The recent judgment in Williams v Hunter New England Local Health District [2022] NSWSC 1042 (Williams) provides further judicial guidance regarding the Court’s protective function when considering applications for approval of settlement under section 76 of the Civil Procedure Act 2005 (NSW) (the “CP Act”).
In layman’s terms, Section 76 of the CP Act provides that a court must approve any settlement in a matter concerning a claimant who is under a legal incapacity (e.g. a child, or a person who is deemed unable to make informed decisions on their own behalf). In essence, the Court must consider what is in the best interests of that person.
In the recent case of Williams, the presiding judge, the Honourable Justice Richard Cavanagh, raised significant concerns regarding the plaintiff’s legal costs.
Note: although, it is not specifically referred to in this case, section 172 of the Legal Professional Uniform Law (NSW) imposes a requirement on law practices that “legal costs must be fair and reasonable”.
The following is extracted from the judgment and should serve as a stern warning to all legal practitioners:
- “The Court has an overall supervisory function and a protective function. I raise this in this matter because the approach of the solicitors for the plaintiff was apparently to simply say that, without any sort of explanation or verification, there may be a further $500,000 to come out of the settlement by way of solicitor/client costs in a case which has not even been to a hearing. On any view, that is a significant amount.
- …[i]t included a round sum of $500,000 in professional fees. On average, this equates to, for example, $500 per hour of 1000 hours of solicitors’ time in preparing this medical negligence matter.
- [the plaintiff’s solicitor] also provided details of all the disbursements in the matter. Again, they are significant and are said to amount to $462,000 plus interest on disbursements.
- Suffice to say that it is somewhat disturbing to learn that a case like this would take a million dollars in legal fees to get to a point of settlement shortly before the hearing.
- I mention these matters because, in my view, it is necessary in an application such as this for those representing the plaintiff not merely to provide an estimate of solicitor/client costs as has been done in this matter, but to provide some verification and justification of the level of fees. …[counsel for the plaintiff]… is correct, that it is, in the end, a matter for the trustee, but it is also a matter for the Court to exercise its supervisory and protective powers and ensure that it is aware of all of the deductions.
- In any event, in this matter, I am satisfied that the settlement should be approved because of the issues on liability. I must leave the other matters (costs) to be worked out with the trustee, who will no doubt consider the extensive costs sought to be charged carefully.”
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