Schwarz v Visy Paper Pty Ltd
[2011] VSC 68
•11 March 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 0318 of 2010
| HUW SCHWARZ | Plaintiff |
| v | |
| VISY PAPER PTY LTD | Defendant |
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JUDGE: | J FORREST J | |
WHERE HELD: | Melbourne | |
DATES OF HEARING: | 2,3,4,7,8, February 2011 | |
DATE OF RULING: | 11 March 2011 | |
CASE MAY BE CITED AS: | Schwarz v Visy Paper Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 68 | |
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ACCIDENT COMPENSATION – Settlement of worker’s claim – Award of costs – Sections 134AB(30) – (31) of the Accident Compensation Act 1985 (Vic) – Entitlement of solicitor to recover costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. Mighell SC with Mr D. Purcell | Maurice Blackburn |
| For the Defendant | Mr R. Meldrum QC with Ms R. Annesley | Wisewould Mahoney |
HIS HONOUR:
Background
The claim by the plaintiff, Mr Huw Schwarz, against his employer, Visy Paper Pty Ltd, was compromised on the fifth day of the hearing. Subsequent to the making of orders discharging the jury and a costs order in favour of Mr Schwarz against Visy, an application was made by Mr Schwarz’s solicitors, Maurice Blackburn,[1] for an order as to their solicitor/client costs pursuant to s 134AB(31) of the Accident Compensation Act 1985 (Vic).[2]
[1]Referred to as “the solicitors”.
[2]Referred to as “the Act”.
The solicitors sought an order that, over and above recovered party/party costs, they be entitled to an amount not exceeding $80,000 including GST – to which would be deducted from the plaintiff’s settlement sum.
In Acir v Frosster Pty Ltd,[3] I set out what I thought were the applicable principles in applications such as this.[4] It is not necessary to repeat those principles here.
[3][2009] VSC 539.
[4]Ibid [26].
Mr Giandinoto, a senior associate of the solicitors’, sets out the following reasons in support of the orders sought by the solicitors:
(a)The 80% limitation on recovery of party/party costs from the defendant as prescribed by s 134AB(29) of the Act.[5]
(b)Mr Schwarz had executed a costs agreement with the solicitors in January 2010, which included an uplift of 25% on professional fees, in effect to take into account the fact that the solicitors were acting on a “no win, no fee” basis (in relation to their professional costs).[6]
(c)Numerous attendances and work carried out by the solicitors in preparation of the proceedings (both this claim and serious injury applications) are not recoverable on a party/party basis, nor are a number of other expenses incurred on Mr Shwarz’s behalf. This is substantiated by an affidavit of Lyn Honan, a senior associate costs lawyer employed by the solicitors, who estimates that the differential between solicitor/client costs and anticipated party/party recovery to be in the range of $85,000 to $88,000, taking into account a sum recovered in respect of the serious injury proceeding and amounts paid by Mr Schwarz. The shortfall is explained by a number of factors, including the 20% statutory reduction, the 25% uplift, the unlikelihood of the recovery on a party/party basis of the total amount of experts’ and counsels’ fees as well as a proportion of the solicitors’ professional costs which may not be allowed.
(d)That Mr Schwarz has been told of the amount ($80,000) likely to be deducted from his damages and has had explained to him his various avenues of redress in relation to costs complaints should he choose to exercise them.
[5]See my remarks contained in footnote 1 of Acir.
[6]An earlier costs agreement had been entered into in April 2006 which also provided for the uplift.
These avenues are also detailed in the costs agreement. I should say that, in addition, I discussed the matter with Mr Schwarz in Court shortly after the settlement was announced and am satisfied that he understands both that the amount is to be deducted from his damages and what remedies he may have if, at some point of time, he wishes to make complaint about the amount charged.
Analysis
Judges and Associate Justices in this Court have regularly been asked to make orders akin to those sought in the present case.[7] In these cases, trial judges have made an order in favour of the plaintiffs’ solicitors acknowledging that because of factors such as the statutory costs provisions and the terms of the relevant “no win, no fee” costs agreement, it is only just and fair that solicitors be appropriately compensated for work performed on behalf of clients – especially so when such work depends upon a favourable result in the scenario of a highly prescriptive statutory costs regime.
[7]See Loveday v Lloyd’s Tree Care Pty Ltd [2000] VSC 204, Quama v Toll Transport Pty Ltd [2004] VSC 81, James v City of Port Melbourne [2010] VSC 91, Bosnali v Bartter Enterprises Pty Ltd [2010] VSC 360, Hancock v Riverend Park Pty Ltd [2010] VSC 39, Karam v Palmone Shoes Pty Ltd (No 2) [2010] VSC 82; Acir v Frosster Pty Ltd [2009] VSC 539.
In the light of Ms Honan’s affidavit, I would normally have made the orders sought by the solicitors fixing $80,000 as a ceiling on the solicitor/client costs over and above the amount recovered for party/party costs and taking into account amounts already received. However, the contents of the costs agreement precludes this course being taken.
The agreement is confusing (or in fact just plain wrong) in parts, particularly as to costs estimates – but that is of no immediate consequence.[8] The significant parts are the following clause in the disclosure statement:
[8]For instance, in the disclosure statement within the costs agreement Mr Schwarz was informed that in the event that he was unsuccessful in this proceeding, he was likely to be liable for costs ranging between $6,500 and $50,000. Even allowing for variables (as mentioned in the agreement), it is simply inconceivable that if Mr Schwarz’s action failed, then his costs liability to Visy would have been within this range.
We estimate the amount payable by you from your settlement money, after recovery of that party/party costs, is between $10,000 to $70,000 (inclusive of the applicable uplift fee). In most circumstances that amount will be deducted from the settlement money payable to you.[9]
And the following clause of the “conditional costs agreement”:
As advised in clause 7.2 of Section B, you will have to pay us legal costs from your settlement money in an amount of between $10,000 to $70,000 for the legal costs that cannot be recovered from the unsuccessful party.[10]
The provisions are clear, although how a serious estimate ranging from as low as $10,000 could have been made when the solicitors were seeking solicitor/client costs for the serious injury application, as well as a potential common law trial in this Court (with a 25% uplift) baffles me. In any event, the disclosure statement and the agreement stipulate a ceiling of $70,000 on the amount recoverable by the solicitors from Mr Schwarz.
[9]Clause 7.2 in Part B – the disclosure statement.
[10]Clause 4 in Part C.
The solicitors are bound by the terms of the costs agreement, notwithstanding that the ultimate amount of solicitor/client costs may well exceed the estimated figure.
Summary
An order should be made in favour of the solicitors. The maximum amount of solicitor/client costs should be $70,000 inclusive of Goods and Services Tax.
I propose to make the following orders
(1)That the plaintiff’s solicitors Maurice Blackburn & Co be entitled to recover from the plaintiff, any costs incurred by the solicitors on his behalf, subject to the following conditions:
(a)the calculation of such costs must take into account payment by the defendant’s solicitors of costs pursuant to the orders of the court and the application of the Accident Compensation Act; and
(b)such costs must not exceed the amount of $70,000 inclusive of Goods and Services Tax.
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