Chapman v Tobin Brothers Pty Ltd [2002] VSC 81

Clifford James Loveday v Lloyds Tree Care Pty Ltd (unreported, decided on 23 May 2000)

2. The proceeding from which this application arises was brought by the plaintiff by a writ issued on 20 June 2000 against the defendant claiming damages in respect of personal injury suffered by the plaintiff in the course of her employment with the defendant. The proceeding was settled, and an order by consent was made by Master Kings on 19 March 2002 to the effect that the defendant pay the plaintiff's costs including reserved costs.

5. Section 135A (13B) and (13C) of the Accident Compensation Act 1985 ("the Act") provides:

(13B) For the purpose of taxing of costs in proceedings to which this section applies, that are commenced on or after 12 November 1997 any applicable scale of costs has effect as if amounts in the scale were reduced by 10 per cent.

(13C) 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 commenced on or after 12 November 1997; 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.

11. In the present application, counsel for the plaintiff sought an order that there be paid to the solicitors for the plaintiff ("the solicitors") from the sum paid by the defendant by way of damages in settlement of the proceeding such sum as represents the difference between the amount for costs (as taxed or agreed) ordered to be paid by the defendant in the proceeding and the plaintiff's costs on a solicitor-client basis, such costs to be taxed, or as agreed in writing between the plaintiff and the solicitors. There was, understandably, no appearance for the defendant.

14. I am satisfied, on the affidavits of Mr Salanitri, the solicitor who had the conduct of the proceeding, and of the plaintiff herself, of the following facts:

(i) that the solicitors acted for the plaintiff on a "no win, no pay" basis, which meant that had she not been successful she would not have been charged any professional costs, and that she was aware of that position;

(ii) that in the course of preparing the proceeding for trial, disbursements were incurred by the solicitors, including court fees, mediation fees, medical reports, expert witness reports and counsel's fees, which, had the plaintiff been unsuccessful, would not have been expected to be recovered from the plaintiff;

(iii) that amounts of costs which would not be recoverable on a party-party basis (i.e. solicitor-client costs) were incurred by the solicitors in acting on behalf of the plaintiff;

(iv) that at the commencement of the proceeding the plaintiff was advised that such costs would be incurred and that, in the event that her action was successful, she would be required to pay those costs;

(v) that both senior and junior counsel were retained to advise on a number of issues;

(vi) that in the context of issues concerning liability it was necessary to obtain the opinion of two expert witnesses, both being consultant engineers and one being also an ergonomist, and a number of conferences were held with these witnesses, one of whom attended a view;

(vii) that a mediation was held on 22 October 2001, at which counsel appeared for the plaintiff;

(viii) that a number of potential witnesses, being co-workers and witnesses relevant to past and present income and wage rates, were approached but were ultimately of no assistance to the plaintiff;

(ix) that a number of other witnesses were approached, from whom witness statements were obtained, being co-workers and witnesses relevant to the accident and also witnesses who personally knew the plaintiff;

(x) that work was carried out by employees of the solicitors with respect to the preparation of legal argument;

(xi) that the plaintiff was provided with advice concerning the possibility of any bill of costs being taxed and the role of Victorian Lawyers' RPA Limited concerning disputes over costs;

(xii) that the plaintiff is aware that she had the option of obtaining independent legal or costing advice concerning solicitor-client costs;

(xiii) that the plaintiff consents and is amenable for an order to be made by the Court for solicitor-client costs to be paid in this matter.

Another relevant consideration is the effect of section 135A (13B), set out above.

20. In Loveday v Lloyds Tree Care Pty Ltd [1] Hedigan J granted a similar application, on evidence similar to that which is before me. His Honour said at [3]:

Without going to the history of the passage of this sub-section (inserted by the 1997 amendment) I would estimate that it was directed towards preventing lawyers from accessing their client's damages in order to pick up the difference between the actual cost of maintaining the proceeding and the costs recovered from the opposite party, and also to prohibit (in the rare case) unscrupulous practitioners from filching excessive amounts for costs from the compensation awarded, without the Court's supervision and order.

24. After setting out the reasons which led him to make the order sought, His Honour continued at [7]:

I do not find it expedient to expound any general principle that might be applicable to the exercise of discretion on applications of this kind. Against the desirability of discouraging unsupervised diminishing of workers' damages on account of costs must be balanced the chance that workers might be cut off from competent representation because solicitors acting simply could not afford to run the risks of substantial loss, particularly when irrecoverable expenditures are made in an effort to get the case into the best possible position for trial. No one consideration can dominate the exercise of discretion in these cases.

28. On the basis of the facts set out in [1] above, and in the light of the views expressed by Hedigan J in Loveday, I am satisfied that this is an appropriate case to make the order sought. Counsel may wish to make submissions as to the form of the order.

[1] [2000] VSCA 204