Maximus Holdings (NSW) Pty Limited trading as Schreuder Partners Compensation Lawyers (ABN 40 110 829 868) v Sandra Primerano

The plaintiff is an incorporated legal practice that trades under the name Schreuders Compensation Lawyers. Since 2010, the plaintiff’s practice has comprised solely of no win/no fee personal injury litigation.

During the period from about 25 September 2017 until 11 August 2022, the defendant was employed by the plaintiff as a solicitor. Her title was Senior Solicitor & Quality Assurance Manager.

The plaintiff terminated the defendant’s employment on 11 August 2022 upon the discovery by the plaintiff of certain conduct by the defendant, whereby she misled clients of the plaintiff by purporting that the plaintiff was providing legal services to them when it was not.

These proceedings were commenced on 30 August 2022 and on 1 September 2022, the Court granted interlocutory injunctions in favour of the plaintiff.

The defendant was represented by solicitors in the matter up until 30 January 2023. The defendant failed to file a defence by 11 April 2023 in compliance with an order made by the Court on 14 March 2023. The Court entered default judgment for damages to be assessed on 28 June 2023.

The defendant has not taken an active part in the proceedings since about March 2023. She was on notice of the hearing which occurred on 18 March 2024 and there was no appearance when the matter was called outside Court on that day.

The plaintiff now moves the Court for the following relief:

For the reasons set out below, I am satisfied that the plaintiff is entitled to damages. The sum that I have assessed as appropriate damages is $75,000. I am also satisfied that a gross sum costs order should be made for the defendant to pay the plaintiff’s costs of the proceedings in the sum of $104,140.28. There is no utility in the present case in the Court making any declarations.

In the absence of filing a defence, the allegations in the statement of claim filed 31 October 2022 stand as admitted: see Obela Fresh Dips and Spreads Pty Ltd v Coetzee [2020] NSWSC 1862 at [20]; Uniform Civil Procedure Rules 2005 (NSW) r 14.26(1).

I set out a summary of those allegations, being the facts against which I determine the appropriate relief. The plaintiff also relied on evidence before me which substantiated the allegations.

As set out above, the plaintiff operates an incorporated legal practice, specialising in personal injury compensation claims.

The defendant was employed by the plaintiff between the period from 25 September 2017 to 11 August 2022. On or about 4 March 2020, the plaintiff and the defendant entered into a written contract of employment. The express terms of that employment contract included:

In addition to the express terms of their employment contract, the defendant owed fiduciary duties to the plaintiff, as well as duties under ss 182 and 183 of the Corporations Act.

The statement of claim sets out conduct in relation to a number of individuals which may be summarised as follows.

From at least January 2018, and without the knowledge or approval of the plaintiff, the defendant represented to Mr Joseph Xuereb and to third parties, by her words and by her conduct, that:

This is in circumstances where neither Mr Xuereb nor Ms Sales were ever a client of the plaintiff.

Ms Carmel Kutcher was a client of the plaintiff, although the plaintiff did not authorise the defendant to provide any legal services to Ms Kutcher on its behalf after 12 July 2022.

On 11 August 2022 and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Kutcher:

Further, on or about 15 August 2022, and without the knowledge or approval of the plaintiff, the defendant made a telephone call to Ms Kutcher during which she:

In or about 2022, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Kathryn Murphy that:

This is in circumstances where Ms Murphy was a client of the plaintiff but at no time did the plaintiff authorise the defendant to provide any legal services to Ms Murphy on its behalf after about July 2021.

Further, on or about 15 August 2022, the defendant:

In or about August 2022, and after her employment by the plaintiff had ceased and without the knowledge or approval of the plaintiff, the defendant falsely represented to Mr Jon Stone that:

This is in circumstances where Mr Stone was a client of the plaintiff but at no time did the plaintiff authorise the defendant to provide any legal services to Mr Stone on its behalf in August 2022.

Mr Robert Gould was a client of the plaintiff to whom it provided services up until about 17 April 2019. Mrs Carol Gould is the grandmother of Mr Gould and conveyed instructions to the plaintiff on behalf of Mr Gould.

The plaintiff has not provided legal services to Mr Gould since about 17 April 2019 and at no time did the plaintiff authorise the defendant to provide legal services to Mr Gould on its behalf after 17 April 2019.

After 17 April 2019, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Mrs Gould that:

At no time did the plaintiff authorise the defendant to provide legal services to Ms Julie Farrell on its behalf after August 2020.

Up until about August 2022, and without the knowledge or approval of the plaintiff, the defendant falsely represented to Ms Farrell that:

By reason of the default judgment, I proceed on the basis that the factual allegations set out above are admitted, and that they constitute misleading or deceptive conduct, breaches of the express terms of the employment agreement, fiduciary duties owed by the defendant to the plaintiff, and the duties owed under ss 182 and 183 of the Corporations Act. Evidence was also adduced to establish the allegations and, based on this evidence, I accept that the allegations have been established independently of the deemed admissions.

The principal financial relief sought by the plaintiff before me was for a sum of money to be awarded for damage to its reputation. The evidence adduced before me established the following matters.

The plaintiff has operated its legal practice for nearly 20 years. It has operated exclusively in the field of injury compensation for 14 years. It operates in multiple locations in Australia and employs 20 staff in its Sydney CBD office. The plaintiff has a sizeable practice providing services in approximately 1,500 matters as at 21 December 2023.

The plaintiff attracts new business by advertising on television, the internet (Google ads) and social media. The plaintiff has used the services of a professional marketing consultant since about 2019 to promote its business, focussing on digital marketing across paid media campaigns and organic tactics.

The plaintiff has acquired a valuable reputation as a specialist firm providing representation to claimants in personal injury compensation matters.

The conduct of the defendant in the present case has likely caused some significant damage to the plaintiff’s reputation. The conduct of the defendant in relation to two of the six ‘clients’ set out in the statement of claim amply demonstrates this.

First, the defendant led Ms Farrell to believe that the plaintiff was running personal injury litigation on her behalf in the Supreme Court of New South Wales, with trial dates in November 2022. This was false, and no such proceedings were commenced. Also, false claims were made by the defendant to Ms Farrell that a mediation had been arranged and had taken place, during which settlement offers had been made to Ms Farrell in the amounts of $800,000 and $1.8 million.

Ms Farrell, then suffering from Stage 4 cancer, came to Sydney expecting to participate in the purported mediation in about April 2022, only to be told by the defendant that the mediator had contracted Covid-19 and that the mediation could not go ahead.

In fact, the plaintiff had closed and archived Ms Farrell’s file in June 2020.

Ms Farrell passed away in September 2023.

In October 2022, “Jules Farrell” left a Google review of the plaintiff in the following terms:

The plaintiff received a total of 27 Google reviews over the 12 months ending December 2023, only three of which were not five-star reviews. The “Jules Farrell” review has received ten “likes”.

This review can only be deleted by the person who posted it. Ms Farrell has now, unfortunately, passed away and accordingly it apparently cannot now be deleted.

Secondly, the defendant led Mrs Gould to believe that the plaintiff was acting for Mrs Gould’s grandson, Mr Gould in personal injury proceedings against Campbelltown City Council. Among the falsehoods the defendant told Ms Gould was that a settlement offer had been made to her grandson in the sum of $300,000 in about May or June 2022.

In fact, the plaintiff had not conducted any work on behalf of Mr Gould since about 2018, when Mr Gould had lost an appeal in a medical negligence action. His file was closed and archived in 2019.

There was evidence before me that, upon learning of these falsehoods, Mrs Gould was, quite understandably, agitated and upset and said that she was “going to the media”.

Mr Schreuder, the principal of the plaintiff, gave evidence in relation to his opinion as to the fees that were lost by the plaintiff by reason of the conduct of the defendant. His estimate was that the firm had lost revenue in the order of $650,000 to $1.3 million based on an estimate as to the downturn in the number of new matters and an estimate of revenue per matter. It was not suggested by counsel for the plaintiff that I should order compensation in relation to this so-called lost revenue. Rather, the figures were put forward to reflect the fact that the actions of the defendant have contributed in a real way to reputational damage and quite possibly actual financial losses. It was accepted that it is very difficult to make an assessment as to what would be the financial losses.

The plaintiff sought to rely upon a number of authorities in analogous areas to support a claim for the Court to order damages for lost reputation.

It is clear that damages for loss of reputation may be awarded for breach of s 18 of the ACL: see, for example, Flamingo Park Pty Limited v Dolly Creation Pty Limited (1986) 65 ALR 500 at [525] (Flamingo Park); Cryeng Pty Limited v Loyola [2011] FCA 956 at [97] – [105] (Cryeng v Loyola); as well as for breach of contract: see, for example, Baltic Shipping Company v Dillon (1993) 176 CLR 344 at [370] per Brennan J.

In Flamingo Park, Wilcox J said at [525]:

Flamingo Park was a case decided in 1986.

In Cryeng v Loyola, a case of misleading or deceptive conduct and breach of contract, Stone J was prepared to award an amount of $50,000 for loss of reputation “doing the best I can with scanty evidence” (see [105]).

Stone J referred to the earlier decision of French J in FAI General Insurance Co Limited v RAIA Insurance Brokers Limited (1992) 108 ALR 479, where French J stated at [509]:

The decision of French J was upheld on appeal: see RAIA Insurance Brokers Limited v FAI General Insurance Co Limited (1993) 41 FCR 164. On the appeal, Beaumont and Spender JJ said at 179:

More recently, in Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) (2017) 122 IPR 279; [2017] FCA 63, a claim in relation to the sale of counterfeit goods brought under the Copyright Act 1968 (Cth) and Trade Marks Act 1995 (Cth) in passing off and for misleading or deceptive conduct, Bromwich J, in relation to damages for loss of reputation, stated at [73]:

In the present case, the plaintiff submitted that using a broad brush approach, an award of reputational damages in the range of $50,000 to $100,000 is justifiable, and unlikely to be disproportionate. I propose to adopt the mid-point of this range, and award $75,000. This is on the basis that, particularly having regard to the “Jules Farrell” Google review, and the fact that Google is one of the main means by which the plaintiff advertises its services, it is indeed likely that the conduct of the defendant, leading to the adverse Google review by “Jules Farrell”, has had, and is continuing to have, a not insignificant impact on the plaintiff’s reputation and thus its business.

The Google review obviously means that other potential clients will become aware of the defendant’s conduct, which will likely cause them to think less of the plaintiff as a reputable law firm and they may well choose to go elsewhere and not retain the plaintiff. That review cannot be removed.

The allegations in the statement of claim also demonstrate that the defendant’s conduct was not isolated to only one client but extended to a number of clients. There is evidence of at least one other client being upset and dissatisfied and threatening to go “to the media”. I also pay some regard to the evidence of Mr Schreuder as to the reduction in new clients, although this could be due to any number of factors, including the defendant’s conduct.

Accepting how difficult the exercise is and that its very nature means that a broad brush approach must necessarily be taken, $75,000 is an appropriate figure.

The plaintiff also sought certain declarations, as set out at the commencement of these reasons.

The plaintiff submitted that declarations of wrongdoing are justified and ought to be made in the matter:

Counsel for the plaintiff conceded at the hearing that the need for declaratory relief was significantly reduced if, as I have found above, an award of compensatory damages for loss of reputation is to be made.

In my view, there is no utility in the Court granting any declaratory relief in circumstances where the public availability of these reasons, and the award of compensatory damages, would serve the same purpose as any declaratory relief.

The defendant should pay the plaintiff’s costs of the proceedings.

The plaintiff also seeks a gross sum costs order.

The principles concerning the making of a gross sum costs order were recently discussed by Peden J in Bell v Hartnett Lawyers (No 4) [2023] NSWSC 1592 at [49], as follows:

The plaintiff submits that a gross sum costs order is appropriate for the following reasons:

I agree that this is an appropriate case for a gross sum costs order. Indeed, it seems to me to be a paradigm case for the making of such an order, provided there is sufficient information to enable an appropriate gross sum to be ordered. To require the plaintiff to go through an assessment process would be to simply impose further cost and delay on the plaintiff.

In terms of quantum, the plaintiff relied upon evidence given by Ms Schreirer-Joffe (the Managing Principal of the firm that acts for the plaintiff in these proceedings). In her affidavit of 7 February 2024, she gave evidence as to the legal costs that have been incurred by the plaintiff up to 31 January 2024. The bills issued by the plaintiff’s lawyers to the plaintiff are annexed to that affidavit and contain detailed narratives. The total professional fees and disbursements (including counsel’s fees) incurred as at 30 January 2024 are (GST exclusive):

Ms Schreirer-Joffe gave evidence that, in her professional experience, which runs to approximately 30 years, following a costs assessment a party typically receives 70-80% of their solicitor/client costs.

Ms Schreirer-Joffe also made a separate affidavit affirmed on 13 March 2024 in which she provided updated information in relation to costs incurred and likely to be incurred. The further professional fees and disbursements incurred from 1 February 2024 are (GST exclusive):

The estimated further legal costs from 1 March 2024 up to and including the final hearing are (GST exclusive):

In view of the foregoing, the plaintiff sought a gross sum costs order comprising (all figures below are GST exclusive):

The plaintiff therefore sought a gross sum costs order of $122,648.87 (even though the correct calculation using the figures sought by the plaintiffs above is actually $122,684.87). Using the figures I have calculated above, the gross sum costs order sought is $112,496.53.

I have reviewed the material provided in support of the gross sum costs order, and in particular the narratives set out in the bills sent out by the plaintiff’s lawyers to the plaintiff. The narratives quite clearly identify the work done. Together with the other evidence, they enable a gross sum to be ordered.

The bills refer to several matters which are unrelated to the conduct of the proceedings and therefore would not likely be recoverable on an assessment.

These matters fall under four broad categories:

The total of these matters is $11,937.50.

During the course of the hearing on 18 March 2024, I brought these matters to the attention of counsel for the plaintiff. He conceded that it would be appropriate to deduct an amount on account of these matters from the total fees and adjust the lump sum payable accordingly.

Doing this I reduce the total amount of professional fees to $96,896.12. Allowing 70% for the purposes of the gross sum costs order calculates to $67,827.28 for professional fees. The additional work which would not be allowed does not impact on the disbursements figure. I therefore include this at $36,313, resulting in a total gross sum costs order of $104,140.28.

The orders of the Court are: