Carrafa v Gomez and Anor (No.2)

In *Carrafa v Gomez and Anor (No.2)*, the Supreme Court of New South Wales was asked to determine whether a party who had been successful in a claim for damages for personal injury was entitled to recover the full amount of their legal costs, including a quantum of costs that had been agreed between the parties in a deed of settlement. The plaintiff, Mr Carrafa, had sustained injuries in a motor vehicle accident and had subsequently commenced proceedings against the defendants, Ms Gomez and her insurer. The parties had reached a settlement in principle, and a deed of settlement was executed. However, a dispute arose regarding the assessment of the plaintiff's legal costs.

The central legal issue before the Court was whether the deed of settlement, which stipulated that the plaintiff was entitled to recover their "full legal costs", encompassed the entirety of the costs as agreed between the plaintiff and their solicitors, or if it was subject to the usual principles of indemnity costs as assessed by the Court. Specifically, the Court had to consider the interpretation of the phrase "full legal costs" within the context of the deed and whether it overrode the standard practice of cost assessment.

Judge Riley reasoned that the plain and ordinary meaning of "full legal costs" in the deed of settlement indicated an intention by the parties to depart from the usual assessment process. The Court found that the parties had expressly agreed to a specific quantum of costs, and that this agreement was binding. The Court applied the principle that clear and unambiguous contractual language should be given effect, and that where parties have agreed to a specific outcome regarding costs, the Court should uphold that agreement unless there are compelling reasons to do otherwise. The Court concluded that the plaintiff was entitled to recover the costs as agreed in the deed of settlement.

The Court ordered that the plaintiff's costs be assessed in accordance with the terms of the deed of settlement.