Taseska v MSS Security Pty Ltd (Costs Ruling)
[2016] VSC 433
•18 August 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2011 03100
S CI 2012 05455
| SILVANA TASESKA | Plaintiff |
| v | |
| MSS SECURITY PTY LTD | Defendant |
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JUDGE: | J FORREST J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 June 2016 |
DATE OF RULING: | 18 August 2016 |
CASE MAY BE CITED AS: | Taseska v MSS Security Pty Ltd (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 433 |
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COSTS – Set-off of costs against judgment – Set-off costs against other award of costs – Senior counsel fees – Self-represented litigant.
SOLICITOR’S LIEN – ‘Fruits of judgment’ lien – Subsequent application for lien – Equitable principles – Discretion – Accident Compensation Act 1985 (Vic) s 134AB(30).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Appeared in person | |
| For the Defendant | Mr D Oldfield | Thomson Geer |
| For Henry Carus & Associates | Mr D Bongiorno | Henry Carus & Associates |
HIS HONOUR:
Introduction
On 20 May 2016, I gave judgment in two common law proceedings brought by Ms Taseska. In the 2012 proceeding,[1] which involved an injury to Ms Taseska’s left knee (the knee injury claim),[2] she was awarded $250,000 with costs. The 2011 proceeding[3] involved a psychological injury as a result of alleged bullying and mistreatment at work (the psychological injury claim). In that proceeding there was judgment with costs for the defendant, MSS Security Pty Ltd (MSS).
[1]Supreme Court proceeding S CI 2012 05455.
[2]The claim arises out of ‘the bag lifting incident’ described in the principal judgment, Taseska v MSS Security Pty Ltd [2016] VSC 252.
[3]Supreme Court proceeding S CI 2011 3100.
The first part of this ruling concerns the order for costs in favour of MSS in the psychological injury claim and whether:
(a) MSS should recover its costs of engaging senior counsel in a trial in which Ms Taseska represented herself;
(b) any part of the cost orders in favour of Ms Taseska in the knee injury claim should be set-off against the award of costs to MSS in the psychological injury claim; and
(c) any part of the damages award in the knee injury claim should be set-off against the award of costs to MSS in the psychological injury claim.
The second part of the ruling relates to an asserted lien by Ms Taseska’s former solicitors, Henry Carus & Associates (Carus), against the damages award in the knee injury claim and, if allowed, how it is to be calculated.
Background to this application
Ms Taseska retained Carus as her solicitors in June 2011. Carus acted on her behalf in a number of proceedings arising out of injuries she allegedly sustained in the course of her employment with MSS. The firm continued to act for her until 5 September 2013, when, on the third day of the trial of both claims before Cavanough J, Ms Taseska sacked Carus. The trial was then adjourned.
Subsequent to the adjourned trial, Ms Taseska conducted both claims on her own behalf, with the assistance of her brother.
In November 2013, Carus delivered a gross sum bill of roughly $171,000 for solicitor/client costs for acting for Ms Taseska. This encompassed all the costs associated with the common law proceedings in this Court including an impairment benefits claim and serious injury applications.
In February 2015, pursuant to orders made by Wood AsJ in the Costs Court, Carus filed two separate itemised bills of costs: one which dealt with the impairment benefits claim and serious injury applications; the other for the knee injury claim and the psychiatric injury claim (the common law bill of costs). The bills totalled $273,947 – including loadings of 55% and 20%.[4]
[4]Exhibit PGL-4 to the affidavit of Paul Lindsell.
On 26 June 2015, Wood AsJ delivered a ruling concerning a Carus application for costs. His Honour was critical of Carus’ non-compliance with the provisions of the Legal Profession Act2004 (Vic) in relation to the right knee injury claim and a claim for interest on the bill.
However, his Honour determined that it would be unfair if Carus were to have no entitlement for the work it performed for Ms Taseska,[5] and concluded:[6]
The respondent is liable to the applicant for legal costs arising from her retainer of the applicant. The amount of these costs is to be fixed as a gross sum to be determined on a date to be fixed. The file and these reasons remain confidential, subject to further order by a Judge or Associate Judge, pending the finalisation of proceedings S CI 2011 3100 and S CI 2012 5455.
[5]Judgment of Wood AsJ in Supreme Court proceeding number SCI 2014 1219 dated 26 June 2015, [29].
[6]Ibid [40].
On 26 October 2015, after a ‘gross sum’ taxation of costs on 11 September 2015, Wood AsJ entered judgment for solicitor/client costs in relation to all the claims in the sum of $164,000 ($175,000, less amounts already paid, being $11,000). Importantly, as a gross sum award, Wood AsJ’s orders did not apportion specific amounts to particular proceedings, and made a number of discounts based on Carus’ conduct.
On 3 September 2015, Ms Taseska instituted proceedings in the Supreme Court against Carus for professional negligence in the handling of her case. That claim (which is the subject of a strike out application by Carus) has been stayed until finalisation of the common law proceedings.
The trial involving the knee injury and psychological injury claims resumed on 8 February 2016 before me. Ms Taseska appeared for herself and was assisted by her brother. MSS was represented by senior counsel, Mr Masel SC, who appeared with Mr Oldfield. Counsel for Carus also appeared at the commencement of the trial. Carus’ application for a lien was deferred until judgment, which was given on 20 May 2016.
In the knee injury claim, judgment was entered for Ms Taseska against MSS in the sum of $250,000, with Ms Taseska’s costs to be paid by MSS. In the psychiatric injury claim, judgment was entered for MSS, with Ms Taseska to pay its costs.
Counsel appeared for Carus and MSS at the delivery of judgment. I adjourned the hearing of any consequential costs applications to 23 June 2016. At that time, in order to get an idea of any potential lien argued for by Carus, I invited counsel for Carus to be ready to provide an estimate at the adjourned hearing of the likely costs associated with the firm’s management of the knee injury claim alone.
At the hearing on 23 June 2016, I made the following orders:
(1) That the order for costs in favour of MSS in the knee injury claim be stayed until further order.
(2) That the costs in favour of Ms Taseska in the knee proceeding be set-off against those payable by her in the psychiatric injury claim.
On 9 August 2016, Ms Taseska issued a summons seeking payment out of court of the remaining funds ($200,000).
Ms Taseska’s application for leave to appeal the judgment in the psychiatric injury claim (and other associated applications) was dismissed by the Court of Appeal on 12 August 2016.[7]
[7]Silvana Taseska v MSS Security Pty Ltd [2016] VSCA 193.
Material filed by the parties subsequent to judgment
Affidavits were filed by Ms Taseska,[8] Ms Georgina Hedges, the solicitor for MSS,[9] Mr Henry Carus,[10] and Mr Paul Lindsell, the costs lawyer engaged by Carus.[11] I shall refer to the relevant parts of those affidavits where necessary.
[8]21 June 2016.
[9]22 June 2016.
[10]14 June 2016.
[11]13 June 2016.
Determination of cost issues by this Court
In the written submissions filed by MSS, it was noted that, under r 63.55 of the Supreme Court (General Civil Procedure) Rules 2015, these issues could be determined by the Costs Court. Unsurprisingly, no oral submission was made to that effect. To refer the matter to the Costs Court would have been unwarranted and a waste of the Court’s resources in circumstances where the trial judge has had the opportunity to observe the whole of the trial (in this case, two proceedings) and has an intimate knowledge of the factual and legal issues involved. A referral to the Costs Court on questions of appropriate allowances for counsel (as opposed to the quantum of the bill) and the existence of a lien (as opposed to its quantum) could not be countenanced.
It follows that, apart from the calculation of the quantum of costs (including the extent of the equitable lien), the issues surrounding the orders for costs ought to be made by this Court.
Orders in relation to costs in the psychiatric injury proceeding
Should MSS recover the costs of senior and junior counsel?
The test to be applied is uncontroversial. It was authoritatively stated 50 years ago by Starke J in Peile v Nobel (Australasia) Pty Ltd.[12]
[12][1966] VR 433 (‘Peile’).
In that case, the Taxing Master applied the principle that in a ‘running down or factory accident case’, two counsel should not be allowed. The Taxing Master disallowed senior counsel’s fee on brief and refresher of £110 and £73.10 respectively.
Starke J rejected this presumption, which apparently flowed from what had been said by Barwick CJ in Stanley v Phillips,[13] and commented:
In determining this question, the Taxing Officer should take into consideration and should balance both the attainment of justice and the interests of the party in the successful outcome of litigation, and should bear in mind that there is an inner and outer bar, and that as a general rule the most skilful and most experienced counsel are within the inner Bar. The Taxing Master must look at the matter from the point of view of the party who has to make the decision before the trial, at the time when it is proper, in the circumstances of the case, that counsel should be briefed. He should guard against having recourse to hindsight in making his determination. The facts in any particular case which should lead the Taxing Master to allow two counsel are as various as is litigation itself, and each case must depend on its own facts. No exhaustive list can be compiled.[14]
His Honour concluded:
Whether in this class of case two counsel should often or seldom be allowed to a successful litigant, or whether it is usual or unusual to do so, are matters which are irrelevant in considering the problem in relation to any particular case. The relevant consideration is whether, in the circumstances of the particular case, applying the principles laid down by the High Court in Stanley v Phillips, supra, the successful litigant is entitled to be allowed two counsel.[15]
[13](1966) 115 CLR 470.
[14]Peile [1966] VR 433, 438.
[15]Ibid 440.
Starke J allowed the fees for senior and junior counsel on the basis that ‘a reasonable and prudent but not overcautious plaintiff in the position of this plaintiff would have sought the services of two counsel, notwithstanding the expense’.[16]
[16]Ibid 441; see also Kroehn v Kroehn (1912) 15 CLR 137.
When it taxes its bill, MSS will undoubtedly seek the costs of senior and junior counsel engaged in the trial, before Cavanough J and before me.
At the hearing before Cavanough J (which, as I said, involved both claims), Ms Taseska was represented by senior and junior counsel, and the case had an estimate of 10 to 15 days. After Ms Taseska terminated the services of Carus and her counsel, the case limped on for a couple of days and was then adjourned.
The trial, in effect, recommenced in February of this year. In the interim, Ms Taseska had not obtained the services of a solicitor, and it was known to MSS and its lawyers from late 2013 that Ms Taseska intended to conduct the litigation herself, with the assistance of her brother.
Senior counsel engaged in the original trial had what was euphemistically described by junior counsel as ‘a diary conflict’ and did not appear at the resumed hearing. One can infer that a considered decision was made by MSS and its lawyers after the first trial was adjourned to engage alternative senior counsel to run the case with junior counsel against an unrepresented litigant – notwithstanding the fact that junior counsel had been engaged in the proceedings early in the piece (or at least from September 2013).
The knee injury claim was a relatively simple industrial accident claim for pain and suffering only. The psychiatric injury claim was more difficult (involving three discrete events), with Ms Taseska seeking damages for both pain and suffering and pecuniary loss. I accept that the psychiatric injury claim involved a complex medical case with significant quantum, complicated by the presence of the quiescent liver condition.
That said, I am unpersuaded that it was reasonable for MSS, in the circumstances, to engage senior counsel. To put it bluntly, there was no basis upon which it could be said to be prudent to engage two counsel – including senior counsel – against an unrepresented litigant. Junior counsel had intimate knowledge of the case and considerable personal injury expertise. Whilst it may have been practical and, arguably, reasonable, to engage another junior to assist with final preparation (in particular to deal with the considerable amount of hospital and medical records) that is as far as it goes.
I should add that what must be borne in mind in determining whether the choice to engage senior counsel was reasonable in the Peile sense is the fact that Ms Taseska had no legal training and relied to a large extent upon the guidance of the Court and assistance of her brother in her management of the trial. That is not to say that she did not present the case in an appropriate manner and, at least for a considerable part of the trial, ask relevant questions and make meaningful submissions. However, senior counsel was engaged when MSS knew full well that no senior counsel, let alone counsel at all, would be engaged on the other side. In an alternative scenario, where senior counsel was engaged to represent Ms Taseska, MSS’ decision to engage senior counsel would, at least prima facie, be justified, assuming the case is of sufficient complexity to warrant the engagement. This case, however, was the antithesis – Ms Taseska had no legal experience, and MSS had the benefit of a highly competent junior.
In the course of discussion, I asked whether an order had ever been made allowing the costs of senior and junior counsel opposed to an unrepresented litigant. Not surprisingly, none could be found.
It follows that the costs of senior counsel in relation to the proceeding before Cavanough J should be allowed – but only to the extent that such costs relate to the psychiatric injury claim. In relation to the trial before me, the only costs of counsel that should be allowed are those of junior counsel – and confined to the defence of the psychiatric injury claim.
Should there be a set-off of the orders for costs in the knee injury claim against those in the psychiatric injury claim?
Ms Hedges, in her affidavit, estimates party/party costs for MSS in the amount of $254,500 in relation to the psychiatric injury claim. This is based on an ad hoc apportionment of two thirds of the global estimate of MSS’s costs to the psychiatric injury claim and one third to the knee injury claim. I assume this figure also includes the costs of senior counsel, which I have held are not recoverable.
Ms Hedges also opines that Ms Taseska’s likely taxed costs will be in the region of $60,100.
There is authority, both in the United Kingdom[17] and in this State,[18] that it is within power, and appropriate, for a court to make a set-off of favourable and unfavourable costs orders in connected proceedings. I see no reason to deviate from that practice. The claims are intertwined and any amount recovered by Ms Taseska in satisfaction of her costs should be applied to the costs payable by her in relation to MSS’s costs. I made such orders on 23 June 2016.[19]
[17]Lockley v National Blood Transfusion Service [1992] 1 WLR 492, 496–497.
[18]Sivritas v Sivritas (2008) 23 VR 349, 388 [13]– 390 [23] (‘Sivritis’).
[19]See [15] above.
Ms Taseska’s appeal on this point was dismissed.[20]
[20]Taseska v MSS Security Pty Ltd [2016] VSCA 193, [99].
Should there be a set-off of MSS’s costs against Ms Taseska’s damages in the knee injury claim?
This is a very different issue to the set-off against costs. This order would, in effect, give MSS preferential treatment over and above that which would normally be enjoyed by a party in litigation where an order for costs has been made in its favour.
There are a number of relatively recent decisions in the Trial Division which have discussed this issue.[21]
[21]Sivritis (2008) 23 VR 349; Slaveski v Victoria [2013] VSC 76 (‘Slaveski’).
Earlier this year, Keogh J summarised the relevant considerations in Walker v Aussie Disposals Pty Ltd.[22] In that case, the plaintiff obtained a jury verdict for just over $89,000 in an industrial accident claim. However, she did not beat the statutory offer that had been made under s 134AB(12) of the Act. Therefore, pursuant to s 134AB(28)(c), a costs order was made against her. The question for his Honour was whether damages could be applied as a set-off against the costs order in favour of the defendant employer. Relevant to this application were his Honour’s observations as follows:
[22][2016] VSC 255 (‘Walker’).
In each of Sivritas and Slaveski, the conduct of the party against whom set-off was sought was relevant to the Court’s determination to make the setoff order…
Based on the evidence given by the parties in the proceeding, my observation of and during the main hearing and what has transpired since that time at several mentions before me, I find that in the absence of a setoff order, there is a serious risk that the first and second defendants will not pay two-thirds of the plaintiff’s costs when taxed, pursuant to my order of 10 October 2008.
In Slaveski, factors relevant to the determination by McMillan J included:
(a)The ongoing failure by the plaintiff to pay previous costs orders, even where instalment orders had been made by the court;
(b)That the plaintiff was on a disability pension, and that the reason for his disability had not arisen due to any wrongful act of the defendants;
(c)That the plaintiff’s litigation guardian had openly stated to the court that she had no intention of abiding the court’s costs orders; and
(d)That the conduct of the plaintiff had been found to be contumelious of court orders, deliberate, calculated and lacking in bona fides.
On this application there was no suggestion put by the defendant that the plaintiff had acted, or was likely to act, in a similar fashion. In particular, there is no evidence in this case that the plaintiff will, if the judgment sum is paid to her, dissipate that amount with the intention of depriving the defendant of the benefit of its costs order.
I accept that, leaving aside the judgment award, the financial resources of the plaintiff are likely to be such that she will not be able to pay the amount of the costs order. However, as I have said, there is no evidence that the plaintiff will actively dissipate the judgment sum in order to avoid the costs order. If the judgment sum is paid to the plaintiff, it is not possible to determine what portion of the judgment sum might remain in her hands and available to assist in meeting the costs order once the amount of costs has been determined.
I accept the defendant’s submission that a purpose of the s 34AB(12) process is to encourage settlement of proceedings. However, there is no statutory provision in the Act requiring set-off of costs against a judgment sum in circumstances where the judgment falls below the amount of the statutory offer made by the defendant. The consequence the plaintiff faces in that circumstance is an adverse costs order. The court has no residual discretion in relation to that order.
…
The WorkCover benefits have now been terminated by reason of the judgment. It seems likely that the plaintiff’s financial resources are now extremely limited. I consider it relevant to this application that, at least in the short to medium term, the plaintiff’s parlous financial state has been contributed to by the termination of the weekly payments of compensation which have been paid for some considerable period by the defendant’s insurer, in respect of the injuries sustained by the plaintiff as a consequence of the tortious conduct of the defendant. Contrary to the submission of the defendant, I consider that the fact and cause of the plaintiff’s parlous financial state weigh significantly in favour of the plaintiff on this application.
On balance, on the particular facts of this case, I am not satisfied that the setoff order sought by the defendant should be made.[23]
[23]Ibid [19]-[23], [26]-[27].
What is clear from Walker, and the cases that preceded it, is that the making of such an order is discretionary and will not occur unless it is clearly in the interests of justice to do so. I consider the following matters to be relevant:
(a) Ms Taseska’s financial position is unknown. It seems clear that she does not own any property in Victoria. I am prepared to accept that it will be difficult for her to meet any substantial costs order made against her.
(b) There is no evidence that Ms Taseska is likely to depart the jurisdiction. Indeed, she has strong ties to the jurisdiction.
(c) Ms Taseska has not engaged in any contumelious conduct or disobeyed any orders of the Court.
(d) The award of damages is for the knee injury for which MSS was responsible.
(e) The award of damages is to compensate Ms Taseska for her substantial pain and suffering as a result of the knee injury.
(f) Ms Taseska has major health issues. She lives on a knife edge in relation to her liver replacement – although, to date, she has been extraordinarily fortunate in its management. She has already had one hip replacement and faces another in the short term. She will, in all likelihood, undergo a knee replacement within the next couple of years. She has major psychological issues which satisfied the ‘severe test’ under the Act’s serious injury regime of the Accident Compensation Act (‘the Act’).
(g) Ms Taseska wishes to have access to funds for treatment of her various conditions. Whilst the Victorian WorkCover Authority (VWA) is responsible for payments of some of these costs, there are, she says, issues concerning whether they will be accepted and other costs that may well be outside the VWA’s remit.
(h) It is quite uncertain as to what amount, if any, of MSS’s costs will ultimately exceed[24] those over and above the set-off it has been granted against Ms Taseska’s costs of the knee injury claim.
[24]This is particularly so given the disallowance of senior counsel’s fees.
The onus rests on MSS to persuade me to make what is an unusual order. The weight of the considerations points to not making the order sought by MSS.
Practical considerations in relation to the taxation of costs
It will be difficult, if not impossible, for Ms Taseska to draw up a bill of costs for the knee injury claim (which will offset the psychological injury costs) without access to the Carus file. I propose to order that Carus provide access to the file upon request by Ms Taseska – on 48 hours’ notice to Carus.
Another issue arises in relation to the timing of any taxation of costs, particularly given that Ms Taseska is not represented. For the set-off to be given practical effect, I propose to order that each bill (i.e. on both claims) be taxed within four months of the date of this ruling – unless the Costs Court orders otherwise. In the event that Ms Taseska does not have her bill taxed during that period, MSS will be at liberty to enforce the taxed amount in its favour on the psychological injury claim.
Finally, I propose to refer the whole of this exercise to Wood AsJ, who will have the ability to vary any of the orders I have made relating to the mechanics of this exercise.
The lien sought by Carus
Principles
Recently, in Karam v Palmone Shoes Pty Ltd,[25] I discussed the principles relevant to a solicitor’s lien for work done in relation to a client’s civil proceeding – a ‘fruits of judgment’ lien. I reiterate what was said in Ex parte Patience; Makinson v The
Minister:
A solicitor has no lien for his costs over any property which has not come into his possession. If, however, as the result of legal proceedings in which the solicitor has acted for the client, the client obtains a judgment or award or compromise for the payment of money, although the solicitor acquires no common law title to his client's right to receive the money or to any part of that right, he acquires a right to have his costs paid out of the money, which is analogous to the right which would be created by an equitable assignment of a corresponding part of the money by the client to the solicitor. That is to say, the solicitor has an equitable right to be paid his costs out of the money; and if he gives notice of his right to the person who is liable to pay it, only the solicitor and not the client can give a good discharge to that person for an amount of the money equivalent to the solicitor's costs. If the person liable to pay refuses, after notice, to pay the costs of the solicitor, the solicitor may obtain a rule of Court directing that the amount of his costs be paid to him and not to the client; and payment by the judgment debtor to the client after notice of the solicitor's claim is no answer to an application for such a rule. Further, if the client and a judgment debtor make a collusive arrangement for the purpose of defeating the solicitor's right, the Court will enforce that right against the judgment debtor notwithstanding the arrangement and notwithstanding that no notice of the solicitor's claim had been given to the judgment debtor prior to the arrangement. These special rights have no resemblance to a solicitor's general possessory lien, although they are sometimes miscalled liens. In Barker v St Quinton Parke B said that 'the lien which an attorney is said to have on a judgment (which is, perhaps, an incorrect expression) is merely a claim to the equitable interference of the Court to have that judgment held as security for his debt', a remark which is reproduced in Chitty's Archbold, and has been repeated in many later authorities. In practice, however, the solicitor has always been treated as possessing equitable rights in the judgment independently of any declaration of those rights, and the Court's assistance is invoked not to create the rights but to enforce them.[26]
[25][2016] VSC 261.
[26](1940) 40 SR (NSW) 96, 100–1 (emphasis added, citations omitted); see also Firth v Centrelink (2002) 55 NSWLR 451.
Then I concluded:
At the risk of justifiably being accused of repetition, I restate the three points that emerge out of the authorities:
(a) first, the discretionary nature of the remedy;
(b)second, the need for the applicant to demonstrate that there is an appreciable risk that the solicitor will not be able to recover his/her costs absent the aid of the Court; and
(c) third, the need for an applicant to demonstrate that the amount sought to be protected by the Court is related to the work performed by the lawyer on the matter which is the subject of the judgment.[27]
[27]Karam v Palmone Shoes Pty Ltd [2016] VSC 261, [32].
The effect, if any, of the Act upon Carus’ asserted lien
Sections 134AB(28) - (31) of the Act read as follows:
(28)In proceedings for the recovery of damages commenced in accordance with this section after a statutory offer was made, or deemed to have been made, under subsection (12)—
(a)if no liability to pay damages is established, the worker must pay the party and party costs of the employer, Authority or self-insurer and the worker's own costs;
(b)if judgment is obtained or a settlement or compromise is made in an amount not less than 90 per cent of the worker's statutory counter offer under subsection (12) and more than the statutory offer of the Authority or self-insurer, the Authority or self-insurer must pay the worker's party and party costs and its own costs;
(c)if judgment is obtained or a settlement or compromise is made in an amount not more than the statutory offer of the Authority or self-insurer under subsection (12), the worker must pay the party and party costs of the Authority or self-insurer and the worker's own costs;
(d)if judgment is obtained or a settlement or compromise is made in an amount that is more than the statutory offer of the Authority or self-insurer under subsection (12) but less than 90 per cent of the worker's statutory counter offer under that subsection, each party bears its own costs—
and the court must not otherwise make an order as to costs.
(28A)For the purposes of determining a liability to pay costs, or an entitlement to be paid costs, under subsection (28)(b), (c) or (d), if the amount of a judgment, order for damages, settlement or compromise is required to be reduced under subsection (25), the amount of the reduction must be the amount of compensation paid—
(a)to the date of the statutory counter offer under subsection (12); or
(b)to the date of the deemed statutory counter offer under subsection (14).
(28B)A reduction under subsection (28A) must be made before the reduction (if any) under section 26(1) of the Wrongs Act 1958 is made.
(29)For the purpose of the taxing of costs in proceedings to which this section applies, any applicable scale of costs has effect as if amounts in the scale were reduced by 20 per cent.
(30)A person who represents or acts on behalf of a worker is not entitled—
(a)to recover any costs from that worker in respect of any proceedings under this section; or
(b) to claim a lien in respect of those costs; or
(c) to deduct those costs from any sum awarded as damages—
unless an award of costs has been made by the court in respect of those costs or those costs are payable in accordance with this section by the worker.[28]
[28]Emphasis added.
(31) The court, on the application of—
(a) the worker; or
(b) the person representing or acting on behalf of the worker—
may determine the amount of costs to be awarded to the person representing or acting on behalf of the worker.
In its written submissions as to the application (or otherwise) of ss 134AB(30) and (31) in its claim for an equitable lien over Ms Taseska’s damages award, Carus said:
Section 134AB(30) of the Accident Compensation Act 1985 (Vic) (the ACA) does not affect this position [i.e. the right to make a claim for an equitable lien]:
(a) That provision applies to “[a] person who represents or acts on behalf of a worker” (emphasis added). These words’ use of the present tense, combined with the broader regime in which those words are found (especially section 134AB(28)), indicate that this provision only applies to a worker’s representative at the time of judgment, settlement or compromise.11 In this instance, a separate regime has been invoked and then determined the quantum of solicitor / client costs.
(b) In this case, the plaintiff terminated Henry Carus in September 2013, soon after the firm had extracted several offers from the defendant. Henry Carus is not “representing or acting on behalf of the worker,” and is not therefore bound by section 134AB(30) of the ACA.
In light of this submission, it is necessary to say something about the scheme under s 134AB of the Act, which applies to claims for damages for most work injuries occurring after October 1999.[29] It establishes, amongst other things, the serious injury process, the statutory offer regime, thresholds and caps on damages and, relevantly to this case, costs.
[29]See s 134AA.
In my opinion, it is clear that:
(a) Sections 134AB(28) – (30) set up a scheme for the determination of awards of costs in industrial injury claims, both as to party/party and solicitor/client costs. These specific statutory provisions, which are clear and unambiguous, prevail in the event of inconsistency with any equitable principle or rule of the Court as to costs.
(b) Where an award of costs (such as that on the knee injury claim) is made in accordance with s 134AB(28) (as it must be, given the mandatory provisions of that section), a lawyer’s entitlement to recover ‘any costs’ from the worker, or more relevantly here to ‘claim a lien’ in respect of such costs, must be the subject of an order under s 134AB(30). This is, in my view, intended to cover a worker’s solicitor/client costs, with the party/party costs being paid to the worker’s lawyer in accordance with the provisions of s 134AB(28)(b).
(c) Section 134AB(31) then enables a court to make a determination as to the quantum of the solicitor/client costs. In doing so it may, if it wishes, have regard to the scale of costs set by the Court as to the quantum of the worker’s solicitor/client costs.
(d) Absent such an award, a lawyer is precluded from recovering such costs and, if it were to do so without the award, he or she would be in breach of the legislation.
Returning to Carus’ submissions, there is no substance to either point. First, as I have just said, there is no elective ‘separate regime’ in a case brought under the provisions of the Act. Indeed, the terms of s 134AB(30) make it clear that the enforcement of a lien is caught by that provision.
Second, I reject the proposition that s 134AB(30) of the Act only applies to a legal practitioner acting for a successful worker at the time that an order for costs is made. The use of the present tense in s 134AB(30) carries no such meaning. It simply makes clear that the entitlement (whenever the work was done) is dependent upon an award of costs which must, by reason of s 30, be determined by the Court.
The relevance of the present tense (which is the foundation of Carus’ submission) depends on the particular provision and the legislation in question. As the New South Wales Court of Appeal recently stated, the present tense ‘need not connote a temporal element; it may merely indicate a state of affairs that has arisen’.[30]
[30]Public Service Association and Professional Officers’ Association Amalgamated Union of New South Wales v Industrial Relations Secretary [2015] NSWCA 386, [9].
The usual, or common, position was described by Gaudron J in Re Dingjan:
The present tense may be used descriptively or it may be used to signify contemporaneity. Although there is no fixed rule, the use in a statute of the present tense, simpliciter, generally indicates that it is being used descriptively (the “simple present”), whereas “is” followed by a present participle (the “continuous” or “progressive” present) usually indicates contemporaneity.[31]
[31](1995) 16 ACSR 92, 119.
While there is no rigid rule as to the way in which tense is to be interpreted, the tense employed in a particular piece of legislation cannot be considered in isolation from the statutory context and legislative purpose. In this case, to simply assert that the present tense gives rise to the meaning contended by Carus would be to ignore basic principles of statutory construction. I consider it clear that in s 134AB(30), the use of the present tense does not give rise to an exclusive, and restrictive meaning that incorporates a temporal element demanding contemporaneity. Rather, it is used descriptively in relation to work performed, at any time, by a lawyer on behalf of a worker.
The consequences of such an extraordinary interpretation, as urged by Carus must be considered.[32] On Carus’ contentions, if a worker was represented by several lawyers, then the only lawyer who would need to comply with s 134AB(30) would be the one acting for the worker at the time of the order for costs is sought – much like a game of musical chairs. In other words, the former lawyers could charge what they saw fit regardless of s 134AB (30) and its clear purpose. So, for argument’s sake, a solicitor who acted for the worker for the last week of a three year saga would need an order in his or her favour for solicitor/client costs under the subsection, whereas another solicitor, who had acted for the client earlier on (and who may have a solicitor/client bill for hundreds of thousands of dollars), would not.
[32]Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297.
The clear purpose of s 134AB(30) is to ensure that workers are not ‘ripped off’ for solicitor/client costs by their lawyers. Whether this is a necessary provision, and whether it could not be effected by recourse to other pieces of legislation or the Rules of the Court, is neither here nor there. This is what the law requires. It is immaterial whether the lawyer seeking costs was acting for the worker at the start, in the middle, or at the end of the proceeding. What is material is that if the costs sought by the lawyer from the worker arise from a proceeding under s 134AB, then that entitlement must be determined by a Court.
Next, I think that the orders by Wood AsJ relating to the bill of costs satisfy the terms of s 134AB(30). Carus’ costs for acting for Ms Taseska in her knee injury claim have been the subject of an award by the Court, as the section requires. Although ‘the award’ is global, it clearly encompasses costs associated with acting for Ms Taseska in that claim. So, if Carus wished to enforce the judgment to ‘recover costs’ as provided by s 134AB(30) then, in my view, there is compliance with the sub-section. The problem is that the precise costs award for the knee injury claim is not specified, as is necessary for an enforceable equitable lien.
In summary, the Act applies to Carus’ application for an equitable lien against the award of damages. There has been an award in respect of these costs in the knee proceeding. This, in my opinion, entitles Carus ‘to claim a lien’ as provided for by s 134AB(30)(b). A lien, if granted and when quantified, will give Carus a right over a portion of the judgment sum – which will then need to be taken into account in respect of any other proceedings brought by Carus for the judgment debt in its favour as a result of the orders of Wood AsJ on 26 October 2015.
Should an order for a lien in favour of Carus be made?
The remaining issue is whether the Court, in its discretion, should make an order for a lien – and if so, in what amount.
First, I am satisfied that there is an appreciable risk that Carus will not recover its costs without a lien.
Second, I am also satisfied that a proportion of the work performed on Ms Taseska’s behalf for the knee injury claim is the subject of the award of costs made by Wood AsJ on 26 October 2015.
Third, the fact that Carus has an enforceable judgment against Ms Taseska which complies with s 134AB(30) does not amount to an election which would inhibit the Court from declaring the existence of a lien.
Fourth, Carus’ evidence as to what amount of costs, even in a general sense, could be allocated to the knee injury claim out of the common law bill of costs, is surprisingly inadequate. Mr Lindsell, the costs consultant, says:
I have closely examined the Bill of Costs [6 February 2015 relating to knee and stress claim] for the purpose of assessing the work claimed therein which relates to the knee proceeding. I do not consider I am able to accurately undertake[n] this exercise having regard to the substantial number of items in the Bill of Costs and the need to apportion or otherwise claim in full each of these individual items.
He then goes on to state:
Having regard to the difficulties outlined…I consider a taxation of costs is the only satisfactory process to enable the Court to adequately address these issues and provide the necessary analysis of the portion of costs which relate to the knee injury claim.
Simply put, at present there is no satisfactory evidence from either Carus or Mr Lindsell as to the quantum of the work on the knee injury claim. I would have thought that Carus and Lindsell, between them, having the advantage of:
(a) knowing the amount allowed in the final taxation by Wood AsJ in September and October 2015 (and the discounts made by his Honour);
(b) drafting the common law bill, which included the costs of the knee injury claim; and
(c) many years of experience in this area of the law,
could have provided (as requested) at least a broad estimate of the solicitor/client costs directly attributable to the knee injury claim.
Notwithstanding these problems I think that it is possible, on the material available, to make a rough estimate as to the likely allowance of costs (which will be the subject of the lien) and have that amount retained in Court to satisfy the amount allowed by the Costs Court for Carus’ work on the knee injury claim.
What portion of Ms Taseska’s damages should be held in Court?
At the present time the Court is holding $200,000 of Ms Taseska’s damages. Ms Taseska wants the balance paid out to her.
For a number of the reasons I have set out in relation to the claim for a set-off against damages, I think it important that Ms Taseska have access to the damages recovered by her as soon as practicable. As I have just mentioned, it is necessary to endeavour to make an estimate of Carus’ costs in the knee injury claim which would form the subject of the lien. The gross sum order for costs of both claims was $175,000. Ms Hedges has estimated Ms Taseska’s costs of the knee injury claim at about $60,000 on a party/party basis, although not all will be attributable to the costs incurred by Carus, given that Ms Taseska ran the case herself and, presumably, there are expert witness expenses to be paid.
Doing the best I can, and bearing in mind:
(a) the total amount of the costs allowed in the gross sum award;
(b) that the psychiatric injury claim was issued approximately one year prior to the knee injury claim with the result that there is no apportionment for that period; and
(c) that much of the evidence in the trial was directed towards the psychiatric injury claim rather than the knee injury claim;
I think that an appropriate allowance to be held in court for solicitor/client costs is the amount of $60,000. This should be held in court until the determination of the quantum of the lien by the Costs Court. The balance remaining (if any) would then be paid to Ms Taseska.
It is important that costs be minimised in the exercise of determining the value of Carus’ lien. To that end, I will direct that the Costs Court fix the apportionment of the gross sum bill attributable to the knee injury claim. Ideally that could be carried out at or around the same time as the assessment of the party/party costs on the knee injury claim and the psychiatric injury claim.
Orders
Subject to hearing from the parties, I propose to make the following orders:
(a) That in the taxation of MSS’ costs of the psychiatric injury claim, no allowance be made for senior counsel’s fees for the trial before J Forrest J.
(b) That MSS’s application for a set-off of its costs in the psychiatric injury claim against the damages in the knee injury claim be dismissed.
(c) Pursuant to s 134AB(30), I declare that Carus is entitled to claim a lien in relation to costs incurred in acting for Ms Taseska in the knee injury claim.
(d) That Carus be granted a lien in relation to its costs of acting for Ms Taseska in the knee injury claim.
(e) That the amount of costs secured by the lien in the knee injury claim be determined by the Costs Court by apportioning the relevant amount out of the gross sum taxation of costs made by Wood AsJ on 26 October 2015.
(f) That, on 48 hours’ notice, Carus give Ms Taseska the opportunity to inspect its file relating to her claims and, if necessary, make copies of documents within it.
(g) That subject to any further order of the Costs Court the taxation of the costs of:
(i) Ms Taseska in the knee injury claim;
(ii) MSS in the psychological injury claim;
take place on or before 18 December 2016.
(h) That subject to any further order of the Costs Court, the stay of the order for costs in favour of MSS in the psychological injury claim cease on 18 December 2016.
(i) That the determination of those costs issues be referred to Wood AsJ or another associate justice or judicial registrar approved by his Honour.
(j) That the monies paid into court pursuant to my orders of 24 June 2016 be dealt with as follows:
(i) the amount of $60,000 be retained in court to be applied to Carus’ lien, after determination of that amount by the Costs Court.
(ii) in the event of the assessment of costs secured by the lien being less than $60,000, the balance be paid to Ms Taseska.
(iii) the balance, namely $140,000 and any interest be paid to Ms Taseska.
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