Applicant v Respondent [2025] VSC 243 | Case summary

Supreme Court of Victoria|2025-05-08|Before: Ierodiaconou AsJ

The applicant is liable for legal costs, and they should be assessed based on the costs agreements between her and Verduci Lawyers.
I reject the respondent's submission that the amount claimed in taxation exceeds the applicant's liability to pay her solicitor by about $133,500. The respondent essentially says that the applicant is not liable for these costs, save for the costs of taxation. On the other hand, the applicant says she is liable for these costs.
I have already found that the applicant is liable for costs for the whole retainer period. I accept the evidence of the applicant's solicitor, Ms Lastrina, that the amounts owing include billed and unbilled costs, and that the taxation costs are yet to be concluded.[76] The unbilled costs are subject to the no-win/no-fee oral costs agreement.
The billed costs amount to $482,340.83 for paid costs and disbursements. The costs yet to be billed have been calculated. The unbilled costs include $344,130.95 for professional fees. There will be additional costs regarding the taxation. They are yet to be invoiced to the applicant, and amount to about $52,218.[77] The total amount (billed, unbilled and taxation costs) is $878,689.78. The amount claimed in the applicant's bill of costs, being $664,674.60, is significantly less. It is about 75% of the total amount.
The objection based on the indemnity principle is disallowed. The taxation of costs should continue.

[2] Exhibit 'JEM-1' to the McIntyre affidavit, 8-15.

[3] Exhibit 'JEM-1' to the McIntyre affidavit, 10-15.

[5] McIntyre affidavit, [18(a)], [19].

[6] Exhibit 'JEM-1' to the McIntyre affidavit, 23-27.

[7] McIntyre affidavit, [18(b)], [19].

[8] Exhibit 'JEM-1' to the McIntyre affidavit, 16.

[9] Exhibit 'JEM-1' to the McIntyre affidavit, 28-37.

[10] McIntyre affidavit, [18(c)], [19].

[11] Affidavit of Heather Wellington sworn on 11 July 2024 ('applicant's affidavit'), [5].

[12] McIntyre affidavit, [18(c)], [19].

[14] McIntyre affidavit, [13]-[14].

[15] Affidavit of Francine Lastrina sworn on 10 July 2024 ('first Lastrina affidavit'), [2]-[3].

[16] McIntyre affidavit, [13]-[14].

[18] This costs register appears to have been referred to by the respondent as a 'pre-billing guide' in her notice of objection filed on 25 March 2024 ('respondent's notice of objections'). See also, second Lastrina affidavit, [10]; exhibit 'FL'1' to the second Lastrina affidavit, 6.

[19] See: Wellington v Metcalf [2022] VCC 1759.

[20] See, eg, Able Demolitions and Excavations Pty Ltd v Barry Kenna & Co [2016] VSCA 312, [88]-[90]; see also Russells v McCargel [2014] VSC 287, [10].

[21] See, eg, Petselis v Tatarka [2019] VSC 8; (2019) 57 VR 375, [60].

[24] LPUL s 6 definition of 'Uniform Rules'.

[25] Rule 72A was applied in Schmid v Skimming [2020] VSC 493 and Burke v Ash Sounds Pty Ltd (No 5) [2020] VSC 772. See also Palmos v Pravlik [2020] VSC 112.

[26] Legal Services Council, 'Clients kept in the know by Uniform Law' (Media Release, 22 April 2016).

[27] Johnston v Dimos Lawyers (2019) 59 VR 16 ('Johnston'), [13].

[28] [2019] NSWSC 1490 ('Malvina Park').

[29] Malvina Park, [85] (Walton J also determined that s 174(3) was a disclosure obligation, disagreeing with the approach of Gourlay JR in Frigger v Madgwicks [2018] VSC 281).

[30] [2011] VSCA 55 ('Shaw').

[37] Shaw v Yarranova Pty Ltd [2010] VSC 567, [25].

[49] [2013] VSC 669 ('Sunland Waterfront').

[53] [2016] FCA 1573 ('Royal').

[57] [2014] VSCA 227; (2014) 47 VR 127 ('Manieri'), [43].

[58] [2006] NSWCA 145; (2006) 66 NSWLR 474 ('Wentworth'), [126] (Basten JA).

[62] Royal, [44]. Further, her Honour distinguished Mourik v Von Marburg [2016] VSC 601 because the obligation to pay fees was not conditional only on recovery of costs: see Royal, [45].

[66] [2022] FCA 1545 ('Wills v Woolworths').

[70] [2019] VSC 744 ('Bennett (A Pseudonym)').

[73] See, Johnston, [42], [45]-[46]; Shi v Mills Oakley [2020] VSC 498, [48].

[74] See, Wills v Woolworths; Bevan v Bingham (2023) 111 NSWLR 7; Bingham v Bevan [2023] NSWCA 86.

[75] See, exhibit 'JEM-1' to the McIntyre affidavit, 16; see also, exhibit 'LAW-1' to the affidavit of Leonard Warren affirmed on 10 September 2024, 51-53, 64-65.

[76] Second Lastrina affidavit, [8], [11]-[12], [14]-[16] (noting the phrase '[i]n addition to the professional fees owing to the Firm' was ruled inadmissible and struck-out at hearing).

[77] The respondent does not quibble with the calculation of the costs of taxation.

Profession Uniform Law Application Act 2014

Profession Uniform General Rules 2015

('Legal Practice Act 1996

Legal Practice Act 1996

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] VSCA 25; (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.

On 6 April 2022, Verduci Lawyers issued an invoice to the applicant for $30,796.72, comprised of $28,468.00 in the firm's professional fees (inclusive of GST) and $2,328.72 in disbursements.[9] The applicant paid the invoice.[10]
On the evidence before me, it is unclear whether the following conversations occurred 'shortly after' the McIntyre 9 Feb 2022 email or in April 2022. While it is ultimately peripheral to my decision, for clarity, I find that it is more likely these conversations occurred in April 2022. I make this finding on the basis of the applicant's evidence, which is that she did not receive another invoice from Verduci Lawyers after her conversation with Mr McIntyre.[11] Accepting this evidence, and accepting that the applicant paid the invoice dated 6 April 2022,[12] it is clear the following conversations occurred after 6 April 2022.
In April 2022, the applicant said she called Mr McIntyre to discuss her concern that she would not be able to afford the legal costs.[13]
Mr McIntyre deposed that he spoke with his principals, Mr Verduci and Ms Lastrina. Mr McIntyre said they discussed the firm entering into a payment agreement with the applicant to defer payment of the firm's professional fees and disbursements for the preparation and conduct of trial unless and until the applicant was successful at trial.[14] Ms Lastrina said they discussed continuing to act for the applicant on a no win/no fee basis.[15] I accept the evidence of Mr McIntyre and Ms Lastrina. I find both topics were discussed.
Consistent with Mr McIntyre's discussion with Mr Verduci and Ms Lastrina, there was a further telephone conversation with the applicant. Mr McIntyre said he made an offer to 'enter into a payment arrangement' to 'defer payment' of the firm's fees and disbursements for the conduct and preparation of the trial until after the trial had concluded. Further, he told the applicant that the firm would not seek to recover those fees and disbursements unless the applicant was successful at trial.[16] The applicant's recollection of this telephone conversation varies slightly, insofar as she recalled Mr McIntyre advising that Verduci Lawyers would continue to act for her on a no win/no fee basis.[17]
I accept the evidence of Mr McIntyre and the applicant regarding the telephone conversation. I find that in or about April 2022, there was an oral costs agreement between the applicant and her solicitors. The terms of the initial costs agreement continued to apply save for a key aspect: a no win/no fee agreement (the 'oral costs agreement'). Any costs liability was deferred until after the determination of the trial. Consistently with the oral costs agreement, Verduci Lawyers remained retained by the applicant in the County Court defamation proceeding but no further invoices were rendered. Verduci Lawyers recorded payments in a costs register.

Applicant v Respondent

At a glance

Court

Decision date

Before

Source

Judgment (41 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (9)