Gadens Lawyers v Beba Enterprises [2012] VSC 519

The borrower defaulted on the loan which resulted in an agreement to settle the debt with the lender on a compromised basis. Part of the settlement agreement included Beba paying $60,000 towards the legal and accounting costs incurred by the lender for their default.

Beba sought a Costs Court review of the legal costs paid on the lenders behalf under Part 3.4 of the Legal Professional Act (“LPA”). This included seeking orders that Gadens provide a copy of the itemised bill of costs or that Gadens fees be costs assessed.

Gadens resisted any enquiry into the legal fees they charged on the grounds that the matter had already been put to bed in the settlement agreement commenting:

In my view, both the structure of the settlement agreement and the evidence about its negotiation make it clear that the parties to the agreement had in mind that the payment of $60,000 would conclusively resolve the issue of what costs the Client was entitled to recover as a result of the default and that it would not be open to one or other of them to re-open or revisit this question.

By agreeing to the payment of $60,000, the parties put an end to any question about how much of the legal costs were recoverable. They did so in the context of putting to an end a larger dispute as to whether there had been a default, whether the whole sum due under the  mortgage  was repayable immediately and so on.

Click here to read the full judgment.

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