Costs of costs dispute ... Firths fights bitter battle against former client ... Court finds that law shop's offers to settle were not genuine compromises ... Client's extravagant claims ... Each side sent home without a costs order
Justice Campbell: critical of Firths' offers and former client's tactics
FIRTH'S compo law shop, which ran miles of overcharging cases against Keddies, has itself been in the frame for overcharging.
In a case against Firths brought by former client Qing Min Ji both sides failed to secure a costs order.
The original dispute was settled in favour of the client for $14,000 but the struggle over the costs of the dispute continued.
The NSW Supreme Court found Firths' offers were not "true compromises" because their client had a right to restitution, but the client failed to have his costs awarded because his "extravagant claims" were a ploy to have proceedings heard in the Supreme Court.
Background
Firths had been the fourth law shop to represent Ji in a workers comp claim.
In an arbitration on February 10, 2011 Ji and his employer reached "in principle agreement" for settlement.
On the same day Firths and Ji entered into a lump sum conditional fee arrangement for the work injury claim.
On August 3, 2011 Firths sent a bill for $33,450 - of which $18,515.18 was recovered by party and party costs, leaving a purported solicitor client margin of $14,934.
Justice Stephen Campbell interpolated "that the memorandum of fees was obviously rendered on a solicitor and client basis".
Original fee dispute
Justice Campbell held a legal practitioner cannot charge on a solicitor and client basis for work injury damages unless separate written notice is provided "that even if costs are awarded in favour of the client the client will have to pay the amount in the costs agreement" as per cl.103 of the Workers Compensation Regulation 2010.
See: Workers Comp Regs.
The judge held in the event that conditions in cl.103 were not complied with, cl.102 stipulated that the costs set out in Schedule 7 were the maximum costs payable, and that depends on what costs were "fair and reasonable" for the work done.
Campbell described the plaintiff's statement of claim as "surprisingly elaborate" and the pleadings as "unnecessarily prolix".
The plaintiff relied on "multifarious causes of action" including: breach of contract; unconscionable contract; breach of an implied term of the contract; misleading and deceptive conduct; breach of fiduciary duty; the tort of deceit; and an entitlement to aggravated and exemplary damages.
It appeared that the original pleader (not the current representative) ...
"sought to derive some tactical advantage out of attempting to justify, by means of extravagant claims, the commencement of proceedings in this court."
Firths contested every basis of relief and claimed that cl.103 was complied with, and notice was given in a separate document dated February 10, 2011.
The dispute was settled by consent in favour of Qing Min Ji for $14,000 but the parties continued to dispute who should pay the costs of the proceedings.
Costs dispute
The plaintiff submitted that costs follow the event.
Firths sought costs on an indemnity basis for the whole proceedings, or at least after July 7, 2012.
There were nine bases for this claim. Four were a series of Calderbank offers and offers of compromise. Four were aspects of "delinquency" on the part of Ji, which were rejected by Justice Campbell.
The last one was r.42.34 of the Uniform Civil Procedure Rules 2005 - that costs orders should not be made in proceedings in the Supreme Court unless the court is satisfied the proceedings were brought in the appropriate court.
Calderbank offers and offers of compromise
Justice Campbell said the notice required by cl.103 of the Workers Comp Regs was not disclosed in evidence, and that may be because Firths had "conceded that the costs agreement is void by dint of s.323 and s.327 of the Legal Profession Act".
He added that presumably, implicit in this concession is a concession that there was no costs agreement as required by cl.103(1)(b) of the Regulation.
As a result there was "no entitlement to charge practitioner and client costs ... regardless of notice".
He found Firths was entitled only to "fair and reasonable costs" as per Schedule 7 of the regulation.
Qing Mi Ji had an "indefeasible right to restitution of the margin of practitioner and client costs over party and party costs".
Fair and reasonable costs were "not necessarily, or accurately, calculated simply by deducting the amount the employer's solicitors agreed to pay as party and party costs from the gross amount charged".
The judge calculated that the amount of work done did not exceed 29 hours, was "mainly administrative work", and even if charged at the professional rate of $200 per hour would amount to only $5,800.
This demonstrated, in light of Qing Min Ji's indefeasible right to reimbursement that:
"none of the settlement offers truly represented a compromise from the point of view of [Firths]; rather, each proceeded in the expectation that the client ought to compromise ... his vested right to restitution."
As a result, Firths could not gain a "tactical advantage" in relation to costs by making offers.
Justice Campbell held the offers of compromise and Calderbank offers were not "true compromises".
Costs following the event
The general rule that costs follow the event is subject to r.42.34(2) that:
"An order for costs may be made, but will not ordinarily be made, unless the Supreme Court is satisfied the commencement and continuation of the proceedings in the Supreme Court, rather than the District Court, was warranted."
Campbell said it was "questionable" that the District Court did not have jurisdiction to grant all of the relief sought and because the "claim involved no more than the recovery of a modest amount of legal fees".
He held held r.42.15 and r.42.15A, which apply where an order or judgment was more favourable than an offer, did not apply here because there had been no judicial determination of a contest - rather the proceedings were concluded by consent.
Each party was ordered to pay their own costs of the proceedings and of the present application.
Reporter: Paul Karp
See: Ji v Firths