Duan v State of Victoria (Ruling)

[2011] VCC 862

IN THE COUNTY COURT OF VICTORIA Revised

Not Restricted

AT MELBOURNE
CIVIL DIVISION
DAMAGES AND COMPENSATION

GENERAL DIVISION

Case No. CI-09-05893

TANJIL LEE GENEVIEVE DUAN	Plaintiff
(by her Litigation Guardian GEOFFREY WAYNE DUAN)
v
STATE OF VICTORIA	Defendant

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JUDGE:	HIS HONOUR JUDGE MISSO
WHERE HELD:	Melbourne
DATE OF HEARING:	1, 2, 3, 6, 7 and 8 June 2011
DATE OF RULING:	20 June 2011
CASE MAY BE CITED AS:	Duan v State of Victoria (Ruling)
MEDIUM NEUTRAL CITATION:	[2011] VCC 862

RULING

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Catchwords: COSTS - application for uplift of solicitor’s professional fees by 25 per cent: section 3.4.28 Legal Profession Act 2004.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Hore-Lacy SC with	Maurice Blackburn Pty Ltd
Mr M Belmar
For the Defendant	Mr S Smith	Norton Rose Australia
HIS HONOUR:

Introduction

1          Following a jury trial of six days’ duration, the jury returned a verdict in favour of the plaintiff, finding that the defendant was negligent, and compensating the plaintiff in damages in the sum of $120,000.

2          Before moving for judgment, Mr Hore-Lacy SC, who appeared with Mr Belmar of Counsel for the plaintiff, applied for, among other things, an uplift of his instructing solicitor's fees of 25 per cent. The application was opposed by Mr Smith.

3          I reserved my ruling and directed that the parties submit written submissions for my consideration.

An Uplift

4 Section 3.4.28 of the Legal Profession Act 2004 (“the Act”) is relevant to a determination of the application. It is in the following terms:

“3.4.28	Conditional costs agreements involving uplift fees
(1) A conditional costs agreement may provide for the

payment of an uplift fee.

(2) The basis of calculation of the uplift fee must be

separately identified in the agreement.

(3)

The agreement must contain an estimate of the uplift fee
or, if that is not reasonably practicable—

(a)	a range of estimates of the uplift fee; and
(b)	an explanation of the major variables that will affect the calculation of the uplift fee.

(4)

If a conditional costs agreement relates to a litigious
matter—

(a)	the agreement must not provide for the payment of an uplift fee unless the law practice has a reasonable belief that a successful outcome of the matter is reasonably likely; and
(b)	the uplift fee must not exceed 25% of the legal

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costs (excluding disbursements) otherwise payable.

(5) A law practice must not enter into a costs agreement in
contravention of this section."

5 Mr Belmar submitted written submissions on 14 June 2011 in which he recited parts of the costs agreement which the plaintiff executed, which provided that her solicitors would be entitled to charge an additional fee of 25 per cent on the professional fees incurred by them on her behalf. It referred to section 3.4.28 of the Act.

6 No issue was taken by Mr Smith in the written submissions in which he submitted that the Costs Agreement was other than in accordance with the requirements provided for by section 3.4.28 of the Act.

7          The issue, in simple terms, is whether the existence of such a costs agreement providing for an uplift fee should form part of the order for costs in favour of the plaintiff against the defendant; in other words, that the quantum of the uplift should be borne by the defendant.

Previous Cases

8          The very same issue was ventilated before Judge O'Neill in Jarvis v Cranston.[1] His Honour reviewed six decisions of Judges of this Court and followed the rulings of Judge Shelton in Pate v Buckley & Clarson Holdings Pty Ltd & Rochecouste;[2] Judge Dove in Conduit v Lisa Lodge Pty Ltd,[3] and Judge Morrow in Ramos v Millar.[4]

[1] [2008] VCC 1445

[2] [2006] VCC 1269

[3] [2006] VCC 1832

[4] [2008] VCC 1226

9          Mr Belmar referred to Pate v Buckley & Clarson Holdings Pty & Rochecouste (supra) in his written submissions. He submitted that it went on appeal and as a consequence of an observation made by the Chief Justice, the defendant/respondent consented to an order for an uplift fee which is reflected in an order on Court Connect made by Mr M Deviny, Taxing Registrar of this Court.

10        I do not consider what occurred in the Court of Appeal is binding upon me. Whatever the Chief Justice actually said is not a judgment of the Court of Appeal. It may be that it was not the observation of the Chief Justice which led to a consent order being made, but some other unknown event in the prosecution and defence of the appeal. I consider it very unsound to simply look at the order and deduce from it something favourable to the plaintiff in this instance.

11        In each of the rulings followed by Judge O'Neill, the application for an uplift fee failed.

12 In short, it would appear that his Honour's ruling was based upon uplift fees not constituting “legal costs” within the meaning of section 1.2.1 of the Act. He also said, after citing a passage of the ruling of Judge Morrow with approval:

“I agree that an uplift fee is in the nature of the fee charged for a funding arrangement, designed to provide "compensation" to the solicitors and counsel who run the risk of expending time and effort without the prospect of payment in the event the case is unsuccessful. This is not of the nature of legal services, nor reimbursement for work actually done nor costs actually incurred in litigation.

Further, had Parliament contemplated that such uplift fees would be recoverable from an unsuccessful defendant, there would have been specific provision in either the Act or the Rules to that effect. I accept His Honour’s reasoning that part 3.4 of the Act specifically contemplates fees as between solicitors and clients, and not party and party, and were an otherwise, uplift fees would be specifically referred to in the definition of "legal costs" in s. 1.2.1 of the Act."[5]

[5]             at paragraph 30

13        Mr Belmar referred me to the ruling of Judge Davis in Ventrice v Joneal Pty Ltd[6] in which her Honour made an order in favour of the plaintiff for indemnity costs in circumstances where the plaintiff had made an offer of compromise pursuant to ORDER 26.08. Her Honour’s assessment of damages exceeded the monetary sum referred to in the plaintiff's offer of compromise.

[6] [2011] VCC 685

14 The plaintiff, in that case, submitted that not only was she entitled to her costs on an indemnity basis, but that the order for indemnity costs should include a 25 per cent uplift permitted by section 3.4.28 of the Act.

15        Judge Davis concluded that because the uplift fee was to be charged pursuant to a valid costs agreement, that it should not be excluded as a matter of course from an order for indemnity costs. Her Honour added that it would ultimately be a matter for the taxing Registrar (now the Costs Court) to determine whether the plaintiff's claim for costs (including the uplift fee) was unreasonably incurred or of an unreasonable amount.[7]

[7]             at paragraphs 26 and 27. Judge Anderson reached a similar conclusion in Young v TAC (unreported - 18 August 2006), referred to by Judge O'Neill in Jarvis v Cranston (supra)

16        There is much good sense in the conclusion reached by Judge Davis in the context of an order for costs on an indemnity basis, but in this instance the position of the plaintiff is distinguishable because she is not entitled to an order for costs on an indemnity basis, but an order for party/party costs, and a limited order for solicitors/client costs because she exceeded a Calderbank offer.

17        I propose to follow the conclusion reached by Judge O'Neill and to refuse the application of the plaintiff for an uplift fee.

Orders
18	In order to finally dispose of the outstanding matters flowing from the verdict of the jury I propose to make the following orders:
• The plaintiff have judgment in the sum of $120,000 together with $4,000 damages in the nature of interest. • The defendant pay the plaintiff's costs to be taxed on County Court Scale “D”, including any reserved costs up to 21 March 2011 and thereafter on a solicitor/client basis, in default of agreement. • I certify for two Counsel as follows:

ƒ	Senior Counsel – one day of preparation at $6,600, and daily fees for the six days of trial at $6,600 per day.
ƒ	Junior Counsel – one day of preparation at $3,300, and daily fees for the six days of trial at $3,300.
ƒ	Certify that the defendant pay for the reasonable costs of preparation, filing and service of the Plaintiff’s Court Book, being one copy on Scale “D” and any remaining necessary copies at commercial copying rates to be determined by the Costs’ Court, including any necessary attendances.]

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