Kasmeridis v Mcnamara Business & Property Law - [2006] SASC 200

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
KASMERIDIS & ANOR v MCNAMARA BUSINESS & PROPERTY LAW
[2006] SASC 200
Reasons of Judge Lunn a Master of the Supreme Court
11 July 2006
PROCEDURE - COSTS - AGREEMENTS AS TO COSTS
Agreement made between solicitor and client for costs to be payable on a time basis - application under s 42(7) of Legal Practitioners Act 1981 to set aside the agreement as not being fair and reasonable - held unfair not to explain tp the client some other lawyers would be likely have done the work for less and not to explain that the client was unlikely to recover all the costs charged if a party and party order was made in their favour - held agreement unreasonable in that it allowed the full rate for an experienced solicitor to be charged for all work done on the matter by a junior solicitor - no proper basis to vary the agreement - agreement set aside.

KASMERIDIS & ANOR v MCNAMARA BUSINESS & PROPERTY LAW
[2006] SASC 200
Reasons on whether the costs agreement is to be rescinded or varied.

JUDGE LUNN These proceedings were commenced by Harry and Vicki Kasmeridis for a taxation of legal costs charged to them by their former solicitors, NcNamara Business & Property Law (“the Lawyer”). All relevant dealings by Kasmeridis were conducted through Harry Kasmeridis and Vicki Kasmeridis played no active role in the matter. (My references to “the Kasmeridis” are to both Kasmeridis). John Viscariello is a lawyer who was admitted on 16 December 2002 and who was an employee of the Lawyer
In response to the request for taxation the Lawyer lodged a Bill of Costs for taxation prepared so that it could be taxed in accordance with the terms of the Costs Agreement to be mentioned later. The Kasmeridis took an initial objection that this Agreement did not comply with s 42(6) of The Legal Practitioners Act (“the Act”). Ultimately on 22 July 2005 the Full Court held that the Costs Agreement did comply with s 42(6) of the Act.
On the resumed hearing of the taxation, the Kasmeridis sought to have the Costs Agreement rescinded pursuant to s 42(7) of the Act as being “not fair and reasonable”. On this issue I directed the parties to file affidavits on the relevant factual matters. John Viscariello filed affidavits on 1 November 2005 and 1 March 2006 and Harry Kasmeridis filed an affidavit on 5 December 2005. Short affidavits were also filed by Stephen McNamara and Robert Sallis. These affidavits, combined with the earlier affidavit of John Viscariello filed on 13 September 2004, which exhibited the Costs Agreement, constituted the only evidence on the s 42(7) issue. No application was made to cross-examine any deponent on their affidavit. Mr Kasmeridis and Mr Viscariello are not entirely agreed in their affidavit evidence, but I have to resolve the issues on the evidence which I have.
The questions of fairness and reasonableness pursuant to s 42(7) of the Act are to be determined as at the time at which the Costs Agreement was struck, ie 9 February 2004: Renton Resources Pty Ltd v Johnson Winter & Slattery Full Court, 1 July 2005, Judgment No [2005] SASC 231, unreported. That means that a substantial amount of evidence put forward about what occurred after 9 February in the Lawyer acting for the Kasmeridis is not directly relevant to what I have to decide. Those events can only be used as illustrations of what might have occurred in the working out of the Costs Agreement and to show what issues on the Costs Agreement are now relevant and require determination.
On 19 November 2003 Sandhurst Trustees Ltd (“Sandhurst”) obtained a default judgment in the Adelaide Magistrates Court against the Kasmeridis for $30,175. They instructed another firm of solicitors, Thomson Playford, to act for them in relation to that judgment. Although they had not been previously served with the Claim, by about 3 December 2003 Thomson Playford had received a copy of it. Under R 87 of the Magistrates Court (Civil) Rules the mere fact that the Kasmeridis had not received the Claim document did not entitle them to have the judgment set aside unless they could also establish an arguable defence on the merits. It seems the Kasmeridis did not give instructions to Thomson Playford which led them to believe that there was any arguable defence on the merits. Acting on the instructions of the Kasmeridis, Thomson Playford negotiated an arrangement with the solicitors for Sandhurst whereby the Kasmeridis were to pay the judgment sum in two instalments, but neither instalment was ever paid. In late January 2004 Sandhurst proceeded to seek to execute its judgment by a warrant for the sale of the home of the Kasmeridis.
On 30 January 2004 Mr Viscariello was contacted by Ms Christian of South Australian Lease Management. She was representing the Kasmeridis. He had had some previous dealings with her. She had recommended the Lawyer to the Kasmeridis and requested the Lawyer to act for them to prevent the sale of their home.
In about early February 2004 Mr Viscariello had his first conversations with Mr Kasmeridis. Initially the Lawyer sought to negotiate a further arrangement for the payment of the debt with the solicitors for Sandhurst, but Sandhurst refused to accept less than immediate payment of the debt in full. The Kasmeridis instructed the Lawyer to do all that was necessary to save their home.
On 5 February the Lawyer sent to the Kasmeridis a letter setting out the terms on which the Lawyer would act for them. The letter contained two pages (apparently out of sequential order) of “Terms of Engagement” and a Schedule of Fees. The Terms of Engagement and the Schedule of Fees (‘the Costs Agreement”) were pro forma documents used by the Lawyer and the relevant parts are set out below.
On 9 February there was a telephone discussion between Mr Viscariello and Mr Kasmeridis. Mr Kasmeridis acknowledged receiving the Costs Agreement, said words to the effect, “Do whatever it takes to save the house” and confirmed the instructions to retain Mr R W Sallis to act as counsel. In his affidavit Mr Kasmeridis says he did not read or understand the Costs Agreement. Mr Viscariello deposed that Kasmeridis had told him in that telephone discussion he had read it and accepted it. I am not in a position to resolve this dispute. Apart from the matters mentioned, nothing was discussed between the Lawyer and the Kasmeridis about the terms of the Costs Agreement and nothing else was said about the basis on which the Lawyer was to charge the Kasmeridis.
Nothing that occurred after 9 February is relevant to what I have to decide other than in the indirect manner mentioned above. The Lawyer successfully challenged the default judgment and had it set aside. On 24 February 2004 the Lawyer rendered an account to the Kasmeridis for $20,613 inclusive of counsel fees and disbursements. The Kasmeridis then terminated the services of the Lawyer and retained other solicitors to act for them.
As will appear below, Clause 2 of the Schedule of Fees reserved the right to the Lawyer to charge a premium where the work involved particularly urgent attention or excessive out of hours work. The Kasmeridis claim that they have been charged such a premium, but the Lawyer denies having done so. It is not necessary to pursue the point further as the Lawyer does not seek a premium, and therefore any premium must be disallowed on the taxation. Insofar as the premium clause might be unfair or unreasonable, it would be clearly severable under the power in s 42(7) to vary the Agreement, and thus would not invalidate the rest of the Costs Agreement.
Counsel for the Lawyer took a preliminary point that any application under s 42(7) had to be pursued by a separate action in the Court and was not justiciable on a taxation of costs. S 42(7) of the Act provides:
The Supreme Court may, in proceedings under this section, rescind or vary any agreement under subsection (6) if it considers that any terms of the agreement is not fair and reasonable.
The present proceedings are proceedings under s 42. Subs (7) confers an express power to give the remedies under subs (7) in these proceedings which are otherwise a taxation of costs. It is similar to other jurisdictions which can be exercised on taxations of costs for the determination issues about retainer agreements: re McCulloch’s Costs (1887) 8 NSWLR Eq 47. The Lawyer’s counsel submitted that there should have been formal pleadings and discovery to enable a proper determination of the issues. If they had been requested at the appropriate stage of the proceedings, they could have been ordered, but they were not sought. If a full trial of the issue had been sought, the issue could have been referred to a Judge under R 106.04, but no such application was made. The Lawyer did not seek any further adjournment of the hearing before me to enable any further interlocutory steps to be taken.
Counsel for the Lawyer raised a further preliminary objection that this application under s 42(7) of the Act was barred by some species of “Anshun estoppel”. He submitted that the Kasmeridis should have raised the s 42(7) point in conjunction with the s 42(6) point, and both of those points should have been dealt with at the same time by the Full Court. I do not accept this submission. If the s 42(6) point had been successful, there would have been no need to have embarked on the s 42(7) point which required considerably more evidence that the s 42(6) point. While the two points could have been dealt with together, I am not aware of any authority which says that they could not be dealt with separately. He further submitted that the Lawyer had been prejudiced in meeting the s 42(7) point because of various pronouncements made by the Full Court in its Reasons ([2005] SASC 269). I do not accept this. The tenor of the Full Court judgment is that the ultimate issue of fairness was to be dealt with under s 42(7), and not under s 42(6). I do not consider that the Full Court has in any way prejudged the s 42(7) issue. Other than re-iterating unexceptional statements about the general law on the topic, the Full Court has not made any pronouncement about the s 42(7) issues in the context of this case. In any event, the Full Court did not have the same evidence before it as is before me. (There may be an exception to this on what the Full Court said about the issue of the premium, but, as I have stated above, that is not a relevant issue).
I deal first with the fairness of the Costs Agreement for the purposes of s 42(7). (Fairness refers to the way in which the Agreement has been obtained and reasonableness to the terms of the Agreement: re Stuart [1893] 2 QB 201 at 204-5). The basic principle for the validity of such Costs Agreements was stated by the Full Court in relation to the predecessor to s 42(7) in Hargrave v Miller [1925] SASR 379 at 384, as:
… Nevertheless, the fact will remain that the Agreement is one made between the solicitor and his client and subject to the control of a Court of Equity as in other cases. The consent of the client must be a real consent, obtained without undue influence, or pressure, which may arise from the confidential relationship, and upon a full disclosure, without any breach of the duty to advise the client fairly and impartially so far as advice is given.
There is a potential conflict of interest between a solicitor seeking to maximise his profits and a client desiring not to pay more than he needs to pay to obtain the legal services.
There is some conflict of authority on who bears the onus of proof to establish such unfairness. See Dal Pont “Law of Costs” para 2.25. The point was not taken by counsel and in any event the Kasmeridis discharged any evidentiary onus upon them to raise unfairness.
The relevant parts of the letter of 5 February 2004, the Terms of Engagement and the Schedule of Fees, are as follows: (I have changed the order of the paragraphs in the Terms of Engagement to make them sequential).
….. The purpose of this letter is to set out the terms on which we will act for you.
Enclosed are our Terms of Engagement and Schedule of Fess (sic) which together with this letter, set out the relevant terms and conditions on which we will act for you.
…..
Please also note that these terms and conditions will apply to all matters in respect of which we accept instructions from you or act on your behalf unless mutually agreed to the contrary in writing.
…..
Please contact us to discuss any aspect of this letter and the Terms of Engagement if you have any queries.
…..
Please read carefully
TERMS OF ENGAGEMENT

THE SOLICITORS

S1    We agree to provide competent legal services and advice in relation to the matter in accordance with ethical and legal standards.

…..

S3    The solicitor responsible for the conduct of the matter will act in the matter with assistance from other solicitors/staff and counsel as is required and appropriate.

S4a   Each solicitor/staff member is assigned an hourly rate determined by seniority, experience, and expertise, and is required to keep detailed records of all time spent on the matter. The present hourly rates are quoted in the attached schedule. Services charged include interviews, preparing of reading documents, correspondence, negotiations, telephone calls, meetings, attending in Court, research of other matters and other relevant work.

S4b In addition to the fees set out above, you are required to pay any expenses we incur on your behalf in connection with your matter. Expenses include such things as court fees, Land Titles Office fees, stamp duty, company and other searches, barrister’s fees, courier charges, expert’s fees, postage and telephone charges.

S4c   The hourly rates quoted in the schedule are inclusive of GST. To the extent that expenses we incur for you are subject to GST, you must reimburse us for any GST payable in respect of those expenses.

THE CLIENT

C1     The client agrees and expressly authorises the solicitors to assign solicitors, staff members or counsel to work on the matter as and when required; to engage and obtain any reports from experts; to engage barrister/s and to incur any unusual disbursement/s the solicitors consider necessary for the proper conduct of the matter.

C2     The client is aware and has been advised that the fixed amount charged or rate payable may exceed the rates set by the relevant Court or other scale and may care to seek independent legal advice concerning this aspect or any part of this agreement.

C3     The client agrees to pay the solicitors’ accounts including interim accounts received within 14 days of presentation. The client agrees to pay or reimburse the solicitors for any GST payable in respect of the fees and disbursements. Interest at the rate of 10% per annum is payable on all accounts unpaid for 14 days or more after presentation.

…..

S5    The hourly rates are reviewed periodically and you will be advised of any changes in the rates at that time. The time recording system is presently based on a minimum recording time of six minutes and all charges will be calculated on that basis. Any change to the minimum recording time will also be advised.

S6    Any initial estimate of legal costs we give you is an estimate only and will always remain subject to review depending on the particular circumstances of the matter. It is particularly difficult to estimate costs in a litigation matter. …..

…..

…..

C6     The client is aware and has been advised that any costs received from other parties in a litigious matter (called “party/party costs”) may not cover all of the solicitors’ costs and disbursements incurred (called “solicitor/client costs”) and the client will have to meet the difference in these costs from the client’s own pocket if this occurs.

…..

SCHEDULE OF FEES
1Client: Harry Kasmeridis
2Fees for Legal Services
The current hourly rates (including GST)
Solicitors         $200.00
Paralegals        $150.00
We reserve the right to charge a premium where your matter requires particularly urgent attention or involves excessive out-of-hours work. Please note that the amount to be charged is not calculated by direct reference to court scales and may exceed the rate set by such scales.
3Expenses
In addition to the fees set out above, you are required to pay any expenses we incur on your behalf in connection with your matter. Expenses include such things as court fees, Lands Titles Office fees, stamp duty, company and other searches, barrister’s fees, courier charges, expert’s fees, postage and telephone charges.
4Goods and Services Tax (GST)
Under the terms of Engagement, our fees are inclusive of GST. To the extent that expenses we incur for you are subject to GST, you must reimburse us for any GST payable in respect of those expenses.
…..

The Costs Agreement enabled the Lawyer to charge for its services at an hourly rate based on six minutes units of time taken in performing the legal work referred to in Clause S5(a). It does not bear any direct relation to much of the work actually performed for the benefit of the Kasmeridis. The law has been traditionally wary of such time costing agreements because they are almost invariably to the financial advantage of the lawyers: see Ipp J in D’Allesandro v Bouloudas (1994) 10 WAR 191 at 222-223 and the cases summarised there. If there had been no Costs Agreement and the costs were to be governed by ordinary principles and quantum meruit, the amount payable by the Kasmeridis most likely would have been significantly less. I deal with this later under the topic of reasonableness. While the undisputed evidence of Mr McNamara was that the rates in the Costs Agreement were about usual for those charged by lawyers in South Australia who charged on a time-costing basis, there is no evidence that there were not other lawyers who would have acted for the Kasmeridis without such a Costs Agreement. If the Lawyer wanted to claim that the Kasmeridis were not disadvantaged because all available lawyers would have required a similar Costs Agreement as a condition of acting, the onus was on it to establish this, and it did not. The likelihood is that there would have been some lawyers in Adelaide who would have been prepared to have done the work for the charges to be allowed by the Court on an ordinary taxation and this would have been significantly less expensive for the Kasmeridis. Nothing was said by the Lawyer to the Kasmeridis on this topic. The Kasmeridis were entitled to be told this by the Lawyer and to make an economic and informed decision whether to employ the Lawyer under the terms of the Cost Agreements or to opt for a cheaper alternative. It was unfair to the Kasmeridis not to be given this information: cf F Pirone v Craig J Roberts Pty Ltd, Layton J, 11/5/06 [2006] SASC 134, unreported. There is no evidence that if the Kasmeridis had been given proper advice by the Lawyer on this topic, they would still have entered into the Costs Agreement: Smith v Moloney (2005) 92 SASR 498. On this ground alone the discretion of the Court under s 42(7) of the Act is activated.
Counsel for the Lawyer pointed to the undisputed evidence that between 1991 and 1993 the Kasmeridis had been the defendants in at least 35 Magistrates Court actions, some of which had resulted in warrants of arrest and sale being issued against them. While I accept from this that they were not as ignorant of the legal system as they might have claimed, there is no evidence that apart from the time they were represented by Thomson Playford from November 2003 to January 2004, they had ever employed lawyers in any of those actions. Furthermore, there was no evidence that either with Thomson Playford, or with any other lawyers, they had ever entered into any agreements to be charged other than on scale rates.

Counsel for the Kasmeridis pointed to Clause C6 of the Costs Agreement. The words there “has been advised” strongly imply that the Lawyer would have given more explicit advice based on the circumstances of the particular case about what, if any, difference there would likely to be between what the Lawyer was charging and what might have been recoverable from the other party on an order of a Court for costs. Nothing on that topic was said by the Lawyer to the Kasmeridis. I do not accept the submission of counsel for the Lawyer that the advice referred to was the contents of the letter and the Terms of Engagement. These words clearly imply something over and above the contents of these documents. The Lawyer was not entitled to presume that the Kasmeridis were aware of anything about the recoverability of costs from Sandhurst. There was a duty on the Lawyer to explain this topic adequately to them. It was not sufficient merely to state in the letter that they could enquire if they did not understand any aspect of the Terms of Engagement.
Furthermore, in respect of Clause C6 it was misleading for the Lawyer to say that the costs received from other parties ‘may not cover all of the solicitor’s costs”. “May” imports there was a real chance that all of the costs charged by the Lawyer could be recovered. However, under this time-costing basis of charging by the Lawyer it was virtually impossible for the Kasmeridis to recover from Sandhurst all of what they would have to pay to the Lawyer. The average lay person would have interpreted Clause C6 to mean that there was some reasonable hope that he would recover all of the costs he had to pay to the Lawyer from Sandhurst, but in reality there was no such hope. The Kasmeridis were entitled to have the Lawyer put the true position to them on this topic: Twigg v Rutherford (1996) 20 Fam LR 862 at 884.
Clause C1 of the Costs Agreement authorised the Lawyer “to incur any unusual disbursements the solicitors considered necessary for the proper conduct of the matter”. That provision would oust the Rule in re Blyth (1882) 10 QBD 207 (see generally Dal Pont (above) paras 5.8-5.16) that an expense which was not necessary for the proper enforcing of the client’s rights which was incurred by the Lawyer was not recoverable from the Kasmeridis unless prior authority had been obtained to incur it, together with proper advice about the desirability to do so. The utility of the rule re Blyth is undermined if lawyers can exclude it without first properly explaining it to the client. Nothing was said by the Lawyer to the Kasmeridis about this topic and it was unfair to them not to do so. It was not sufficient for the Lawyer merely to point to the Kasmeridis having said the Lawyer should do whatever was necessary to save their home. The Kasmeridis were entitled to proper advice about the extent to which they were committing themselves financially before the Lawyer accepted instructions which would authorise the incurring of unusual disbursements subjectively considered by the solicitor to be necessary for the proper conduct of the matter, which is what is envisaged by Clause C1. Counsel for the Kasmeridis complained of the Lawyer having retained counsel at a rate of $300 per hour which was well above scale rates. This was not specifically part of the Terms of Engagement and so is not directly relevant to fairness in this context. However, it would have constituted an unusual “expense” for the purpose of the rule in re Blyth. The operation of that rule was unfairly excluded by the Lawyer.
Counsel for the Kasmeridis complained it was unfair for the Lawyer either to have given no estimate of the likely costs (as was evidence of Mr Viscariello) or an estimate of $4,000-$4,500 as was the evidence of Mr Kasmeridis. Clause S6 of the Costs Agreement did not require an estimate to be given before the Costs Agreement was entered into. It would seem the estimate of $4,000-$4,5000 was given after 9 February. Accordingly, it is not a matter relevant under s 42(7).
Counsel for the Kasmeridis complained that the provisions in the Costs Agreement about the payment of GST were inconsistent, and prejudicial to his clients. I do not accept this. It turns on the proper interpretation of Clauses S4c and C3 and paragraphs 2 and 4 of the Schedule of Fees. I accept the submission of counsel for the Lawyer that the proper interpretation of the documents as a whole is that the amounts for the Lawyer’s hourly rates were inclusive of GST and that GST was payable on any disbursements incurred by the Lawyer. In some places the term “fees” is ambiguous as to whether it refers to the Lawyer’s time charges or to out of pocket expenses, but in its overall context the Agreement is sufficiently clear as to what is intended. There is no unfairness in those GST provisions.
I now turn to the issue of reasonableness which relates to the potential outworking of the terms of the Agreement and whether their effect was objectively unreasonable to the Kasmeridis in the circumstances of the case: Brown v Talbot (1993) 9 WAR 70 at 75. Although after 9 February 2004 the work of the Lawyer was mainly directed to setting aside the default judgment and entering a defence and a third party notice, the undisputed evidence of the Lawyer was that the retainer was potentially wider that the prosecution of the defence to the Magistrates Court proceedings.
There is no scale of solicitor and client costs for proceedings in the Magistrates Court: “Legal Costs South Australia” para 17,101. Where it is necessary to tax the costs of such proceedings between solicitor and own client the usual practice is to tax against the Supreme Court Scale and to allow a percentage of those costs as taxed on the Supreme Court scale. The percentage allowable varies according to the particular circumstances of the matter, but in respect of a claim for over $30,000 the percentage would usually be at least 80-90 per cent, and possibly even 100 per cent, of the costs on the Supreme Court scale. As the relevant percentage may be a matter of further argument in this matter, I do not intend at this stage to make any pronouncement about it. However, in order to assess the reasonableness of the provisions of the Costs Agreement, it is necessary to compare the costs chargeable under that Agreement with what would have been chargeable if there had been no such agreement.
At the relevant time in 2004 the hourly rate under the Supreme Court Ninth Schedule for solicitors’ work properly chargeable on a time basis was $180 per hour plus GST. This worked out to $198 per hour which was not significantly different from the $200 per hour provided for solicitors’ time in the Costs Agreement. The only significant differential would be any percentage by which the Supreme Court rate was to be reduced because it was only a proceeding in the Magistrates Court.
At the relevant time the hourly rate under the Ninth Schedule for clerks, other than junior clerks, for work which was assessable on an hourly rate was $86 per hour plus GST which worked out to $94.60 per hour. This was considerably less than the $150 per hour provided in the Schedule to the Costs Agreement for paralegals. It is unclear whether the terms “paralegals’ included junior clerks, but if so, the differential would be even greater.
The most significant provision in the Cost agreements which affected the amounts which could be charged was Clause S4a which provided “services charged include ….. research of other matters and other relevant work”. In the context of this time costing agreement I infer these more general expressions encompass all the time spent by the Lawyer on the matter, including whatever research had to be undertaken to prepare and equip themselves for the necessary tasks. As is demonstrated by the bill presented for taxation this included many hours spent by Mr Viscariello in familiarising himself with the law, the procedures and precedents. A lawyer with more experience in the field, and more general experience, would be likely to have accomplished necessary tasks in significantly less time. The question is whether it is objectively reasonable that the Kasmeridis should have to pay at the rate of $200 per hour for all of the time spent by Mr Viscariello in the matter.
It is relevant that Rule S4a of the Terms of Engagement provides:
Each solicitor/staff member is assigned an hourly rate determined by seniority, experience, and expertise, ….. the present hourly rates are quoted in the attached schedule.
The Schedule only quoted a single rate for solicitors regardless of their seniority, experience and expertise. This is not what was envisaged by Clause S 4a. It did not envisage that same hourly rate would be chargeable by both the most senior and the most junior practitioner in the Lawyer’s practice, and that the same rate would be charged for Mr Viscariello as was chargeable for Mr McNamara.
At the time in question Mr Viscariello, who was the solicitor in the Lawyer’s firm responsible for the conduct of the matter under Clause S3, had been an admitted practitioner for just over 12 months. The services of an experienced counsel were also utilised. Mr Viscariello was a mature person who had had considerable business experience in the building industry, but the time which he needed to accomplish the necessary tasks in Magistrates Court litigation was likely to have been significantly greater than that of a lawyer of several years more experience in such matters. There is no question here of the competence of Mr Viscariello to do the work. It is rather that a significant part of the time taken by him to perform the work is likely to have been attributable to his learning processes. Counsel for the Lawyer pointed out that the Lawyer had been recommended to Kasmeridis by Miss Christian who was otherwise familiar with him and presumably his capabilities and lack of experience. However, there was no evidence from Miss Christian. If Mr Viscariello was to charge for all of his time spent in the matter, it was unreasonable that it should have been charged at a rate as high as $200 per hour. Conversely, if the time spent had been limited to that appropriate to an experienced solicitor, then the rate probably was reasonable.
Accordingly, I find that the terms of the Costs Agreement were neither fair nor reasonable. That activates the discretion under s 42(7) of the Act either to rescind or vary the agreement. Counsel for the Lawyer invited me to vary any terms which I found were not fair and reasonable. I can find no authority on the circumstances in which the power of variation should be exercised. I accept that it can be used to delete discrete terms, such as I have done with the premium clause in paragraph 1 of the Schedule. However, I do not consider that the power should be used to rewrite the agreement where the unfairness and/or unreasonableness goes to the heart of it and to matters which may have caused the Kasmeridis not to enter into it if its import had been properly explained to them. In all of the circumstances, the whole of the Costs Agreement should be rescinded. I will hear the parties on what further orders should now be made.