Counsel's fees allowed in full on review of Costs Assessors Certificate (examining or comparing upheld)

Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd [2024] QSC 28

Application for Costs Assessment – Experts fees and Counsel’s fees, care and consideration and examining or comparing considered.

COSTS – COSTS ASSESSMENT – APPLICATION FOR REVIEW – COSTS ON THE STANDARD BASIS – CLAIM – COUNTERCLAIM; PLAINTIFF APPLICATION FOR REVIEW – COSTS ASSESSOR – WRONGFUL DISALLOWANCE – PREPARATION COSTS – COUNSEL FEES – ADEQUACY OF COSTS ASSESSOR’S REASONS – APPOINTMENT OF COSTS – CARE AND CONDUCT COSTS; DEFENDANT APPLICATION FOR REVIEW – COSTS ASSESSOR – ADEQUACY OF PARTICULARS – OBJECTIONS – LIBAILITY FOR COSTS

Introduction

The Parties filed application under rule 742 of the Uniform Civil Procedure Rules for a review of the Costs Assessors determinations. Primarily the parties applied to the court for a determination-as to whether costs assessor’s approach to whether the costs claimed were standard costs necessary or proper for the attainment of justice and whether the costs statement complies with the requirements of r705 UCPR the notice of objection complies with r706 UCPR and whether the costs assessor provided adequate reasons.

The Plaintiff CMC alleged errors by the Costs Assessor including Pre-commencement costs; Mitchell Brandtman costs (Expert); Counsel’s costs; costs of the claim/counterclaim costs and Care and conduct costs. The Defendant contended that the Costs Assessor erred by allowing certain costs of “examining or comparing documents”, rejecting a general objection and that the Defendant pay all of the Plaintiff’s costs of the Assessment.

Muir J considered eight principles to be considered on an application for a review under r742 including:

a)    The onus is on the party seeking to prove the Costs Assessor erred. (Australian Coal and Shale

Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627- 628 per Kitto J)

b)    the Court can only interfere with a Costs Assessor decision where the Costs Assessor (House v The

King [1936] 55 CLR 499 at 505):

a.    has either acted upon a wrong principle;

b.    failed to exercise a discretion, or exercised a discretion in a way that was manifestly wrong;

c)    Costs Assessors decision will be manifestly wrong if it was not open on the facts or not within the costs

assessor’s lawful discretion. (Wiesac Pty Ltd v Insurance Australia Ltd (No 3) (2021) 7 QR 642 at [12]-

[14])

d)    That there is a strong presumption that the Costs Assessors decision is correct unless it is proven to

manifestly wrong ; (Australian Coal)

e)    the discretion of the Costs Assessor cannot be impinged unless the Costs Assessor erred on a question

of principle; King v Allianz Australia Insurance Limited [2015] QCA 101 at [18]

f)     the question of quantum only it will be an exceptional case that the court would interfere with a Costs

Assessors decision;(Australian Coal)

g)    the parties must show some form of error, not merely that on assessment a different value would have

been applied; Picamore Pty Ltd v Challen [2015] QDC 67 at [7]-[8] per McGill KC DCJ and

h)      Eighthly following it appropriate to for the Court to exercise the decision of the Costs Assessor (quasi

registrar) Hennessey Glass & Aluminium v Watpac Australia [2007] QDC 57 at [23] per McGill KC DCJ

Costs on the standard basis

Necessary and Proper Cost

It was ordered that the Defendant pay the Plaintiff’s costs of the Claim and the Plaintiff pay the Defendant’s costs of the counterclaim. Following Smith v Buller (1875) LR 19 Eq 47 it was found that “Necessary or proper costs have been described as costs incurred to enable a party to conduct the litigation or establish its case”. Muir J at [23] explained that standard costs was explained as “party and party costs”. However, Muir J failed to take into effect that “party and party costs” are costs under the UCPR. In Queensland Standard costs are under the Scales of Costs under the schedules in the UCPR. Queensland Scales of Costs can also be used by agreement or court order for costs under the Legal Profession Act.

It was noted that under rule 702 (2) a Costs Assessor  when assessing costs on a standard basis  “must allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.” In Smith “as costs incurred to enable a party to conduct the litigation or establish its case” and are “not confined to the “bare minimum necessary to enable a party to conduct litigation – and no more”. [27]  It was noted that the addition to the words “or proper” widens the necessary test (per W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWLR 527 at 534) and the meanings are distinct and not interchangeable. (Wiesac at [6]). In respect to necessary and proper Muir J held that:

a)      That a rigid or narrow approach should not be made on the assessment.( See also Hennessey Glass at

[26]; Francis v Francis and Dickerson [1956] P 87 at 95)

b)      Necessary is described as that litigation would not have occurred without incurring said costs and it was

“proper” for a client with a reasonably competent solicitor to incur those costs. Hennessey Glass at [24].

The Costs Statement and Notice of Objection

Costs Statement

Muir J referred to rule 705(2) (a) where a Costs Statement “must contain sufficient details to enable the party liable to pay the costs to understand the basis for the costs, prepare an objection to the costs statement”[35] Muir J also referred to Innes v Electoral Commission of Queensland [2022] QSC 122 where the Court confirmed that the Costs Statement was in compliance with rule 705 as the Costs Respondents was self-represented and was aware of the all the claims in the Costs Statement [36]. At 38 Muir J confirmed that the items in the Costs Statement where chronological, with an assigned number and date and brief description of each item (Form 60(a)). Importantly for the claim for Examining or comparing under item 9 the total time spent on the task was included.

Notice of Objections

Muir J noted that there were general objections to the items in the Costs Statement as well as specific objections in special reference to rule 706(2) (c), 3, 5 and 5). [40] to [43] Muir J also noted that general objections are not uncommon as they avoid repetition. It was noted that the Costs Assessor did not consider a general objection as the approach taken only added unnecessary complexity to the assessment. The approach taken will depend on the complexity and the approach taken [44]

The Costs Respondent expressed concern regarding how the Costs Statement was prepared including claiming costs that were not incurred and claiming costs that could be indemnity costs. [45] The Costs Respondent also required the Costs Assessor a verification process in particular regarding invoices as it could not prepare objections to those disbursements. It was noted that in Picamore Pty Ltd v Challen [2015] QDC 67 at 24 McGill held that “The onus is on the practitioner to show that there is an entitlement to charge the amount sought to be recovered for the legal services performed, and to justify by file notes or other appropriate means the amount of the charge by showing that it does reflect legal services actually provided. If the amounts claimed are not adequately documented, it follows that the claims must be disallowed, or allowed only to the extent that they are properly documented, unless it is apparent from other material or the logic of the situation that some amount of time must have been spent on the task in question.

Muir J determined that the Costs Assessor on its evidence was providing due process to the parties [48] & [49]

Adequacy of Reasons

Muir J followed Pinehurst Nominees Pty Ltd v Coeur de Lion Investments Pty Ltd [2015] QSC 122 where it was held that “…the assessor is not in the same position as, say, a judge who is required to set out, in some detail, the reasoning behind the making of findings.” [55]. For a request under rule 738 Muir J referring to Martin J found that it may be appropriate for experienced Lawyers and Costs Assessors may to provide “abrupt” requests or “truncated responses”  and a further response may be necessary [56]. Muir J followed Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219 at 237 where it was held that “decisions as to costs (more generally) “do not require the same degree of elaboration as other decisions” Muir J took no issues with the Costs Assessors reasons event though noting that they were as:

a)      The Legal and factual issues were complex;

b)      The Costs Applicant appeared to have claimed all its costs of litigation;

c)      The approach taken by the Costs Respondent in the Notice of Objections complicated the Costs

Assessment;

d)      Unsolicited submissions to the Costs Assessor from the parties;

e)      The Costs Assessor had access to the Costs Applicant’s electronic file;

f)        The Costs Assessor verified each claim line-by-line.

Muir J in the circumstances determined that the Reasons were adequate.

Plaintiff’s Application for Review

Ground one: pre-commencement costs

The Plaintiff argued that the Costs Assessor wrongfully disallowed pre-commencement costs notwithstanding the Defendant objected to all the pre-commencement costs. The Costs Assessor however allowed a significant amount of the pre-commencement costs. [62] It was noted that the Costs Assessor disallowed pre-commencement costs included an adjudication application as they were not “necessary for the attainment of Justice. [65] Muir J found not there was no reviewable error of principle.

Ground two: the Mitchell Brandtman costs (Expert)

The Plaintiff claimed that the Costs Assessor error by not allowing the experts fees. [84] The Costs Assessor disallowed the expert’s fees as the Costs Assessor accepted that the instructions were abandoned, and that the expert was not relied upon at trial. [83] Muir J considered W & A Gilbey Ltd where it was held that necessary and proper costs are to be considered at the time that they were incurred and not with the benefit of hindsight. [85]

It was noted that the Plaintiff provided no explanation as to why the expert was not relied upon and an alternative expert in the same field obtained.[86] In the circumstances Muir J determined that there was no error by the Costs Assessor in disallowing the expert’s fees. In the alternative the Plaintiff claimed that the expert’s evidence was used in the Plaintiffs new report [93] however Muir J determined that there was not error in the Costs Assessors discretion or that the decision to disallowing the experts fees were wrong.

Ground three: Counsel costs

The parties claimed the fees of 3 Kings Counsel and one senior Junior Counsel. [96] The parties argued that the Costs Assessor erred by reduced Counsels’ fees Muir J:

Regarding Mr O’Donnell of Kings Counsel’s fees:

a)    allowed Kings Counsel’s fees at $10,000 as it was held that the Costs Assessors decision was wrong

[106 (f)], [107] to [109]

a. It is irrelevant as to what opposing Counsel charged as it was irrelevant as to whether the daily rate

was necessary or proper for the attainment of Justice [106 (a)]

b. There was guidance as to the proper rate for Counsel’ fees noting that there is no guidance as to the

proper rate in Queensland; [106 (b)]

c. There was no evidence as the proper rate for Counsel’s experienced in complex construction or

commercial matters; [106 (c)]

d. There was no evidence that Counsel’s fees were not proper not that it did nor require the expertise of

the Counsel engaged; [106 (d)]; and

e.  There is no argument that Counsel’s fees should be limited to that of opposing Counsel. [106 (e)]

b)     did not interfere with the Costs Assessor decision to limit Counsel’s preparation to 36 days (one day

preparation for one day trial) considering the material provided by the parties; [114] and

c)     held that it was necessary and proper to attend to other tasks other than preparation for trial; [116] and

d)     Held that that the Costs Assessor decision to reduce Counsel’s fees for the preparation of the

Submissions, noting the counterclaim was not wrong. [118]

Regarding Mr Doyle of Kings Counsel Muir J held at [122] that :

a)      the capping of Kings Counsel’s fees was wrong on similar grounds to that Mr O’Donnell; and

b)      there was no error and agreeing with the Assessor in the finding that the parties agreed that each party

would bare the costs of the assessment (other than mediation expenses)

Regarding Mr Holt of Kings Counsel Muir J held that when instructing alternative Counsel that the Costs Assessor did not err in finding that some of the costs of Mr Holt was not wasted of duplicated costs and fell within the Costs Assessor discretion.

Regarding Mr Websters fees (Junior Counsel) Muir J noted that on the facts and the parties’ submissions that the Costs Assessor did not err regarding the Costs Assessors discretion.

Ground four: the claim and counterclaim costs

The Defendant claimed that the Costs Assessor erred in the Costs Assessor apportionment between the Claim and the Counterclaim. On the facts Muir J found no error in the Costs Assessors discretion regarding the apportionment of between the claim and counterclaim the consideration of relevant documents and the disallowance of items before the Counterclaim.

Ground five: Care and conduct costs

The Plaintiff sought an uplift of their fees of 30% (for the Counterclaim) pursuant to rules 691(5) and (6) plus Care and consideration 35% pursuant to item 1 of the Scale of Costs [175]. The Costs Assessor disallowed the uplift under sections 691(5) and (6) but allowed the care and consideration under item 1. The Costs Assessor considered that the matter was of such complexity to warrant 35% under item D Practice Directions 22 of 2018. The Costs Assessor found that the claim under 691(5) and (6) was a duplication of item 1 for care and consideration.  [189]

It was noted that under rule 691 when assessing costs on standard Bais an Australian Lawyer can claim amount of not more than 30% of the relevant Queensland court scale. However, this competes with Practice Directions 2018 of 2022 which states that care and consideration for amounts above $2 million may be claimed at between 25% and 35%. Muir J held that there is no reason why rule 691 and the Practice Directions should be read as being exclusive of the other.

Muir J referred to Toomey v Scolaro’s Concrete Constructions Pty Ltd (in liq) [2001] VSC 477 when holding that this matter could be a special case leaving to the taxing masters (Costs Assessor’s discretion [193] . In Schmid v Skimming [2020] VSC 493, Forbes J it was noted that special consideration needs to be made when to avoid double dibbing between s691 and the Practice Directions. Williams v AusNet Electricity Services Pty Ltd (No 3) [2017] VSC 528 allowed 30% for care and consideration and a further uplift of 5% for special loading under 63,34(3) (similar to that of 691)

Accordingly, Muir J held that the Costs Assessor did not err in not accepting that the proceedings falls within the upper range of litigation and the upper range of the Practice Direction [220]

Defendant’s Application for Review.

The Costs Assessor allowed various claims under item 9 of the Scale for examining documents. The Costs Respondent (Defendant) contended that these claims are not allowable as they are not actually proper claims under item 9, that the otherwise fall under items 4 and 5 (Drafting and Producing), Item 1 for care and consideration and are otherwise indemnity costs.

Insufficient particulars and Review of documents

The Defendant contended that there was a lack of particulars in the Costs Statement for the claims for examining or comparing documents. The Defendant claimed that it could provide adequate objections due to the lack of particulars. General Muir J held that the general objections deferred to the Costs Assessors general discretion and found that there was no obvious error where there no evidence that the Costs Assessor did not properly consider the documents.

Allowance for Examining or comparing

The Costs Assessor allowed or disallowed claims generally for examining or comparing including for drafting and producing documents, settling and settling and preparing documents. Generally, Muir J found no error with the Costs Assessors reasoning in that it was necessary and proper to examining or comparing documents for the purpose of:

a)      of production of documents as:

a.      the drafting of documents includes the review of the documents relevant to same. [274]

b.      Producing a document allows for the “allows the costs of the actual production of the finished piece

of work”; and

c.      Re-examination of a document already examined then forms part of care and consideration

b)      settling documents involves a high level review of the related documents [286]

c)      Preparing and collating material as there is no other provision in the sale. [288]

Analysis.

Generally, it is a high bar for a costs assessment to succeed. As long as a Costs Assessor properly applies the relevant principles to the assessment, with evidence, an Application for a Costs Assessment will fail. Further Counsel’s fees would normally be allowed in full unless there is evidence that they are manifestly excessive as compared to market rates. Also confirmed is the rule of thumb for one day’s preparation and one day for hearing.