In the 14 February 2022 decision in Osei v P K Simpson Pty Ltd [2022] NSWCA13, the Court of Appeal clarified an important issue regarding the cap on costs for personal injury damages matters, as set out in clause 2 of Schedule 1 to the Legal Profession Uniform Law Application Act (NSW) 2014 (‘the Uniform Law’). 

Legal costs (excluding disbursements) are capped at either $10,000 or 20% of the damages sum (whichever is higher), if personal injury damages are less than $100,000.

The appellant was an injured worker who settled his weekly payments of compensation for a lump sum. He later successfully sued both his solicitor and barrister in the District Court for alleged negligent professional advice in respect of that settlement. 

In the professional negligence case, the District Court awarded $19,086.65 in damages (including interest) to the appellant.  In a separate judgement, the District Court held that the appellant’s costs were capped at $10,000, being capped under the Uniform Law.

The Court of Appeal gave the appellant leave to appeal on the question of costs, stating that before this case, the issue had not been directly decided by the NSW Court of Appeal or the High Court.

The majority held that the appellant’s District Court costs were not capped under the Uniform Law, because the District Court award of damages was for pure economic loss arising from professional negligence, not personal injury damages.  The appellant had lost the chance of a more favorable outcome to receive weekly payments of workers compensation, this being pure economic loss.

One of the judges (Garling J) agreed the costs were not capped, but on the basis that the monetary award was for a statutory entitlement under workers compensation legislation, and therefore not damages for personal injury.

The cost cap under the Uniform Law will apply in professional negligence cases where a direct claim for personal injury is brought, such as in medical negligence cases (if the damages are under $100,000).

However, if an injured plaintiff later sues their legal representatives for negligent advice in their medical negligence matter, based on this decision the costs cap will not apply to the legal professional negligence claim, because a claim against a solicitor is not a claim for personal injury. The same goes in professional negligence cases that may arise from general liability personal injury or motor accident claims.

If you have a query relating to any of the above information, please don’t hesitate to get in touch with Zara Officer, Partner within Holman Webb’s Insurance Group.