This matter concerned two representative proceedings (the ‘Thomas Proceeding’ and ‘Shina Proceeding’) which were commenced against two related partnerships operating supermarkets in New South Wales and South Australia. As the primary claim against the respondents was the same, an order was made for the proceedings to be determined concurrently.
The lead applicants, Mr Thomas and Mr Shina were full time employees and managers for the respondents. Their employment was governed by the General Retail Industry Award 2010 (Award). The applicants alleged:
The respondents admitted the allegation with respect to the uniform costs, but otherwise denied liability.
The parties sought approval to settle the proceedings on the terms made in a Deed of Settlement and Release (Deed) and in accordance with an agreed distribution model (Proposed Settlement).
After private mediation, the parties recorded the outcome in the Deed. The Deed included conditions to the following effect:
The Court raised a number of concerns with the Deed including:
Adero Law had a conditional costs agreement with the lead applicants. Adero Law conducted the proceedings on a no-win, no-fee basis and charged a 25% uplift fee. In support of a contention that the Costs Amount should be $825,000, counsel for the lead applicants relied on the opinions of the cost consultants, particularly Ms Dealehr. In determining the reasonableness of the Costs Amount, Charlesworth J considered the question as if the costs were being assessed as between Adero Law and its clients under the Legal Profession Act 2006 (ACT) (LPA).
Her Honour noted that Adero Law failed to comply with various provisions of the LPA including:
|Section 269(1)(d)||Adero Law failed to disclose to the lead applicants “an estimate of the total legal costs … or … a range of estimates of the total legal costs and an explanation of the major variables that will affect the working out of the costs…” (at ).|
|Section 293(3)(e)||The costs agreement failed to provide for a 5-day cooling off period.|
|Section 284(3)||Adero Law failed to provide an estimate of the uplift fee in quantitative terms. Adero Law had merely specified a 25% uplift on their usual rates.|
|Section 284(4)||The costs agreement applied a 25% uplift to disbursements.|
Her Honour considered the failure to comply with s 269(1)(d) as being particularly egregious because there was a material risk that any judgment sum awarded would be consumed by legal fees. Adero Law’s failure to provide the lead applicants with a timely estimate of costs meant that the applicants were not able to make an informed decision on the viability of progressing their claims to trial. By breaching s 284 of the LPA, Adero Law’s costs agreement was deemed void under s 287(1) of the LPA. As an additional consequence, Adero Law was not entitled to recover their uplift fee. Her Honour concluded that a reduction of 25% should be applied to Adero Law’s total claimable costs.
Her Honour cited Gordon J in Modtech Engineering Pty Ltd v GPT Management Holdings Ltd  FCA 626 regarding the role of the Court in assessing requests to deduct solicitors’ fees from a proposed settlement sum (at ):
Despite Ms Dealehr’s costs assessment, the Court determined that for the purposes of the Deed, the Costs Amount should be fixed at $560,893.52. The Court made a number of observations with respect to Adero Law’s costs including:
Excessive Claims – Her Honour rejected the assertion in Adero Law’s instructions that the proceedings contained a high degree of complexity. Her Honour noted that the matter was referred to mediation at an early stage, that the content of the pleadings in the two proceedings were very similar and that much of the work was unnecessary.
Amount for Disbursements – Her Honour generally accepted Ms Dealehr’s assessment of the reasonableness of the disbursements. However, her Honour was critical of counsel’s charges for attempting to persuade the Court that the Costs Amount should be $825,000.
Her Honour approved the Deed prepared by the parties and clarified that the payment of the Settlement Sum is a fair and reasonable solution to the risk that a successful judgment sum would be consumed by legal fees.
The Court’s orders included:
Federal Court of Australia, Charlesworth J
19 September 2022
Applicants’ Solicitors: Adero Law
Respondents’ Solicitors: Crawford Legal
Applicants’ Funder: N/A
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