Burgess Accident and Compensation Lawyers v Adams & Co Lawyers
[2024] NSWPIC 222
•19 April 2024
| CERTIFICATE OF DETERMINATION OF MEMBER | |
| CITATION: | Burgess Accident and Compensation Lawyers v Adams & Co Lawyers [2024] NSWPIC 222 |
| APPLICANT REPRESENTATIVE: | Adams & Co Lawyers |
| RESPONDENT REPRESENTATIVE: | Burgess Accident and Compensation Lawyers |
| MEMBER: | Belinda Cassidy |
| DATE OF DECISION: | 19 April 2024 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; assessment and apportionment of costs between the claimant’s current lawyers (the applicant) and former lawyers (the respondent); claimant injured and made a damages claim which settled at an assessment conference in September 2023 on an inclusive of costs basis; the claimant retained the applicant lawyers shortly before an assessment conference hearing which was vacated; the respondent lawyers had lodged the claim, provided particulars and lodged the application for assessment; Regulation 22(3) provides the Commission with power to apportion costs between the two legal practitioners and as the claim was a damages claim, the dispute was to be referred to a Member of the Motor Accidents Division; parties agreed that the Member should approach the assessment of costs on the basis the claim settled for $270,000 plus costs of $30,000; Held – the former legal representative was entitled to all of stages 1 and 2, 50% of stage 3 and two conference fees; the current solicitors were not entitled to stage 4, as the claim settled without the issuing of a certificate; costs for legal services were awarded to the former solicitor in the sum of $9,362 which was an apportionment of 43% of the total amount of legal services costs allowed; discussion of various provisions of the Regulation relevant to costs and an outline of the operation of the costs regime provided. |
| DETERMINATIONS MADE: | CERTIFICATE In accordance with Regulation 22(3) of the Motor Accident Compensation Regulation 2017, the Commission’s assessment is: 1. The amount of costs for legal services provided by Burgess Accident and Compensation Lawyers to Ms Grace Chen in respect of her claim arising out of the motor accident on 17 December 2019 is the sum of $9,632.00 plus GST of $963.20. |
STATEMENT OF REASONS
INTRODUCTION
Grace Chen was injured in a motor accident on 17 December 2019. She made a claim against NRMA for damages arising out of the injuries she sustained in that accident.
Ms Chen and NRMA could not resolve the claim and Ms Chen referred her claim to the Personal Injury Commission (the Commission) for assessment.[1] Ms Chen was, at that time, represented by Ms Burgess of Burgess Accident and Compensation Lawyers.
[1] Commission proceedings numbered 10536465/22.
On or about 1 May 2023 Ms Chen engaged Mr Adams of Adams & Co Lawyers to represent her and pursue her damages claim.
The proceedings in respect of the assessment of Ms Chen’s damages claim were allocated to Member Ford. After a preliminary teleconference, he listed the matter for an assessment conference hearing on 15 May 2023. That hearing date was vacated at the request of Mr Adams soon after he was retained, and the matter was relisted for hearing on 22 September 2023.
The claim settled at the hearing and the claimant filed a notice of discontinuance of the proceedings on 12 October 2023.
The current proceedings have been commenced by Mr Adam’s firm against Ms Burgess’ firm. Mr Adams seeks the assessment of the costs that can be recovered by the claimant from the insurer and the apportionment of those costs between the two firms of solicitors. Specifically he requested an assessment of the costs payable to Ms Burgess’ firm.
For ease of reference, Ms Burgess’ firm will be referred to as the former firm and Mr Adams’ firm the current firm.
LEGISLATIVE FRAMEWORK
Legislative provisions – costs
Ms Chen’s claim, her entitlement to damages and her legal representatives’ entitlement to costs are governed by the provisions of the Motor Accident Injuries Act 2017 in particular Part 8 headed “costs and fees”.
Section 8.3 provides the regulation making power for the fixing of maximum costs for legal services provided to a claimant or insurer, services related to proceedings and where no costs are payable. Section 8.4 enables regulations to be made in respect of medico-legal services.
Section 7.37 provides that when the Commission assesses the claim, the Commission may include an assessment of the costs of the claim. As Ms Chen’s claim was settled with the insurer on the day of the hearing, on an inclusive of costs basis, Member Ford was not required to assess Ms Chen’s costs.
Legislative provisions – disputes about costs
Section 24 of the Personal Injury Commission Act 2020 provides for the general function of the Commission as follows:
“The Commission has the jurisdiction and functions that may be conferred or imposed on it by or under this Act, enabling legislation or any other legislation.”
The Commission’s power to determine the dispute and apportion costs lies in the Motor Accident Injuries Regulation 2021 (the MAI Regulation). Regulation 22 says:
“(1) Except as otherwise provided by this Part, the costs set out in Schedule 1 are the maximum costs recoverable by Australian legal practitioners and claimants for—
(a) legal services provided by an Australian legal practitioner to a claimant or to an insurer in a motor accidents matter, and
(b) matters that are not legal services but are related to a motor accidents matter.
(2) If there is a change in the Australian legal practitioner retained by a claimant or insurer in a motor accidents matter, the relevant costs are to be apportioned between the Australian legal practitioners concerned.
(3) If there is a dispute as to such an apportionment, either Australian legal practitioner concerned (or the client claimant or insurer concerned) may refer the dispute to the President for determination (unless the dispute arose in a matter involving a claim for damages that is exempt from assessment under section 7.34 of the Act).
(4) The President is to arrange for a dispute referred under this section to be dealt with by—
(a) …
(b) if the dispute arose in a matter involving a claim for damages - a member of the Commission assigned to the Motor Accidents Division of the Commission.”
PROCEDURAL HISTORY OF THE MATTER
First preliminary conference 16 February 2024
The application was made by Mr Adams to the Commission. The only document filed in support of the application was the Tripartite Deed purportedly executed by the claimant, her previous lawyer and her current lawyer. As a result, I convened a teleconference to discuss the matter.
It was clear there was a significant dispute about the Tripartite deed, the assessment of Ms Burgess’ costs on a solicitor client basis as well as the issue of the sum of the regulated costs. After much discussion the two solicitors agreed:
(a) that the Commission had no power to assess or apportion any solicitor and client costs between Ms Burgess’ firm and her former client. That was a matter for the Supreme Court costs assessment process;
(b) that I had power to assess the dispute about the regulated party and party costs and apportion them between the two solicitors pursuant to regulation 22, and
(c) that in order to do so, I should determine the amount of costs payable to Ms Burgess’ firm.
I was advised by the parties that the claim had settled for the sum of $300,000 inclusive of costs.
In my report of that preliminary conference, I asked the two legal representatives whether they could agree on the costs component of that settlement. I also advised the parties that I proposed approaching the assessment task by determining:
(a) the costs associated with stages 1-4 and any additional professional legal costs e.g. for any late claim or interlocutory dispute where Ms Burgess’s firm was acting;
(b) the costs of any advocate retained by Ms Burgess to appear at any stage in the proceedings, and
(c) the costs of the disbursements regulated or unregulated claimed and paid for by Ms Burgess’ firm.
I informed the parties I would need to know when Ms Burgess was retained, when the retained was terminated and therefore when Mr Adams was retained and a rough outline of the significant steps in the claim relevant to the various stages (in terms of costs).
It was agreed that I should proceed with the assessment of costs pursuant to the regulated regime and apportion costs between the two solicitors.
Directions were issued and the parties have complied providing me with all the information I require in order to undertake the assessment.
The former solicitor’s submissions
Ms Burgess submitted on 27 February 2024 that she is entitled to:
(a) $350 for stage 1;
(b) $518 for stage 2, and
(c) 90% of the costs permitted for stage 3 on the basis that the current solicitors only took over the matter five months before settlement.
Ms Burgess noted that the claimant paid for the disbursements “up front”, and Mr Clearly was briefed and rendered fees of $4,620 inclusive of GST.
The current solicitor’s submissions
Mr Adams wrote to the Commission on 15 March 2024 and noted:
(a) liability had been admitted by the insurer in the claim;
(b) his firm “took over the matter” on 24 April 2023, and
(c) Mr Adams advised the Commission he had no notes which might indicate the breakdown of the accepted settlement offer. The insurer has also been unable to provide assistance.
Mr Adams submitted:
(a) he agreed with the sums allowed for stages 1 and 2 but not the apportionment of 100% to Ms Burgess;
(b) he did not agree with her calculation of the sum for stage 3 and offered his own calculation;
(c) he said he was entitled to all of the stage 4 costs as the matter settled during the assessment conference and before it had concluded;
(d) Ms Burgess ceased acting due to evidence obtained by the insurer suggesting that the claimant had fully recovered;
(e) while Ms Burgess had investigated Ms Chen’s entitlement to non-economic loss, he said the assessment or calculation of economic loss had not been fully investigated. When he was first engaged the matter had already been listed for hearing and he had formed the view the matter was not ready. The claimant was involved in five companies as either an employee or director and shareholder and financial statements had to be gone through with counsel. A forensic accountant’s report was requested and “many meetings and correspondence” a draft report was prepared and a conference with counsel occurred;
(f) there was a request for particulars about four of the claimant’s entities which needed to be addressed;
(g) the claimant’s personal tax returns and notices of assessment had to be considered;
(h) a teleconference was scheduled by Member Ford on 21 June 2023 (which Mr Adams apparently attended) and the matter was listed for hearing, and
(i) additional information was obtained from the claimant’s psychologist in respect of some of the matters in Dr Bertucen’s report and consideration was given to a further application for medical assessment.
Mr Adams sought 10% of the costs for stage 1, 10% of stage 2, all of stage 3 and all of stage 4, three conferences with counsel and the disbursements. He objected to any payment to the former solicitor’s counsel.
Second preliminary conference 26 March 2024.
Further discussions occurred at the second teleconference where Mr Adams was represented by Mr Reynolds of counsel. It was clear that there was a significant dispute between the parties concerning the interpretation and application of the tripartite deed and I was advised that Ms Chen had contracted out of the regulated costs regime with both her lawyers.
However there was much constructive discussion and my report issued following that conference noted the following agreements reached between the two lawyers:
(a) I should proceed on the basis the claim settled for $300,000 of which $30,000 was for costs and that the quantum of the claim was therefore $270,000;
(b) Ms Burgess was entitled to the whole of stages 1 and 2 and that she had no entitlement to any amount pursuant to stage 4 costs. The real issue in dispute was the apportionment of costs between the parties in respect of stage 3,
(c) there was no late claim or other interlocutory dispute and no reference of any medical dispute to the Commission;
(d) the monetary unit to be applied when calculating costs was that applicable in September 2023 when the claim was settled;
(e) in terms of disbursements, Ms Burgess had obtained reports from Dr Bodel and Dr Bertucen and possibly a further report obtained from Dr Bodel. Mr Adams had retained Furzer Crestani and Ms Burgess obtained the notes of the general practitioner (GP). It was mentioned during both teleconferences and in submissions that Ms Chen had paid for all disbursements as they were incurred;
(f) Mr Cleary was briefed by Ms Burgess. I told that parties that I did not have a copy of his fee note and would need a copy of it to ascertain if any of his fees fall within the allowances permitted by the scheme, and
(g) Mr Reynolds was briefed by Mr Adams – Mr Reynolds appears at the May 2023 hearing (which was vacated) and for the hearing when the matter was settled and had four conferences in total with Ms Chen.
It was agreed I should proceed to an assessment on the papers. Noting that Mr Adams has outlined the work done by his firm since taking over the matter, I requested the former solicitors provide a summary of the work done by her firm (in respect of stage 3 in particular).
The former solicitor’s further submissions
The former solicitors advised on 26 March 2024 that Ms Burgess terminated the retainer on 19 April 2023.
In terms of stage 3, the following information was provided:
(a) Ms Burgess wrote to Dr Bodel and Dr Bertucen requesting medico-legal examinations and reports;
(b) the claimant’s personal financial records, and the records of five companies were obtained, reviewed and analysed;
(c) three requests for further and better particulars from the insurer dated 2 December 2021, 11 August 2022 and 31 October 2022 were answered;
(d) Ms Burgess attended an informal settlement conference with the insurer;
(e) a statement from the claimant was prepared to accompany the application for assessment of damages. The application was filed and the insurer’s reply with1,060 pages of attachments was reviewed;
(f) Ms Burgess attended a preliminary teleconference with Member Ford;
(g) additional liability evidence was provided by the insurer which had to be reviewed and discussed with the claimant;
(h) a further report was requested from Dr Bodel, and
(i) Mr Cleary was briefed to advise and appear at the hearing on 15 May 2023.
CONSIDERATION OF THE ISSUES
What is the applicable costs regime?
Part 6 of the MAI Regulation concerns costs. Some costs are regulated but not all costs are regulated. Clause 20 provides a list of unregulated costs which, relevantly to this matter includes the fees for accountants’ reports and the fees associated with obtaining clinical records from a treating health practitioner.[2]
[2] Clause 20(b) and (e).
Legal services are regulated by cl 22(1) and the sums provided for in Schedule 1. Medico-legal services are regulated by cl 28 and the amounts which can be allowed are listed in Schedule 2.
Costs are allowed at a “maximum” rate. This appears to operate by way of a cap. Costs can be assessed at or incurred at a greater rate or amount than allowed but the costs that are recoverable are limited to the maximum or cap.
Costs that are allowed and listed in Schedules 1 and 2 terms of monetary units and the amount of a monetary unit is adjusted each year in accordance with the provisions of Schedule 3. In this case the parties agreed that the monetary unit that I should be considering is the monetary unit applicable as at 22 September 2023 when the claim was settled. According to Schedule 3(2) that is the sum of $112.53.
Schedule 1, Part 1(4) provides a maximum amount for the following:
(a) representation at an assessment conference – 30 monetary units plus 3 monetary units for each hour over two hours, and
(b) conferences directly related to an assessment of a claim for damages – 3 monetary units per hour.
Schedule 1, Part 2 then provides for the assessment of “additional costs”. Part 2(2) provides an amount for certain “stages of claim” and Part 2(4) says “commencing on the occurrence of one specified event and concluding on the occurrence of another specified event or the resolution of the claim …” Part 2(5) states that a reference to an award of damages is a reference to the amount of the award after deducting the amount of weekly statutory benefits paid. This appears only referable to awards of damages by the court not the assessment of damages by the Commission or settlement of damages by the parties.
The stages are defined as follows:
(a) stage 1 – from the acceptance of the retainer to the service of the notice of claim and provision of all relevant particulars – 2.92 monetary units;
(b) stage 2 – from service of the claim to the preparation and service of a response to the insurer’s offer of settlement – 4.32 monetary units;
(c) stage 3 – if resolution of the claim occurs without the issue of a certificate by the Commission, from service of the response to the insurer’s offer to resolution of the claim, the amount of costs is determined with reference to the quantum of the “resolution amount” and the liability status (wholly admitted or not). In this case, on the basis of a $270,000 settlement plus costs, the amount allowed is:
(i)a base amount of 114.48 monetary units, and
37.(ii) two cents for each dollar over $100,000;
(a) stage 4 – if resolution of the claim occurs after the issue of a certificate of assessment but without the commencement of court proceedings – an amount calculated for stage 3 plus two cents for every dollar of the assessment amount, and
(b) stage 5 – if the matter is finalised after the commencement of courts proceedings (by settlement or an award of damages) – from the issue of the certificate to the finalisation the stage 4 amount plus two cents for every dollar of the settlement or award amount.
Country and interstate loadings are provided for in Part 2(3) and (4) but are not relevant. Merit review matters, medical disputes and miscellaneous claims assessment matters can attract costs under Part 1(1) (2) and (3).
Of relevance to the current matter are the costs allowed for medical reports in Schedule 2 of Part 2. Reports from a specialist jointly arranged by the parties attract 18 monetary units if the examination of the patient is not required and 22 monetary units if an examination of the claimant is required.
ASSESSMENT
What legal professional costs should be allowed?
Noting the agreed monetary unit is $112.53 and Schedule 3(3) requires any amount calculated in accordance with that monetary unit to be rounded down, it is my view that the following amounts would have been assessed on a damages settlement of $270,000.
(a) Stage 1 $329 (2.92 monetary units x $112.53)
(b) Stage 2 $486 (4.32 monetary units x $112.53)
(c) Stage 3 $12,882 base amount (114.48 monetary units x $112.53)
41. $3,400 (2 cents x $170,000)
In addition to that I note the following professional costs should be allowed:
(a) the representation fee for an assessment conference of two hours is claimed by the current solicitor at $3,376. There is no evidence of any additional time. There is no evidence of any costs order or comments about costs made by Member Ford and so there should be no costs for the vacated hearing date in May 2023 but costs allowed for the 22 September 2023 assessment conference hearing;
(b) the former solicitor’s counsel had one conference with the claimant[3] and the claimant’s solicitor says she had a conference with her client for the purposes of preparing the statement attached to the application for assessment. One hour for each ($338) should be allowed, and
1.[3] Mark Cleary’s invoice 26 April 2023 included perusal of the brief, a conference with the claimant and Ms Burgess an advice, draft letter of instructions to forensic accountants and preliminary submissions to the PIC.
2.
(c) the current solicitor (and Mr Reynolds) had four conferences with the claimant. In my experience noting the apparent complexities of the economic loss arguments, four conferences are reasonable and the should be allowed at $338 each).
What disbursements should be allowed?
Ms Burgess and Mr Adams have provided me with invoices to substantiate the disbursements claimed which should be allowed:
(a) Dr Bodel report – a tax invoice from the Assessor Group dated 28 January 2022 addressed to Ms Burgess refers to a medico-legal assessment with Dr Bodel (consultation and report). The sum claimed in the invoice was for $1,710 plus GST. As this is below the regulated fee for a medico-legal examination ($1,800) it should be allowed in full;
(b) Dr Bertucen report – a tax invoice from the Assess Group dated 16 June 2022 addressed to Ms Burgess refers to a medico-legal assessment with Dr Bertucen (consultation and report) in the sum of $1,710.24 plus GST. It is below the regulated fee and should be allowed in full;
(c) Dr Bodel report – another tax invoice from the Assess Group dated 13 March 2023 to Ms Burgess in respect of a medico-legal assessment with Dr Bodel (consultation and report). The sum claimed was $1,800 plus GST and it too should be allowed in full;
(d) Dr Con Costa – there is a tax invoice dated 21 March 2023 addressed to Ms Burgess for the costs of obtaining medical records in the sum of $339.74 plus GST. As this is an unregulated item it should be allowed in full, and
(e) Furzer Crestani Forensic accountants rendered invoices to Adams & Co dated 31 July and 5 September 2023 totalling $6,328 plus GST.
What is the total amount of costs and disbursements allowed?
In my view based upon the sums claimed by the two practitioners and the agreed sum for the damages component of the settlement ($270,000), my experience of what would have been assessed as reasonable costs had an assessment of costs been required at the time of the settlement is:
(a) $17,097.00 stages 1-3
(b) $5,404.00 assessment conference and conferences
(c) $5,220.24 regulated medical report fees
(d) $6,667.74 unrelated accountant and medical records
(e) $34,388.98 total.
Goods and Services Tax ($3,438.90) of course need to be added to the total making a grand total of $37,827.88.
Apportionment of costs
I do not accept the current solicitor’s initial argument that he is entitled to a component of the first two stages. The words of Schedule 1, Part 2(2) make it clear that the stages of the claim are for “legal services provided in the period” which commences and ends with certain events. Mr Adams had no involvement in the legal services provided in the period from the start of stage 1 to the end of stage 2. While the work done by Ms Burgess in stages 1 and 2 was relevant and affected the work done and the outcome achieved in stage 3, it could not be said that any work Mr Adams did in stage 3 contributed to anything done in the earlier stages.
I also reject the current solicitor’s initial argument that costs for stage 4 should also be allowed. The wording of that stage is clear and requires the issue of a certificate of assessment before the stage is triggered. While the matter settled at an assessment conference, it was settled on an inclusive of costs basis and no certificate was issued as to the quantum of the claim or the assessment of costs. It is arguable that had the matter settled on a plus costs basis and Mr Ford had been asked to assess and apportion costs at that time and issue a certificate of the assessment of those costs, that stage 4 may have been triggered.
It is appropriate therefore that Ms Burgess’ firm should be allowed all of stages 1 and 2.
In terms of stage 3, this encompasses a large period of time from the time of the settlement conference. Ms Burgess during this stage further investigated the matter, responded to further requests for information from the insurer, prepared the application for assessment, statement and schedules, attended the first preliminary conference and briefed counsel to appear and advise. Her services were terminated two to three weeks before the hearing date.
Mr Adams during this stage also undertook a great deal of work, obtaining financial documents, responding to a further request for information from the insurer, obtaining the forensic accountant’s report, attending a teleconference to vacate the hearing date, attending the preliminary conference to set a new hearing date, briefing counsel and attending at the hearing and settling the claim.
In my view an appropriate apportionment of the maximum costs for this stage would be 50% to each of the two firms.
I have dealt with the allowances for the other professional costs and the disbursements above and which do not require additional reasons.
A summary of the costs allowable and how they should be apportioned is set out below:
Item
Amount assessed
Former solicitors
Current solicitors
Stage 1
$329
$329
Stage 2
$486
$486
Stage 3
$16,282
$8,141
$8,141
Conferences and counsel
$5,404
$676
$4,728
Sub-total of legal services only
$22 501 (100%)
$9,632 (43%)
$12,869 (57%)
Regulated medical
$5,220.24
$5,220.24
Unregulated fees
$6,667.74
$339.74
$6,328
Total costs plus disbursements
$34,388.98 (100%)
$15,191.98 (44%)
$19,197 (56%)
CONCLUSION
It was agreed by the current and former legal representatives that I should proceed on the basis that the sum of $30,000 was the costs component of the settlement reached between Ms Chen and the insurer and $270,000 the damages component. My total of assessed costs is obviously greater than the sum anticipated by the agreement.
I do not have any of the claims related documents before me and therefore have not been able to undertake an analysis of the reasonableness and necessity of the work done and in particular the disbursements claimed. I also note that there would have been an element of compromise involved in the settlement which may have included a compromise on the amount of costs recoverable from the insurer had the matter settled on a plus costs basis.
The real issue in dispute in the proceedings before me is the apportionment of the regulated legal services costs between the two parties.
I was advised by the parties that the claimant paid for all of the disbursements as they were incurred. There is therefore no real dispute in the proceedings as to the apportionment of that component of costs and therefore the disbursements will not be included in the certificate.
Bearing in mind the somewhat artificial exercise of undertaking an analysis of costs at this point in time and in circumstances when the claim was settled on an inclusive of costs basis, I will proceed with apportioning only the costs of the legal services provided by the two legal representatives as allowed by the Regulation.
I will include in my certificate only the amount that would have been recoverable by the former solicitor from the insurer in accordance with the Regulation.
Finally, I note that there is nothing in the MAI Act or the Regulation that suggests there is an entitlement to costs in respect of this application.
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