Loveday v Lloyds Tree Care Pty Ltd [2000] VSC 204

5. I made orders by consent that the defendant pay the plaintiff's costs including reserved costs of the proceeding, and otherwise dismissed it. Counsel for the plaintiff, Mr. J. Forrest, Q.C., made application to the Court for a further order, namely that there be paid from the settlement sum the plaintiff's solicitors' costs on solicitor-own client basis, in default of agreement between the plaintiff and his solicitors, such costs be taxed and when taxed paid to the solicitors for the plaintiff. Although Mr. Forrest did not advert to it, I interpret that what is sought is really the difference between (i) the party-party costs of the plaintiff agreed to and ordered to be paid by the defendant to the plaintiff and (ii) the actual costs incurred by the plaintiff's solicitors in mounting and maintaining the proceeding to settlement. Section 135A(13)(C) of the Accident Compensation Act 1985 provides that a person representing or acting on behalf of a worker is not entitled to recover costs from the worker in actions commenced on or after 12 November 1997 or to deduct them from any sum awarded as damages, unless an award of costs has been made by the court in respect of those costs. Sub-section (13)(D) provides that on the application of the person representing the worker the court may determine the amount of costs to be awarded to the person representing or acting for the worker.

8. 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.

11. I directed that material be filed to support this application and this has been done, bythe affidavit of Miguel Salas, the solicitor in charge of the case at Maurice Blackburn Cashman, who are the plaintiff's solicitors. Having read that affidavit, I am prepared to make an order to enable the difference between the recoverable party-party costs and the cost of running the case be paid out of the settlement amount. My reasons for doing so are as follows:

(i) The case was taken on on a "no-win, no fee" basis, which meant in this case that all of the disbursements including all court fees, medical report costs, expert witness reports, counsel's fees, travel expenses (including a witness from the U.K.) have been met by the solicitor.

(ii) The plaintiff has agreed to the course proposed and was told of it at the outset of the case.

(iii) The solicitors have offered an undertaking to the Court to provide to the plaintiff information in relation to the obtaining of independent advice as to costing concerning the solicitor-client costs which will be charged by the solicitors.

(iv) A substantial amount of moneys expended on the case in its preparation will not be recoverable from the defendant. The action was one with some risks. Expert evidence was likely to have been crucial. Opinions were obtained which cost money but were of no assistance including a consulting engineer, an arborist and a Council expert. Numerous lay witnesses were interviewed at cost, unlikely to be recovered.

(v) Not all of counsel's fees as to advice and pleadings will be recoverable, nor will all of the solicitor's extra work on the proposed amendment.

17. I note that under s.135A(13)(B) the party-party costs recoverable, applicable to this case, are reduced by 10% (now 20%). This appears to be transferring the burden of meeting reasonable costs away from the statutory insurer towards plaintiffs and their representatives.

20. I note that the settlement involved a payment of $500,000 to the plaintiff plus retention of all past payments which total about $180,000.

23. 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 worker's 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.

26. In this case, I am satisfied that necessary costs and expenses were incurred by the solicitors in their client's interests in a risky case. The client agrees that they should be paid. The matter has been ventilated in public. The solicitors have given an undertaking that will enable the client to take other advice, if he wishes. It would be unjust not to make the order in this case.

29. Accordingly I order that there be paid to the solicitors for the plaintiff 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 his solicitors.