57,919.75 being for the solicitor-client costs claimed against Mrs Lakic by VCL for the extension of time application determined by Judge Kings. Justice Macaulay set off the sum of $57,919.75 against the total of the Magistrates’ Court judgment obtained by Prior & Prior against Mrs Lakic for $39,017.36 plus costs and interest, totalling $73,504.33. Mrs Lakic is responsible for the balance of $15,584.58, accruing interest and the costs of that proceeding.
6Mrs Lakic’s defence and counterclaim in this proceeding was only finalised after she obtained the assistance of counsel, although substantial parts of the pleading drafted by counsel were struck out by me on 22 January 2016.
7The specific defences relied upon by Mrs Lakic are as follows:
a.appropriate disclosure under the Legal Profession Act 2004 in relation to the costs agreement was not provided in the Serbian language;
b.the estimated total legal costs was not updated as VCL became aware of substantial changes in the likely costs;
c.VCL was obliged to continue acting for Mrs Lakic pursuant to the costs agreement as:
i.Mrs Lakic had not refused the reasonable advice of VCL;
ii.VCL wrongfully terminated the solicitor-client retainer;
d.the costs have already been paid to VCL from monies wrongfully retained by it from her successful judgment in the Supreme Court proceeding.
8Matters raised by Mrs Lakic in her counterclaim were as follows:
a.in breach of the retainer in relation to the common law claims, VCL failed to:
i.investigate or pursue any claims arising from the accidents in 2002 and 2006;
ii.pursue the home help and other services claim, including to VCAT by way of review of the decision of TAC;
iii.pursue a claim arising from Mrs Lakic’s gynaecological problems or to provide discovery of her gynaecological reports in Supreme Court proceeding (SCI-2012-60464);
iv.wrongfully terminated the retainer by seeking and obtaining leave to file a notice of ceasing to act as Mrs Lakic’s solicitors in the Supreme Court proceeding on 24 October 2013;
b.alternatively, the termination of the retainer constituted misleading and deceptive conduct in breach of the Australian Consumer Law;
c.in relation to the Magistrates’ Court proceeding brought by Prior & Prior, in breach of the retainer VCL:
i.failed to advise Mrs Lakic that a defence must be filed to the complaint within 21 days, resulting in the plaintiffs obtaining a default judgment;
ii.briefed counsel to appear at the rehearing on 23 May 2012 as “amicus curie”, rather than appearing by a solicitor or by counsel to represent Mrs Lakic;
d.alternatively, the failure by VCL to appear as solicitor or by counsel to represent Mrs Lakic constituted misleading and deceptive conduct in breach of the Australian Consumer Law.
9By its reply and defence to counterclaim, filed by leave granted on the first day of the trial, VCL raised a number of matters, including that VCL was immune from a suit for negligence by reason of the principle of advocates immunity, as the counterclaim made by Mrs Lakic was appropriately connected with the conduct of the relevant proceeding in the Supreme, County or Magistrates’ Courts.
10This proceeding raises the following issues for determination:
a.in relation to the common law proceedings:
i.whether the costs agreement is enforceable by reason of a lack of disclosure by VCL:
A. to Mrs Lakic in the Serbian language;
B. of substantial changes to the estimated total legal costs;
ii.whether VCL properly terminated the retainer, or whether the termination of the retainer by VCL:
A. was in breach of the retainer;
B. constituted misleading and deceptive conduct;
iii.whether VCL’s costs have been paid by retention from the damages awarded in the Supreme Court judgment;
iv.whether Mrs Lakic is obliged to pay VCL:
A. the sum of $158,905.78 or some other sum as the party-party costs of the serious injury application;
B. the sum of $51,093.45 or some other sum as the solicitor-client costs of the section 23A application;
v.whether VCL breached the retainer by failing:
A. to investigate and pursue claims arising from the 2002 and 2006 accidents;
B. to pursue the home help and other services claim;
C. to pursue a claim arising from Mrs Lakic’s gynaecological problems;
D. to provide discovery of Mrs Lakic’s gynaecological reports in the Supreme Court proceeding;
b.in relation to the Magistrates’ Court proceeding:
i.whether VCL was retained to act, or were obliged to take steps, on Mrs Lakic’s behalf;
ii.whether VCL should have advised Mrs Lakic that a defence must be filed within 21 days;
iii.whether VCL’s failure to represent Mrs Lakic at the rehearing by a solicitor or counsel:
A. breached the retainer by Mrs Lakic of VCL;
B. constituted misleading or deceptive conduct;
c.whether VCL is immune from a suit for negligence by reason of the principle of advocates immunity;
d.whether Mrs Lakic is entitled to damages for breach of the retainer and if so, in what sum.
Plaintiff’s application to further amend its statement of claim
11On 20 May 2016, at the end of the second week of the trial, VCL served a proposed second further amended statement of claim. On 23 May 2016, an affidavit was sworn by the plaintiff’s solicitor in support of the application. The application to amend followed comments I made on 19 May 2016, querying the basis of the plaintiff’s claim for legal costs. I heard submissions on the application with the parties’ final submissions and reserved my decision.
12I have decided to grant the plaintiff leave to amend. The application was very late and the explanation for delay was scarcely credible. Ordinarily, the possibility of prejudice, particularly to an unrepresented litigant, would mean that such a substantive amendment, effectively re-pleading the whole of the plaintiff’s claim, would need to be rejected.
13I have, however, allowed the amendments to the pleading in order to reach a just result that may not otherwise have been possible. I do not believe that the decision I propose in relation to the plaintiff’s claims will prejudice Mrs Lakic for the following reasons:
a.in relation to the claim for VCL’s costs of the serious injury application:
i.the costs are limited to party-party costs to be paid by TAC;
ii.the costs claimed by VCL for work performed by Prior & Prior, if recovered, will be paid to Prior & Prior if any sum, after taking account of the set off and Mrs Lakic’s liability for the costs of that proceeding as ordered by Justice Macaulay, remain unpaid. Any balance will be paid to Mrs Lakic subject to any set-off in this proceeding;
iii.Mrs Lakic will be able to raise any item which she says was paid for by her rather than by VCL and which was properly claimable against TAC. Any items so assessed will be paid to Mrs Lakic subject to any set-off;
iv.otherwise, VCL will recover its costs as properly assessed after TAC has the opportunity to raise any objections it wishes before the Costs Court;
b.in relation to the claim for VCL’s costs of the section 23A application:
i.Mrs Lakic will be able to raise before me any item which she says was paid for by her rather than by VCL. Any items so assessed will be allowed to Mrs Lakic;
ii.Mrs Lakic has been allowed by Justice Macaulay the whole sum claimed of $51,093.45 plus interest as damages for Prior & Prior’s negligence and this sum has been set off against the sum owing to Prior & Prior in relation to the Magistrates’ Court complaint. It is appropriate in those circumstances that Mrs Lakic pays (or allows) to VCL the whole of the sum of $51,093.45 plus interest, save for any payments actually made by Mrs Lakic for any item included in the bill of costs.
Effect of the decisions in other cases involving Mrs Lakic
14Mrs Lakic has been involved in a number of proceedings where courts have made determinations on a number of issues which have some relevance to this proceeding. In the other proceedings, the parties opposite Mrs Lakic have been different:
a.in County Court proceeding (CI-07-02633) and Supreme Court proceeding (SCI-2012-60464), the Transport Accident Commission was the defendant;
b.in Magistrates’ Court proceeding (A13533817) and Supreme Court proceeding (SCI-2015-00118), Prior & Prior were respectively the plaintiffs and the defendants;
c.in the present proceeding, VCL is the plaintiff and the defendant to counterclaim.
15Section 91(1) of the Evidence Act 2008 (Vic) provides that, “Evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding”.
16Nevertheless, courts have determined that, “it is clear that s 91 does not prevent the tender of judgments which contain findings as to the existence of facts relevant to the issues in the trial which they are tendered. It merely prevents the judgments from being tendered for the purpose of proving the existence of those facts. If they are admissible for some other purpose – as they are in the present case, in order to demonstrate that they would have persuaded any honest-minded person that the defendant’s allegations were false – they may not then be used to prove the existence of those facts, a consequence which would otherwise have flowed from s 60 of the Evidence Act”. (Ainsworth v Burden [2005] NSWCA 174 at paragraph 109 per Hunt AJA (with whom Handley and McColl JJA agreed), cited by Elliott J in Talacko v Talacko [2014] VSC 328 at paragraph 66).
17I must also keep in mind the “considerations of finality and fairness” which the High Court in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at paragraph 22 and 24 said apply to all forms of estoppel (res judicata, issue estoppel and Anshun estoppel) which “result from the rendering of a final judgment in an adversarial proceeding”, as well as to the “doctrine of abuse of process [which may have application] in any circumstances in which the use of a court’s procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute”.
18I consider, therefore, that I must pay appropriate regard to the decisions made in the other proceedings involving Mrs Lakic although the opposite parties in those cases were not VCL. In those proceedings, particularly in the judgments of Justice Rush and Justice Macaulay, Mrs Lakic obtained the benefit of certain of their findings or orders. In those circumstances it would be an abuse of process, if I were to approach this case on the basis that it was open for me to make contrary decisions or findings of fact.
Summary of findings in this proceeding
19On VCL’s claim, I consider that I should make the following findings:
a.Mrs Lakic is bound by the terms of the costs agreement dated 31 March 2009. I do not consider that:
i.in the circumstances, the failure by VCL to have the agreement translated into the Serbian language is fatal;
ii.there was a material lack of disclosure, including in relation to estimates, and revised estimates of the total costs of the proceeding;
b.it is not necessary for me to decide whether VCL has established that Mrs Lakic, in breach of the terms of the costs agreement, failed to accept the reasonable advice of VCL to settle her claim for the terms offered by the TAC;
c.by reason of the decision of Justice Macaulay in Supreme Court proceeding (SCI-2015-00118) that:
i.Prior & Prior was negligent in failing to issue County Court proceeding (CI-07-02633) before the limitation period expired;
ii.Mrs Lakic’s damages constituted the solicitor-client costs incurred to VCL in the sum of $51,093.45 plus interest;
iii.that sum should be set off against the orders obtained by Prior & Prior in Magistrates’ Court proceeding (A13533817)
Mrs Lakic would not be permitted to rely upon any failure by VCL to prove that her rejection of offers to settle breached the costs agreement and brought it to an end. VCL is therefore entitled to recover their solicitor-client costs of the section 23A application;
d.as to VCL’s party-party costs of the serious injury application:
i.it is unnecessary for me to decide whether VCL established that it was entitled to terminate of the costs agreement on the basis that Mrs Lakic did not accept reasonable legal advice;
ii.VCL should be entitled, to recover from TAC its costs and disbursements of the application as assessed by the Costs Court pursuant to the order of Judge Saccardo made 13 February 2012, and to receive the assistance and cooperation necessary from Mrs Lakic to achieve that end;
iii.Prior & Prior’s costs and disbursements included in the VCL bill shall be payable to Prior & Prior, if any money remains owing to it as a result of the set off or other orders made by Justice Macaulay. Otherwise, Mrs Lakic shall be entitled to those recoverable costs.
20On Mrs Lakic’s counterclaim, I consider that the following findings are appropriate:
a.VCL was negligent in failing to advise Mrs Lakic that the claim in respect of the injuries she suffered in the second accident in 2002 was already statute barred and that in order not to prejudice any application for an extension of time to bring a proceeding based on that accident, an application for an extension and for a “serious injury” finding should be made promptly;
b.VCL was not negligent in failing to advise Mrs Lakic that the claim in respect of the injuries she suffered in the third accident on 12 September 2006 would become statute barred six years later and that, if she were contemplating pursuing a claim for the third accident, a “serious injury” application should be made in advance of the expiry of the limitation period;
c.these findings are appropriate in view of:
i.the difficulty of determining whether Mrs Lakic would succeed in establishing a “serious injury”, including the aggravation of a pre-existing injury, arising from the second and third accidents;
ii.the fact that Justice Rush in Supreme Court proceeding (SCI-2012-60464) determined that, as a result of the first accident on 15 May 2000, Mrs Lakic had suffered past and future pecuniary loss which he assessed and allowed, and attributed to that accident 90% of the pain and suffering damages which he assessed at $247,500; and
iii.the potential damages, and therefore the likelihood of establishing serious injury, was very limited;
d.the total damages as a result of the negligence of VCL in relation to the second accident is assessed in the sum of $4,000;
e.VCL was not negligent in failing to pursue the home help and other services claim as VCL notified Mrs Lakic that it would not proceed with a review of the decision of TAC unless VCL was separately instructed by Mrs Lakic and paid a sum on account of the costs of the VCAT proceeding;
f.VCL was negligent in failing to pursue a claim arising from Mrs Lakic’s gynaecological problems by not giving Mrs Lakic appropriate advice in relation to the second accident. Mrs Lakic’s gynaecological issues were raised for determination before Justice Rush as having arisen as a consequence of the first accident. If they were raised by Mrs Lakic in a further proceeding arising from the second accident, the possibility of a successful result and any potential damages, would be limited. The damages of $4,000 I have awarded in relation to VCL’s failure to give proper advice in relation to the second accident takes account of this claim;
g.VCL was not negligent in failing to provide discovery of Mrs Lakic’s gynaecological reports in Supreme Court proceeding (SCI-2012-60464). The reports were before Justice Rush and were considered in his judgment and in the finding he made that Mrs Lakic had not established a causal link between those problems and the first accident;
h.VCL was negligent in relation to the Magistrates’ Court proceeding (A13533817) by failing to advise Mrs Lakic, if VCL were not intending to act for her and file a defence, that a defence must be filed within 21 days of service of the complaint, or judgment may be entered against her;
i.having accepted instructions upon her behalf, and received money on account of counsel’s fees, the basis upon which Mrs Lakic was represented at the rehearing was confused. VCL failed to properly assess the merits and likely success of any defence to the claim. In relation to these issues, I consider that VCL would succeed in a defence based on advocates immunity. In any event, it appears that the basis upon which Mrs Lakic was represented at the hearing in the Magistrates’ Court had little relevance to the outcome;
j.Mrs Lakic should recover as her damages the costs she incurred to Prior & Prior following the entry of judgment on 11 February 2011, related to her application for a rehearing. The damages, including some interest total $21,222.52. Mrs Lakic should not recover the $1,100 she paid as counsel’s fees, as Mrs Lakic would necessarily have incurred some costs to be properly advised on whether she might successfully defend the complaint. Further, Mrs Lakic had the opportunity in Supreme Court proceeding (SCI-2015-00118) to recover in respect of costs which she might have established had been improperly claimed by Prior & Prior by reason of their negligence in failing to issue proceedings in relation to the first accident before the limitation period expired.
21The precise orders I propose will be set out at the conclusion of these reasons. The parties will be given the opportunity to address any further submissions they wish to make on the form of the orders proposed.
Background facts
22The costs agreement is described as a “conditional fee agreement (aka “no win, no fee” agreement)” by which VCL undertook, “To investigate and pursue your rights: Under the Transport Accident Act 1986 including weekly payments, medical and like expenses, lump sum payments, your Common Law rights for damages as well as related superannuation and/or insurance entitlements”.
23Mrs Lakic had previously instructed other solicitors about these matters, most recently Prior & Prior. Mr Bektas said that he told Mrs Lakic that unless they reached a separate agreement, VCL would not be acting in relation to the dispute with the former solicitors over their costs.
24It is important, in my view, to take account of the different applications and proceedings Mrs Lakic was involved in when considering the disputes raised by the present proceeding. At times, only one of these disputes required the attention of the parties, whilst at other times, a number of the matters intersected.
25For this reason, I shall include a chronology below of the critical events before, during and after the period VCL acted for Mrs Lakic:
Date Event 15 May 2000 Mrs Lakic was involved in a motor vehicle accident with an unidentified driver (“first accident”). 26 January 2002 Mrs Lakic was a passenger when her motor vehicle was struck in the rear (“second accident”). 12 September 2006 Mrs Lakic was a passenger when her motor vehicle was struck in the rear (“third accident”). 13 July 2007 County Court proceeding (CI-07-02633) issued by Prior & Prior. 31 March 2009 Mrs Lakic retained VCL. 5 January 2011 Magistrates’ Court complaint issued by Stephen and Rosemary Prior against Mrs Lakic for payment of costs. 21 January 2011 County Court action – Serious Injury Application fixed for hearing but adjourned. 11 February 2011 Magistrates’ Court complaint – judgment in default of appearance. 11 April 2011 VCAT application issued by VCL on behalf of Mrs Lakic seeking to set aside costs agreement with Prior & Prior. 19 August 2011 Magistrates’ Court complaint – application for rehearing filed by VCL on behalf of Mrs Lakic. 31 January 2012 County Court action – Serious Injury Application heard before Judge Saccardo. 13 February 2012 County Court action – Serious Injury Application granted by Judge Saccardo. 23 May 2012 Magistrates’ Court complaint – application for rehearing refused. 6 July 2012 County Court action – first offer by TAC. 6 August 2012 TAC rejects home help and other services claim. 10 August 2012 County Court action – extension of time application heard before Judge Kings. 18 October 2012 County Court action – extension of time application granted by Judge Kings. 21 November 2012 Supreme Court action – issued by VCL on behalf of Mrs Lakic pursuant to the leave granted by Judge Kings. 14 December 2012 Supreme Court action – second offer by TAC. 6 March 2013 Supreme Court action – third offer by TAC (offer of compromise). 24 October 2013 Supreme Court action – VCL’s application to cease to act on behalf of Mrs Lakic granted by Associate Justice Daly. 28-30 May and
2 June 2014
Supreme Court action – heard by Justice Rush. 20 June 2014 Supreme Court action – Justice Rush delivered judgment in Mrs Lakic’s favour. 16 July 2014 VCL’s bills of costs sent to Mrs Lakic. 20 January 2015 Present County Court proceeding issued by VCL against Mrs Lakic.
Credibility of witnesses
26Mr Bektas was a presentable witness. However, his actual memory of events seemed limited and his claims of recall implausible. It is unlikely, in my view, that Mr Bektas might remember events, such as his explanation of the costs agreement to Mrs Lakic, which he would probably have done as a matter of routine with new clients, when his recollection of most meetings with her was based on his reference to file notes or correspondence.
27Mr Bektas appeared at a disciplinary hearing at VCAT in proceeding J25/2013. He pleaded guilty to eight charges of professional misconduct and 5 charges of unprofessional conduct. These matters included charging excessive costs, providing deficient costs disclosure, failing to give appropriate advice in relation to offers of compromise and failing to maintain a reasonable standard of competence and diligence. On 16 December 2013, Her Honour Judge Jenkins cancelled Mr Bektas’s practicing certificate and ordered that he be ineligible to apply for the issue or renewal of the practicing certificate for 4 years. Whilst this matter was raised by the plaintiff’s solicitor in an affidavit filed shortly prior to the trial commencing, I ensured that the decision of Judge Jenkins was tendered in evidence so that the parties could, if they wished, make submissions as to what effect the matters disclosed in that hearing should have upon my view of Mr Bektas’s evidence before me.
28Although, I have taken account of the decision, it has not persuaded me that I should be inherently suspicious of the evidence Mr Bektas has given. Generally, the impression I gained was that he was a reasonably competent lawyer and that he had established an efficient work system at VCL. However, at the time VCL was handling Mrs Lakic’s matters, his firm was growing quickly and the few other qualified lawyers in the firm were relatively inexperienced and required significant assistance and guidance which, I consider the evidence showed, was not always available.
29Mr Pervaz and Ms Nicholson also worked on Mrs Lakic’s matters. VCL was their first employer. I am satisfied that they were both conscientious with their work but at the time they did not have the experience to themselves deal with the problems that arose, or all the requests made by Mrs Lakic. The responsibility in this regard was primarily Mr Bektas’s and at times he was too busy, or simply not prepared, to respond to Mrs Lakic or her problems.
30Ms Nicholson was insistent that she had attended the Magistrates’ Court on 23 May 2012 with Mrs Lakic. The evidence suggested otherwise. Her recollection was in my view mistaken and possibly relied on another experience in court with Mrs Lakic. Otherwise, the evidence of both Mr Pervaz and Ms Nicholson was based on their file notes and other contemporary records and was generally not controversial.
31Mrs Lakic, her husband and her older son Boris gave evidence. They had each been involved in the preparation of the case during the interlocutory stages and for trial. This involved hearings to consider the form of Mrs Lakic’s defence and counterclaim and the preparation of the defendant’s five volume court book. It is clear that as a result of performing these tasks, each member of the family had a detailed understanding of not only the issues in the case but also the extensive documentary material.
32Mrs Lakic impressed as a very intelligent, organised person. The trial took 12 sitting days. Mrs Lakic’s stamina and concentration was generally unflagging. She had the additional burden of needing to find her way around court books comprising English language documents. Whilst Mrs Lakic has some limited capacity in both spoken and written English she seemed to primarily cope with the demands of examining and cross-examining witnesses by using translations of documents, and other notes in Serbian.
33As regards the issues in the case, Mrs Lakic, on my observation, appeared to be able to appreciate subtle shifts in evidence that arose and to quickly and skilfully adjust her position. This is a capacity not often exercised by counsel with as much deftness as was displayed by Mrs Lakic in this case. As a consequence, Mrs Lakic seemed able to cope with the demands of the trial and was able to work from issue to issue and to examine each witness with a logical approach and clear understanding of the chronology of events and the documentation.
34Mr Zdravko Lakic and Mr Boris Lakic were also very familiar with the issues, the chronology and the documentation. Mr Boris Lakic, with his competence in both English and Serbian, had assisted his mother with the translation of documents both when VCL acted for her, and subsequently in this proceeding.
35Generally, Mrs Lakic, her husband and son gave evidence consistent with each other and with the documentation. However, when the consistency of their evidence unravelled on any particular point it cast doubt on the veracity of the evidence of each of them.
36An example was a letter dated 9 February 2011 which Boris Lakic said he hand delivered to VCL’s offices on his way to classes at university one morning. Mr Bektas said that the letter had not been received and was not in VCL’s files. The letter was very relevant to the determination of the issue of whether VCL had been instructed to act on Mrs Lakic’s behalf in relation to the Magistrates’ Court complaint issued by Prior & Prior.
37When the question was raised as to why Boris would have been at university at a time some weeks before the university classes commenced, Mrs Lakic tried to elicit other reasons why her son might have been going to university that morning or whether he was in the city for some other reason. This cast doubt on the unqualified evidence each of the family members had given earlier.
38Mostly, the chronology of events was clearly defined by the contemporaneous correspondence and documentation. On significant issues, however, Mrs Lakic claimed to have a recollection of a specific matter that was inconsistent with a file note made by VCL staff at the time, or she denied knowledge of the contents of a document which, although sent to her, she claimed was not translated adequately for her at that time.
39Accordingly, where possible in relation to both the plaintiff’s and the defendant’s witnesses, I have endeavoured to find independent supporting evidence where there were conflicting matters of evidence, or reliance by Mrs Lakic on her lack of knowledge of a particular communication or other document. Where such supporting evidence was lacking, I have only made positive findings where there was a logical or other proper basis for doing so. On occasions, this meant that the party with the onus of proof on a particular issue had not satisfied that onus.
Costs agreement
40Mrs Lakic first saw Mr Bektas on 28 March 2009 at the VCL offices in the Melbourne CBD. He said that he received instructions about her injuries and “explained our retainer” to Mrs Lakic. Their conversation was in “mixed English and Serbian” with “more Serbian”.
41In relation to the terms of the retainer, Mr Bektas said that the firm “generally acted on a no-win no-fee basis” and they would “only get the fees if they win” and that the costs would be “paid out of the proceeds of the damages claim”. Mr Bektas said that he explained that on the serious injury claim, the costs order would be for “party-party” costs and they would only claim “solicitor-client” costs out of the monetary result.
42Mr Bektas said that he also referred to the client’s “right to negotiate”, that bills could be “reviewed”, interest might be charged although this “usually didn’t happen”, the “estimated range” of the total costs and the “variables”. Mr Bektas said that the firm would fund on her behalf the cost of disbursements for doctors and barristers and, if successful, they would recover those costs.
43Mr Bektas said that he could expressly recall giving these explanations to Mrs Lakic. Mr Bektas told Mrs Lakic that he would send a formal written agreement to her but “would not do anything until she signed the agreement”. Mr Bektas said that Mrs Lakic “didn’t ask for the agreement to be in Serbian”.
44Mrs Lakic’s husband accompanied his wife to the conference. He had also been injured in the second accident and wanted VCL to act for him. The discussion about the costs agreement was also relevant to him and he was later sent a costs agreement and disclosure statement.
45Mrs Lakic said in evidence that at the conference, Mr Bektas asked her about the three accidents and her injuries. She asked him “how he worked”, as she had previously paid her solicitors. Mr Bektas said that he worked “no-charge, no-win” and would explain more in the agreement. He said that he could not interpret the agreement but would explain it to her.
46Mr Lakic gave similar evidence. He said that Mr Bektas told them “he would organise an interpreter and have the agreement translated, if he decides to work for us”. The costs agreement and disclosure statement were sent to Mrs Lakic with a letter dated 31 March 2009. Mrs Lakic said that she called the VCL office as Mr Bektas “had promised to have the agreement translated and explained”. Mrs Lakic was told by a female receptionist that she could not explain or interpret the agreement. Mrs Lakic apparently returned the agreement signed by her. She also signed a number of authorities so that VCL could obtain relevant information, particularly about her medical condition and treatment.
47Mrs Lakic said that “several times after that” she had been in Mr Bektas’ office, but it was not until 2010 that the agreement was “translated or explained”, although the “only thing I understood about that agreement was no-charge, no-win”. Mrs Lakic said that, “after that I was blackmailed because of the agreement that I did not sign properly”. In this regard, Mrs Lakic meant that, before signing the agreement, the agreement was not translated for her into Serbian or she was not given an adequate explanation in her language.
48Mrs Lakic has been in Australia since 1995. It is obvious, however, that her English language skills are limited. Generally, a qualified Serbian interpreter was available for court hearings and at significant conferences with lawyers and consultations with doctors. Mr Bektas, and a number of the support staff in VCL’s office, were Serbian speakers.
49In addition, Mrs Lakic’s older son, Boris, has an excellent command of both Serbian and English. Boris wrote a number of letters, particularly to VCL, on behalf of his mother and upon her instructions. Mrs Lakic said that Boris’s involvement did not include the translation of “significant” documents, including letters from VCL and court documents. I consider, however, it is likely that letters received for Mrs Lakic were translated by Boris and thereby Mrs Lakic obtained some understanding of the documents.
50By her defence, Mrs Lakic claims that the costs agreement is unenforceable because the contents of the agreement and the disclosure statement were not “in a language”, or the information was not “conveyed orally…in a language that [she] could understand”.
51Section 3.4.15 of the Legal Profession Act 2004 provides that a costs agreement and disclosure statement “may” be translated into another language. I consider that this word should not simply be given a discretionary meaning, in contrast to a mandatory word such as “must”. The occasions in which the section will require the documents to be in another language, or an explanation given in that language, will depend on the circumstances of a particular case.
52In the present case, I make the following findings:
a.I am not satisfied that Mr Bektas recalled giving the detailed explanations he said he had given to Mr and Mrs Lakic. Notwithstanding his insistence that he had a clear recollection, I consider that what he was doing was perhaps stating what was his “usual practice”, or what he might have been advised to do in circumstances where, for a person with limited English, the costs agreement and disclosure statement were not translated. This specific recollection was inconsistent with Mr Bektas’s limited recall of the specific details of most other contacts with Mrs Lakic where he relied upon file notes and correspondence whilst giving evidence;
b.Mr and Mrs Lakic appeared to suggest by their evidence that Mrs Lakic had signed the costs agreement conditionally or in reliance upon Mr Bektas’ promise to have the documents translated or explained to them. Mrs Lakic did sign the costs agreement and return it to VCL. There is, however, a file note taken by a receptionist of a conversation with Mrs Lakic on 6 April 2009 stating that Mrs Lakic “wanted to speak to Sam about her cost agreement. Advised her that she will need to speak to Sam about that as I cannot explain to her or give details of cost agreement”;
c.VCL continued to act for Mrs Lakic, notwithstanding what Mr and Mrs Lakic suggested was a continuing uncertainty about the precise terms of the costs agreement. It is likely that, if there had been concerns about the documents, they could have been clarified by informal translation for example by Boris, or Mrs Lakic would have recorded her unease in a letter to the solicitors. She did not do this.
53In the circumstances, I consider that the affixing by Mrs Lakic of her signature to the costs agreement and her acceptance of the legal services and the payment of disbursements by VCL over many years does not justify the agreement being set aside on the basis that the document was not in the Serbian language or was not sufficiently explained to Mrs Lakic. I consider that generally Mrs Lakic understood the essentials of the agreement and should be bound by its terms.
Changes in the estimates of costs
54In the disclosure statement, included with the costs agreement sent to Mrs Lakic on 31 March 2009, it is stated that, “It is not reasonably practicable to estimate the total legal costs and a range of estimates is between $7,500 and $50,000 and in some cases it could be more”. The statement then set out a number of “major variables that will affect the calculation of these costs”.
55In an email from Mr Bektas sent to Mrs Lakic care of Boris on 2 August 2010, it is stated that, “we advise that the value of our unpaid work in progress at this stage is at least $55,000 (and perhaps more with itemisation). If we are unsuccessful then we do not charge you for our services, if we are successful then as per the terms of our agreement, we shall seek an order from the court so that we may recover a significant proportion from the other side and the balance will be paid out of any common law damages settlement thereafter. If you end our retainer then you will be liable to pay us, regardless of your outcome”.
56On 13 February 2012, the serious injury application was determined by His Honour Judge Saccardo in favour of Mrs Lakic. Mrs Lakic was granted leave to commence a proceeding for damages and it was further ordered that TAC pay Mrs Lakic’s costs.
57On 26 May 2012, Ms Nicholson in a letter to Mrs Lakic stated, “We confirm our fees in relation to your ongoing TAC matter (that is within the scope of our retainer) is in the vicinity of $150,000 plus disbursements of more than $37,000 that have yet to be invoiced to you, despite our success in your County Court Serious Injury proceedings. We confirm that we do not propose to issue an account for payment until we have completed the matter or our retainer is otherwise ended”. On 18 October 2012, Her Honour Judge Kings granted Mrs Lakic’s section 23A application. No order was made, on this occasion, as to the costs of the application.
58On 14 November 2012, Mrs Lakic telephoned VCL. A file note records that Mrs Lakic “asked if TAC would pay for costs of s.23A. Client was taken through orders granted by Kings J – extension of limitation period and no order as to costs unlike serious injury hearing. SB [Sam Bektas] advised client that once bill drawn re s.23A would look into pursuing Prior & Prior for costs of s.23A. Noted that client still had costs matter on foot against Prior & Prior. May be able to offset costs of s.23A if granted against monies owed to them. Would keep client informed of developments. Confirmed we were not involved in client’s costs matter with previous solicitors – client being sued for costs”.
59I consider, in the circumstances, that the disclosures by VCL as to its estimates of the total costs of the proceeding were not unreasonable, and this matter is not a proper basis for me to determine that the costs agreement should not be enforced.
Whether VCL were paid its costs by TAC
60In her defence, Mrs Lakic alleges that VCL “has already been paid as [it] was paid the settlement sum of $848,350.67, from which they remitted the sum of $728,000 to [Mrs Lakic], and wrongly retained the difference for their costs and disbursements”.
61The allegation has no substance. In error, TAC, on about 3 July 2014, paid the sum of $689,824.83 to VCL on behalf of Mrs Lakic. The sum of $689,824.83 was the judgment sum of $848,350.67 less monies to be reimbursed to Centrelink. VCL returned the sum of $689,824.83 to TAC on about 31 July 2014. The receipt of the money and its repayment were evidenced by documents produced by VCL.
Was the retainer properly terminated by Mrs Lakic’s failure to accept reasonable advice?
62The costs agreement included the following provision, under the heading “Change of Solicitor / Ceasing to Act”:
“The law practice may terminate the retainer by you if you do not accept our reasonable professional advice relating to your matter(s). If this happens, then all legal costs incurred will become due and payable but without any uplift fee being applied”.
63The costs agreement also contained the following relevant provisions:
a.in order to comply with section 3.4.28(4) of the Legal Profession Act 2004, the law practice must not enter a conditional cost agreement “unless the law practice has a reasonable belief that a successful outcome of the matter is reasonably likely”, VCL confirmed in the agreement that “we maintain such a reasonable belief in the successful outcome of your matters”;
b.the agreement defined “a successful outcome” as including not only “a settlement reached by negotiations resulting in compensation or damages being paid to you” and an award of “damages or compensation” by a court or tribunal, but also where “an offer of settlement is made which we recommend that you accept”;
c.the law practice undertook, subject to its obligations to the Court, to “always act in your best interest in pursuing your claim for damages and obtaining for you the best possible result”;
d.Mrs Lakic undertook to make open and honest disclosure, to cooperate in the preparation of her claim and not to ask the practice to act “in a way that is improper or unreasonable”;
e.the “liability to pay professional fees arises only if there is a successful outcome of this matter”;
f.if a court makes costs order in the client’s favour, “this only gives you a right to recover some costs from the defendant. It does not affect your responsibility to pay out legal costs and disbursements”.
64VCL alleged in its statement of claim that Mrs Lakic, “On about 22 August 2013, at a meeting” at its Melbourne offices “refused the reasonable advice of [VCL] and advised that she had sought to engage other solicitors with respect to her damages claim”.
65On 26 February 2016, pursuant to an order of the Court, VCL gave further and better particulars of the “advice”, as follows:
a.prior to 18 October 2012, when Judge Kings granted the section 23A application, VCL advised Mrs Lakic “to engage in settlement discussions and consider accepting TAC’s offer of $50,000 plus retention of benefits received by [Mrs Lakic], namely $25,911.13”;
b.at a conference on 10 August 2012, Mr Richards SC and Mr Ruddle of counsel advised Mrs Lakic “to submit an offer to TAC in the range of $100,000 - $150,000 but accept the sum of $80,000, if TAC made such an offer”;
c.VCL advised Mrs Lakic “both verbally and in writing” that she should “engage in settlement discussions and consider accepting TAC’s offer of compromise [made on 6 March 2013] of $75,000 for pain and suffering, in addition to the benefits paid at that time, namely $25,911.13”. The written advice was in letters dated 6 and 18 March 2013 and the verbal advice in a telephone conversation on 19 March 2013;
d.in the letter dated 6 March 2013 from VCL to Mrs Lakic, the firm explained the offer and the costs implications of accepting or rejecting the offer and stated, “To allow us to proceed further with your claim, we required confirmation of your instructions to accept or reject the offer of compromise”;
e.the letter dated 18 March 2013 from VCL to Mrs Lakic noted that Mrs Lakic had failed to attend an appointment organised for her on 15 March 2013 and advised that the firm was “yet to receive your instructions” in relation to the offer of compromise;
f.a letter dated 19 March 2013 from VCL to Mrs Lakic noted that conversations had occurred that day between Ms Grbic, a support staffer at VCL, and both Mr and Mrs Lakic in which Mrs Lakic was “uncooperative and that you did not provide instructions in relation to the offer of compromise”.
66The further and better particulars of the statement of claim stated that Mrs Lakic’s “refusal of the advice” was constituted by her failure to “accept the offer of TAC”, her “refusal to negotiate with TAC or make any offers to TAC” and her failure to accept VCL’s advice to accept the offer from TAC. This appears to be a reference to the TAC offer of $50,000 plus retention of benefits made on 6 July 2012 and repeated on 14 December 2012, and perhaps the offer of compromise made on 6 March 2013.
67The further and better particulars refer to other matters which, whilst not directly a refusal to accept advice, appear to be related to VCL’s decision to terminate the retainer. They include:
a.failing to “cooperate in relation to preparation of her claim” by failing “to attend a settlement conference on 6 July 2012” and “an appointment at [VCL’s] office on 15 March 2013” and refusing “to provide instructions in relation to the damages proceedings … on 4 July 2013”;
b.indicating that “she did not require the assistance of [VCL] and/or she had consulted other solicitors with a view to taking over conduct of her common law claim for damages… verbally over the phone, in person and in writing” on 23 and 25 May 2012, 19 March, 10 April and 22 August 2013.
68In her defence, Mrs Lakic pleaded that the advice to accept TAC’s offer “could not be regarded as reasonable advice when the Supreme Court entered judgment in favour of [her] in the sum of $848,350.67 … and when there was no medical evidence that [she] was fit for work”.
69VCL asserted that the advice given to Mrs Lakic was reasonable. VCL’s advices had regard to the risk that Mrs Lakic may not obtain leave pursuant to section 23A or, after leave had been granted, that Mrs Lakic may not be regarded as a “credible witness”. The statement of counsel, Mr Richards SC and Mr Ruddle, in conference on 10 August 2012, and Mr Paine in a written advice dated 21 November 2011, were said to confirm VCL’s advice.
70VCL considered Mrs Lakic “would not pose as a good witness” because of “damaging expert opinions”, “years of accumulated covert surveillance which showed [Mrs Lakic] moving more freely than indicated in medical examinations”, the “multiplicity of injury complaints” and that there were “multiple transport accidents”. In these circumstances, VCL was seeking to ensure, by its advice, that Mrs Lakic was “compensated for her injury to some degree, instead of risking a loss and not being entitled to any compensation”.
71Contain of the matters raised by VCL in its further and better particulars, which have not already been discussed, will be considered chronologically.
72Written advice by Mr Paine of counsel (21 November 2011): Mr Paine’s advice was given prior to the serious injury and the section 23A hearings in January and August 2012. Mr Paine stated that he had been “briefed to advise in relation to a serious injury application”. Mr Paine noted that it is “difficult to give any definite advice in this matter without having seen the plaintiff whose presentation will be important and the various video surveillance”.
73Mr Paine suggested concentrating on Mrs Lakic’s psychiatric rather that her physical injuries, and on the first accident. He thought Mrs Lakic “has reasonable support for a significant perhaps severe psychiatric impairment”, apart from a particular video that doctors considered showed her “acting in a relatively normal way”, and that Mrs Lakic incapacity to work, Mr Paine thought, “amounts to a severe consequence”.
74Mr Paine gave other advice as to how Mrs Lakic’s chances of success in her upcoming court appearances might be improved. In my view, there is little in Mr Paine’s memorandum that “upholds” the reasonableness of VCL’s advice in relation to the TAC’s settlement offers. Mr Paine concentrated on the serious injury application and to a lesser extent on the s.23A application, and issues which needed addressing in those applications. No specific advice was given about the prospects of success in a common law claim.
75Mrs Lakic’s communications on 23 and 25 May 2012: VCL relied upon these communications in its further and better particulars as evidence that Mrs Lakic did not want VCL to act for her any longer in her common law claim for damages. Two internal emails from receptionists at VCL to Mr Bektas record the following:
a.on 23 May 2012, Mrs Lakic phoned “wanting to speak only to SB [Mr Bektas]”. The receptionist asked Mrs Lakic “what this was in relation to and offered assistance”. Mrs Lakic “stated that I ‘can no longer help her’ and that she is ‘finished with us’. Advised would ask SB to return call”;
b.on 25 May 2012, Mr Lakic had phoned wanting to speak to the receptionist his wife had spoken with two days earlier; a Serbian speaker. The email continued, “I advised him [the receptionist] is unavailable and offered assistance. He advised only wants to speak to [the receptionist] or SB. Advised [asked] what it was in relation to, he advised they are going to find new solicitors and do not want us to act for them any longer. Advised him will notify [the receptionist] and SB to call”.
76On 29 May 2012, Mr Lakic phoned again. The same receptionist as on 25 May 2012 recorded that Mr Lakic “wants SB to call him to advise whether they will continue to assist them if not they will take it to the SC [Supreme Court] and sue. I advised him that will notify SB of call but cannot assist any further until I discuss with SB”. On 4 June 2012, emails record that “Lakic’s husband is here with the priest (only them two)”, and that they were conferring with Ms Nicholson.
77It is important to put these communications in context. On 23 May 2012, at the Magistrates’ Court at Melbourne, Mrs Lakic’s rehearing of the complaint by Prior & Prior was unsuccessful. Mrs Lakic was represented by counsel, although she said, only as a “friend of the court”, and no interpreter and no one from VCL had attended, as she had expected. Mrs Lakic was very unhappy with what had happened at the Magistrates’ Court and this matter will be discussed in greater detail later. In my view, the two emails to Mr Bektas by the receptionists were taken out of context and do little to support VCL’s contention that this matter was related to Mrs Lakic’s failure to accept the firm’s reasonable advice in the common law claim.
78First TAC offer (6 July 2012): on July 2012, the first offer of compromise was made by TAC - $50,000 plus retention of payments. It was apparently made at a common law conference with TAC. Although complaint is made in VCL’s further and better particulars that Mrs Lakic’s absence from the conference was evidence of her failure “to cooperate in relation to the preparation of the claim”, no evidence was led to support that allegation. A letter dated 9 July 2012 from VCL to Mrs Lakic, referred to the “settlement conference on 6 July 2012 with TAC”, and noted, “We confirm you declined to attend and were advised to be available by phone if required to obtain further instructions”.
79Mrs Lakic was requested by a VCL support staffer to attend a conference with Mr Bektas to discuss the offer. Mrs Lakic said that she was unwell and requested that she be advised in writing what the offer was before she saw Mr Bektas. Mr Bektas wrote to Mrs Lakic on 9 July 2012 setting out the terms of the offer and that VCL proposed to “waive any solicitor/client costs” and to “pursue what costs recovery we can from TAC”. The letter stated, “Our reasonable advice to you is to accept this offer… There is a real prospect of you not seeing any better outcome from this litigation and we are not required to waive or withhold any part of our fees if you do not accept our reasonable advice. It is our intention to make the best for you out of a difficult situation as regards yourself and the TAC”.
80The letter went on to discuss “the alternative” to accepting the offer, firstly succeeding on the s.23A application to be heard 10 August 2012 and, if successful, proceeding to trial on the common law claim. These steps would require Mrs Lakic to “overcome a number of evidentiary hurdles and significant accumulated costs to realise any benefit from any common law action”.
81On 11 July 2012, Ms Nicholson spoke with Boris. She recorded in a file note, “spoke to Boris – he advised that parents are unhappy with the offer – is not enough. Confirmed that his Mum does not wish to settle – advised implications and likelihood that jury trial will not yield favourable outcome – does not care and wants the J[udge] to decide – confirmed this is not always the best way as court may not yield a ‘just’ outcome in eyes of his mum”. In a letter that day to Mrs Lakic, VCL confirmed “your instructions to reject the offer, which is against our advice”.
82Mr Bektas also spoke to Mrs Lakic on 11 July 2012, and later that day wrote to her referring to the TAC offer as a “final offer to settle” and noting that he had “reiterated [to Mrs Lakic] problems that may arise should this matter proceed to the scheduled section 23A application” and noting Mrs Lakic’s “instructions to reject” the offer.
83Conference with Mr Richards SC and Mr Ruddle (9 & 10 August 2012): On 10 August 2012, Judge Kings heard the section 23A application. Mrs Lakic attended conferences with counsel and Mr Pervaz on 9 August 2012 and the following morning before court.
84Mr Pervaz recorded in file notes the conference Mrs Lakic had with counsel on 9 and 10 August 2012. On 9 August 2012, Mr Richards SC considered the costs claim by Prior & Prior against Mrs Lakic and discussed the possibility of suing the firm for negligence if the section 23A application were unsuccessful. At counsels’ request, the following day Mrs Lakic produced documents relating to Prior & Prior including “copies of equitable charge, caveat and the [Magistrates’ Court] complaint”.
85Mr Pervaz recorded that before court on 10 August 2012, counsel advised Mrs Lakic that “if were to win today could proceed for damages against TAC. Outline increased risk/costs of jury trial. Adv cli that her CL prospects were not favourable and barrs adv that should try and resolve matter at conf. Most of the funds would go to pay prev sols costs and remove caveat. Cli would not be left with much. Also could sue prev sols for sol-cli costs of 23A matter as well as costs of delay of proceedings – will get party-party costs anyway. Adv cli if lose today should look to sue prev sols. Explained that cli could sue for loss of chance if unsuccessful today. Might be easier to sue prev sols than run damages trial”.
86There were later discussions between counsel and Mrs Lakic recorded by Mr Pervaz, apparently before the application proceeded in court: “Adv of TAC position. Also adv cli that good chance that we may win today so unable to pursue prev sols and would have to proceed with CL damages case. JR adv that this was an opportunity to resolve matter and he would strong adv cli to make an offer to TAC possibly in the region of 100k-150k. Adv cli that prospects of matter as jury trial were not good – cli would not present as a good witness and surveillance would kill case. Also adv cli that her SINJ was granted by Saccardo for mental injuries and not physical (although it can be argued) and therefore their valuation of the case was not as high as cli may want. Adv cli that if matter resolved today for -80k his adv would be accept”.
87Mr Ruddle of counsel “concurred” with this advice. Mr Pervaz telephoned Mr Bektas to seek his instructions. Mr Pervaz relayed Mr Bektas’s views to Mrs Lakic. “Cli adv of SB adv. Cli was adv that if made/accepted an offer as advised cli would receive settlement amount (no sol-cli costs to be taken from amount) and cli would pay prev sols remove caveat and have small amount to herself. Cli instr was not to negotiate or make any offers to TAC. Wanted her day in court. Acted contrary to advice of barrs and sols. JR reiterated that her CL damages case would be very difficult to win and highlighted increased costs and risk of jury trial. Cli reiterated prev instructions”.
88This case raises some of the problems which might arise when a solicitor agrees to act on a “no-win, no-fee” basis. VCL agreed with Mrs Lakic to “act in your best interests in pursuing your claim…and obtain for you the best possible result”. In this case, VCL paid disbursements so that Mrs Lakic could have the benefit of representation by experienced barristers and the opinion evidence of appropriate expert medical witnesses.
89If firms of solicitors were not prepared to act on this basis, and to effectively invest time and resources on behalf of their clients, many injured persons who might otherwise have an entitlement to compensation would be denied the opportunity of pursuing a common law claim.
90Most proceedings of this nature settle before trial. Others are not pursued. The court process is designed to ensure that the parties actively consider the option of a negotiated settlement. Otherwise, if a case does proceed to trial, a considerable investment is made by all who agree to act, in the first instance perhaps without fee – the examining doctors, the barristers and the solicitors - before the final result is known, either by jury verdict or the decision of a judge. Very few litigants are able or prepared to participate in litigation right up to a final determination by a judge or jury.
91In this case, VCL in the costs agreement asserted in accordance with its statutory obligation that it had a “belief that a successful outcome of the matter is reasonably likely”. The phrase “successful outcome” was broadly defined in the agreement to include where “an offer of settlement is made which we recommend that you accept”.
92VCL accepted obligations to act in Mrs Lakic’s “best interests”, to explain “risks and benefits of the legal action” and to give “professional advice whether to accept any offer of settlement”. The costs agreement provided that the law practice may “terminate the retainer by you if you do not accept our reasonable professional advice”.
93In these circumstances, the solicitors needed to ensure that a client was not advised to accept a settlement offer simply because the law practice believed it would be in its own best interests to withdraw from litigation with a compromise which enabled the solicitor to recover at least part of its costs and disbursements whilst also leaving some limited compensation for the client.
94If the solicitor were to withdraw from the retainer in circumstances where it could not show that there was “good cause” and a “successful outcome”, the solicitor would not be entitled to charge the client for its costs and disbursements. If the client terminates the retainer “for any cause”, the client must pay the costs, without any uplift fee. In this sense, the costs agreement binds them together.
95In this case I would ordinarily on the evidence, need to decide whether I were satisfied that VCL gave “reasonable professional advice” which Mrs Lakic did not accept. In her defence and the counterclaim, Mrs Lakic asserts that VCL’s advice to settle the damages claim “could not be regarded as reasonable when the Supreme Court entered judgment in favour of [Mrs Lakic] in the sum of $848,350.67…and when there was no medical evidence that [she] was fit for work”.
96Inherent in that pleading is the fact that the highest settlement offer made by TAC (the offer of compromise dated 6 March 2013) was for payment of $75,000 plus the retention of benefits paid of $25,991.13 (“the third offer”). The acceptance of the offer would ordinarily, at that time, have entitled VCL to tax its costs on a party-party basis and have them paid by TAC.
97During the time VCL acted for Mrs Lakic, TAC made three offers. The earlier offers were:
a.on 6 July 2012, for $50,000 plus retention of prior benefits (“the first offer”);
b.on 14 December 2012, the first offer was repeated (“the second offer”).
98The first offer was made after the decision of Judge Saccardo on 13 February 2012 but before Judge Kings’ decision on 18 October 2012. The second and third offers were made after the Supreme Court proceeding (SCI-2012-06464) had been issued on 21 November 2012.
99The first offer was made at the common law conference attended by Mr Bektas and Mr Pervaz with representatives of TAC. In the VCL letter dated 9 July 2012, Mrs Lakic was told it was a “final offer” and if Mrs Lakic succeeded in her section 23A application, TAC “will not make any further offer and that it shall defend any common law damages claim to verdict”. The offer was open to be accepted by 13 July 2012.
100The letter set out the consequences to Mrs Lakic of accepting or not accepting the offer, including her potential liability for costs in each case. The letter stated that, “Our reasonable advice to you is to accept this offer” and that, “It is our intention to make the best for you out of a difficult situation as regards yourself and the TAC”.
101On 11 July 2012, Mr Bektas and Ms Nicholson wrote two letters to Mrs Lakic noting her “instructions to reject the offer, which is against our advice”. The second letter noted that Mrs Lakic has spoken to Mr Bektas that day and Mr Bektas had “explained in detail to you the offer…the firm’s instructions…and reiterated problems that may arise should this matter proceed to the scheduled section 23A application…on 10 August 2012”.
102VCL did not terminate the retainer at that time. I do not consider that having continued to act for Mrs Lakic at the section 23A application and having issued the Supreme Court proceeding as a result of Judge Kings’ order, that VCL could later simply rely upon Mrs Lakic’s failure to follow VCL’s advice to accept the first offer as a basis for terminating the retainer.
103The second offer was made at the common law conference on 14 December 2012. TAC repeated its first offer. The file note by Mr Pervaz recorded that, “SB put forward figure of $250,000 pain and suffering only plus keep but TAC advised they would not increase previous offer and that they want matter to run to trial”.
104At Mrs Lakic’s request, VCL wrote to her on 14 December 2012 setting out the terms of the offer and recommending “that you settle your proceedings on the abovementioned basis”. On 18 December 2012, in a telephone conversation with a VCL staffer, Mrs Lakic advised that “she does not want to accept the offer and wants to go to court”.
105On 19 February 2013, Mr Bektas and Mr Pervaz wrote to Mrs Lakic noting “that on two occasions you have not heeded our reasonable advice in relation to offers” and informed her that VCL “reserve our rights in relation to filing a notice of ceasing to act at the Supreme Court, thereby concluding our involvement as your legal representatives in this matter”.
106Mrs Lakic tried to speak with Mr Bektas by phone the following day but was unsuccessful. On 26 February 2013, she wrote asking for a conference “to discuss my case as it is very important for me as I wish for my case to go on further to the Supreme Court”.
107On 6 March 2013, the offer of compromise was served. VCL sent the offer to Mrs Lakic that day with an explanatory letter. An appointment on 15 March 2013 was not kept by Mrs Lakic without explanation at that time. On 19 March 2013, Mrs Lakic apparently had a telephone conversation with a VCL staffer who sought her instructions about the offer. The file note records Mrs Lakic stating that she understood VCL was not acting for her.
108VCL wrote to Mrs Lakic later that day noting that the TAC offer was likely to lapse and informing her than “our office is seeking the drawing of a bill in relation to the solicitor/client costs incurred in relation to” the section 23A application.
109In a letter dated 10 April to VCL, Mrs Lakic suggested that she had not attended the appointment on 15 March 2013, “due to the letter which you sent to us on the 19th of February 2013. In that letter you told me that you were going to withdraw your involvement in my case in the Supreme Court due to not accepting TAC’s offer”.
110Mr Bektas commenced practice as a sole practitioner in mid 2007 after seven and a half years as an employee solicitor and senior associate in the same personal injury practice. On 1 July 2008 he established VCL. Mr Pervaz commenced employment as a graduate lawyer with VCL in August 2010. He worked at VCL until about December 2013. He was admitted to practice either shortly before or early during his time at VCL. Ms Nicholson commenced employment with VCL as a graduate lawyer in March 2011 and worked at VCL until February 2015. She was admitted to practice in March 2012.
111No expert evidence was led in the case as to what might constitute “reasonable professional advice”, (or relating to what was alleged to constitute the professional negligence raised in the counterclaim). Both Mr Bektas and Mr Pervaz gave evidence of the matters each of them considered when advising Mrs Lakic about the offers. These included:
a.the video evidence and its effect on Mrs Lakic’s credibility and the view a court, including a jury, may take of her physical capacity;
b.the fact that Mrs Lakic had been involved in three accidents;
c.the multiplicity of her injury complaints.
112The assertions, particularly in VCL’s correspondence and the file notes, that Mrs Lakic refused to accept “reasonable advice”, are simply the statement of a conclusion and could not be regarded as expert opinion, by reason of the relative inexperience of the three VCL lawyers and Mr Bektas’s admitted unprofessional conduct in unrelated matters at about this time.
113Mr Richards SC and Mr Ruddle did not give evidence at the trial and I cannot give the recording of their comments in conference, before and after the hearing before Judge Kings, as much weight as if they had given the evidence themselves, including reference to their reasoning processes and the contextual matters that might have had some relevance to their advice. Mrs Lakic did not have the opportunity to effectively test the less direct evidence of their views.
114In the end the question of whether Mrs Lakic failed to accept VCL’s reasonable professional advice on a matter which justified the termination of the retainer is a matter that I would need to consider on the basis of the evidence I heard.
115The fact that Judge Saccardo adjudicated in favour of Mrs Lakic in relation to the serious injury application and, more significantly, Justice Rush awarded Mrs Lakic substantial damages after the trial of the action, are important considerations, although not decisive on the issue of whether VCL’s advice was “reasonable”.
116I consider that there is little utility in reaching a conclusion on the issue of whether VCL has satisfied me that it gave Mrs Lakic “reasonable professional advice” which she did not accept. It is unnecessary for me to determine that issue because I have decided that VCL should obtain the relief it seeks in relation to its costs claims for other reasons. The issue of the reasonableness of the advice will need to be decided in order to determine the claim by Mrs Lakic that VCL wrongfully terminated the retainer. However, in that regard, different considerations will apply.
117In relation to the claim for $51,093.45 for VCL’s costs of the section 23A application determined by Judge Kings, Mrs Lakic has been allowed credit for that sum, plus interest, as damages awarded by Justice Macaulay. As for VCL’s claim for $158,905.78, Judge Saccardo made an order that TAC pay those costs. The taxation of the costs did not proceed because Mrs Lakic indicated to TAC that VCL no longer acted for her.
118There are certain matters that must be considered in relation to the costs of the serious injury application:
a.I do not have the necessary skills or experience to assess the costs. It is appropriate that the task be undertaken by the Costs Court;
b.TAC, as the party ordered to pay the costs, must have all rights it would have had to challenge any of the items of costs claimed;
c.if the Costs Court considers that TAC is entitled to be paid any costs as a result of the assessment process, those costs shall be deducted from any assessment made;
d.if part of the bill of costs relates to work undertaken by Prior & Prior and not by VCL, VCL must pursue the recovery of those costs as it had previously intended to do. Those costs will be recovered on behalf of Mrs Lakic as her obligation to pay Prior & Prior has been finalised by the judgment of Justice Macaulay. If any money is owing to Prior & Prior by Mrs Lakic pursuant to that judgment, including for legal costs, those sums must be first satisfied before any recovery from TAC is paid to Mrs Lakic;
e.Mrs Lakic has asserted that some of the items that may be included in the bill of costs were paid by her and not by VCL. Those disputes will be determined by me at a further hearing after Mrs Lakic has identified the precise details of any dispute;
f.Mrs Lakic must cooperate with VCL in the assessment process, to ensure that VCL can achieve an appropriate recovery from TAC.
119This process has been adopted because there is an existing costs order in place which VCL had wished to pursue. It would be unconscionable if Mrs Lakic were able to thwart the recovery of VCL’s appropriate party-party costs of the successful serious injury application in circumstances where VCL is not pursing solicitor-client costs in the proceeding.
Solicitor’s negligence – failing to investigate and pursue claims relating to the accidents in 2002 and 2006
120By her counterclaim, Mrs Lakic alleges that VCL “failed to investigate [her] rights pursuant to the transport accidents that occurred on 26 January 2002 and 12 September 2006, and failed to pursue any claims arising from the said accidents” and that VCL should have “made an application for a serious injury certificate and an extension of time within which to initiate legal proceedings for common law damages”.
121In the counterclaim, Mrs Lakic refers to the injuries she suffered in the two accident, as follows:
a.in the 2002 accident, “injuries to her left shoulder, surgery to her gall bladder, gynaecological problems (including bleeding), psychiatric injuries, broken teeth and nose injury and an injury to her neck”;
b.in the 2006 accident, “injury to her neck and dizziness and an exacerbation of her previous injuries”.
122The counterclaim referred to the fact that Justice Rush in the Supreme Court proceeding (SCI-2012-06464) held “that 10% of [Mrs Lakic’s] psychiatric injuries were due to the [second and third] car accidents” and claimed, “the loss in the opportunity to claim the damages that could have been recovered in relation to the [second and third accidents]”.
123Justice Rush made the following findings in the Supreme Court proceeding:
a.since the first motor vehicle accident on 15 May 2000, Mrs Lakic “has not been capable of employment as a consequence of her injuries [which have] rendered [her] incapable of employment”;
b.Mrs Lakic was therefore entitled to damages for past pecuniary loss for the period of 13 years and 28 weeks from 15 November 2001, the date from which Mrs Lakic’s loss must be calculated pursuant to the Transport Accident Act 1986;
c.Mrs Lakic’s future pecuniary loss was calculated for a further 15 years on the basis that she “would have worked to 62 years of age”. The damages were calculated by application of the appropriate multiplier and a discount of 15% for contingencies of life;
d.the assessment of Mrs Lakic’s pain and suffering damages was based on the evidence indicating that “there will be little or no improvement in [her] overall condition [and that her] chronic pain syndrome and depression will be an unremitting feature of [Mrs Lakic’s] future life”;
e.“the first [accident] is responsible for 90% of [Mrs Lakic’s] present incapacity”;
f.“the effects of the latter two [accidents] are cumulative [and were] temporary aggravations” on Mrs Lakic’s physical condition;
g.Mrs Lakic’s pain and suffering damages should be discounted “by 10% for the contribution to her current situation of the second and third [accidents]”.
124In the circumstances and on the basis of these findings, the total amount that Mrs Lakic would ordinarily recover as damages in relation to the failure by VCL to investigate and pursue claims relating to the second and third accidents would be $24,750 (or 10% of the assessment by Justice Rush for pain and suffering damages).
125Justice Rush noted that the relevant claim forms detailed the injuries Mrs Lakic suffered in each accident, as follows:
a.after the first accident, as reported in the claim form for the second accident, dated 14 February 2002, “lower back pain, neck pain, headaches, interscapular pain, chronic pain syndrome, right leg and right shoulder injury”;
b.sustained in the second accident, as reported in the claim form dated 14 February 2002, “neck, whole back, upper right leg, left shoulder pain, very bad headaches, stomach aches and damage to teeth”;
c.sustained in the third accident, as reported in the claim form for the third accident, dated 21 October 2006, “headache, back pain, chest pain, leg pain, neck pain, shoulder pain right side”.
126In relation to the second accident, Mrs Lakic has alleged in her counterclaim that the second accident resulted in matters not referred to in her claim form including “surgery to her gall bladder, gynaecological problems (including bleeding), psychiatric injuries…and nose injury”, and the injuries from the third accident included “dizziness” and “an exacerbation of her previous injuries”.
127In order for Mrs Lakic to have brought a claim for damages in respect of either the second or third accident, she would have needed to obtain leave of the court to bring the proceeding by establishing that she had suffered a serious injury as a result of the accident.
128In respect of the second accident, because the limitation period had expired before Mrs Lakic retained VCL, she would also have needed to obtain an order extending the time for the bringing of the proceeding. It is, in my view, likely that Mrs Lakic would have been successful in obtaining an extension of time, but only if her injury were first adjudged to be a serious injury.
129I consider that the likelihood of Mrs Lakic establishing serious injury arising from either the second or third accident is remote. The court would look at the consequences to Mrs Lakic of the injuries she suffered in the accident, including both physical and mental injuries, any aggravation of a pre-existing injury and any psychiatric or psychological sequelae of a physical injury.
130Both the gall bladder surgery and the gynaecological problems have been attributed to the stress suffered by Mrs Lakic as a result of the pain she experienced, as amplified by her chronic pain syndrome. Whilst Justice Rush stated that although Mrs Lakic had “in her evidence complained of having menstrual bleeding (menorrhagia) since the first [accident]…the evidence does not satisfy me that [Mrs Lakic’s] menstrual dysfunction has been physically caused by the first [accident] or the psychiatric sequelae that followed [notwithstanding] any temporal connection to the first [accident]”.
160On 21 January 2011, the serious injury application was listed for hearing at the County Court. The hearing was adjourned. File notes by Mr Pervaz suggest that the reason was because of Mrs Lakic’s counsel’s concern about the absence of affidavit material filed in the section 23A application. In a letter to Mrs Lakic on 24 January 2011, Mr Bektas and Mr Pervaz suggested that the adjournment was necessary because of the large volume of subpoenaed material produced. Mr Pervaz recorded in a file note, “Client was very upset. Wanted to speak to a judge today. Would not leave County Court until she saw a judge. Client was extremely difficult to reason with and volatile…Client was unreasonable and threatening. Wanted to finish matter today and refused to leave County Court”.
161It was with this background that VCL wrote to Mrs Lakic on 24 January 2011 briefly reporting on the hearing on 21 January and confirming the “advice of counsel not to proceed with the matter on the day in light of new circumstances [the subpoenaed documents]”.
162The letter concluded as follows: “Moreover, we refer to your facsimile dated 17 January 2011 regarding a Complaint filed in the Magistrates’ Court of Victoria by your former solicitors, Prior & Prior Solicitors. We confirm that we have not received instructions to enter a Defence or Notice of Appearance on your behalf. We further confirm that this matter falls outside the scope of your Costs Agreement. Should you wish for us to act for you in this matter, we request written instructions from you to do so. Should you have any queries, please feel free to contact this office”.
163File notes by receptionists on 25 January 2011 record a phone call from “client asking to speak with SB” and a similar record on 28 January 2011, also noted that Mrs Lakic “has called plenty of times and has not heard [had] response”. There was a similar message taken on 1 February 2011 recording that Boris “wanted to speak to SB only re caveats and the court case in general”.
164Mr Bektas did not phone Mrs Lakic, but instead sent an email to Mr Pervaz which read as follows:
“AP – fyi – cli fmr sol had cli sign on to agree to a caveat to house whilst he was acting for her (Prior & Prior). We sent a ltr to cover us re fmr sol complaint in MC for fees. Pls discuss with cli son or with SB if you need feedback. In our ltr to cli we recommended certain steps be taken but we do not have formal written instructions re this matter. If they wish for us to act they should tell us and we can confirm in writing. We recc they apply to set aside costs agreement as he should not be able to add uplift (25%) under law unless he works no win no fee and also (as I recall) there was no cooling off period at least 5 days)”.
165The letter “to cover us” was presumably the letter dated 24 January 2011 requesting instructions before VCL was to act for Mrs Lakic in the proceeding. It is difficult to discern what were the “certain steps” VCL “recommended …be taken” unless it was “to enter a Defence or Notice of Appearance on your behalf”. There is no reference in the letter dated 24 January 2011 that, “We recommended they apply to set aside costs agreement”, presumably a reference to the course later taken by VCL when on 11 April 2011, it issued such an application in VCAT on behalf of Mrs Lakic.
166On 2 February 2011, a file note records a telephone call between Mr Pervaz and Boris, translating for Mrs Lakic. Mrs Lakic wanted to speak with Mr Bektas. She thought Mr Bektas “is avoiding them”. Mr Pervaz said that he was “happy to help them as SB was occupied”. Mr Pervaz said that if it was regarding the “complaint by former solicitors … we would need written instructions as our previous letter [said]”. Mr Pervaz said that he attempted to “update client and discuss recommendation to set aside costs agreement but was interrupted and was told to ask SB to return their call today”.
167On 7 February 2011, Boris phoned VCL. A receptionist recorded Boris asking about “emails sent about caveat about a week ago…still have not heard back from SB”. Boris also phoned Mr Pervaz that day. Mr Pervaz said that because Mr Bektas was occupied he “would be happy to speak to them”. Mr Pervaz recorded:
“Told them had sent letter on 24/1/11 seeking instructions Cli son advised that their Dad will bring in a letter confirming written instructions to act for both SI and matter with prev sols. Wanted an apt with SB. Advised that I would be happy to see cli or husband to discuss matter when they dropped off letter. Cli wanted to only speak to SB. Said they will call back later to see if can get an apt with SB next week”.
168On 9 February 2011, Mr Lakic said that he and Boris prepared a “letter of instructions” to VCL which Boris hand delivered to VCL’s office that morning. Mr Bektas disputed that such a letter was delivered. He said it was office practice for the receptionist receiving documents at the front counter to prepare a file note recording the circumstances of the delivery, attach it to the documents and forward it to the appropriate person in the office.
169The letter dated 9 February 2011 to VCL read as follows:
“We are writing to you in regards to the letter you sent dated 24/01/2011. We wish to know what has happened and what is going to happen in the future in regards to this claim. We have tried to contact you a number of times over the last few weeks and left a number of messages for you to call us back however we still haven’t heard anything from you.
Secondly, we have advised you of the Caviet (sic) which our previous solicitor created for the car accident and the court procedures. You advised us to leave this situation for February that is why we have tried to contact you. We wish for you to explain what the procedure is for this as the current court case still isn’t finished. In regards to this Caviet we have advised you that we wish for you to continue working for us for our claim and for this Caviet as this is Caviet is joined with this claim.
Please understand that Bogdanka’s current mental and physical situation is something that she has no control over due to her pain and her mediation.
We would also like to make an appointment to see you in regards to the claim and the caviet. If you have any other queries, please contact”.
170File notes by VCL receptionists, support staff and Mr Pervaz record further attempts by Mrs Lakic through Boris and his brother Njegos to speak with Mr Bektas on 18, 21 (twice) and 22 February (twice). A call on 22 February 2011 was transferred to Elena Tranjkovska, a support staffer who spoke Serbo-Croatian. Mrs Lakic said that she wanted Mr Bektas to write a letter advising that “we are either working or not working for her”. Ms Tranjkovska recorded, “Repeated that we are and we are continuing with claim as I explained earlier, as well as working on issue of caveat”.
171A letter dated 22 February 2011 was sent to Mrs Lakic referring to the “telephone communication between yourself and Elena of our office this afternoon”. The letter stated that it was “confirmation that we are still acting on your behalf in regards to your claim. This is in accordance with your Cost Agreement dated 1 March 2009 (sic). Should you have further enquiries, please do not hesitate to contact our office”.
172Judgment was entered by Prior & prior in the Magistrates’ Court complaint on 11 February 2011. Mrs Lakic was ordered “to pay Stephen Prior and Rosemary Prior, claim $39,017.39 and interest $538.56. Costs $1,014.90”.
173In summary, what happened between this time and 23 May 2012 when Mrs Lakic’s application for a rehearing of the complaint was refused, was as follows:
a.on 29 March 2011, Mr Pervaz reviewed the file subpoenaed from Prior & Prior. He told Boris that, “We’re going through material to see if any material relevant to cost agreement, caveat or 6 year period to determine what further steps to take;
b.on 5 April 2011, Mrs Lakic was asked to provide Mr Pervaz with documents from Prior & Prior, “including her cost agreement”. The documents were brought in later that day and Mrs Lakic apparently told Mr Pervaz that “costs agreement – signed in office of P&P - younger son acted as translator”. Mr Pervaz advised “re VCAT process to set aside costs agreement”;
c.on 11 April 2011, Mrs Lakic had “explained to her need to take matter to VCAT to knock out cost agreement and challenge bill”;
d.on 18 April 2011, Mrs Lakic “confirmed that she has no other solicitors in relation to her costing matter. [The VCL staffer] advised her that we will forward the document [the VCAT application] and then proceed to solve her issues with costing of former solicitors”. Mr Bektas would not speak to Mrs Lakic;
e.on 27 April 2011, VCL filed with VCAT the application signed by Mrs Lakic on 11 April 2011 seeking to set aside the costs agreement with Prior & Prior dated 30 September 2005 pursuant to the Legal Profession Act 2004. VCL’s letter to VCAT noted, “We confirm we act on behalf of our client Bogdanka Lakic”;
f.on 15 June 2011, Ms Nicholson attended a directions hearing at VCAT before Deputy President Macnamara. The matter was referred to mediation. The Deputy President apparently “stated no point in setting the agreement aside as respondent had already obtained judgment in default in Magistrates’ Court”. Ms Nicholson further noted in regard to the judgment - “VCL has no paperwork re this”. At the hearing it had been clarified that the application was more appropriately made under the Legal Practice Act 1996;
g.on 16 June 2011, VCL wrote to Prior & Prior noting that at the VCAT hearing, “the applicant was self-represented”, although Ms Nicholson had attended the hearing to argue the application for Mrs Lakic. The mediation was “scheduled for 20 July 2011 at VCAT”;
h.at the mediation on 20 July 2011, Prior & Prior “confirmed they will consider an out of court settlement should an appropriate offer be made”. Apparently at the mediation, and in the weeks that followed, Prior & Prior had indicated that it may accept an offer of $28,000 payable by instalments;
i.on 4 August 2011, Ms Lakic advised VCL that she was not financially capable of making an offer. She was told by a VCL staffer that if “she does not agree” to make an offer, the “matter will go to court”;
j.on 11 August 2011, Ms Nicholson and Mr Bektas wrote to Mrs Lakic advising that although the firm had “aided you to further your application “ in VCAT, that “we have never been formally retained in this particular matter”. The letter referred to Mrs Lakic’s “refusal to provide further instructions to enable us to negotiate with your previous solicitors in relation to monies owed”. The letter advised of a further “mention” at VCAT on 17 August 2011 when if nothing were done, the application “is likely to be dismissed” and Prior & Prior would be able to enforce the Magistrates’ Court order;
k.on 15 August 2011, Ms Nicholson spoke to Mrs Lakic. Mrs Lakic repeated what she had said on earlier occasions, that she “wants to pay a fair figure [to Prior & Prior] from the settlement sum” in the common law proceeding. Ms Nicholson apparently passed on Mr Bektas’s advice that Mrs Lakic should “commence proceedings in Moorabbin Magistrates’ Court to set aside the order made” against her in February 2011;
l.Mrs Lakic apparently spoke to Mr Bektas on 15 August 2011. The next day she wrote to him outlining the circumstances in which she signed a document with Prior & Prior. She concluded by saying that she wished “to sue Stephen Prior for the caveat and for not advising me of the 6 year time limit”;
m.on 19 August 2011, Ms Nicholson saw Mrs Lakic with an interpreter to assist with the “signing/explanation” of a rehearing application and supporting affidavit in relation to the Prior & Prior judgment;
n.on 31 August 2011, the application for a rehearing was filed with the Magistrates’ Court. The letter to the Court that day enclosing the documents was signed by Mr Bektas and stated, “We confirm we act for the Defendant in this matter”. The application for rehearing noted that VCL were the “solicitors for the defendant”;
o.a letter on 6 September 2011 from Mr Bektas to Mrs Lakic confirmed “your instructions that your wish for our firm to continue acting for you in relation to your serious injury application and in relation to the current VCAT/ Magistrates’ Court action to set aside the costs agreement and subsequent notice of order made against you”.
174I do not propose to summarise the further events leading up to the application for rehearing being refused on 23 May 2012. It is clear, in my view, that VCL accepted an obligation to act for Mrs Lakic, or at least to advise her, in relation to the Magistrates’ Court complaint. I am however, reluctant to accept that Mr Bektas, in conversations with Mrs Lakic and other family members in January 2011, expressly undertook to act for her in relation to the complaint or that VCL in fact received the letter from Mrs Lakic dated 9 February 2011. The evidence in relation to those matters is contradictory and unclear.
175It is my view that, having asked Mrs Lakic to fax through the complaint served upon her, Mr Bektas must have known she would look for and rely upon his advice. The letter dated 24 January 2011 was written at a very stressful time for Mrs Lakic. The serious injury application, issued by Prior & Prior on 13 July 2007 and taken over by VCL on 31 March 2009, was finally fixed for hearing on 23 January 2011. The hearing was adjourned in circumstances which do not appear to have been properly explained to Mrs Lakic and which left her bewildered and distressed.
176The letter dated 24 January 2011 from VCL referred to the events the previous day, and then turned to the Magistrates’ Court complaint. The letter “confirmed that we have not received instructions to enter a defence” and stated, “should you wish for us to act for you in this matter, we request written instructions from you to do so”.
177The letter signed by Mr Bektas finished with the usual offer, “Should you have any queries, please feel free to contact his office”. Mrs Lakic and her family attempted to do this on many occasions over the next few days, weeks and months. Rarely would Mr Bektas speak with her. It is probable in my view that he deliberately ignored Mrs Lakic on most occasions and left others in his office to deal with her. It was likely, therefore, that misunderstandings would occur.
178Judgment was entered by Prior & Prior on 11 February 2011, although both Mrs Lakic and VCL were apparently not aware of that fact for some time. I consider that up until 11 February 2011, Mrs Lakic was entitled to assume that VCL would accept some responsibility to ensure that her position in relation to the Magistrates’ Court complaint was not prejudiced.
179I do not accept Mr Bektas’s view, expressed to Mr Pervaz in his email dated 1 February 2011 that the letter sent to Mrs Lakic on 24 January 2011 will “cover us re former solicitors’ complaint”. I consider, that at the very least, to achieve that objective, Mr Bektas would have needed to make it clear in the letter that the Magistrates’ Court processes required that certain documents (an appearance and defence) must be filed within limited periods, and if the documents were not filed, either by VCL upon instructions or by Mrs Lakic herself, that Prior & Prior were likely to enter a default judgment against her.
180On 7 February 2011, Mr Pervaz, who spoke to Boris in the absence of Mr Bektas, was told that “their Dad will bring in a letter confirming written instructions to act”. On 22 February 2011, Mrs Lakic was told by a VCL staffer that “we are working on issue of caveat”. This was a shorthand method of referring to the “costing issue from previous solicitors (caveat)”. On that day, Mr Pervaz told Boris that “we were currently looking at application to VCAT to set aside costs agreement”.
181In the months that followed, VCL accepted responsibility for acting for Mrs Lakic in relation to the cost dispute. It is possible that VCL did so because it had received written instructions by the letter from Mrs Lakic dated 9 February 2011 or that VCL accepted responsibility on the basis that Mrs Lakic needed someone to look after her interests, particularly as her County Court proceeding was reaching a critical stage.
182The failure to file an appearance or defence, or to clarify that Mrs Lakic must do so, was a critical error. The strategy of going to VCAT to seek to set aside the costs agreement was poorly thought through. The caveat threatened Mrs Lakic’s continued enjoyment of the family home. It seemed, also, that VCL saw the need to resolve the costs dispute with Prior & Prior as an added reason to settle the transport accident claim so that the necessary funds would be available to pay out Prior & Prior.
183Notwithstanding, the continued urging of Mrs Lakic by VCL to settle her transport accident claim, she refused to do so. As a consequence, the application for a rehearing of the Magistrates’ Court complaint was effectively abandoned after counsel advised that it had no chance of succeeding. In the circumstances, it was no wonder that Mrs Lakic was confused as to what had been happening over the previous months.
184No satisfactory explanation was offered for the statements about the basis upon which VCL was acting for Mrs Lakic in the letter dated 7 March 2012 drafted for Mrs Lakic to sign so that it could be sent to Prior & Prior. The letter read as follows:
“I refer to the above Magistrates’ Court Hearing listed for 20 March 2012.
Victorian Compensation Lawyers have advised me of your letter dated 23 February 2012.
I confirm that Victorian Compensation Lawyers are assisting me in this matter as a friend of the Court and are authorised to receive documents from your office and relay instructions on my behalf in relation to the conduct of this matter.
Should you have any queries in relation to this matter, please contact Victorian Compensation Lawyers directly”.
185Further, it was never made clear why Mrs Lakic was required to attend a number of hearings at the Magistrates’ Court in 2011 and 2012 before the application for a rehearing was refused on 23 May 2012. For example, on 24 October 2011, VCL wrote to Mrs Lakic stating, “We are not on the record to act for you in this matter and your attendance at the Moorabbin Magistrates’ Court on the 14 November 2011 will be required”. As noted previously, the application for a rehearing was filed by VCL as Mrs Lakic’s solicitors. On 23 November 2011, Mrs Lakic paid $5,000 to VCL for the legal costs associated with the rehearing application.
186I consider, in all the circumstances, that after judgment was entered on the complaint on 11 February 2011, that VCL must be responsible for the further legal costs Mrs Lakic was ordered to pay Prior & Prior in respect of the complaint. Those costs totalled $7,557. I will also allow interest on that sum for approximately 3 years to 2 February 2014 of a further $13,665.52. I assess the sum of $21,222.52 as Mrs Lakic’s damages for this allegation of negligence. In this regard, I have adopted the figures for the further costs and interest contained in Schedule 1 to the judgment of Justice Macaulay.
187I consider that VCL’s actions in this regard are not protected by advocates immunity. The further allegations concerning the failure to properly advise about the merits of the complaint and the appearance before the Magistrates’ Court on 23 May 2012, when the application for a rehearing was refused, would probably be covered by the immunity. It is, however, not necessary to decide this part of the counterclaim by reference to those matters.
Did VCL’s termination of the retainer on 24 October 2013 breach the retainer or constitute misleading or deceptive conduct.
188Mrs Lakic in her counterclaim alleges that VCL’s termination of the retainer, by obtaining leave from Associate Justice Daly on 24 October 2016 to file a notice of ceasing to act as Mrs Lakic’s solicitor, breached the retainer. Mrs Lakic says that VCL “did not have good cause” to terminate the retainer and Mrs Lakic “did not fail to accept the reasonable advice of the plaintiff”.
189Mrs Lakic asserted that VCL’s advice to accept TAC’s offer of compromise “could not be regarded as reasonable when the Supreme Court entered judgment in favour of [Mrs Lakic] in the sum of $848,350.67”. Mrs Lakic pleaded that she “was unable to obtain further legal practitioners to act on her behalf before Justice Rush” and her loss is “the value of the opportunity to claim damages for all of her injuries”. These included, the claim for home help and other services and the claim for her gynaecological issues.
190As a matter of counterclaim, the onus is upon Mrs Lakic to make out the causes of action she relies upon. In my view, Mrs Lakic has not satisfied the onus, for the following reasons:
a.what I must consider is whether Mrs Lakic has proved:
i.whether the advice she refused to take was not reasonable;
ii.whether that was an appropriate basis for VCL to terminate the retainer;
b.I consider that, if the advice were reasonable, Mrs Lakic’s failure to take the advice would be a good basis to terminate the retainer. The failure to accept the advice was likely, in my view, to have meant that the proceeding would proceed to final verdict. This would involve VCL, barristers and medical experts expending substantial time and resources in pursuit of litigation which VCL believed would not have a successful outcome;
c.as to whether the advice was reasonable, looking back from Justice’s Rush’s decision with the benefit of hindsight, it could be argued that the elements of the decision were obvious conclusions, including that:
i.Mrs Lakic had a severe psychiatric disturbance as a result of her chronic pain syndrome and her response to pain;
ii.any inconsistency in her physical capacity as evidenced by her presentation to examining doctors and the video surveillance material largely arose as a result of Mrs Lakic suffering from her psychiatric condition;
iii.the psychiatric condition arose as a consequence of the first motor vehicle accident;
iv.her condition had prevented her from working since the accident;
v.her condition was continuing and was likely to prevent Mrs Lakic working until retirement age;
vi.Mrs Lakic’s condition was extremely debilitating and would continue unabated;
d.each of these conclusions was reached in favour of Mrs Lakic and by a judge sitting alone. TAC had given a notice that a jury was required in the Supreme Court Action. It is not clear why the trial was conducted without a jury. It is assumed that Justice Rush considered that the conduct of the trial by an unrepresented litigant through a Serbian interpreter was not appropriate for a jury. Nevertheless, VCL was entitled to assume that the trial would be conducted with a jury. It is said to be “accepted wisdom” that juries may be less forgiving where issues of credit and the interplay of psychiatric conditions are involved. It is unlikely that there is objective evidence which would support that this is the invariable or even the likely approach by juries. Nevertheless, I consider that it was an appropriate matter for VCL to consider and advise on. Further, jury trials inevitably take longer and therefore cost more. In those circumstances, even if Mrs Lakic were to succeed at trial, her recoverable damages would be likely to diminish the longer the trial went on;
e.Mrs Lakic has shown surprising resilience to have been able to represent herself, not only before Justice Rush in 2014, but also in two long trials this year. Most litigants with her level of disability and being represented by lawyers, would find coping with a Supreme Court trial a heavy burden. Solicitors have a responsibility to their clients to advise resolution before trial, perhaps even more so with litigants suffering from a psychiatric condition, even in circumstances where the client is resolved to proceed.
191I do not determine that VCL’s advice was reasonable. I am, however, not satisfied that Mrs Lakic has established that the advice was not reasonable. Accordingly, this aspect of her counterclaim must fail.
Whether Mrs Lakic’s other claims for damages are viable
192Mrs Lakic provided further and better particulars of the calculation of the quantum of the losses claimed in her counterclaim. The losses were as follows:
a.arising from the second accident:
i.“$80,000 [for pain and suffering] plus future treatments or any other remedy” for her left shoulder injury;
ii.“$30,000 [for pain and suffering] or any other remedy” for the gall bladder removal;
iii.“$180,000 [for pain and suffering and treatments] or any other remedy” for gynaecological issues;
iv.compensation for pain and suffering for “my psychiatric injuries” not presented to Justice Rush (also in respect of other two accidents);
v.“$30,000 [for pain and suffering] or any other remedy” for “injuries sustained to my jaw”;
vi.“$30,000 plus future treatments or any other remedy” for the “injuries to my nose";
vii.“$80,000 [for pain and suffering] plus treatment or any other remedy” for the worsening of “injuries to neck” and “my dizziness”;
b.arising from the third accident, compensation for injuries sustained and because of Mrs Lakic’s inability “to obtain medical treatment for my injuries”;
c.arising from VCL’s wrongful termination of the retainer:
i.$60,000 for the further stress caused by the sheriff attending to execute upon the Prior & Prior judgment;
ii.“$28,000 and any other remedy” for the two years of “schooling and work” lost by Boris Lakic as a result of him translating for, and otherwise assisting Mrs Lakic;
iii.any other losses for “pain and suffering and damages” which Mrs Lakic has been unable to calculate because she could not find replacement lawyers.
193In my view, Mrs Lakic is unable to succeed in any of the claims I have not already dealt with. The reasons include:
a.the legal basis for the claim arising from VCL’s professional negligence has not been established;
b.the requirements of Part VBA of the Wrongs Act 1958 has not been satisfied and it was unlikely they could be;
c.the damages claimed are estimates not proved by sufficient evidence of loss or damage.
Advocates immunity
194In my view, the issue of advocates immunity has limited relevance in this case. I am not satisfied that the defence applies in relation to the claims regarding VCL’s failure to pursue a claim in relation to the second accident or the failure to advise Mrs Lakic of the steps she should take upon receipt of the Magistrates’ Court summons.
Proposed orders
195The following orders seem to me appropriate in the circumstances:
Proposed orders to be made today:
1.Leave to the plaintiff to file a second further amended statement of claim in the form of the document dated 20 May 2016 being exhibit “JLM-14” to the affidavit of John Louis McGirr sworn 23 May 2016, without further service of the document on the defendant.
2.The plaintiff’s bill of costs dated 16 July 2014 in the sum of $158,905.78 (“the first bill of costs”) is referred to the Costs Court for assessment on a party-party basis as against the Transport Accident Commission (“TAC”). TAC shall have all rights to participate in the assessment as if the assessment had proceeded before the Costs Court in the normal course.
3.The defendant shall comply with any reasonable requests made by the plaintiff to facilitate the assessment of the first bill of costs by the Costs Court.
4.If the defendant alleges that any item in either the first bill of costs or the plaintiff’s bill of costs in the sum of $51,093.45 (“the second bill of costs”), both served on 16 July 2014, relates to a matter paid by her personally and not by the plaintiff, then before 4pm on 5 August 2016, she shall:
a.file and serve a document headed “Items disputed by the defendant in the two bills of costs served by the plaintiff on 16 July 2014 for sums totalling $158,905.78 and $51,093.45 on the basis that she and not the plaintiff paid for the item”;
b. the document shall set out:
(i)the number and description and amount of the item from the particular bill of costs;
(ii) a short statement as to why it is said the item was paid for by the defendant and was not paid for by the plaintiff;
(iii)reference to any relevant document that evidences the defendant’s assertions;
c. the document shall attach copies of all relevant documents referred to in the statement.
5.Any dispute raised in accordance with paragraph 4 and remaining after proper consideration by the plaintiff, evidenced by the filing and serving of a response document within 14 days of the claim document, shall be determined as soon as is reasonably practicable in a hearing before His Honour Judge Anderson at a date and time to be fixed by the associate to Judge Anderson after consultation with the parties.
6.Following the assessment by the Costs Court in accordance with paragraph 2, the costs assessed by the Costs Court, less any costs (if any) the Costs Court considers should be paid by the plaintiff to TAC, shall by paid by TAC to the Registrar of the County Court in full satisfaction of its liability for costs pursuant to the order of His Honour Judge Saccardo dated 13 February 2012.
7.The Registrar of the County Court shall disburse the money paid into Court by TAC, in accordance with the further directions of His Honour Judge Anderson.
8.Reserve costs.
9.Reserve liberty to apply.
Draft of proposed orders to be made after a further hearing:
1.Judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $51,093.45.
2.On the defendant’s counterclaim, judgment for the defendant against the plaintiff that the plaintiff pay to the defendant damages in the total sum of $25,222.52.
3.The damages awarded to the defendant in paragraph 2 and the total of any sums assessed by the Costs Court in relation to work performed by Prior & Prior or performed before 31 March 2009, together with any sum adjudged by Judge Anderson in accordance with paragraphs 4 and 5 of the orders made on 18 July 2016 to be owing to the defendant for items in either bill of costs which the defendant rather than the plaintiff paid, shall be set off against the judgment for $51,093.45 in favour of the plaintiff in accordance with paragraph 2. Any balance in favour of the plaintiff, shall be paid by the defendant to the plaintiff. Any balance in favour of the defendant, shall be paid by the plaintiff to the defendant.
196I shall hear further from the parties before making any final orders including questions of interest and costs. I will fix a date in late August 2016 that is convenient to the parties for the further hearing of:
a.the proposed further orders;
b.questions of interest and costs of the proceedings;
c.the final hearing and determination of any further dispute raised by the defendant in accordance with paragraphs 4 and 5 of the “proposed orders to be made today”.
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Certificate
I certify that the preceding 55 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 18 July 2016.
Dated: 18 July 2016
Mi-Lin Chen Yi Mei
Associate to His Honour Judge Anderson
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