Costs agreement read contra proferentem

Justice Byrne construed a no-win no-fee costs agreement in Maurice B Pty Ltd v Burmingham [2009] VSC 20. It was drafted by the solicitors and presented as a printed document for signature.  His Honour construed it so as to resolve any ambiguities in favour of the client, invoking Clare v Joseph to reiterate the courts’ jealous supervision of lawyer-client relations to guard against the exercise of undue influence:

‘116 I approach an agreement of this kind between a solicitor and client with considerable caution. As Fletcher Moulton LJ observed in Clare v Joseph [1907] 2 KB 369 at 376

agreements between a solicitor and his client as to the terms on which the solicitor’s business was to be done were… however, viewed with great jealousy by the Courts, because they were agreements between a man and his legal adviser as to the terms of the latter’s remuneration, and there was so great an opportunity for the exercise of undue influence, that the Courts were very slow to enforce such agreements where they were favourable to the solicitor unless they were satisfied that they were made under circumstances that precluded any suspicion of an improper attempt on the solicitor’s part to benefit himself at his client’s expense.

117 With greatest respect, his Lordship’s views are as apposite today as they were a century ago, perhaps even more so in the modern environment where fee agreements are required and where these may include provisions for uplift fees. There is in this case no allegation of undue influence and no relief is sought based on any breach of MBC’s duty with respect to the preparation of the costs agreement. Nevertheless, the modern legal environment is more sensitive to the consequences of inequality of bargaining power. In this case, Mr Burmingham was presented with a printed agreement prepared by his solicitors. The circumstances are such that I will construe the document contra proferentem, that is, I shall construe ambiguities in favour of the client.’

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