A judge has told the lead plaintiff in a class action over allegedly excessive legal fees to get their “house in order”, amid complaints by the Queensland compensation law firm at the centre of the dispute that the litigation is “costing them a fortune”.
Mihaela Calinoiu filed a representative proceeding against Brisbane-based QLD Law Group in August last year, after she engaged the firm in relation to a motor vehicle personal injury claim. She argued that $35,500 in professional fees deducted from her settlement was neither fair nor reasonable and amounted to misleading or deceptive conduct under the Australian Consumer law.
On Thursday, Calinoiu was granted leave to amend her statement of claim to include further alternative pleadings, namely that the costs agreement was void because it either did not meet legal professional standards, or it included unfair terms, or it was unconscionable.
Justice Michael Lee warned the plaintiff that she needed to “get her house in order about how they want to run these alternatives” to allow an opt-out notice to be issued to approximately 1,600 people.
Class action “completely disproportionate” to matters in issue
Counsel for QLD Law Group Philip Looney QC questioned whether the plaintiffs were “wishing for too much” by attempting to run an unconscionability argument.
“In any event, I can report it would be with the greatest disappointment of my clients with how the case is going, because… this is costing a fortune, and we say, completely disproportionate to the matters that are in issue,” Looney said.
QLD Law Group has made an applications for security of costs, as well as an application for a discontinuance order under section 33N of the Federal Court of Australia Act. It is yet to file a defence.
Looney said they would not press their applications for security and discontinuance until after the adoption of a costs referee report.
Justice Lee asked the parties to take the time they needed to “get this right”, asking them to agree on a “sensible regime” for how the case should progress.
The class action extends to those who entered into conditional costs agreements with QLD Law Group from August 2012 and retained the firm in relation to motor vehicle accident claims.
The original arguments
According to the original statement of claim, Queensland Independent Costing Services was hired by QLD Law Group for Calinoiu’s case in October 2017 and found that the expenditure up to that time of $44,500, which included a 25 percent uplift, was fair and reasonable.
While the fee was later reduced to $25,500 due to a so-called “50/50 rule,” a total of $36,500, which comprised professional fees, uplift fee and disbursements, was deducted from the settlement sum Calinoiu received.
Despite the independent costs assessment finding, Calinoiu claims the firm breached an implied term that the fees would be fair and reasonable. It also amounted to misleading and deceptive conduct in breach of the Australian Consumer Law, she says.
Calinoiu is seeking damages, equitable and statutory compensation, declarations, interest and costs.
Calinoiu was represented by Dominique Hogan-Doran SC, instructed by O’Brien Lawyers. QLD Law Group was represented by Philip Looney QC, instructed by Eakin McCaffery Cox Lawyers.