Medical: Costs on approval of settlement – supervisory function.

Williams v Hunter New England Local Health District [2022] NSWSC 1042 (on Caselaw).

Although a simple approval of a settlement in a birth trauma claim, this matter is of interest for the approval judge’s comments in relation to costs. The Court said at [24] that 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.

The following appears at [18] – [25]:

However, I do wish to say something else about the legal costs in this matter. When this matter first came before me, the only evidence as to costs was … (an estimate of) … an amount for solicitor and client costs which should not exceed $500,000. I raised with … (counsel) … as to whether it was appropriate in a matter such as this for there to be some further explanation of the amounts that would be coming out of the settlement (the other amounts to come out were explained). He pointed out that it is a matter for the trustee to approve any costs or any amounts which would be deducted from the amount of the settlement.

That is so. However, it seems to me that in circumstances in which the solicitors for the plaintiff suggest that, in a matter which has not ever been to hearing, their solicitor/client costs alone would be up to $500,000 (that is, over and above the amount they recover from the defendant, by way of party/party costs), there needs to be some sort of additional explanation or verification of those costs. This is not just for the purposes of the trustee but for the purposes of the Court in ensuring that the settlement is for the benefit of the plaintiff. I thus stood the matter down and directed that the solicitors provide some further itemisation of the costs.

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 received a further affidavit … (which)… broke down the cost estimate. It 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. … 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. … 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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