This is a tripartite imbroglio, the protagonists in which are a client (to whom I shall refer as Alice with no disrespect intended) and two firms of solicitors which, at different times, acted for her in connection with a claim she made against a supermarket (Coles) for damages for personal injuries when she fell near a flower display.
Briefly, Alice received settlement monies from Coles and there is an argument between her and the respective solicitors as to their entitlements, if any, to a portion of it.
I shall refer to the first firm of solicitors which acted for her as GMP, and the second as Brydens.
[2]
FACTS
Alice slipped and fell at a Coles supermarket in Penrith, New South Wales, on 26 June 2018 allegedly because there was water on the floor.
She retained GMP on a 'no win no fee' basis, to sue Coles.
She commenced proceedings on 11 December 2019 in the District Court at Parramatta. The proceedings were subsequently transferred to this Court on 7 April 2021. On 24 June 2021, they were set down for hearing to commence on 21 March 2022.
On 16 November 2021, there was an informal settlement conference with Coles' lawyers, but the proceedings did not settle. Almost immediately thereafter, the relationship between GMP and Alice broke down and, on 6 December 2021, GMP served a notice of intention to cease acting.
On 19 December 2021, Alice withdrew instructions from GMP and GMP ceased to act on 20 December 2021.
GMP immediately gave notice to Coles that it had a lien over GMP's file until their fees and disbursements were paid. They also asserted an equitable charge over any judgment or settlement, securing payment of their fees and disbursements.
The hearing scheduled for 21 March 2022 was vacated and the proceedings were relisted to commence on 15 May 2023.
Alice then instructed Brydens.
On 30 May 2022, Brydens asked GMP for the file.
On 7 July 2022, GMP sent a tripartite deed, a final tax invoice and their bill of costs to Brydens, under cover of a letter stating that they were prepared to release the file if, relevantly:
1. Brydens and Alice signed the tripartite agreement;
2. Brydens provided an undertaking to protect GMP's costs upon successful completion of the matter; and
3. in the event that a dispute arose between GMP and Alice, that Brydens would retain in their trust account sufficient funds to protect GMP's interests pending resolution of such a dispute.
The salient features of the tripartite deed were that:
1. Brydens agreed, upon receipt of settlement monies from Coles to pay GMP's legal costs of an amount agreed or assessed;
2. Alice gave Brydens an irrevocable authority to pay GMP's legal fees and expenses out of the settlement proceeds; and
3. GMP would transfer its file to Brydens upon execution of the deed.
Under cl 4 of the tripartite deed, GMP agreed to refrain from commencing any court action to enforce the recovery from Alice of any costs owed to it unless the deed has been breached by Brydens or Alice.
GMP's tax invoice (enclosed with the letter) was for a total of $288,267.66, comprising professional fees of $156,826.45, expenses of $105,768.48, and GST of $25,672.73.
The matter was to be heard by Chen J.
Before the hearing, settlement negotiations were initiated and, on the advice of Brydens and experienced senior counsel, Alice settled her claim for payment of $650,000 inclusive of costs.
Consent judgment was entered by Chen J on 15 May 2023 against Coles for $650,000 inclusive of costs (the Settlement Sum).
The consent judgment contains an acknowledgment by Alice that she has been informed by Coles' solicitors, McCulloch & Buggy, that she may be liable to pay amounts from the Settlement Sum pursuant to the Health and Other Services (Compensation) Act 1995 (Cth), the Health and Other Services (Compensation) Care Charges Act 1995 (Cth) and the Social Security Act 1991 (Cth).
Paragraph 3 of the consent judgment provides:
The Defendant is authorised to deduct from the Settlement Sum:
(a) $65,000.00 to be remitted to Medicare Australia, being the 10% Advance Payment required to be paid or payable under the Health and Other Services (Compensation) Act 1995 (Cth), the Health and Other Services (Compensation) Care Charges Act 1995 (Cth), and the Social Security Act 1991 (Cth).
(b) Any amount specified in any Centrelink Notice of Clearance or Charge pursuant to the Social Security Act 1991 (Cth).
In broad terms, the statutory enactments referred to, enable the Commonwealth to recover monies paid to a recipient pursuant to those enactments if the recipient later recovers money under a judgment or settlement which will result in the recipient receiving double payment for substantially the same thing.
Section 24 of the Health and Other Services (Compensation) Act 1995 (Cth) enables the Chief Executive (Medicare) to give notice of charge to the compensation payer who, on receiving such a notice, becomes obliged to pay to the Commonwealth the amount specified in the notice within 28 days after the notice is given. It is an offence for the compensation payer to fail to comply.
On 8 December 2023, the Director (Medicare Compensation Recovery) gave a notice of charge to Coles, via its solicitors, requiring it to repay $25,075.80 in payments made to Alice.
Under s 1184 of the Social Security Act 1991 (Cth), the Secretary (Centrelink) may give written notice to a compensation payer that the Secretary proposes to recover from it the amount specified in a notice. If such a notice is received, the compensation payer must not make any payment to the claimant unless they have first paid the Commonwealth the amount specified. It is an offence for the compensation payer to fail to comply.
On 4 August 2023, Centrelink gave Coles a compensation notice of demand requiring it to pay $98,073.00.
[3]
THE DISPUTE
Alice disputes the quantum of GMP's costs.
Brydens claim costs of $203,771.32. Alice disputes their costs too.
This has spawned two sets of proceedings.
First (the GMP proceedings), GMP as plaintiff, by way of an amended summons filed 28 June 2023, seeks orders that:
1. the sum of $288,267.66 be held for the payment of legal fees owed to GMP pending agreement or assessment;
2. the legal costs be taken from the judgment monies in the personal injury proceedings and be paid into the trust account of GMP pending agreement or assessment of those costs;
3. the balance of the judgment monies in the personal injury proceedings be paid to Alice; and
4. Alice to bear the costs of the application.
Brydens is cited as first defendant, Alice as second defendant and McCulloch & Buggy as third defendant.
I have taken the references to 'judgment monies' in the summons to be to the Settlement Sum.
Second, (the Brydens proceedings), Brydens as Plaintiff, by way of a summons filed on 8 June 2023, seeks orders that:
1. Coles (which is cited as second defendant) pay the sum of $203,771.32 to Brydens out of the proceeds of the settlement effected between Alice (cited as first defendant) and Coles; and
2. Alice pay the costs of the application.
Although Coles has not brought a cross-claim, it and its solicitors seek the following orders in their written submissions:
1. the liens imposed by Brydens and GMP be discharged;
2. on behalf of Coles, its solicitors repay $98,073.67 owed to Centrelink and $25,075.80 owed to Medicare from the settlement monies held in its trust account;
3. on behalf of Coles, its solicitors to pay the remainder of the settlement monies into Court;
4. Coles and its solicitors to be dismissed or released from further involvement in these proceedings; and
5. Alice and/or Brydens and/or GMP to pay Coles and its solicitors' legal costs in relation to the summonses.
[4]
The Parties' Positions
It is worthy of observation that, on the positions taken by GMP, Brydens and Coles, the monies currently in trust will be disbursed as follows:
GMP: $288,267.66;
Brydens: $203,771.32;
Centrelink: $98,073.67;
Medicare: $27,075.80
TOTAL: $615,188.45
This will leave just $34,881.55 for Alice.
At the hearing, the positions of the parties (apart from Alice) were refined. They are now as follows:
1. both GMP and Brydens accept that their bills of costs are to be the subject of formal costs assessments and have undertaken to the Court expeditiously to implement the costs assessment process;
2. no party is seeking any costs order against Alice (or, for that matter, against any other party (it being the common position that each should pay their own));
3. Coles correctly accepted that it is not for the Court to order that monies be paid out of the Brydens trust account to Centrelink or Medicare. It is for Coles to discharge its statutory obligations (whatever they are) out of monies which are currently held;
Alice provided the Court with written argument and conveyed that she did not wish to address orally. The gravamen of her position is that the settlement amount was too little and that the fees her lawyers have charged her are excessive.
She is reluctant for the bills to be the subject of formal assessment because of the additional cost involved. She seeks a ruling that, of the money in Court, 25% should go to the lawyers and 75% to her, out of which Centrelink and Medicare will be paid.
This is not an occasion upon which the Court can or should embark on any consideration of whether the settlement figure was inadequate. I have already observed that the settlement was reached on the advice of experienced senior counsel. There is a consent judgment finally disposing of Alice's claim on a final basis. It is also not within the jurisdiction of the Court to order that the proceeds of settlement be distributed on a random percentage basis, not according to law.
Alice's position on the legal fees is protected by the requirement for those fees to be the subject of formal assessment. The additional costs involved may not be substantial but they are a consequence of her not accepting the quantum of the bills (which no doubt is perfectly understandable).
Neither Coles nor its solicitors have any interest in, nor should it be their burden of, continuing to hold monies in trust.
I propose to order that the amount held by them, less what is apparently due to Centrelink and Medicare, be paid into Court. I observe that Alice's own submissions acknowledge that money is payable to Centrelink and Medicare.
I make the following orders:
1. McCulloch & Buggy are forthwith to pay into Court, out of the monies currently in their trust account, as a consequence of the settlement of proceedings 2019/00390185, the sum of $526,850.53;
2. The summons in proceedings 2023/00173889 is otherwise dismissed with no orders as to costs to the intent that each party shall pay their own; and
3. The summons in proceedings 2023/00180783 is otherwise dismissed with no orders as to costs to the intent that each party shall pay their own.
I observe that after I had given these ex tempore reasons, Counsel for GMP wished to have it noted that GMP's formal position was that it still sought an order for costs of its summons against Alice. After a brief exchange with the Court, this position was, correctly, not pressed.
[5]
Amendments
19 February 2024 - Removed typographical error in case name
20 February 2024 - Cover Sheet - amended case name to remove individual's first name
[6]
[45] - amended typographical error
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 20 February 2024
Legislation Cited (4)
(Cth), the Health and Other Services (Compensation) Care Charges Act 1995(Cth)