Di Lorenzo v The Magistrates’ Court of Victoria  VSC 475 was a case in which the Supreme Court spent 2 hearing days on a judicial review of a costs order worth $5,000. One paragraph of it piqued my interest, about the interpretation of provisions which say there should be no order for costs of the proceeding, absent special or extraordinary circumstances. Horrible members of that species of provisions are to be found inside s. 303 of the Legal Profession Uniform Law.
It seems that Mukhtar AsJ found Bougainville Copper Ltd v RTG Mining Inc  VSC 231 fascinating and rewarding. It was an application for preliminary discovery to find out whether the applicant had a cause of action for damages for bribery and corruption by the respondent. The respondent had a ‘resounding victory’; the applicant got no discovery at all, unable to establish the threshold suspicion to warrant such an order.
His Honour dismissed the respondent’s application for indemnity costs nevertheless in reasons published as  VSC 348. The indemnity costs application was based in part on allegedly unfounded allegations of wrongdoing insinuated by the applicant. But it is one thing to make unfounded allegations in a case proper and another to insinuate them for the purposes of establishing whether there is such a case in a preliminary discovery application which is inherently fishing.
It is a beautifully written set of reasons, but I draw your attention to the costs judgment principally because it sets out crisply in one place the differences between the old party party costs and the new standard basis costs, and the old solicitor-client and indemnity costs and the new indemnity costs. If you are after authority that the new standard basis is akin to the old solicitor-client basis, this is it (though the theory will not necessarily be reflected in Costs Court practice).
And the judgment re-iterates that which is much mis-understood, namely that when you get common garden variety indemnity costs, they are still calculated by reference to Scale, not by reference to what the winner was actually billed. It is a while since this little newsletter has made that point.
One other mis-understood bit of the law of costs, to complete the picture, is the difference between taxation as between solicitor and own client and taxation as between parties on the solicitor-client basis, two different but dangerously similarly named enquiries. The new taxonomy of costs as between party and party should reduce confusion since there will be no taxations on the solicitor-client basis as between parties. But it is as well to remember that even where costs have been taxed as between party and party on Scale, and the winner’s solicitor was charging the winner on the same Scale, the results of the two enquiries will not necessarily be the same. Indeed, the same may be said, even where the costs have been taxed as between party and party on the indemnity basis. Because as between party and party, the question is what is reasonable as between the parties, whereas as between solicitor and own client, the question is what is reasonable between the solicitor and the solicitor’s own client, a test which is generally more generous to the solicitor.
The bits of Mukhtar AsJ’s reasons which I think will be of general interest to those who do not already have this stuff front of mind are as follows:
Update, 19 March 2021: My Sydney colleague, Andrew Bailey, drew my attention to Longjing Pty Ltd v Perpetual Nominees Ltd  NSWSC 1690 at ff, which is to similar effect.
Original post: In Carter v Mehmet  NSWCA 32, the Court granted the respondents’ security for costs application in part because the appellant’s solicitors had much to gain from the appeal’s success and had agreed to do it no win no fee, and so were creditors associated with the proceeding, but the appellant had not proven that the solicitors could not contribute funds in order to provide security. Since it was not suggested that they could not provide funds to enable the appellant to give security in the order of scores of thousands of dollars (though there was evidence that they would not do so), it could not be said that the appeal would be stultified by virtue of the inability of the appellant and those who stood behind him to provide the security.
If you are a lawyer whose fees are unpaid from round one, consider very carefully whether you agree to do the appeal no win no fee, as opposed to entering into an orthodox retainer in the knowledge that payment may be difficult unless the appeal succeeds. If you are an impecunious appellant in that situation, think even harder about accepting or proposing such a retainer, since — good as it sounds — it may effectively preclude you from pursuing the appeal.
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by victorious litigants who engage their lawyers on the basis of a greater variety of pro bono arrangements. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the last few days, I published parts one and two of the paper I distributed. What follows is the third and final part, which considers different kinds of client-favourable costs agreements (some quite esoteric) and analyses their indemnity principle implications. It also provides some thoughts on how to draft costs agreements for work done otherwise than on a purely commercial basis, and how to ensure counsel get paid. Part one is here and part two here
Species of client-favourable costs agreements
Options available to lawyers who wish to do work at less than their usual rates for non-commercial reasons include:
(a) not making any arrangements as to fees at all;
(b) charging your usual rates and leaving it to your discretion whether you send out a bill, or whether you forgive some or all bills given in the event that certain outcomes obtain;promising to do the work for free;
(c) agreeing to do the work at a reduced rate;
(d) doing the work on a no win = reduced fee basis;
(e) doing the work no win = no fee;
(f) doing the work no costs order = no fee;
(g) doing the work on no actual recovery of costs / compensation / costs or compensation = no fee basis. Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 3”
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by victorious litigants who engage their lawyers in a greater variety of pro bono bases. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the next few days, I will publish, in digestible chunks, the paper I distributed. What follows is the second part. Part one of this article is here.
The Court of Appeal declared that the indemnity principle is not offended by a costs agreement which is conditional on the client obtaining a costs order in Mainieri v Cirillo (2014) 47 VR 127. In that case, the successful party’s solicitors’ costs agreement said: Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 2”
I was asked to talk to my colleagues at the Victorian Bar recently in relation to costs recovery in pro bono cases. It is now more certain that costs may be recovered from the other side by litigants who engage their lawyers in a greater variety of pro bono bases. That is as a result of both recent developments in the judge-made law and changes to the Supreme and County Courts’ rules. Over the next few days, I will publish, in digestible chunks, the paper I distributed. What follows is the first part.
The amendments to Order 63 of the Supreme Court’s rules and of Order 63A of the County Court’s rules are designed to overcome one aspect of the operation of the indemnity principle in costs law.
Simply put, costs are awarded as a partial indemnity to a successful party for that party’s liability to pay their own lawyers and witnesses and for such payments already made. The indemnity principle says that the amount allowed under a costs order may not exceed the total of those liabilities. Put most pithily, the loser’s costs liability cannot be greater than the winner’s fees and disbursements. Continue reading “Costs recovery in pro bono cases in Victorian state courts: Part 1”
The Civil Procedure Act 2010 applies to proceedings in the Magistrates’ Court, County Court, and Supreme Court but not federal courts or VCAT. Its overarching purpose is to
‘facilitate the just, efficient, timely and costs effective resolution of the real issues in dispute’: s. 7. Continue reading “The Civil Procedure Act’s overarching obligation to keep costs proportionate”
For far too long, the law was unclear about whether costs agreements which said ‘We’ll only charge you if you win and only for work in respect of which we get a costs order’ actually worked. The problem was that losing parties invoked the indemnity principle in the law of costs, arguing that what was recoverable under a costs order was nil. The indemnity principle says that party-party costs awards are in no way punitive; they are wholly compensatory. Party-party costs orders are awarded as a partial indemnity to the winning party’s liability for their lawyers’ fees and other expenses of the litigation. If the winning party has no such liability at the time of the costs order, there is nothing for the losing party to be ordered partially to indemnify. Where the winner’s liability to pay their lawyer was conditional on a party-party costs order, there was, at the moment of making the costs order, nothing to indemnify. Wentworth v Rogers  NSWCA 145 was the leading case for many years. Justice Santow’s dictum was favourable to pro bono solicitors while Justice Basten’s was unfavourable. The third judge did not weigh in on this question.
What the judges in that case said, however, was obiter dicta. Now there is a unanimous decision of the Victorian Court of Appeal which actually decides that this kind of costs agreement works; the winning party may obtain from the losing party a party-party costs order by way of a partial indemnity against the liability to pay their lawyers. The case is Mainieri v Cirillo  VSCA 227 and Nettle, Hansen and Santamaria JJA expressly preferred Justice Santow’s reasoning in Wentworth. It may be expected that state courts, including Courts of Appeal, elsewhere in Australia will follow the Victorian Court’s decision: Farah Constructions Pty Ltd v Say-Dee Pty Ltd  HCA 22 at  and .
That is the good news though. The bad news is that an unfortunate level of confusion still prevails in relation to costs agreements which are even closer to pure pro bono in that they say ‘We won’t charge you anything unless you get a costs order, and then we will only charge you so much as you are actually able to recover from the person ordered to pay costs under the costs order’. A costs agreement which was, as a matter of substance, to that effect was found not to present a problem in LM Investment Management Limited v The Members of the LM Managed Performance Fund  QSC 54. Then in Mainieri, the Court of Appeal left open in obiter dicta the possibility that a costs agreement in which the winning party’s liability to pay their solicitors was conditional on recovery of costs from the losing party might not work. Subsequently, in Mourik v Von Marburg  VSC 601 the Costs Judge in Victoria decided that such an agreement in fact does not work, but the correctness of that decision has subsequently been doubted in dicta of a Victorian Federal Court judge sitting in Sydney. What a mess. But I am not convinced that the pro bono sector should give up on obtaining judicial recognition of a costs agreement which, as a matter of substance, predicates recovery of costs on the actual recovery of costs from the other side. Continue reading “The latest on pro bono costs agreements which preserve the possibility of a costs order against the other side”
Under the Legal Profession Act 2004, if a lawyer applied for renewal of their practising certificate prior to the expiry of the old one, but a decision was not made before the old one runs out, the certificate is extended until either it is renewed or a decision to refuse renewal is finally determined by the exhaustion of all rights of review of that decision. No one has ever really known what that meant. There is a statutory review procedure in VCAT and then there are appeals all the way to the High Court. Are the appeals from the review ‘a right of review of the decision’? The Supreme Court has now determined that the certificate endures (if not earlier cancelled or suspended by the stipes) until the end of the High Court appeal.
The question arose in Batrouney v Forster (No 2)  VSC 541, handed down by Justice Robson yesterday (see paras  – ). It represents a further embarrassment for the Legal Services Board appointed receivers of David Forster’s practice, Hollows Lawyers, with a savage series of costs orders against the receivers in Mr Forster’s favour. That followed findings that the receivers’ proceedings were in part misconceived, and that they breached more than one provision of the Civil Procedure Act 2010. The question was at what point did Mr Forster cease to hold a practising certificate and so cease to be entitled to claim costs of acting for himself under the Cachia v Hanes (1994) 179 CLR 403 at 411–413 exception to the rule that self-represented litigants are not entitled to costs for work done by themselves.
The question is a matter of significance to practitioners who get themselves fairly deep into trouble. It means that those whose practising certificates are not renewed may continue to practice and earn income to put towards the legal costs of challenging that decision, and it also means that such practitioners may brief counsel directly in circumstances where, by virtue of Bar rules about direct access, they might not otherwise be able to. And of course, it also means that if successful in such proceedings, they will get a costs indemnity against the time spent running their litigation.
Mr Forster is a man with his back to the wall, the subject of an avalanche of litigation brought by professional regulators. Until recently, he had been singularly unsuccessful and much chastised. It is probably fair to say that some people in the administration of justice, including the profession, would see him as a pariah. It ought therefore be of some comfort to those responsible for the justice system that this result has obtained. It suggests that the cab rank principle is alive and well, that judges are capable of dealing with each case impartially on its merits and according to law without being unduly influenced by past cases, and that the State will not protect itself where the law requires that it be dealt with.
There has been another challenge to the legality of the work done by non-lawyer costs consultants. It did not go anywhere because of deficiencies in the way the client (himself a lawyer) went about trying to prove in the Magistrates’ Court that the costs consultant in question (a struck off lawyer) had engaged in unqualified practice, and because of the limited nature of an appeal from a Magistrate. The Supreme Court’s judges also emphasised the exactness of proof necessary to establish a breach of s. 2.2.2 Legal Profession Act 2004‘s prohibition on unqualified practice, given that it sets up an indictable criminal offence punishable by up to 2 years’ jail. Such exactness is needed even in civil proceedings which obviously do not carry criminal consequences.
But as three judges of the Supreme Court made clear, all this means is that this was not the vehicle to decide just how much non-lawyers are permitted to do in the realm of costs law, and subject to what level of supervision by a lawyer, and there is little solace for unqualified costs consultants in the judgments.
The reasons of the Court of Appeal for not granting leave to appeal the Supreme Court’s dismissal of an appeal from a Magistrate are: Defteros v JS  VSCA 154. They are interesting for three reasons:
1. They endorse comments made by the Costs Judge in a June 2010 decision as to the need for consideration of reform of the ‘mini-industry’ of costs consultants (Kaye J did so at  VSC 205 at  and Santamaria JA (with whom Neave JA agreed) did so at  VSCA 154 at );
2. They record an interesting submission of counsel, namely that the solicitor client was relying on his own contempt of the Supreme Court by asserting as a defence to a suit for fees a statutory prohibition on the recovery of money charged for the provision of legal services in contravention of the prohibition on unqualified practice — the contempt arose, so the argument ran, because the solicitor well knew at all relevant times that the costs consultant was not a practising certificate holder, and so had permitted the costs consultant to engage in unqualified practice if it had occurred, contrary to s. 2.2.10 of the Legal Profession Act 2004; and
3. They emphasise the modern trend of leaving to the Costs Court questions which have traditionally been dealt with by certificates of the trial judge (e.g. certification for two counsel).
It will not be too long before someone takes a grip of this issue and runs a test case carefully. An alternative battle ground might be found if the unqualified costs lawyers seek to influence the makers of the forthcoming Uniform Rules of professional conduct so as to provide an exemption for unqualified costs lawyers from the prohibition on unqualified practice: see s. 10(3), Legal Profession Uniform Law (Vic). That seems to me to be the most efficient means of resolving the question. In my books, if there is to be a place for the continued operation of unqualified practitioners there may be a case for restricting the exemption from unqualified practice to existing practitioners and closely defining the permissible ambit of their activities, perhaps to party-party disputes. Continue reading “Unqualified costs consultants”
Hartnett v Taylor  VSC 501 was a Part IV claim for testators’ family maintenance. The defendant executrixes said that the plaintiffs’ conduct led to estrangement from the deceased and to the deceased’s alcoholism. The plaintiffs said that the deceased’s alcoholism led to their estrangement, and that is what Sifris J found. The defendant executrixes’ contention was one which was contradicted by their own witness, the deceased’s doctor, who said that the deceased was an alcoholic before the estrangement with the plaintiffs. Sifris J said:
’12 It is in my view clear that the defendants’ evidence and contentions in relation to the deceased’s alcohol consumption and the estrangement from the plaintiffs were made in wilful disregard of known facts and were allegations which ought never have been made. This provides a sufficient basis for an order for indemnity costs notwithstanding that the defendants are not personally liable for such costs.’
Regrettably, the plaintiffs do not appear to have argued the case under s. 18(d) of the Civil Procedure Act 2010. I say ‘regrettably’ because it is desirable that a coherent and easily accessible body of law about the costs consequences of the making of allegations without a proper factual foundation grow up around the new statutory provision.
Then Sifris J denied the second defendant her costs of being separately represented, since there was no need for the two executrixes to have separate representation.
On 3 October 2014, Besanko J decided in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd  FCA 1066 that an order of a fellow judge that one party pay the other’s costs on an indemnity basis, which did not specify that the costs were to be assessed by reference to the successful party’s costs agreement with its solicitors, entitled it to costs assessed on that basis.
The Federal Court is therefore a better place to get an indemnity costs order than the Supreme Court because the law in the Supreme Court, as determined by the Costs Judge, is that the beneficiary of an indemnity costs order gets costs assessed according to the same scale as ordinary costs are assessed by reference to, but with an easier road to showing that the costs incurred ought to be paid by the other party at all: ACN 074 971 109 as trustee for the Argo Unit Trust v National Mutual Life Association of Australia Limited  VSC 137.
In the Supreme Court, of course, a special costs order allowing costs to be taxed by reference to the costs agreement may still be sought, and obtained, e.g. Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3)  VSC 399. But that is the exception rather than the default, and one which many trial counsel may not be aware of.
So badly do many trial counsel deal with the question of costs that it really would not be a bad idea if litigants got advice more often than they do from costs lawyers before costs fell to be argued in any case in which there are substantial costs and fault in the costs sense on both sides, or a number of interlocutory costs issues remaining for determination.
Mind you, according to Besanko J, it has long been thus. His Honour pointed to Beach Petroleum NL v Johnson (1995) 57 FCR 119 at 121 (per Von Doussa J) and older cases from other jurisdictions.
This case demonstrates that ultimately what determines questions of costs is always the statutory instrument which provides for them. Increasingly, one jurisdiction’s jurisprudence will not prove persuasive in relation to different statutory regimes.
Original post: Deutsche Bank AG v Sebastian Holdings Incorporated  EWHC 2073 (Comm) is big. Deutsche Bank sued a company in the English High Court and got a quarter of a billion American dollars judgment. Justice Cooke also ordered the company to pay costs and ordered an interim payment towards the company’s costs liability of about £35 million within a fortnight. The company, a special purpose shell company incorporated in the Turks & Caicos (a British territory in the Bahamas and offshore financial centre), didn’t pay. The plaintiff successfully applied ex parte to join the company’s sole shareholder and director and effect substituted service in the US. He is the Norwegian born, Swedish raised, Harvard educated, Monaco domiciled Alexander Vik, said to have been miraculously lucky in his path to billionnairedom. Until now…
The plaintiff then succeeded in its non-party costs order against the director for the reasons set out below. It seems all the rage over in England; consider also Xhosa Office Rentals Ltd v Multi High Tech PCB Ltd  EWHC 1286 (QB). (And see also this post about a similar decision in Victoria, Lillas and Loel Lawyers Pty Ltd v Celona  VSCA 70. Even more recently, see JJES Pty Ltd v Sayan (No 2)  NSWSC 475 in which the director of a corporate plaintiff which sued its solicitors for professional negligence was ordered to pay the solicitors’ costs personally on an indemnity basis. It refers to two more authorities directly on point: FPM Constructions v Council of City of Blue Mountains  NSWCA 340, and May v Christodoulou  NSWCA 75; (2011) 80 NSWLR 462) Continue reading “Director ordered to pay company’s £35M and counting costs liability”
In King v Benecke  NSWSC 957, Mr King alleged that his solicitor was negligent. The solicitor denied everything and lost on all but one issue, namely causation, with the result that the solicitor got judgment and Mr King only Pyrrhic victories.
Mr King argued he should not have to pay all of the solicitor’s costs. Rather, he argued, he should have his costs of the issues on which he succeeded (duty, breach, the proportionate liability defence), which took up most of the case.
Harrison J only acceded to that argument in one respect. The solicitor had alleged that Mr King’s solicitors in the professional negligence suit were themselves concurrent wrongdoers against whom some of any liability which might be established against him ought to be apportioned under the proportionate liability regime. The consequence was that Mr King had to get new solicitors, the plea having put the old ones into a position of conflict between self-interest and duty to Mr King.
The solicitor never adduced any evidence in support of the proportionate liability defence. His Honour found that Mr King should have his costs of and incidental to it, but otherwise pay the solicitor’s costs of the entire proceeding: Continue reading “Costs of a solicitor’s negligence claim which bombed only on causation; costs of the successful solicitor’s unsuccessful proportionate liability defence”
Associate Justice Lansdowne has released for publication an edited transcript of reasons her Honour gave in Chan v Falls Creek Alpine Resort Management Board for not approving a proposed compromise of the claim of a person under a disability. The citation for the decision is  VSC 314. ‘Disability’ in this sense is a term of art and extends to the disability of being a minor.
The plaintiff, through his litigation guardian, had proposed a compromise in terms which were expressed as an amount for the claim and an amount for his costs. Her Honour pointed to Sztockman v Taylor  VR 572 which suggests that such compromises are to be discouraged lest the plaintiff’s solicitors be attracted to an offer which is comparatively favourable in relation to costs but comparatively unfavourable in relation to the claim. That raises a conflict between interest and duty which is inherent in any compromise structured this way, but which is comparatively impermissible because of the disability of the plaintiff and the important role played by the parties’ lawyers in assisting the Court to evaluate the reasonableness of the compromise, a judicial function which is not a feature of compromises of claims by people not under a disability. Another reason for the discouragement of such compromises is that the judge approving the compromise is ill-equipped to assess the reasonableness of the proposed compromise in relation to costs.
Following the non-approval of the compromise, the deal was renegotiated such that the settlement sum was expressed on an all-in basis as the total of the separate sums originally proposed by way of compromise of the claim and of costs. That sum was to be paid to the Senior Master and the plaintiff’s solicitors were to apply to the Senior Master for costs. The renegotiated proposed compromise was approved by the Court.
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: Continue reading “Efficacity of lawyers’ retainers effected by written instructions procured by crash n bash agents”
A NSW solicitor was partially successful in a defamation suit. But for the circumstance that he had retained an incorporated legal practice with which he was associated and for part of the time the director and the file handler, the Court was willing to order the defendant to pay his costs on an indemnity basis. In respect of the period in which the solicitor was — the fictions of corporations law aside — substantially self-represented, his costs were ordered to be assessed on the ordinary basis. What McCallum J said in McMahon v John Fairfax Publications Pty Ltd (No 8)  NSWSC 673 is:
The award of costs is by way of an indemnity — usually only a partial indemnity — against out of pocket expenses and the cost of legal services reasonably incurred in litigation. Except in no-costs jurisdictions, everyone can usually recover their out of pocket expenses, but only those who incur a liability for fees charged by lawyers can claim costs other than for out of pocket expenses. Because solicitors are so special, though, where they act for themselves, they can recover costs other than out of pocket expenses even though there is nothing but their own effort for the indemnity to indemnify against. Whether barristers in the same situation can avail themselves of the same exception to the general rule seems not to be entirely clear.
The question arose in Ada Evans Chambers P/L v Santisi  NSWSC 538. A Magistrate had allowed a barrister to avail himself of the exception. The Supreme Court considered that the question of whether barristers are entitled to costs of acting for themselves was an important one, but declined to grant leave to appeal the Magistrate’s decision in this regard because the dispute was an inappropriate vehicle for the determination of that question. Very interestingly to my mind, a principal reason for not granting leave was that the costs of arguing it were disproportionate to the amount in issue in the case. Nevertheless, the Court gathered together the authorities on the question: Continue reading “Latest on whether barrister-litigants can recover legal fees for their own work”
Hidden away in Trkulja v Efron  VSCA 76, at footnote 49, is a little dictum of the Chief Justice and Justice of Appeal Santamaria which explains their Honours’ understanding of the term ‘pro bono’:
‘In current legal practice, the expression ‘pro bono basis’ is understood to refer to the basis where a practitioner offers his or her services on a voluntary basis without any entitlement to or expectation of remuneration.’
Practitioners should, it seems to me, think carefully before describing themselves as acting ‘pro bono’ when their retainers provide for them to be paid out of the proceeds of a costs order made in favour of their client in litigation to be paid by their client’s opponent in the litigation.
There has been uncertainty in relation to the efficacy of a retainer which says ‘I will charge you $300 per hour but will seek to recover it from you only if you obtain an order that the other party pay your costs, and then I will only seek to recover my fees to the extent of the other side’s liability under the costs order’ or any variation of that concept.
The issue was that the indemnity principle requires total party-party costs to be no more than the liability of the person seeking the costs order to their own lawyers for costs. If the liability depends on the making of a costs order, until the order is made, the liability is nil, so that the indemnity principle precludes the making of the order in the first place (so the argument goes). The latest important decision to endorse this reasoning, albeit in dicta, was King v King  QCA 81.
Now if there is a principle which is properly described as ‘flexible’, it is the indemnity principle in costs law and it is a matter of surprise to me that the uncertainty has persisted so long given the obvious desirability from the perspective of access to justice to sanctioning such arrangements.
Happily, the Supreme Court of Queensland recently gave a decision this year which decided as a matter of ratio that an otherwise orthodox hourly rates costs agreement which included the following special condition was efficacious and did not offend against the indemnity principle:
‘No fees will be payable by you unless an order is made by the Supreme Court of Queensland in your favour for the payment of costs and those costs are recovered by us from other parties and any fees charged shall be limited to the amount of costs so recovered.’ Continue reading “What does ‘pro bono’ mean? Are ‘semi-pro bono’ costs agreements legally efficacious?”
In Tugrul v Tarrants Financial Consultants Pty Limited [No 5]  NSWSC 437, Kunc J, deciding the fifth interlocutory matter in a proceeding, gave a warning to the profession about the need to try hard to resolve interlocutory skirmishes including picking up the telephone. It was a little reminiscent of the Victorian Court of Appeal’s fulmination in Yara Australia Pty Ltd v Oswal  VSCA 337. An applicant for security for costs against individual opponents was ordered to pay the costs of the unsuccessful application forthwith and on an indemnity basis. His Honour’s Nine Commandments were:
- How do these dicta and the requirements of ss 56 and 59 of the CP Act translate into practice when interlocutory issues arise, including such matters as amendments, strike outs, discovery and security for costs? Assuming compliance by the practitioner with the relevant professional conduct rules, nine points may be made by way of general, practical guidance. Nevertheless, the variety of circumstances confronted in practice means that what follows cannot be exhaustive.
- First, it must be emphasised that s 56 of the CP Act and its related provisions are not just pious exhortations to be acknowledged and then ignored. They have real consequences for the clients and lawyers in this Court and are to be applied rigorously in the conduct of all litigation, great or small.
- Second, solicitors and barristers are members of a profession. It is of the essence of a profession that relations between its members are characterised by civility, trust and mutual respect. The Court sees far too much correspondence between lawyers that bears none of those qualities. They must never be abandoned at the behest of clients or in the misguided belief that that is what successful representation of a client requires.