The Local Court of NSW has released for publication a considered decision about costs in what it treated as a test case, Foot v Burrett  NSWLC 26. A man’s car was damaged. It was taken to panel beaters in Marrickville. He there signed a document in order to get use of a replacement car while his car was being repaired. He did not have to pay until later and it seems to have been anticipated that the repairer would pursue the cost from the allegedly negligent other driver on the man’s behalf. The transaction was something like (but probably not) the man giving the repairer an equitable assignment of his right to damages for loss of the use of his vehicle against the allegedly negligent other driver in return for the free use of a car. The document authorised Boston Commercial Services Pty Ltd to act for the man in recovering the costs of hiring the replacement car from the allegedly negligent driver who allegedly caused the property damage. The document also said:
‘I hereby consent to Boston instructing Dejure Commercial Lawyers as my Solicitor on the record in respect of any proceedings commenced in relation to this retainer and I hereby retain Dejure on the terms and conditions of Boston’s existing retainer with Dejure….’
Proceedings were commenced in the man’s name. Dejure Commercial Lawyers went on the record for him. It is apparent that the man was required by the circumstances of the litigation to have an involvement in it. The other driver lost. He was ordered to pay costs. He invoked the indemnity principle, saying that the man had no liability to pay Dejure Commercial Lawyers’ costs and so could not recover a partial indemnity against any such liability in the form of party-party costs. The Court, treating the question as a test case, declined to accept that argument. The decision casts doubt on the correctness in law of positions adopted by various legal disciplinary bodies as to the impropriety of lawyers accepting instructions from interested third parties in writing obtained from the agent. The Court seemed a lot less perturbed by this mode of retainer than the Victorian Legal Services Commissioner tends to be, saying helpfully:
- ‘The evidence available to the Court is supportive of the existence of a retainer. The conduct of Mr Foot in providing a statement to the Court and referring to information shown to him by his solicitors is conduct that is consistent with the existence of a retainer. Mr Foot also signs an authority giving consent to Boston to act as his agent in instructing Dejure Commercial Lawyers. As a matter of agency law Dejure Commercial Lawyers would be entitled to seek payment of their costs directly from the plaintiff. Even if the Court were to assume that there was no written costs agreement between Mr Foot and Dejure Commercial Lawyers it would be open for Dejure Commercial Lawyers to seek payment on a quantum meruit basis from Mr Foot given his knowledge and acceptance of the benefit provided by the lawyers acting on his behalf.
- Accordingly, the Court is satisfied that the indemnity principle is not infringed. Mr Foot is entitled to an award of costs. The Court will allow costs on the issue fee and service fee of the claim in the sum of $125.00 together with legal costs at the [maximum sum allowable in view of the fact that the matter was a small claim] being the sum of $662.20.’
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