Lennon Mazzeo v Karam
[2015] VSC 433
•11 August 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 09926
| AKRAM KARAM | Plaintiff |
| v | |
| PALMONE SHOES PTY LTD | Defendant |
AND
| LENNON MAZZEO | Applicant |
| v | |
| AKRAM KARAM, PALMONE SHOES PTY LTD AND ALOE & CO PTY LTD | Respondents |
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JUDGE: | LANSDOWNE AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 11 August 2015 |
DATE OF JUDGMENT: | 11August 2015 |
DATE OF WRITTEN REASONS: | 20 August 2015 |
CASE MAY BE CITED AS: | Lennon Mazzeo v Karam and ors |
MEDIUM NEUTRAL CITATION: | [2015] VSC 433 |
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FUNDS IN COURT – application for payment out to satisfy solicitor’s liens – potential further claim – potential change to amount of taxed costs - further adjournment refused on the giving of solicitors’ undertakings to repay if so required by the Court.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff/First Respondent | Mr P Donnellan, solicitor, appeared until excused. The plaintiff appeared in person after counsel was excused. | PRD Legal |
| For the Defendant/Second Respondent | No appearance | |
| For the Applicant (Lennon Mazzeo) | Mr S McCredie | Lennon Mazzeo |
| For the Third Respondent (Aloe & Co Pty Ltd) | Mr J Aloe, solicitor | Aloe & Co |
| For CTT Legal Management Pty Ltd, an interested party by leave | Ms P Toop, solicitor | CTT Legal Management |
TABLE OF CONTENTS
Background to the application........................................................................................................ 1
Appeals................................................................................................................................................. 4
Taxation of costs................................................................................................................................. 6
Applications for adjournment......................................................................................................... 6
Applications by CTT Legal Management and Mr Karam (through his solicitors)............. 7
Application for adjournment by Mr Karam personally.......................................................... 9
Orders for payment out................................................................................................................... 11
HER HONOUR:
The reasons that follow are the revised form of reasons I gave orally at the conclusion of the hearing when I indicated the orders that I would make. In these revised reasons I have substantially elaborated the background facts, and in so doing have corrected some matters. I have also corrected my oral account of what occurred in relation to the adjournment applications to better accord with what transpired, and added to a small extent to my reasons for refusing adjournment. I have not, however, departed, from the substance of my oral reasons for refusing adjournment and pronouncing the orders that I would make.
Background to the application
Listed before me today is a summons filed by Lennon Mazzeo Lawyers (‘Lennon Mazzeo’) on 20 May 2015 which seeks payment out of the sum of $106,123.00 from funds held in Court pursuant to the orders of Justice T. Forrest made 23 February 2010. The payment is to meet the taxed costs of Lennon Mazzeo who acted for the plaintiff, Mr Karam, against his employer Palmone Shoes Pty Ltd, the defendant, in two work injury claims heard by Justice Forrest.
In one of those claims, in proceeding S CI 2009 09226 (‘the asthma claim’), Mr Karam was successful. That is the proceeding in which the current summons is brought. In the other claim, brought by proceeding S CI 2009 09113 (‘the cancer claim’), Mr Karam was not successful. Judgment was entered for Mr Karam in S CI 2009 09226 and for the defendant in S CI 2009 09113, on 18 January 2010. His Honour adjourned the proceedings to a later date for hearing on the judgment sum, interest and costs.
His Honour made orders in relation to those matters on 23 February 2010. Those orders provided as follows:
1.There be judgment for the Defendant in proceeding S CI 2009 09113.
2.The Plaintiff pay the Defendant’s costs of the proceeding in matter S CI 2009 09113.
3.The payment of those costs is stayed until the resolution of the appeals by the Plaintiff relating to both matters.
4.There be judgment for the Plaintiff in proceeding S CI 2009 09926 in the sum of $196,315.00.
5.The Defendant pay into Court the proceeds from the judgment sum in proceeding S CI 2009 9926, to be held by the Senior Master or his equivalent pursuant to s 113(1) of the Supreme Court Act 1986.
6.Each party bear their own costs of proceeding S CI 2009 09926 pursuant to s 134AB(28)(d) of the Accident Compensation Act 1985.
7.I declare Lennon Mazzeo Lawyers have a lien over the proceeds of the judgment sum of proceeding S CI 2009 09926.
8.I declare Aloe & Co Pty Ltd have a lien over the proceeds of the judgment sum of proceeding S CI 2009 09926, such lien not to include any legal fees relating to proceeding S CI 2009 09113 but to include disbursements for that proceeding and their costs and disbursements of proceeding S CI 2009 09926.
9.Pursuant to s 134AB(30) of the Accident Compensation Act 1985 Lennon Mazzeo Lawyers are entitled to such costs as are agreed or allowed by the Taxing Master in respect of their representation of the worker in proceeding S CI 2009 09113.
10.Pursuant to as 134AB(30) of the Accident Compensation Act 1985 Aloe & Co Pty Ltd are entitled to such costs as are agreed or allowed by the Taxing Master in respect of their representation of the worker in proceeding S CI 2009 09113, such costs not to include any legal fees relating to that proceeding but to include disbursements relating to that proceeding.
11.Such amount is as approved upon the taxation of Bills of Costs rendered by Lennon Mazzeo Lawyers and Aloe & Co Pty Ltd in relation to both proceedings be paid to those firms from the proceeds of proceeding S CI 2009 09926 that are held in Court.
12.The costs of Lennon Mazzeo Lawyers and Aloe & Co Pty Ltd arising out of this application for costs be paid from the proceeds of proceeding S CI 2009 09926 that are held in Court.
13.I stay the operation of orders 4 to 12 until the resolution of the appeals.
14.There is liberty to apply.
The orders as to payment of costs, payment of the judgment sum, declarations as to the solicitor liens and order for payment of taxed costs from funds in Court were stayed by orders 3 and 13 until ‘the resolution of the appeals by the Plaintiff relating to both matters’ and ‘resolution of the appeals’ respectively. According to the orders, the stay expressed by order 13 also extended to the judgment sum ordered to be paid by order 4. This was corrected by a slip rule order, made by His Honour on 25 February 2014, which amended order 13 made 23 February 2010 to apply to only orders 5-12 made that day.
Mr Karam appealed the substantive determination of the cancer case and the assessment of damages in the asthma case, and sought leave to appeal the costs orders. He was ultimately unsuccessful in both respects. The Court of Appeal dismissed his appeals against the substantive determinations on 29 September 2010.[1] His application for special leave to appeal that judgment of the Court of Appeal to the High Court was dismissed on 9 February 2011.
[1]Exhibit NM-5 to the affidavit of Nick Mazzeo sworn 19 May 2015.
The judgment sum, less an amount required to be repaid to Centrelink, was paid into Court with interest on the balance after payment to Centrelink, on 3 September 2012, pursuant to orders made by Justice Judd on 28 August 2012. The sum paid in, with interest that has continued to accrue, is now in the order of $232,265.27.
In the proceeding in which he was successful, because the amount awarded was more than the defendant’s statutory offer, but less than 90% of his statutory counter offer, Mr Karam was required to bear his own costs of the proceeding, although successful. Forrest J expressed the view in the reasons accompanying the orders made 23 February 2010 that he considered that result in the particular circumstances to be ‘manifestly unfair’.[2] Nevertheless, he considered himself bound by the legislation.[3] Order 6 of his orders made 23 February 2010 reflects this result.
[2]Karam v Palmone Shoes Pty Ltd (No 2) [2010] VSC 82 at [9], henceforth ‘Reasons’.
[3]S 134AB(28)(d) of the Accident Compensation Act 1985.
The current applicant, Lennon Mazzeo, and the third respondent to the summons, Aloe & Co Pty Ltd, had both acted for Mr Karam in both proceedings. They each sought a lien over the judgment sum for their unpaid costs.
Forrest J held that Lennon Mazzeo were contractually entitled to charge the plaintiff for all legal costs and disbursements incurred on his behalf in both proceedings.[4] He held that Aloe & Co Pty Ltd were contractually entitled to recover from the plaintiff all fees and disbursements in the asthma case, but only disbursements in the cancer case.[5] He considered that he should declare a lien over the judgment sum for all those costs.[6]
[4]Reasons at [12.2].
[5]Reasons at [12.6].
[6]Reasons at [14]-[15].
Section 134AB(30) of the Accident Compensation Act 1985 (‘the Act’) controls the circumstances in which costs may be recovered from a worker in proceedings under that section, in this case by declaration of the liens and orders for payment out. In his Reasons Justice Forrest held that it was appropriate to make orders permitting recovery from the plaintiff under that section in respect of costs incurred in what he described as ‘the cancer claim’ [7]. At the hearing of Mr Karam’s application for leave to appeal the costs orders, Tate JA, with whom Hargrave AJA agreed, held that this description must have been an error, and the intended reference in the Reasons must have been to the asthma case.[8] It would seem that orders 9 and 10 were also affected by this error in their reference to the cancer proceeding. I will proceed on the basis that the judgment of the Court of Appeal on this issue has the effect of permitting recovery under the Act by Lennon Mazzeo and Aloe & Co Pty Ltd of the costs the subject of the liens as taxed.
[7]See the Reasons at [18]-[20].
[8]Karam v Palmone Shoes Pty Ltd [2011] VSCA 144, 16 May 2011, at [31].
Appeals
I set out earlier that Mr Karam was unsuccessful in appeals against the substantive judgments. He also sought leave to appeal the costs orders. Limited leave was granted. The appeals against the costs orders were not heard by the Court of Appeal until 3 June 2014. They were heard at that time together with a further attempt by Mr Karam to appeal the substantive judgments in the work injury claims on the ground that they were procured by fraud, and some other applications and appeals by Mr Karam arising from the work injuries. Each of his applications and appeals was dismissed on that day.[9] His applications to the High Court for special leave to appeal those judgments were dismissed on 10 December 2014.[10]
[9]Karam v Palmone Shoes Pty Ltd [2014] VSCA 148.
[10]Relevantly, Karam v Palmone Shoes Pty Ltd [2014] HCASL 203 (costs orders); [2014] HCASL 205 (judgments obtained by fraud). The other refusals of special leave are reported as [2014] HCASL 204; [2014] HCASL 206; and [2014] HCASL 207. All are exhibited to the affidavit of Nick Mazzeo sworn 19 May 2015 as NM-6.
It follows that the stay on application for payment out from the funds held in Court ceased to have effect from 11 December 2014.
For completeness I note that Mr Karam also made an application in this proceeding for payment out to him personally from the judgment sum, which was refused by Zammit AsJ (as she then was) on 8 May 2014.[11] An appeal against that order was dismissed by Ginnane J on 17 July 2014.[12] Mr Karam sought to appeal that order to the Court of Appeal but his appeal was deemed abandoned and his application to reinstate it was refused by the Court of Appeal on 15 October 2014.[13]
[11]Exhibit NM-7 to the affidavit of Nick Mazzeo sworn 19 May 2015.
[12]The order is Exhibit NM-8 to the affidavit of Nick Mazzeo sworn 19 May 2015. Reasons were published as Karam v Palmone Shoes Pty Ltd [2014] VSC 378.
[13]The order is Exhibit NM-9 to the affidavit of Nick Mazzeo sworn 19 May 2015. The reasons of Neave JA, with whom Sloss AJA agreed, do not appear to have been reported. They show that the Court regarded the appeal as overtaken by the determination of the costs appeals, and an attempt to re-litigate issues determined by them, so reinstatement would be futile.
In my view, an appeal from the determination of that application for payment out was not encompassed by the words ‘the appeals’ in order 13 of Justice Forrest made 23 February 2010, because those words referred back to the phrase ‘the resolution of the appeals by the Plaintiff relating to both matters’. That phrase in turn meant appeals relating to the substantive judgments and costs orders, some or all of which had already been filed on 1 February 2010 i.e. by the date of the 23 February 2010 orders. I do not consider that the phrase could have meant appeals from the dismissal of applications in the proceeding which had not at that time even been made, or appeals from the determination of other proceedings even if arising from the same facts. In any event, if the application for payment out, and following appeals are seen as further attempts to challenge the costs orders, then appeal to the Court of Appeal has been exhausted. There is no evidence of any further appeal.
Taxation of costs
Declaration of the solicitor liens preserved the judgment sum so that it would be applied first to payment of the solicitors’ costs, before any payment out to Mr Karam. Order 11 of Justice Forrest required those costs to be taxed.
Lennon Mazzeo sought taxation of its costs by summons filed 16 February 2010 in the Costs Court with an accompanying bill of costs dated 27 November 2009 seeking $109, 836.00. The summons was listed for a callover on 2 March 2010. Mr Karam did not attend the callover. The taxation was listed for 8 September 2010. Mr Karam did not attend. Associate Justice Wood taxed the costs and allowed them in the sum of $106,123.00. on 8 September 2010.[14] Mr Karam has now sought to set aside that order. I was informed at the hearing that that application is listed for 28 August 2015 before Associate Justice Wood.
[14]Exhibit NM-10 to the affidavit of Nick Mazzeo sworn 19 May 2015.
Aloe & Co Pty Ltd waited until after the determination of the costs appeals by the Court of Appeal to seek taxation of their costs. They issued a summons for taxation on 17 September 2014. That bill was taxed and allowed in the sum of $143,392.47 by Registrar Conidi on 14 July 2015.[15]
[15]Exhibit JPA-5 to the affidavit of John Peter Aloe sworn 22 July 2015.
It is immediately apparent that the sum of the two taxed costs exceeds the funds in Court. Lennon Mazzeo and Aloe & Co Pty Ltd have now agreed that there be a proportionate reduction as between them. Once the funds are paid out to those firms, there will be no surplus available for payment to Mr Karam.
Applications for adjournment
The summons filed by Lennon Mazzeo was first returnable before me on 24 June 2015. At that time the costs of Aloe & Co Pty Ltd had not been taxed, but the taxation was imminent. For that reason I adjourned the hearing of the summons until today.
Applications for further adjournment were also made today.
Applications by CTT Legal Management and Mr Karam (through his solicitors)
In his Reasons, Forrest J recited that other solicitors had also acted for Mr Karam prior to Lennon Mazzeo and Aloe & Co Pty Ltd, including Clark Toop & Taylor.[16] That firm acted for Mr Karam immediately prior to the first appointment of Aloe & Co Pty Ltd as his solicitors. Clark Toop & Taylor changed its name to CTT Legal Management following acquisition of the business of Clark Toop & Taylor by Slater & Gordon on 26 March 2013. Ms Patricia Toop deposes that she is the principal of CTT Legal Management and that CTT Legal Management remains responsible for collection of monies owed to Clark Toop & Taylor and payment of outstanding disbursements incurred by that firm prior to 26 March 2013.[17] Ms Toop sought leave to be heard in the application by Lennon Mazzeo, and I granted her that leave.
[16]Reasons at [10].
[17]Affidavit of Patricia Toop sworn 10 August 2015.
She deposes that on the transfer of the file to Aloe & Co Pty Ltd Mr Aloe undertook to pay the legal costs and disbursements of Clark Toop & Taylor at the conclusion of the proceeding. She subsequently delivered to Mr Aloe a bill of costs in taxable form seeking costs and disbursements in the sum of $58,992.47.[18] Forrest J in his Reasons states that Mr Aloe agreed to pay Clark Toop & Taylor the sum of $21,405 for fees and disbursements in the asthma case at the conclusion of the proceeding.[19] It seems that this was the estimate that had been given by Ms Toop to Mr Aloe prior to his undertaking being given.
[18]Ibid, at [3].
[19]Reasons at [11.10].
When the costs of Aloe & Co Pty Ltd came on for taxation they were unable to recover what they had included as a disbursement, being the costs of Clark Toop & Taylor (now CTT Legal Management). I was informed that they were unable to recover that sum because those costs themselves had not been taxed. CTT Legal Management now seeks to be joined as a respondent to the application for payment out, and at the commencement of today’s hearing made an application for adjournment. The application for adjournment made by CTT Legal Management is on the basis that it will seek to make application to Forrest J for a declaration of a lien and would then seek to have its costs taxed, ultimately with a view to making a claim on the funds in Court.
Mr Karam through Mr Donnellan also made application for adjournment. In Mr Karam’s case it was on the basis that the amount of Lennon Mazzeo’s costs on taxation may change if his application to set aside the unopposed order is successful and there is a new taxation.
Both applications for adjournment were opposed by Lennon Mazzeo. Both were supported by Aloe & Co Pty Ltd. However, on the proffering of an undertaking by Mr Nick Mazzeo of Lennon Mazzeo Lawyers and an undertaking by Mr Aloe in the same terms for his firm, CTT Legal Management withdrew its application for adjournment.
The terms of Mr Mazzeo’s signed written undertaking dated 11 August 2015 are as follows:
I, Nick Mazzeo of Lennon Mazzeo Lawyers, undertake to repay into the account held by the Senior Master, any amount paid to Lennon Mazzeo Lawyers pursuant to the lien declared in the order of the Honourable Justice T. Forrest dated 23 February 2010 (“the Funds”), within 7 days of becoming aware of an order of this Court requiring the payment of the Funds.[20]
[20]Mr Mazzeo’s undertaking is marked Exhibit B and retained on the Court file.
It was put for Lennon Mazzeo that that is a sufficient undertaking to deal with any eventuality, in particular a reduction in their taxed costs arising from a new taxation or possible permitted claims by other firms, including CTT Legal Management. That was accepted by Ms Toop for CTT Legal Management provided an undertaking in similar terms was given by Mr Aloe. Mr Aloe agreed to give that undertaking. His undertaking is in handwriting dated 11 August 2015, and is in identical terms to that of Mr Mazzeo save for the insertion of his name and the name of his firm instead of ‘Mr Nick Mazzeo’ and ‘Lennon Mazzeo Lawyers’ respectively.[21]
[21]Mr Aloe’s undertaking is marked Exhibit 1 and retained on the Court file.
The effect of those undertakings which I note and accept is that if the matter proceeds today and orders are made by me for payment out to those firms, if for any reason at any time an order of this Court requires repayment of the funds into Court, those sums will be repaid.
Following discussion about the undertakings, Mr Donnellan the solicitor then on the record for Mr Karam also withdrew his application for adjournment.
Mr Karam then indicated personally that he might have some concern at the submissions put by his solicitor and I stood the matter down. Mr Donnellan informed me when we resumed that in the course of that interval his instructions had been withdrawn. There being no objection from other parties I allowed Mr Donnellan to withdraw and file a notice of ceasing to act.
Application for adjournment by Mr Karam personally
I then heard from Mr Karam and I gave him the opportunity to reopen the question of adjournment if he wished to do so. He did wish to do so and he put submissions to me to the effect that there should be an adjournment.
I refused that application for adjournment for the reasons set out below, which essentially adopt the reasons advanced by Mr McCredie in opposition to the adjournment.
Mr Karam first said that there should be an adjournment because of his ill health. There is no substantiation of that ill health before the Court, but even if there were, given the very long history of this matter I do not consider it to be a sufficient reason for keeping the former solicitors for Mr Karam out of their funds any longer.
The second matter that Mr Karam relied upon in support of an application for adjournment is that he has proceedings on foot in another court for weekly payment and wishes this proceeding, that is the application for payment out to pay his former solicitors, to be adjourned until after the weekly payment proceedings.
I accept the submission put by Lennon Mazzeo that the two sets of proceedings are not related, although they may arise from the same claimed injury. The fact that there is another proceeding on foot arising out of the same underlying facts but of a different type is not a reason to keep these former solicitors out of their funds any further.
The third matter put was a concern that Clark Toop & Taylor as it then was, or CTT Legal Management as it now is, may not have a proper claim for their costs or there may have been a binding agreement that those costs were to be paid by Aloe & Co Pty Ltd and fixed in a lower amount. Those are matters that will require determination if CTT Legal Management make their foreshadowed application to Forrest J. If that occurs, that will be the time for those issues to be ventilated. Those matters were initially put as a reason why this payment out should be postponed but CTT Legal Management now accept that the undertakings are sufficient to deal with that eventuality. I consider them to be sufficient as well.
The fourth matter put was that claims of negligence have been made against both Clark Toop & Taylor (now CTT Legal Management) and Aloe & Co Pty Ltd and those claims have not yet been determined by the Legal Services Commissioner. Again, if that is the case, and I am unable to determine whether or not that is the case, and it ultimately affects the amount due to those solicitors, the undertakings are sufficient to deal with that risk, together with the fact that no amount will be paid out to CTT Legal Management by my orders. A Court order requiring the moneys to be paid back in would be required, but if there is a Court order to that effect both Mr Mazzeo and Mr Aloe have undertaken to the Court that they will do so, and a similar undertaking could be sought from Ms Toop if and when CTT Legal Management obtain an order for payment out to them.
The final matter put by Mr Karam is that he wants to review the taxation recently undertaken in respect of the costs of Aloe & Co Pty Ltd. He may have rights to do so. If he wishes to do so, and he is ultimately successful and the Aloe & Co Pty Ltd claim is less than what it currently is, then again the undertaking is a sufficient answer.
In my view none of the reasons advanced by Mr Karam are sufficient to adjourn the proceeding for payment out. It has had a very long history. The orders were first made in 2010. Various appeals at the instance of Mr Karam have delayed the prosecution of the payment out until late 2014 at the earliest. In my view there is no good reason shown for further adjourning that matter and the undertakings offer sufficient protection for any future eventuality that may change the amount properly due to the solicitors. For those reasons I refuse the application for adjournment and the hearing will proceed.
Orders for payment out
In my view all preconditions for payment out from the funds in Court in accordance with the orders made by Justice Forrest in 2010 have now been met. The stay is exhausted, and both sets of costs have now been taxed. Those taxed costs exceed the amount held but the parties with a current claim, that is Lennnon Mazzeo and Aloe & Co Pty Ltd, have agreed to proportionate reduction and that is what I will apply. I will cause a draft of the orders to be sent to those two firms for their checking and any comment as to the form. The form is dictated by the Funds in Court office because they have a particular manner of dealing with interest and they are required to retain a sum for taxation.
As a final matter, I record that neither of the firms with an enforceable lien, Lennon Mazzeo and Aloe & Co Pty Ltd, seek an order for their costs on the summons. No order is sought by CTT Legal Management as that firm sought an indulgence. Mr Donnellan flagged an application for costs but did not press it prior to being excused. Accordingly, no costs orders will be made.
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