Wellington v Metcalf (No 2) - [2025] VSC 243

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COSTS COURT

S ECI 2023 04390

BETWEEN:

HEATHER WELLINGTON	Applicant
v
KIRSTY METCALF	Respondent

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JUDGE:	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	12 February 2025
DATE OF RULING:	8 May 2025
CASE MAY BE CITED AS:	Wellington v Metcalf (No 2)
MEDIUM NEUTRAL CITATION:	[2025] VSC 243

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COSTS – Indemnity principle – Where there was an initial costs agreement – Where failure of law practice to comply with ongoing costs disclosure – Where applicant and her solicitors subsequently entered into an oral costs agreement – Where oral costs agreement was conditional on no-win/no-fee – Cost agreement void – Whether applicant is liable to pay legal costs despite the void cost agreement – Whether taxation should be stayed until a costs assessment is conducted – Legal Profession Uniform Law Application Act 2014 (Vic) sch 1 ss 172, 174, 178, 180, 181, 184, 185, 196, 198–200 – Legal Profession Uniform General Rules 2015 r 72A – Shaw v Yarranova [2011] VSCA 55 – Kuek v Devflan (2011) 31 VR 264 – Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 4) [2013] VSC 669 – Royal v El Ali (No 3) [2016] FCA 1573 – Wills v Woolworths [2022] FCA 1545.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr S Buchanan	Verduci Lawyers
For the Respondent	L A Warren Lawyers

TABLE OF CONTENTS

Evidence

Background

LPUL

Indemnity Principle

Is there an obligation to pay legal costs despite the void costs agreement?

Is the applicant liable to pay legal costs to her solicitors?

Should the taxation be stayed until a costs assessor conducts a costs assessment?

Conclusion

HER HONOUR:

This proceeding concerns the taxation of costs. The application of the indemnity principle is in dispute between the parties. That is, whether the applicant is seeking costs from the respondent that exceed the applicant’s liability for costs to her solicitors. The respondent contends that the applicant is not liable to pay costs to her solicitors because of a void cost agreement. The applicant concedes the cost agreement was void but says liability remains.
There are three central questions to resolve. First, is there an obligation to pay legal costs despite the void cost agreement? Second, is the applicant liable to pay her solicitors’ costs? Third, should the taxation of costs be stayed until a costs assessment between the applicant and her solicitors is conducted?

Evidence

The respondent relies on the affidavits of her solicitor, Leonard Adrian Warren, affirmed on 29 May 2024 and 10 September 2024.
The applicant relies on her affidavit sworn on 11 July 2024 (‘applicant’s affidavit’), the affidavits of her solicitor, Francine Lastrina sworn on 10 July 2024 (‘first Lastrina affidavit’) and 10 September 2024 (‘second Lastrina affidavit’), and the affidavit of her former solicitor, James McIntyre sworn on 10 September 2024 (‘McIntyre affidavit’).[1]
[1]During the course of the hearing, I ruled a number of paragraphs in the affidavits of Francine Lastrina sworn on 10 September…

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.

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Details

Case: [2025] VSC 243
Decision Date: 8 May 2025

CaseChat Overview and Summary

The case of Wellington v Metcalf (No 2) involved a dispute between the applicant, Ms Wellington, and the defendant, Mr Metcalf, concerning costs incurred in a legal matter. The primary issue before the court was whether Ms Wellington was liable for legal costs despite the void nature of a subsequent oral costs agreement. The court was also required to determine if the taxation of costs should be stayed until a costs assessment was conducted. The matter was heard in the Supreme Court of Victoria.

The central legal issues revolved around the validity of the oral costs agreement and its implications for Ms Wellington's liability. Initially, an indemnity costs agreement was in place, but it was not followed by the law practice, leading to an oral agreement conditional on a no-win/no-fee basis. The court had to assess the enforceability of this oral agreement and its impact on the indemnity principle. Furthermore, the court considered whether the costs should be taxed immediately or if a formal costs assessment was necessary to determine the appropriate costs.

In delivering the judgment, the court concluded that the oral costs agreement was void because it was conditional on a no-win/no-fee basis, which is inconsistent with the original indemnity principle. Consequently, Ms Wellington was not liable for the costs incurred under the void agreement. The court also determined that the taxation of costs should be stayed until a formal costs assessment was conducted, ensuring that the costs were assessed in accordance with the applicable legal provisions. This decision aligned with previous cases that emphasised the importance of compliance with costs agreements and the need for a formal assessment to determine the appropriate costs.

The final orders of the court were that the taxation of costs be stayed until a formal costs assessment was conducted, and Ms Wellington was not liable for the costs incurred under the void oral costs agreement. The court's decision underscored the significance of adhering to the terms of costs agreements and the necessity of a formal assessment to accurately determine the costs owed.

Orders