The Victorian Supreme Court of Appeal has found that a
successful party represented under a pro bono scheme has a right to
recover costs, rejecting the Queensland authority on point and
tapering the barrier for people experiencing financial hardship to
The Court of Appeal was asked to determine whether the order for
costs for a party represented on a pro bono basis offended the
In Mainieri v Cirillo  VSCA 227, the respondent,
Mrs Cirillo, sold her home and contributed $240,000 of the proceeds
of sale to her son, Mr Mainieri, and his wife, to be applied in
reduction of his mortgage. In consideration, Mr Mainieri and his
wife undertook to permit Mrs Cirillo to live with them indefinitely
in their home and take care of her.
After the relationship broke down, Mr Mainieri refused to repay
the money to Mrs Cirillo.
Mrs Cirillo instituted a proceeding claiming that she was
entitled to a constructive trust over her son's property to the
extent of her contribution to its costs of acquisition, or
alternatively, a right of repayment with an equitable charge or
lien as security for repayment.
The Supreme Court Decision
In finding in Mrs Cirillo's favour, the Supreme Court
awarded costs to Mrs Cirillo, despite being represented on a pro
Mr Mainieri sought leave to argue, amongst other things, that
the trial judge erred in making an order for costs in favour of Mrs
In allowing the appeal and awarding costs to Mrs Cirillo, the
court considered the effect of a costs agreement whereby Mrs
Cirillo's liability to pay her solicitors was contingent on a
costs order being made in her favour, or the case being settled on
terms which included the payment of her costs.
Relevantly, the costs agreement provided that:
"2. How we calculate what we
2.1 You will not have to pay us anything out of your own pocket for
any of the work done by our lawyers on your matter (professional
3. Issuing a bill for payment by another party
We will only issue you with a bill for our professional time if one
of the following things happens:
(a) a Court or other tribunal or statutory scheme orders another
party to pay your legal costs; or
(b) the case is settled, and part of the settlement includes
payment of your legal costs.
If one of these two things happens, we will issue a bill which
includes our professional time and all disbursements which we have
incurred in this matter. We will not ask you to pay any more under
the bill than the amount recovered for legal costs in paragraph
3.1(a) or 3.1(b), even if that amount is less than the amount of
The indemnity principle
The indemnity principle is that, as between party and party, the
party ordered to pay the other party's costs is obliged to pay
only those costs which the other party is legally obliged to pay
his or her solicitor. In making its decision, the court referred to
the New South Wales decision of Wentworth v Rogers:
"[I]t is beyond dispute that
the purpose of an adverse costs order is to compensate or partly
indemnify one party to litigation (usually the successful party)
for the legal costs incurred in the course of the proceedings. The
[indemnity] principle does not require that the costs have been
paid, but it does require that there be a legal liability to pay
The court decided that the application of the indemnity
principle should not depend on a distinction between a contingency
to pay costs expressed as a condition precedent or
"The general law governing
the indemnity principle with its emphasis on flexibility is, in my
opinion, quite capable of accommodating conditional fee agreements
of this kind. It should do so recognising the importance of such
agreements in promoting access to justice which may otherwise be
unaffordable. The residual undertaking to pay, though qualified,
strengthens the case for conformance with the indemnity principle.
It is reasonable, not just in this ferocious litigation but more
generally, to recognise in a costs agreement that the unsuccessful
party who is subject to a costs order may delay or defeat recovery.
Hence predicating payment on successful recovery is not
unreason-able. In the words of Bramwell B this gives no unjustified
bonus to the successful party nor does it impose any punishment on
the losing one, so as to invoke the rationale behind the indemnity
The position in Queensland
In making its decision, the Victorian Supreme Court of Appeal
considered but rejected the position in Queensland.
In King v King & Ors  QCA 81, the
applicant's lawyer was acting on a pro bono basis, and the
costs agreement provided that there would be no charge to the
applicant for professional work undertaken. Subsequent to judgment
being pronounced in favour of the applicant, the applicant's
lawyers filed submissions as to costs, and varied the costs
agreement between the applicant and the solicitor so that the
solicitor could recover costs if successful. The Queensland Court
of Appeal rejected the application, finding that the applicant
could not recover his costs.
It is to be seen whether the position in Queensland will change
following this recent Victorian Court of Appeal decision.
1Wentworth v Rogers (2006) 66 NSWLR 474 ,
. 2Mainieri v Cirillo  VSCA 227 at . 3Wentworth v Rogers(2006) 66 NSWLR 474 at  per
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This was an interlocutory decision about the appointment of a tutor for the child appellant, to carry on his proceedings.
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