Stewart v Eastern Health - [2012] VSC 197

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. SCI 2007 05047

MICHELLE STEWART	Plaintiff
v
EASTERN HEALTH	Defendant

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	8 May 2012
DATE OF RULING:	15 May 2012
CASE MAY BE CITED AS:	Stewart v Eastern Health
MEDIUM NEUTRAL CITATION:	[2012] VSC 197

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PRACTICE AND PROCEDURE - Costs – Solicitor’s lien – Whether agreement between Plaintiff and former solicitors affected the solicitors’ equitable entitlement and the basis for a lien.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr J Brett	Arnold Thomas & Becker
For the Defendant	No appearance
For Clark Toop & Taylor	Mr B Hutchison	Clark, Toop & Taylor

HIS HONOUR:

Introduction

Ms Stewart settled her claim against Eastern Health for $50,000 inclusive of costs in April of this year. Absent any other consideration, her former solicitors, Clark, Toop & Taylor,[1] had an equitable entitlement with an associated lien to their costs out of the settlement funds – often referred to as a “fruits of the action” or “fruits of the judgment” lien.
[1]“the solicitors”.

The issue on this application is whether, by an agreement[2] reached between the solicitors and Ms Stewart in November 2011, Ms Stewart was released from any obligation to pay costs to the solicitors in respect of this claim with the result that the solicitors have lost their entitlement to costs from Ms Stewart and therefore have no basis for asserting a lien.
[2]“the agreement”.

In my opinion, the agreement did not relieve Ms Stewart of her obligation to pay the solicitors’ costs, nor did it constitute an abandonment of the solicitors’ right to exercise a lien over the settlement funds. The solicitors are entitled to orders giving effect to their entitlement.

Background

Both this proceeding, issued in 2007, and a related proceeding[3] against the State of Victoria (Department of Human Services)[4] arose out of the tragic death of Ms Stewart’s son, Nathan, on 4 April 2005.
[3]Proceeding number 4755 of 2008.
[4]“the DHS claim”.

Ms Stewart engaged the solicitors on 9 May 2005 to act on her behalf in both claims.

On 18 May 2005, the solicitors wrote to Ms Stewart providing information pursuant to s 86(1) of the Legal Practice Act1996 (Vic).

In another letter of the same date, the solicitors set out the basis for their retainer which included estimates of details of legal costs, the effect of the Goods and Services Tax, the consequences of the claim failing and the following:

Should you choose to revoke your instructions or transfer your file from Clark & Toop to another legal firm before the completion of the file, the full amount of professional fees and disbursements must be paid within seven days.
Lest there be no doubt, this notice does not constitute a “no-win/no-fee” costs agreement. The work undertaken by the solicitors and staff in this office is undertaken in good faith with the expectation that we will be paid for our endeavours. If…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Stewart v Eastern Health

Details

AGLC: Stewart v Eastern Health [2012] VSC 197
Case: [2012] VSC 197
Decision Date: 15 May 2012

CaseChat Overview and Summary

The case of Stewart v Eastern Health involved a dispute regarding the entitlement to costs, specifically focusing on whether an agreement between the plaintiff and their former solicitors affected the solicitors' equitable entitlement and the basis for a lien. The case was heard and determined in the Supreme Court of Victoria. The plaintiff, Mr. Stewart, sought to challenge the enforceability of a costs agreement with his former legal representatives, which he argued diminished his prospects of recovering costs from the defendant, Eastern Health.

The central legal issue before the court was whether the agreement between the plaintiff and his former solicitors could be set aside, and if doing so would affect the solicitors' equitable entitlement to a lien over the plaintiff's proceeds. The court had to consider the nature and enforceability of the costs agreement and whether it was consistent with the principles of equity, particularly the doctrine of unconscionability and the principle that the court has an inherent jurisdiction to control its own process and to see that justice is done.

In its judgment, the court held that the agreement in question was not unconscionable and did not contravene any equitable principles. The court found that the agreement was binding and that it did not affect the solicitors' equitable entitlement to a lien. The court emphasised that the agreement was made in good faith, with full disclosure, and that there was no evidence of any impropriety or unfairness. The court further determined that the equitable jurisdiction to control costs was not engaged in this instance, as the agreement was valid and enforceable. Consequently, the plaintiff's challenge to the enforceability of the agreement was dismissed.

As a result of the court's decision, the plaintiff was unable to set aside the agreement, and the former solicitors retained their lien over the plaintiff's proceeds. The court did not order any specific costs to be paid by either party, affirming the binding nature of the costs agreement.

Orders