Background
LCM Operations Pty Ltd funded the unsuccessful Gladstone Fisheries class action. Clyde & Co Australia provided legal services to the lead plaintiffs, not to LCM. Under the retainer, LCM was expressly not a client and received no legal services, although Clyde & Co owed it contractual obligations as the litigation funder and associated third-party payer.
Clyde & Co delivered bills totalling $20,384,890.34, which LCM paid. LCM sought assessment of those bills after the original fee cap of $4.8 million had been increased to $9,775,800. The costs assessor referred three questions to the Court: whether the assessment should use the parties’ costs agreements or the Supreme Court scale, whether Clyde & Co’s solicitors could participate in the assessment, and whether the assessor could calculate and impose interest on any refund.
The Court’s Holding
Smith J held that the assessment must proceed under the existing costs agreements. The agreements adequately identified the variables affecting the uplift fee and, read as a whole, limited the 25 percent uplift to professional fees. Although one table mistakenly incorporated disbursements into its calculation, the Court treated that as an immaterial arithmetic error rather than a breach invalidating the agreements. LCM also failed to establish that Law Essentials’ relevant fees were disbursements.
The Court found it arguable that Clyde & Co had failed to make timely disclosure of substantial cost increases, including the increases from the $4.8 million cap to approximately $9.7 million and then to approximately $20 million. That did not make the agreements invalid, and LCM had not shown that they were unfair or unreasonable so as to justify setting them aside. The costs assessor could nevertheless consider a proportionate reduction under s 316(4) of the Legal Profession Act 1997 (Qld). Clyde & Co’s solicitors were entitled to be heard in the assessment, while any repayment and interest orders were matters for the Court, not the assessor.
Key Takeaways
- A litigation funder may seek assessment as an associated third-party payer even though it is not the solicitors’ client.
- An isolated calculation error did not invalidate an agreement whose operative provisions clearly confined the uplift fee to professional fees.
- Disclosure failures may support a proportionate reduction on assessment without making the costs agreement void or requiring it to be set aside.
Why It Matters
The decision distinguishes a litigation funder’s rights as a third-party payer from the solicitor-client relationship and confirms that costs agreements are construed objectively and as a whole. A disclosure failure does not automatically displace the agreement, but it may still materially reduce recoverable costs.
It also clarifies the division of responsibility after an assessment: the assessor determines allowable costs and may hear the law practice’s representatives, while the Court determines any resulting repayment and interest.