Bounds v Rostjazz

[2011] VSC 283

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 3028 of 2010

JASON ROBERT BOUNDS	Plaintiff
v
ROSTJAZZ PTY LTD	Firstnamed Defendant
and
SIMS ALUMINIUM PTY LTD	Secondnamed Defendant

---

JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	Written application made 15 June 2011
DATE OF RULING:	22 June 2011
CASE MAY BE CITED AS:	Bounds v Rostjazz & anor
MEDIA NEUTRAL CITATION:	[2011] VSC 283

---

ACCIDENT COMPENSATION – Judgment in favour of worker – Awards of costs – Section 134AB(30) and (31) of Accident Compensation Act – Entitlement of solicitor to recover costs from a worker – Considerations in making an order under s 134AB(30).

---

HIS HONOUR:

Introduction

1. Mr Bounds settled his personal injury proceedings on 17 May 2011 in the sum of $157,500 inclusive of costs.

1. The solicitors for Mr Bounds, Clark, Toop & Taylor (“the solicitors”), have applied to the Court for an order that he pay their solicitor/client costs capped at $35,000.

1. Section 134AB(30) of the Accident Compensation Act (“the Act”) provides that such an order is necessary for the payment of costs.

1. Consistent with my ruling in Acir v Frosster,[1] it is not necessary on an application such as this that a specific amount and costs be stipulated in the order. It is sufficient to merely order that the solicitor be entitled to such costs without identifying the precise amount.

The orders sought by the solicitors

1. The order sought by the solicitors is that “they be entitled to charge non-recoverable professional costs and disbursements (to be taxed in default of agreement)” not to exceed $35,000.

The provisions of the Act

1. Section 134AB(30) reads as follows:

“A person who represents or acts on behalf of a worker is not entitled-

(a)to recover any costs from that worker in respect of any proceedings under this section; or

(b)to claim a lien in respect of those costs; or

(c)to deduct those costs from any sum awarded as damages-

unless an award of costs has been made by the court in respect of those costs or those costs are payable in accordance with this section by the worker.

1. The clear purpose of s 134AB(30) is to impose a degree of Court supervision of the costs which may be paid personally by the worker, unless such costs are covered by the provisions of the Act.

The affidavits

1. Mr Bounds filed an affidavit deposing that he has been advised of the following matters by his solicitors:

(a)party/party legal costs are recoverable from his employer up to a scale rate of 80% and, thereafter, his solicitors would require him to pay solicitor/client costs;

(b)his entitlement to seek a bill of costs in a taxable form which can be taxed by the Taxing Master;

(c)his rights to review bill and particularly he was given information concerning the role of the “Victorian RPA” in assisting with any dispute as to costs;

(d)his option to obtain independent legal or costing advice concerning his solicitor/client costs.

1. Mr Taylor, Mr Bounds’ solicitor, filed an affidavit which deposed to the following matters:

(a)       Mr Bounds had entered into a written fees agreement stipulating that the solicitors were entitled to recover from him “non-recoverable” costs incurred in the prosecution of the proceeding over and above any party/party costs recovered from the Defendants.

(b)An experienced costs consultant, Ms Fiona Mullen, employed by the solicitors, had assessed the file.

Applicable principles

1. In Acir[2], I set out the principles relevant to the determination of an application by a solicitor to recover costs from a worker under s 134AB(30):-

(a) A solicitor cannot recover solicitor/client costs from a client in proceedings under s 134AB (whether a claim for damages or a serious injury application) absent compliance with the provisions of s 134AB(30). In practice, this means, unless there is an interlocutory order, no entitlement to such costs arises until judgment or settlement.

(b)      That entitlement is only enlivened by an order of the Court or where the section mandates that the worker’s costs are payable in accordance with s 134AB.

(c)       A Court may make an order for costs on a solicitor/client basis under sub-s 30.  In doing so, it has a general discretion as to the form of the order.  It may order costs on a solicitor/client basis, or fix costs payable up to a certain level, or attach any other condition it sees fit.  It is not limited to fixing the amount of such costs.

(d)      In considering whether to make an order for solicitor/client costs (and, if so, in what form), a Court may, without limiting its general discretion, take the following matters into account:[3]

·    The retainer between the worker and solicitor and the consequential entitlement of the solicitor to costs “due and payable” by the worker to the solicitor.

·    The purpose of sub-s (30) is to ensure Court supervision of any bills of costs rendered by the solicitor to a worker.

·    The limit of 80% of party/party costs set by s 134AB(29) and imposed on the recovery of costs from the defendant.

·    The extent to which the Court considers that non-recoverable costs have been expended by the solicitor on behalf of the worker to achieve the result obtained.

·    The satisfaction of the Court that the worker understands his or her right to have the Court fix the amount of costs (either by way of taxation or by order pursuant to sub-s 31) and that the worker has a general understanding of his or her rights in relation to the avenues of redress or review of the costs sought by the solicitor.

·    The manner in which the claim has been conducted, and in particular whether the solicitor has exposed the worker to adverse cost consequences which could have been avoided by careful and responsible preparation of the claim.

·    A reliable estimate of the solicitor/client costs has been put forward providing the Court with some guidance as to the basis for the estimated amount of solicitor/client costs.

·    Whether, in the circumstances of the case, it is desirable that the Court fix the amount of costs (by either setting a ceiling or approving the amount) as opposed to making an order for solicitor/client costs generally.

·    Whether, in the circumstances of the case, it is appropriate to refer the estimation of such costs to an experienced officer of the Court, such as (in this Court) the Taxing Master.

Application of the principles and conclusion

1. Mr Bounds’ affidavit deposes as to his understanding of his rights explained to him by his solicitor.

1. Although this proceeding settled prior to trial I have no doubt that the solicitors expended considerable time, expense and energy in preparing the matter for trial, a proportion of which would not be recoverable on a party/party basis, particularly given the 20% reduction on party/party costs prescribed by sub-s (29).

1. Without the participation of the solicitors on a no win, no fee basis, the prosecution of Mr Bounds’ claim would no doubt have been particularly difficult.  The fees agreement entitles the solicitors to recover the “non recoverable” costs.

1. I am satisfied that the seemingly modest ceiling of $35,000 inclusive of GST is appropriate and the order sought by the solicitors should be made.

Orders

1. I have drafted the order a little differently to that sought by the solicitors, but, I hope, to the same effect.  The following orders will be made:

(1)       The plaintiff’s solicitors, Clark, Toop & Taylor be entitled to recover from the plaintiff, Jason Robert Bounds, any costs incurred by the solicitors on his behalf, subject to the following conditions:

(a) that the calculation of such costs take into account payment by the defendant’s solicitors of costs pursuant to any order of the Court and the application of the Accident Compensation Act; and

(b) that such costs not exceed the amount of $35,000 inclusive of Goods and services Tax.

(2)       There be liberty to apply.

(3)       The proceeding be dismissed.

[1][2009] VSC 539 (“Acir”).

[2]See also Schwarz v Visy Paper Pty Ltd [2011] VSC 68; Bosnali v Bartter Enterprises Pty Ltd [2010] VSC 360.

[3]See Loveday v Lloyds Tree Care Pty Ltd [2000] VSC 204, Qualma v Toll Transport Pty Ltd [2004] VSC 81.