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[2026] NSWSC 262
Supreme Court of NSW
2026-03-25
Peden J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Council of the City of Broken Hill v Redenbach Group Pty Ltd trading as Redenbach Legal [2026] NSWSC 262
Hearing dates: 23 - 27 February; 2 - 5 and 12 March 2026
Date of orders: 25 March 2026
Decision date: 25 March 2026
Jurisdiction: Equity - Commercial List
Before: Peden J
Decision: See [335]
Catchwords: CONTRACT — Formation — Intention to contract — Where Council invited legal practice to tender to be appointed to panel — Whether after accepting tender proposals Council entered into separate costs agreements — Whether any “uplift” or “deferred” fee agreement reached orally or by conduct by Council employees
FIDUCIARY DUTIES — Breach of fiduciary duties — Where legal practice received money on trust for Council – Whether legal practice entitled to distribute money where no authorisation from Council — Whether Council entitled to have trust fund reconstituted – Whether Council entitled to equitable compensation from those who knowingly received trust money
RESTITUTION — Whether Council paid higher rates than contract rates by mistake — Whether Council paid for work not done by mistake - Whether Council entitled to restitution for payments
CONSUMER LAW — Misleading or deceptive conduct — Representations as to future matters — Whether reasonable grounds for making representations — Whether Council suffered loss or damage “because of” representations — Quantum
Legislation Cited: Civil Procedure Act 2005 (NSW)
Competition and Consumer Act 2010 (Cth)
Legal Practice Act 1996 (Vic)
Legal Profession Act 2004 (Qld)
Legal Profession Uniform Law 2014 (NSW)
Local Government Act 1993 (NSW)
Local Government (General) Regulations 2005 (NSW)
Professional Standards Act 1994 (NSW)
Cases Cited: ACCC v Michigan Group Pty Ltd [2002] FCA 1439
Adamson v Williams [2001] QCA 38
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445
Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq) (2007) 239 ALR 702
Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662
Baden v Société Générale pour Favouriser le Développment du Commerce et de l’Industrie en France SA [1993] 1 WLR 509
Baker Johnson Lawyers v Jorgensen [2002] QDC 205
Barnes v Addy (1874) LR 9 Ch App 244
Brady v Bale Boshev Solicitors [2009] NSWDC 387
Breen v Williams (1996) 186 CLR 71
Carter Capner Law v Clift (2020) 4 QR 600
Clare v Joseph [1907] 2 KB 369
Colonial Ammunition Co v Reid (1900) 21 LR (NSW) 338
Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham’s Warehouse Sales Pty Ltd (2012) 246 CLR 498
Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164
Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 172 ALR 346
Frost v Miller [2015] QSC 206
Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296
Hartnell v Birketu Pty Ltd [2021] NSWCA 201
Hartnett t/as Hartnett Lawyers v Bell as Executor of Estate of late Deakin-Bell (2023) 112 NSWLR 463
Hegarty v Keogh (No 2) [2023] SASCA 30
Henville v Walker (2001) 206 CLR 459
Hillam v Iacullo (2015) 90 NSWLR 422
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451
Jones v Dunkel (1959) 101 CLR 298
Kytec Pty Ltd v Prolearn Corporation Pty Ltd [2024] VSCA 23
Legal Services Board v David Forster [2011] VSC 292
Lynden Iddles v Fonterra Aust Pty Ltd [2023] VSC 566
Malec v JC Hutton Pty Ltd (1990) 169 CLR 638
Mills v Walsh [2022] NSWCA 255
New South Wales Crime Commissioner v Fleming (1991) 24 NSWLR 116
Players Pty Ltd (in liq) v Clone Pty Ltd [2019] SASC
Re Webster (1975) 132 CLR 270
Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912
Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154
Tonkin v Cooma-Monaro Shire Council (2006) 145 LGERA 48
Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132
Texts Cited: Practice Note SC Eq 3
Category: Principal judgment
Parties: Council of the City of Broken Hill (Plaintiff/Third Cross-Defendant)
Redenbach Group Pty Ltd trading as Redenbach Legal (First Defendant/First Cross-Claimant)
Passer Par Pty Ltd ACN 620 165 728 (Second Defendant/Second Cross-Claimant)
Keith Redenbach (Third Defendant)
Broken Hill Legal Pty Ltd ACN 620 166 207 (Fourth Defendant/Third Cross-Claimant)
Jay Nankivell (First Cross-Defendant)
James Roncon (Second Cross-Defendant)
Representation: Counsel:
S Fitzpatrick SC with S J Hoare (Plaintiff/Third Cross-Defendant and First Cross-Defendant)
A Vernier (Defendants/Cross-Claimants)
A Avery-Williams with N Franco (Second Cross-Defendant)
Solicitors:
BAL Lawyers (Plaintiff/Third Cross-Defendant and First Cross-Defendant)
Bull, Son & Schmidt Lawyers (Defendants/Cross-Claimants)
RGSLAW (Second Cross-Defendant)
File Number(s): 2023/00213494
Publication restriction: Nil
Council of the City of Broken Hill alleged that solicitor, Mr Keith Redenbach, has, through incorporated legal practices, Redenbach Group Pty Ltd and Passer Par Pty Ltd, overcharged it for legal services. Mr Redenbach provided legal services to Council through Passer Par, trading under various business names, until 30 June 2022; from 1 July 2022 until its retainer was terminated, Redenbach Group, trading as Redenbach Legal, provided legal services to Council. Collectively, Redenbach Group, Passer Par, Mr Redenbach and Broken Hill Legal Pty Ltd, are referred to as the “Redenbach parties”.
The primary dispute is which legal services agreements bound the parties: whether written Tender agreements or whether Council employees agreed orally or by conduct to various “Costs agreements”, and in particular, whether “deferred fees” or “uplift fees” were agreed.
The context was litigation between Council and the builder and architect of the Broken Hill Civic Centre, Unique Urban Built Pty Ltd (UUB) and Allen, Jack + Cottier Pty Ltd (AJC) respectively (UUB/AJC litigation).
Council engaged Passer Par, and then Redenbach Group to provide advice and legal services in that litigation. Between 29 December 2017 and 20 January 2023, Council paid approximately $6,886,557 ex GST in legal fees.
Here, Passer Par and Redenbach Group claimed they were entitled to more money, because of the Costs agreements they said Council accepted.
In March 2022, the AJC proceedings settled, with AJC paying Council $1.5 million plus “costs as agreed or assessed”.
On 22 April 2022, Council engaged Passer Par to prepare a bill of costs, believing it would be for a lower or similar cost than estimates provided by external costs consultants. For the preparation of the bill of costs, Council paid in excess of $973,131 ex GST. The filed bill of costs claimed professional fees of $6,886,557.75 ex GST, disbursements of $1,055,634,45 and the filing fee of $79,421.92.
On 10 March 2023, AJC offered to settle the costs assessment for $4,580,000 including interest. On 24 March 2023, before that offer was accepted, AJC paid $4,298,000 into Redenbach Group’s trust account to prevent interest accruing.
On 24 March 2023, when informing Council of AJC’s payment, Redenbach Group issued INV3050 for $2,144,036.94 ex GST primarily for a 25% “uplift fee” because of the “success” in the AJC litigation. The invoice also included $186,240 ex GST for alleged “time not [previously] charged” by Mr Redenbach.
On 27 March 2023, Council terminated Redenbach Group’s retainer.
On 28 March 2023, Redenbach Group paid $1,893,367.56 to Council from the AJC settlement monies, but refused to transfer any further funds, which were disbursed elsewhere.
In submissions, Council sought:
Recovery by way of a statutory debt of “uplift fees” charged in INV3050 and INV1132, totalling $1,812,968.81 ex GST, and $186,240 ex GST in INV3050 regarding the “time not charged”.
Recovery by restitution or equitable claims for inflated hourly rates beyond agreed Tender rates, and charges in excess of legal work actually performed.
Compensation under the Australian Consumer Law (ACL) (sch 2 Competition and Consumer Act 2010 (Cth)) for alleged representations made by Passer Par and Redenbach Group that they would prepare a bill of costs for the AJC proceedings at a lower or similar cost to the estimates provided by external costs consultants. Mr Redenbach was allegedly a “person involved” in the representations.
Passer Par and Redenbach Group denied they overcharged; they claimed they were entitled to charge what they did, either by reason of Costs agreements or oral conversations with representatives of Council between April 2016 and January 2021, namely Mr Roncon, Council’s general manager during that time, and Mr Nankivell, Council’s chief financial officer who, from December 2020, became general manager. They claimed to be entitled to disburse the settlement trust funds as they did and denied any misrepresentations.
Passer Par and Redenbach Group also advanced two cross-claims:
Council was indebted in respect of unpaid invoices for “uplift” and “deferred” fees.
Mr Roncon and Mr Nankivell misled Passer Par and Redenbach Group by orally agreeing that they could charge higher fees and defer invoicing the whole of the fees, or charge an uplift fee. Mr Redenbach claimed he would not have continued providing legal services to Council if the oral representations had not been made.
For the reasons that follow, I find that Council’s claims generally succeed and Passer Par and Redenbach Group have been wholly unsuccessful in their cross-claims.
For the reasons that follow, I find that the only contractual arrangement between Council, and Passer Par and Redenbach Group was by way of Tender processes prescribed by the Local Government Act 1993 (NSW) (LG Act) and the relevant regulations.
That determination finalises these issues:
Council was not and is not liable for “uplift fees” and “deferred fees”; and
Council overpaid higher rates than the Tender rates.
It follows that I reject Passer Par and Redenbach Group’s case that there were multiple Costs agreements with Council for the AJC and UUB litigations, separate to the Tenders as it alleged below:
a. from 18 January 2018 – the 2018 Costs Agreement between [Passer Par] and Council applied to both the AJC [litigation] and the UUB [litigation];
b. from 7 August 2020 – the 2020 Costs Agreement between [Passer Par] and Council applied to the AJC [litigation] and the 2018 Costs Agreement continued to apply to the UUB [litigation];
c. from 1 July 2022 – the 2022 Costs Agreement between [Redenbach Group t/as Redenbach Legal] and Council applied to both the AJC [litigation] and the UUB [litigation], however, all rights under the 2018 Costs Agreement and the 2020 Costs Agreement held by [Passer Par] were assigned to [Redenbach Group t/as Redenbach Legal].
It also follows Passer Par and Redenbach Group were not entitled to issue tax invoices at various rates higher than the Tender rates as they submitted:
For the period 18 January 2018 to 30 June 2019, invoiced rates from the 2016 Tender applied, but with the balance of the rates deferred.
From 1 July 2019, the invoiced rates increased again, but were not as high as the rates in the 2018 Costs agreement; the balance of the rates was also deferred.
From 7 August 2020, the July 2019 rates increase formed part of the 2020 Costs agreement for the AJC litigation with an uplift fee, but the UUB litigation continued under the 2018 Costs agreement (though, it applied the 2019 rates increase and the deferred payment structure).
From 1 July 2022, the rates in the 2022 Costs agreement applied. From this point, Redenbach Group had the right to pursue all entitlements owed to Passer Par by Council that arose under the 2018 Costs Agreement and the 2020 Costs Agreement pursuant to the assignment of those choses in action, such assignment being completed on 2 February 2024.
It is commercially illogical that Council would agree to such convoluted arrangements in the context of the Tender processes, where it received no obvious advantage, and where there is no Council document or advice or estimate from Passer Par or Redenbach Group that referred to the alleged Costs agreements having application.
In reaching this conclusion, as detailed further below, I do not accept Mr Redenbach’s version of most events, including alleged conversations with Mr Roncon and Mr Nankivell.
Where spoken words are foundational to a cause of action, the conversation must be proven to the “reasonable satisfaction” of the Court. The seriousness of the allegation made, inherent unlikelihood of a conversation of a given description, gravity of the consequences flowing from a particular finding, and existence of reliable contemporaneous records or other satisfactory corroboration may be relevant: John Holland Pty Ltd v Kellogg Brown & Root Pty Ltd [2015] NSWSC 451 at [94] (Hammerschlag J, as the CJ in Eq then was).
Mr Redenbach was a thoroughly unimpressive witness who, despite claiming he had “no interest in prolonging [the hearing]”, appeared to intentionally refuse to respond to simple questions, for example, by requiring counsel to repeat simple questions or restate page numbers or dates. Mr Redenbach gave self-serving evidence and even evidence which I consider was false. I have not accepted Mr Redenbach’s evidence unless it was corroborated by documentary evidence or other witnesses. In contrast, Mr Nankivell and Mr Roncon gave honest, clear evidence and made appropriate concessions.
Additionally, during cross-examination, Council raised with Mr Redenbach that since the commencement of the litigation, Mr Redenbach had:
Alleged in the Redenbach parties’ Commercial List Responses that Council’s current solicitors had been negligent and an apportionment of liability was appropriate, an assertion abandoned only after the hearing commenced.
Made complaints to the ACT Law Society about Council’s solicitors.
Commenced eight separate NCAT proceedings against councillors making allegations about the instructions given to continue this litigation against him.
Mr Redenbach denied that those actions “were done for some forensic advantage in the litigation and not for a proper purpose”, but did not explain them and their timing. I consider they speak against his credit.
Below I set out a chronology of events either agreed by the parties or as I have found them, which is unfortunately lengthy because of the duration of the relationship and the complexity of the allegations and documentation prepared by and relied upon by the Redenbach parties.
In March 2016, Council published a Request for Quotation for Legal Services under the LG Act, which incorporated a “quotation offer form”.
In April 2016, Passer Par submitted a completed quotation offer form. It incorporated a “Proposal” and provided rates of $390 ph ex GST for a partner; $350 ph ex GST for a special counsel; $250 ph ex GST for a solicitor; and $180 ph ex GST for a paralegal. It also noted that Passer Par would “review [their] rates every year on 1 January”.
In early June 2016, Council accepted that Proposal, and Passer Par became a “panel” lawyer.
It is not disputed that Council’s acceptance formed a contract, and the Tender was a “standing offer” arrangement: Colonial Ammunition Co v Reid (1900) 21 LR (NSW) 338 at 345 (Darley CJ); Re Webster (1975) 132 CLR 270 at 285 (Barwick CJ). All the documentation must be read as a whole for the terms of that contract.
I reject Mr Redenbach’s allegation that after Council accepted the 2016 Proposal, Mr Roncon met with Mr Redenbach and agreed that “each new matter may result in varying fee arrangements and fee estimates”. Mr Roncon was not meaningfully challenged on his denial he ever said that. Further, there is no document that substantiates Mr Redenbach’s representation, which if accepted was clearly inconsistent with the operation and purpose of the Tender. Instead, I prefer Mr Roncon’s version of the first conversation with Mr Redenbach, in which he stressed that “[w]orking with Council is a bit of a trust thing”.
Similarly, I reject that in May 2017 Mr Redenbach told Mr Roncon that the UUB/AJC litigation “will be … complicated… We would need to look at our rates for a project like this too”. It makes no logical sense that Mr Redenbach’s rates would need to increase. He had no real knowledge at the time that the matter would become “complicated”. He could not know much until he had carried out a review, and he could not know the builder’s response to determine it would be complicated.
From May 2017 to early 2018, Passer Par behaved as if the 2016 Tender governed the legal services it provided for the AJC litigation, including:
Preparing a “legal review” of the Civic Centre re-development;
Defending Council against the UUB’s claim for unpaid invoices;
Advising Council to replace AJC as superintendent and to seek an extenuating circumstances resolution under s 55 LG Act to engage a replacement without a further Tender process;
Issuing invoices for work done in the AJC and UUB litigation at Tender rates.
On 22 January 2018, Passer Par sent Mr Roncon “Formal Terms of Engagement” for “NSW Proceedings against AJC and UUB”. This was referred to as the 2018 Costs agreement.
Passer Par’s explanation for the 2018 Costs agreement was that the 2016 Tender did not cover fees for legal services for the UUB/AJC litigation. It submitted that Mr Roncon had agreed to Passer Par charging “deferred fees”, by issuing “interim” invoices with Tender rates and then later sending further invoices for the difference between the Tender rates and the rates in the 2018 Costs agreement. In particular, it relied on clause 1(ii) in the 2018 Costs agreement, which provided:
Professional Fees: We will charge you professional fees at an hourly rate noting panel rates applied initially in our interim accounts may be lower. For partners, the hourly rate is $650.00-$550.00 plus GST. Special Counsel rates are $550.00-$450.00 per hour plus GST. Solicitors’ rates are $450.00-$350.00 per hour plus GST and paralegals are $220.00-$180.00 per hour plus GST.
On 27 November 2017, Passer Par sent Council a “status document”, referring to the possibility of proceedings against AJC and UUB and a proposed takeover from UUB of remaining works on the Civic Centre. That evening, Mr Redenbach reported to Council that since an earlier briefing in October 2017, AJC had been removed as project managers, and UUB had been issued with show cause notices and a letter of demand. Mr Redenbach advised Council to “take over the works” and rely on s 55(3) LG Act to make an “extenuating circumstances” resolution to engage alternative contractors. The relevant 28 November 2017 mayoral minute does not record that the briefing referred to any increase in Passer Par’s fees because of complexity, nor was there any reference to deferred invoicing or a new Costs agreement.
There was a process for a Council panel law firm to increase their fees, as set out in Mr Roncon’s affidavit, on which he was not challenged:
Where a contractor wished to increase their rates outside of the tender process, they would usually first have a discussion with me. Then they would submit a request in writing, via letter to Council, which explained why an increase in rates was requested. The Council would need to be provided with the letter if it would affect the budget set for the project… If an increase in rates was accepted, there would be a formal written response from Council and the contractor would be issued a revised fee schedule from Council that reflected the new rates.
Mr Redenbach never sought written confirmation from anyone at Council about different rates. I accept Mr Roncon’s evidence that he did not and would not have approved any increase in the rates above those provided in the 2016 Tender.
On 28 November 2017, Mr Redenbach and Mr Roncon likely spoke.
Mr Redenbach’s version of that conversation was that Mr Roncon agreed with everything Mr Redenbach said, including:
That the UUB/AJC litigation did not fall within the 2016 Tender and an extenuating circumstances resolution was required for the legal services Passer Par would provide.
Passer Par would need to increase its rates to those Mr Redenbach orally indicated.
Passer Par would apply the Tender rates:
… on an interim basis except for paralegals on our interim tax invoices… if Council agreed that the firm could charge [Council] its full construction litigation hourly rates at the conclusion of the matter… We will keep the hourly rates we apply in the interim invoices for your cash flow down as long as we can… if the balance of the work requires us to increase these rates, we will have to increase them and we will let you know.
I do not accept Mr Redenbach’s version of the conversation for the following reasons.
Mr Roncon, whose evidence I prefer, denied Mr Redenbach’s version and proffered his own; his version of the conversation makes more logical sense in light of the 28 November mayoral minute and other circumstances, and I accept it.
I accept Mr Roncon’s evidence that the purpose of the conversation was to discuss the extenuating circumstances resolution to be passed to engage replacement contractors for the Civic Centre works without a Tender. That is consistent with an email sent by Mr Redenbach to Mr Roncon that day at 7.32pm which provided amended wording to the resolution. The email did not make any reference to a discussion about increased rates or deferred fees.
I do not accept the Redenbach parties’ submission that Mr Roncon lacked credibility. His evidence was balanced, making concessions about not recalling particular events or specific details of conversations between 2017 and 2022, which is credible as a busy general manager of a large local council. He is unlikely to have favoured Mr Redenbach’s financial position at the expense of Council, in circumstances where he repeatedly expressed concerns to Mr Redenbach about legal costs, in relation to which he was often criticised by councillors. I do not consider he colluded or behaved inappropriately in reading Mr Nankivell’s evidence concerning conversations and agreeing, evidence on which he was not challenged.
Further, at the time, Mr Roncon was being investigated by the Ombudsman for events said to have occurred without an extenuating circumstances resolution. He therefore would have been cautious to seek legal advice to ensure Council only took steps that were appropriately authorised and documented. It makes no sense he would not be transparent about a significant matter such as agreeing to increased legal fees.
I accept Mr Roncon’s evidence, about which he was not challenged, that his view at all times was that Council as a statutory body must pay amounts payable and due at the time they were incurred. It was not suggested that his understanding was wrong in law, which suggests that Mr Redenbach was asking Council to engage in an unlawful process by deferring fees.
In contrast, Mr Redenbach’s version of the conversation was internally inconsistent as to the rates he would charge (compared to the 2018 Costs agreement he sent later), and when any deferred fee would be charged (noting that no fee estimate ever referred to the deferred fees being payable at the conclusion of the matter). Mr Redenbach also acted inconsistently with the conversation itself; there is no evidence of any invoice that was titled “interim” or billed at a higher rate, but only sought part payment. If increased fees had been agreed, it is unclear why he waited months to send the 2018 Costs agreement.
… 2. That having regard to the substantial breaches of contract by the Contractor, and associated damage and loss sustained by Council, the General Manager be authorised in relation to contract number T16/3:
(a) To take over the works, including but not limited to in such case where works must be subcontracted by Council without further tender due to the extenuating circumstances, remoteness of locality or the unavailability of competitive or reliable tenderers, and pursue such remedies as is required to mitigate the losses; and
(b) Pursue such losses as advised by Council’s solicitors, Redenbach Lee, from time to time.
That resolution merely authorised the procurement of contractors to take over and oversee works on the Civic Centre without tender under s 55(3) LG Act, as advised by Mr Redenbach. It did not on its terms concern Council’s procurement of legal services, which was covered by the 2016 Tender. Instead, the general manager was authorised to instruct Passer Par as “Council’s solicitors”. Mr Roncon did not have authority to negotiate terms of legal services different from the Tender terms. I do not accept the Redenbach parties’ submission that because Mr Roncon was Council’s general manager and “highest employee”, he had authority to orally agree to a variation of legal fees. If acting under his delegated authority delegated from Council, Mr Roncon was still required to comply with this regulation: LG Act s 377.
After the resolution, Mr Redenbach continued to refer to his firm as “Council’s panel solicitors”, without reference to any agreement other than the 2016 Tender, which is consistent with there being no expectation of any variation to the Tender terms.
You may accept the Costs Disclosure and Costs Agreement by:
(a) signing and returning this document to us; or
(b) continuing to instruct us.
On acceptance, you agree to pay for our services on these terms.
Council never signed any document purporting to be a Costs agreement. Passer Par relied on Council continuing to instruct it after receipt of the 2018 Costs agreement as acceptance that bound Council to its terms and conditions. I do not accept that Council ever held an objective intention to be bound to those terms and conditions for the following reasons.
Mr Redenbach never gave Council clear notice that he was purporting to alter the Tender terms. It was not discussed in any conversation. The cover letter attaching the 2018 Costs agreement provided:
Re: Formal Terms of Engagement – 506 NSW Proceedings against AJC and UUB
We write to provide you with our formal terms of engagement.
This Letter and the attached General Terms of Business is our costs agreement and disclosure pursuant to the Legal Profession Uniform Law (NSW) (“the Uniform Law”).
You have instructed us to provide you advice in relation to claims by and against Council and AJC/UUB. It is a privilege to be asked to advise on these matters. We will strive to provide you with both quality service and good value for money. …
The letter did not indicate that:
The attached terms varied the Tender rates.
Mr Roncon had orally agreed to increased rates and deferred fees.
The varied terms needed to be considered and accepted by Council.
While I accept Mr Roncon and Mr Nankivell’s evidence that they did not read the terms and conditions, nor did they intend to accept them, that is not sufficient to conclude that Council was not bound.
However, objectively, in the context of the 2016 Tender and previous conduct of Passer Par providing services and invoicing in accordance with that Tender, and referring to the Tender in that letter, it was not obvious that the attachment was an offer to be accepted. It expressly referred to “formal terms”, rather than “amended terms”.
In any event, Council’s conduct of continuing to instruct was not unequivocal acceptance of the 2018 Costs agreement; it was also consistent with Council giving instructions on the basis of the 2016 Tender.
The Redenbach parties relied on Passer Par’s 2016 Tender Request for Quotation, which included “We review our rates every year on 1 January” as allowing Passer Par to unilaterally vary the hourly rates without reference to Council. I reject that submission. It was open to Passer Par to review its rates and notify Council that they sought a different rate each year, but as Mr Roncon stated, Council would need to have agreed to any variation and it never did.
There was no imperative for Council to agree to a Costs agreement. I do not accept that the AJC and UUB litigation fell outside the scope of the Tender because it was a “complicated matter” which would require Passer Par to “increase our resources”. Such an assertion was inconsistent with Passer Par’s representations in the 2016 Tender Proposal that it was capable of running complex litigation, that “no matter will be too large”, and where it claimed to have acted in NSW Supreme Court litigation for other councils.
There was no statement in the documentation that some matters would not be invoiced at Tender rates. Until January 2018, Passer Par had acted consistently with the Tender.
The Redenbach parties submitted that the words “noting panel rates applied initially in our interim accounts may be lower” was inserted into the 2018 Costs agreement to allow Passer Par to charge the difference between the rates in the 2018 Costs agreement and the 2016 Tender, “which assisted Council with cash flow”. However, the past tense “applied initially” does not clearly convey that from the date of the Costs agreement there will be “interim” and then later accounts or invoices. Rather, it conveys that previous invoices or accounts charged panel rates, but going forward the firm intended to apply higher rates (if contractually allowed).
Consistently with that interpretation, at no time did Passer Par issue “interim accounts” with an indication that further fees would be charged in the future.
On 1 February 2018, Passer Par commenced proceedings against UUB and AJC on Council’s behalf. The UUB litigation was referred to arbitration. The proceedings continued against AJC alone. In mid-2018, orders were made in the AJC proceeding, and the UUB arbitrator was appointed as a referee to decide aspects of the remaining AJC claims.
On 11 August 2018, Council published a request inviting tenders for legal services.
In September 2018, Passer Par submitted a Tender Proposal, including rates of $390 ph ex GST for a partner; $370 ph ex GST for a special counsel; $300 ph ex GST for a solicitor; and $200 ph ex GST for a paralegal.
On 2 October 2018, Council accepted Passer Par’s proposal. Neither the proposal nor acceptance referred to any Costs agreement, different rates or deferred fees.
The Redenbach parties submitted that the 2018 Tender “was not relevant to, nor did it apply to” the UUB/AJC litigation for three reasons; I reject them all.
First, they submitted that the 2018 Costs agreement was specific to that litigation and “consideration may be missing”, without developing that further. I reject that submission primarily because I have rejected the submission that Council ever accepted the 2018 Costs agreement. However, it is also trite that a later contract may replace an earlier one, if that is the parties’ intention. This may be the case where the subject matter of both overlaps, which is the case here with the 2018 Tender: see Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 172 ALR 346 at 353-354, [21]-[25] (Gleeson CJ, Gaudron, McHugh and Hayne JJ) (Sara Lee); Hillam v Iacullo (2015) 90 NSWLR 422 at [52]-[68] (Leeming JA) (Hillam). Contrary to the Redenbach parties’ submission, it would make no commercial sense for Council to have different fee arrangements for different types of work carried out by the same panel firm, who professed expertise in them all.
Secondly, they submitted that the 2018 Tender could not apply to the proceedings because Passer Par’s pricing stated that all “fees quoted in the tender shall be for the initial year only … subject to negotiation with Council”, which meant it only referred to future matters and not the UUB/AJC litigation. I reject that submission. There is nothing in the 2018 Tender documentation that indicates it was not to apply to existing matters, where instructions continued to be given going forward. However, that statement did recognise Tender rate increases had to be agreed with Council. It can be inferred that such agreement would also be documented.
Thirdly, they submitted that it would be “inconsistent with the documents exchanged between the parties, conduct of the parties and commercial reality”. None of those elements were identified by reference to any document, conduct or alleged “commercial reality”. I reject the submission; it is more commercially likely that Council intended to be bound only by the Tender documentation.
On 29 August 2018, Council accepted a report and resolved: “Council reaffirm its position to pursue the recovery of construction costs associated with completing the Civic Centre works abandoned by UUB and the legal costs incurred to date, along with all future costs”.
On 14 September 2018, Passer Par wrote to Mr Nankivell attaching an “invoice reconciliation” spreadsheet for the Civic Centre review, the AJC litigation and the UUB arbitration. It did not refer to any Costs agreement.
In about April 2019, UUB was placed into voluntary liquidation.
During 2019, without notifying Council, Passer Par increased its hourly rates in its invoices:
In March and April 2019, rates were increased for a handful (but not all) of its paralegals from $200 to $220 ph ex GST.
In July 2019, rates were increased: for partners from $390 ph ex GST to $480 ph ex GST; for (some) solicitors from $300 ph ex GST to $350 ph ex GST; and for all paralegals from $200 ph ex GST to $220 ph ex GST.
In September 2019, rates were again increased for some (but not all) of its paralegals to $250 ph ex GST; all solicitors’ rates were increased to $350 ph ex GST.
The Redenbach parties submitted that this was only an increase in “interim rates”, with the rest of the rates allegedly agreed orally, on 28 November 2017, to be “deferred”. I have found that conversation did not happen. No document records such a version of events either. Council’s payment of invoices with increased rates did not amount to acceptance of Passer Par’s attempted unilateral variation of the contract. Council made payments at inflated rates by mistake, as discussed below.
…we are going to be in a world of hurt if we are looking at a further $1.5-$2m in legal fees to the completion of the case. …
1. We were advised around this time last year that it will be approximately a further $1m until completion... We ended up spending circa $4.5m-$5m on fees … fees have at least tripled. …
2. Council simply cannot afford these legal fees. …
… would very much like to see an outcome that leaves Council in a viable position...
… As you know, the organisation is bleeding from the ongoing cost of the [UUB/AJC] litigation … [Councillors] were and still are really nervous about the final cost (rightly so) and the success of recovery. Based on … advice we budgeted a further $1.7m through to completion as a worst-case scenario due to it being the upper limit of your forecast. From the 14 October through to 14 December we have paid $855,727.81, when the upper limit as per your forecast and subsequently our budget was $612,000.
Including your most recent invoices … we will have spent $1,008,053 creating a budget variance of $264,471. We have spent 60% of our legal budget through to completion.
Can you please confirm that the remainder of the legal fees for litigation will be within this threshold and budget. …we only have $650,000 remaining and it must be completed within this range. …
Also I just wanted to bring a couple of items to your attention in your latest set of invoices. It appears some days you are working 14+ hours on the Civic Centre case, which … appears to be unusually high for this time of the year. We have no dramas if this is correct, but in the event it’s a clerical error, I just wanted to bring it to your attention. …
Noted – we understand. Our earlier estimates remain correct. …We will do our best to remain within estimate and note your cost constraint.
… I personally enter all of my timesheets. I manage a team constituting over 10 people on the matter. My timesheets are correct. …
Notably, Mr Redenbach did not raise the matter of deferred fees to be factored into any budget, estimate or “cost constraint”, which tells against any agreement about them.
At this point, Mr Redenbach could have reviewed his invoices and his timesheets. The issue of charging for work not done is discussed below.
In January 2020, in further response to Mr Nankivell’s concerns about legal costs, Mr Redenbach emailed offering to “defer some of our further fees on the basis of an uplift on a success basis”. This email belies the suggestion that a deferred agreement had already been agreed. It also appears that this was the first time an “uplift fee” was suggested.
On 21 January 2020, Mr Nankivell asked Mr Redenbach for an “updated expected expenditure” and warned that “[w]e can’t spend any more than the remaining $650k”. Mr Redenbach provided the original costs spreadsheet up to trial “noting of course this is higher than the numbers [Mr Nankivell] suggests we need to hit”. Mr Redenbach proposed “to defer some of this cost and not compromise outcomes…”.
On 23 January 2020, Mr Nankivell asked Mr Redenbach about the “uplift option” for the Civil Centre litigation and another case against a contractor, CBC, and asked “what happens in the unlikely circumstances the cases are unsuccessful?”.
Mr Redenbach responded:
No success uplift is charged unless we succeed, which means a judgment in favour of Council. If a loss occurs we would not increase panel rates but will not require payment of amounts above your budget until 1/7/20.
The fact that Mr Redenbach at this point refers to “panel rates” still applying supports the conclusion that there was no other binding Costs agreement.
After that email, Mr Roncon told Mr Nankivell that Council could not agree to a deferred fee arrangement, because:
…as a Local Government Authority, Council …. Need[s] to pay our dues when they fall due and it does not matter if they occur now or later.
The two men then told Mr Redenbach the same thing and that his fees had to be kept in line with the budget that had been set.
Mr Redenbach was therefore aware that Council was not interested in a deferred fee or uplift fee arrangement.
On 24 February 2020, Mr Redenbach (and Mr Lee) briefed Council and discussed the legal fees in the UUB/AJC litigation. Mr Redenbach took a file note of this briefing, which included that costs were $9 million for Council’s claim of $5 million. In the file note, Mr Redenbach recorded that he said he “also note[s] that barrister and expert fees are super high” and that he did not think the $9 million figure sounded correct, though he did not record an accurate figure.
On 25 February 2020, Mr Redenbach was chasing payment of invoices. Mr Nankivell responded, repeating that Council was “literally bone dry” and that “cashflow management is becoming a high priority and issue for us”. He also requested a breakdown of costs paid to date.
On 3 March 2020, Mr Nankivell asked Mr Redenbach the “reasonable likelihood of success in [Council] seeking to recover what is fast approaching $9m in legals”. Mr Redenbach said he considered $9 million unlikely, but planned on updating the estimate that week. That same day Mr Roncon emailed Mr Redenbach with concern about the significant legal fees being paid for with public money, including:
… Both you and Greg have repeatedly said … that you “will seek to recover every dollar council spends in this matter, we’ll just load up the costs claim” … If that was not the case we would have taken a different approach 12-18 months ago.
I think the real question is, is what’s approaching $9m spent on this matter to date, the best use of public money if we can only recover a fraction of it? …
On 11 March 2020, Mr Nankivell asked Mr Lee for expected costs to completion of the UUB/AJC litigation, and in relation to the other CBC litigation he asked what “the deferred payment looks like”. No deferred payment was referenced for the UUB/AJC litigation.
That same day, Mr Lee provided a further estimate to Mr Nankivell for the Civic Centre litigation: “$323-$412k will be payable in FY20 and $173-$230k payable in FY21 to finalise the [UUB and AJC] cases”, noting the “budgetary constraints” flagged by Council.
On 26 March 2020, Mr Nankivell emailed Mr Redenbach that “it’s more important than ever that we keep to that upper limit of $600K for the remainder of the litigation”.
On 6 April 2020, Mr Redenbach emailed Mr Nankivell offering a “deferred fee arrangement” and a “cap” of fees for the CBC litigation; again, no deferred payment was referenced for the UUB/AJC litigation. Later that day, he also raised a “‘contingency’ style arrangement” for the CBC litigation, where if there was no win there would be no fee and “if there is a win the insurer pays our fees on an uplift, not council”.
On 7 April 2020, Mr Nankivell again told Mr Redenbach that Council was “not in a position to pay anything further even with a contingency style arrangement”.
On 1 June 2020, Mr Nankivell had a telephone call with Mr Redenbach; Mr Nankivell’s file note recorded that Mr Redenbach was the partner for the UUB/AJC litigation and that Council could save on costs by Mr Lee no longer also working on the case. That afternoon, Mr Redenbach sent further invoices for $171,354.04 for professional fees.
On 2 June 2020, Mr Nankivell complained about invoices to Mr Lee, who then suggested to Mr Redenbach that he was happy to “write the invoices down to stick to the budget”.
On 19 June 2020, Mr Nankivell asked Mr Redenbach for “clarity” because “the [October 2019] estimate” had already been exceeded by $300,000. Mr Nankivell also raised concerns about the 11 March 2020 estimate, which was meant to take Council “through to trial on the 22 June 2022”. Mr Redenbach did not respond immediately.
On 1 July 2020, Mr Redenbach began providing legal services to Council through Redenbach Group.
On 2 July 2020, Council’s insurer’s solicitors asked for copies of any Costs agreements or fee disclosures from Redenbach Group in connection with other related Ombudsman matters in order to explain some of the invoices. Mr Nankivell said Mr Redenbach would provide that information. Mr Redenbach apologised to Mr Nankivell for the delay and asked for payment of an invoice. Mr Nankivell responded:
As we have all discussed previously, we cannot make any further payment without the approval of Council. We don’t have delegation to go above that amount, hence why we have been bugging you for the past month to get that advice from you, so we can give to Council for approval.
We can’t breach delegations provided by the council on this matter. We are being pummeled on this and I could be sacked. Can’t take the risk. Trust you understand that.
On the same day, Mr Redenbach wrote to Council demanding payment of invoices “in order to move forward” and giving an estimate of a further $200,000 ex GST in fees and disbursements to get the UUB/AJC litigation to mediation.
On 13 July 2020, Mr Redenbach emailed Mr Nankivell and Mr Roncon, notifying them that Mr Lee had left the firm and re-iterated that he remained the contact partner of “your Legal Services Panel appointment for the duration of the contract”. Again, this is consistent with Mr Redenbach not considering there was any Costs agreement other than the Tender, because he referred to being Council’s Tender “panel” firm “for the duration of the contract”, which was the Tender, and no other costs agreement applied to the UUB/AJC litigation.
On 29 July 2020, Council met. Mr Redenbach advised that Council could either maintain its current claim in the UUB/AJC litigation with an estimate of approximately $182,000 of legal costs, or expand the claim to seek over an additional $2 million with an estimate of legal costs of about $350,000. Council resolved to expand the claim with an increased budget for legal fees.
On 30 July 2020, Mr Roncon and Mr Redenbach exchanged text messages about the meeting:
[Redenbach:] How did it go last night?
[Roncon:] … Went well in the end. Took some skin off in the process but we got them there… got budget through to mediation as per your advice (need to talk costs agreement) and got approval to pay your account which I will arrange to have paid today.
Mr Roncon’s evidence about the Costs agreement in the message was that he wanted to “nail costs down” and to get a firm estimate; this was consistent with the previous communications demanding costs were minimised and that the estimates did not move.
That same day, Council paid the outstanding invoices.
On 4 August 2020, consistent with Mr Roncon’s concern about a costs agreement, Mr Nankivell asked Mr Redenbach for “a fixed cost agreement” to mediation “based on the upper limit of your advice (being $220,000 + GST…) to give Council a level of comfort and guarantee that this amount won’t be exceeded”. Mr Nankivell repeated a common complaint about fees:
… Council is [in] an extremely vulnerable position, and with litigation continuing and further costs being incurred, it is placing Council in a worsening position where it will not be able to afford to pay invoices or continue with the proceedings post mediation.
On the same day, Mr Redenbach responded, saying he could “see a way of giving you and the Council comfort in respect to these issues which probably ends up similar to where you want”. The men agreed to speak on 7 August 2020.
On 5 August 2020, Mr Redenbach asked his staff to “find our terms and conditions” because there was a need to do “some work on this for the client”. Mr Redenbach said that after this his staff found a proforma Costs agreement and “cobbled together” the alleged 2020 Costs agreement, which included a clause for “uplift fees”.
On 6 August 2020, Mr Redenbach messaged Mr Nankivell:
Hi Jay, just working on this costs agreement for you – do you have a quick second to briefly chat about a technical issue which can help me finish this off?
Mr Redenbach spoke to Mr Nankivell in the afternoon on 7 August 2020.
Mr Redenbach claimed during that meeting he discussed a new Costs agreement that included an uplift fee, which was the “technical issue” referenced in his text message the day before. He claimed that the Costs agreement, including the uplift fee, was sent later that evening with terms corresponding to their discussion; Mr Redenbach claimed that was supported by the covering email sent to Mr Nankivell:
… As discussed today:
1. The estimates in our letter of 13 July 2020 remain current for the work we are performing on the AJC (506) matter to the point of mediation.
2. We would be happy to regard our estimated fees to the point of the mediation as a cap, noting though that it may be necessary for us to carry out some of the work estimated as barristers [sic] fees ourselves (which would increase the cap on our fees). …
3. For completeness, we enclose our General Terms and Conditions of Business for the AJC (506) matter, which includes in the cover letter an estimate of our fees to that point. …
We will charge you professional fees at an hourly rate. For partners, the hourly rate in this matter is between $390.00 to $480.00 plus GST. Solicitors rates are between $250.00 to $350.00 per hour plus GST and paralegals are between $180.00 to $250.00 per hour plus GST.
Mr Redenbach also claimed he discussed the uplift fee as a way to “keep our rates down” and that he told Mr Nankivell that it would be applied to “Any money received from AJC. We just receive it into a trust account from AJC’s solicitors, then deduct the fee, then send Council the balance”.
Mr Nankivell denied Mr Redenbach’s version, and said the “technical issue” discussed was the possibility that Mr Redenbach’s firm would do some of the barristers’ work, as noted in point 2 of the letter. He said he relied on the parts of the cover letter that indicated the estimate from 13 July 2020 remained current and Redenbach Group would regard their estimated fees as a cap. It did not allow for any uplift fee.
In cross-examination, Mr Redenbach denied he took a file note of the conversation. However, there was an internal email in evidence, which I consider is in the nature of a file note of the conversation, which reads:
I had a 20 minute discussion with Jay [Nankivell] and he agreed we should press on with the CBC hearing. He also understands the dynamics in relation to our 13 July estimate and will accept a cost agreement retrospective. We will issue those on [three existing matters for Council] in due course.
It is unclear why Mr Redenbach would shy away from this being described as a file note. However, it is consistent with him generally in cross-examination refusing to agree to simple propositions, ostensibly fearing the consequences.
Despite Mr Redenbach’s denial, I accept this file note is consistent with Mr Nankivell’s evidence that the discussion concerned the rebalancing of fees between counsel and solicitors and was described as “the dynamics in relation to our 13 July estimate”. The agreement was that the firm would be paid more than their estimate if they did some of the work allocated to counsel fees. I would have expected Mr Redenbach to have outlined an agreement to an uplift fee in the file note, had that conversation ever taken place.
I accept Mr Nankivell’s evidence over Mr Redenbach’s, because generally Mr Redenbach’s evidence was not credible. For example, it would have made no sense for Mr Redenbach to be discussing receipt of settlement money into a trust account, which he said would trigger the uplift fee, when his General Terms allegedly discussed contained clause 8 which specified that “We do not operate a trust account…”.
Additionally, it is implausible that either Mr Roncon or Mr Nankivell would have agreed to an uplift fee:
Mr Roncon always maintained Council was required to pay bills when they fell due.
Council had just increased its budget for the UUB/AJC litigation to mediation, such that there was no pressure to reach further alternative arrangements.
Mr Nankivell and Mr Roncon had been cautious to ensure that Council did not pay fees in excess of the budget set by the elected councillors. For Mr Nankivell to suggest that such a significant change to the terms would be approved without council’s agreement is inherently improbable.
The emails and texts from 30 July 2020 onwards indicated that Mr Nankivell and Mr Roncon were seeking to cap Council’s legal costs to mediation, not agree to increase the fees payable to Redenbach Group.
The opaque reference in Mr Redenbach’s 6 August 2020 text to a “technical issue” is not how a very significant change to the fees payable by Council would be referred to.
I do not accept that Mr Nankivell was content to apply a 25% uplift fee retrospectively to fees paid that were, by this point, already in excess of $6.4 million. The uplift fee at that point would be about $2 million - a sum equal to the estimated value of Council’s remaining claims against AJC. It would make further prosecution of the AJC litigation not only pointless, but very likely to result in a loss to Council even if it recovered close to 100% of the fees charged.
Further, the cover letter supplied with the General Terms stated that “in addition to the terms of the initial Tender of 1 April 2016, we confirm that these are the terms that we are continuing to work under and are of retrospective effect as necessary”. However, it also stated:
We confirm you have accepted these terms from the outset of our agreement with you.
To the extent that statement was intended to convey that the Tender terms prevailed, it might be accepted. It could not be accurate for the attached “General Terms and Conditions of Business”, which expressly required acceptance “of offer” only “by continuing to instruct us”.
A few days later, Mr Redenbach sent Mr Nankivell two further identical General Terms and Conditions of Business regarding the Ombudsman matter, in relation to which Council’s insurers were asking for copies of Costs agreements. Again, the covering email stated that the General Terms and Conditions of Business were “consistent with our obligations under the relevant tenders”. The Ombudsman document contained an identical provision for an uplift fee, which made no sense when there was no litigation in that matter; there could be no “success”. Mr Redenbach would only concede that “It’s possible that it was a pro forma which the … new firm cobbled together … and … that clause [didn’t have] … any effect”. Instead, it appears likely that the “cobbled together” agreement was deployed for all matters irrespective of what had in fact been agreed.
This 2020 Costs agreement for the UUB/AJC litigation was never signed. I find it was not accepted by Council, for the same reasons as the 2018 Costs agreement.
Council submitted that consistent with the “heavy responsibilities which the law imposes upon a fiduciary”, to the extent that there is any ambiguity in a Costs agreement, it ought to be resolved in favour of the client, being Council: see eg Equuscorp Pty Ltd v Wilmoth Field Warne (No 3) [2004] VSC 164 at [10], quoting Clare v Joseph [1907] 2 KB 369 at 376; see also Adamson v Williams [2001] QCA 38 at [19]-[20]. However, I have found that there was never any agreement for uplift fees, and it was not explained what different constructions were at play rendering any ambiguity.
In September 2020, Mr Redenbach told Council there might be a $50,000 budget overrun to mediation.
In mid-October 2020, Mr Redenbach sent Mr Nankivell a “draft cost estimate for next steps in the matter”. It did not refer to any “deferred” or “uplift fee”.
On 23 October 2020, Council exercised its option and extended the 2018 Tender agreement with Passer Par to 30 September 2021. Council indicated that “[t]he conditions of the quotation are as per the original quotation document supplied”. There was no reference to any Costs agreement, deferred or uplift fee.
Even if the 2020 Costs agreement had been accepted by Council (which it was not), so as to vary the terms of Redenbach Group’s Tender agreement, exercise of the option can be taken to have restored conformity to the 2018 Tender for a further year on the original terms.
Between then and June 2021 it appears that there was preparation for the hearing, including issues of discovery and evidence.
On 10 June 2021, Council again sought tender submissions for legal services.
Passer Par submitted a response, which noted Passer Par’s relationship as part of Council’s “panel of solicitors” since 2016 and named the AJC and UUB proceedings as “key examples” of its work.
There was no reference to any relationship governed by a Costs agreement separate to the Tender and the specific reference to the UUB/AJC litigation being performed as a “panel” solicitor is inconsistent with the submission that any Costs agreement applied instead of the Tender.
The letter also included reduced fees from previous Tenders:
Pricing for the work mentioned throughout this tender to be carried out by our firm is set out in the schedule below. This pricing will apply to new instructions received from the date of this tender…
Principal Solicitor $385 ph (including GST)
… Redenbach Legal operates under a policy … to ensure that costs incurred by Council are limited.
In August 2021, Passer Par provided an updated estimate for the AJC Proceeding, which noted the “remaining balance… is $614,048.35 inc GST”.
In September 2021, Mr Nankivell responded, stressing Council’s expectation it would be informed of all matters relevant to legal costs, and that estimates were accurate and would not be exceeded:
Council was under the impression that the bottom line fee provided in October 2020, was for the full costs through to the trial.
… can you confirm that … the final fee estimate provided on the 10 August all things reaming [sic] as expected will not vary materially until the finalisation of the trial.
I appreciate that this case has been difficult… however we cannot continue to increase the budget for this case. We simply are not in a viable position for this to occur and as we said last year, we really need to start reining these costs in and tighten the belt…
1. On 22 January 2018 the file 506 [for the UUB/AJC litigation] was opened, which was a matter received from [Council] as per our tender appointment in June 2016.
2. During late 2017 and throughout 2018, Keith Redenbach personally provided numerous written PowerPoint presentations to the full Council as to the costs of the litigation on an ongoing basis. At no point were those estimates rejected, indeed to the contrary they were accepted in the form of continuing instructions. …
9. On 23 October 2020, we received the extension to our legal services agreement. …
11. On 10 August 2021, we provided a further detailed and itemised estimate.
Nowhere in that letter did Mr Redenbach refer to any Costs agreement beyond the Tender agreements. Mr Redenbach recognised that his firm had performed legal services in relation to the AJC litigation under the Tender agreement not a separate Costs agreement.
In early September 2021, Council advised Passer Par that it had been successful in the Tender, noting it was a 2-year appointment and the “conditions of the agreement are as per the original quotation document supplied”. The 2021 Tender, being inconsistent with the 2020 Costs agreement would be construed to have superseded it: see eg Sara Lee at 353-354, [21]-[25]; Hillam at [52]-[68].
On 10 December 2021, Mr Redenbach wrote to Mr Nankivell enclosing a letter and updated fee estimate for the UUB/AJC litigation, which noted the remaining balance of estimate was $524,496.53 incl GST.
On 25 January 2022, Mr Redenbach sent Mr Nankivell a further costs estimate for the UUB/AJC litigation, which noted the balance of the remaining estimate was $528,256.53 incl GST together with a proposed mediation settlement range and a mediation position paper.
On 2 February 2022, Mr Nankivell asked Mr Redenbach whether costs could be saved by him not bringing an additional lawyer to the mediation, stressing that “we can’t afford the continual blowouts in costs estimates”.
After the mediation, Mr Redenbach advised Council about offers made, likely outcome at a hearing and estimated legal costs recovery from AJC. He indicated that:
Council had spent approximately $5.2 million in legal fees including disbursements. He considered it was arguable $1 million of fees could be claimed from UUB.
AJC’s offer to settle the proceedings by paying $1.1 million and costs as agreed or assessed was worth about $3.5 million total.
Nowhere in his advice did he mention Council’s liability for any uplift fee if Council accepted the offer or something close to it. I consider that is because Mr Redenbach knew Council never agreed to an uplift fee. The same is true for “deferred fees”.
On 17 February 2022, Mr Redenbach provided Council an updated “costs billed” schedule, indicating that in fact $5,831,500 had been invoiced but with a small note “This is an estimate only. It is not a quote and does not represent a cap on our fees” without expressly indicating an entitlement to more. It is difficult to understand how a list of costs “actually” billed could be relied on as an “estimate”. There was no reference to deferred or uplift fees.
On 15 March 2022, Mr Redenbach provided a further estimate for the AJC litigation, which included the following words in the fine print:
* Indicates a reduction in actual fees rendered to estimate claimable costs in the litigation, with actual and estimated solicitor/client fees and disbursements to be increased by approximately 20% on the figures stated above. As at 1 January 2022, we estimate the further 20% amounts total a further $1.4 million…
The basis for this note was not explained, however 20% does not accord with the alleged 25% uplift fee, nor deferred fees.
About a week later, the matter settled with AJC to pay Council $1.5 million plus costs as agreed or assessed.
Around that time, UUB’s claim in the arbitration was dismissed.
The settlement required Council’s costs to be agreed or assessed. By March 2022, Council had paid Passer Par $5,913,426 ex GST for legal fees.
In late March and early April 2022, Mr Redenbach contacted two costs consultants, Blackstone Legal Costing Australia Pty Ltd and Costs Partners, for estimates to draw a bill of costs. Then Mr Redenbach wrote to Mr Nankivell enclosing “further advice in relation to the preparation of a bill of costs”, about the options of engaging Blackstone, Costs Partners or Passer Par to draw the bill of costs for the AJC litigation. Council alleged this was the first representation made which was misleading or deceptive. This is considered further below.
In July 2022, Mr Redenbach emailed Mr Nankivell stating that “You will see that we have updated our ABN, effective today, and as such we attach a copy of the new ABN’s insurances and accountant’s letter for your information and updating”.
Further documents were attached, one being “220701 BHCC Costs Agreement and Terms of Business”, which included a letter and terms. The letter stated:
… This letter and the attached General Terms of Business is our costs agreement and disclosure pursuant to the Legal Profession Uniform Law (NSW) (“the Uniform Law”). We confirm you have accepted these terms from the outset of our agreement with you. …
For partners and senior solicitors our rates range between $650.00 to $750.00 plus GST. Solicitors rates are $350.00 per hour plus GST and paralegals are between $180.00 to $250.00 per hour plus GST.
It also included an “uplift fee” clause, identical to that in the 2020 Costs agreement.
Mr Redenbach’s evidence was that upon receipt of Mr Nankivell’s response, “Thanks Keith”, he understood Council agreed to be bound to the terms. However, Mr Redenbach did not suggest that he had any conversation with Mr Roncon or Mr Nankivell about this Costs agreement or the uplift fee. I do not accept that by sending the Costs agreement in that context, he intended to vary the terms of the existing Tender.
For similar reasons to the 2018 and 2020 Costs agreements, I find Council did not accept this 2022 Costs agreement. At most, that document supplemented the terms of Redenbach Group’s retainer agreed in accordance with the 2021 Tender, concerning ABN and the like. None of the Tenders included the extraordinary provision of a retrospectively operating uplift fee. Again, Mr Redenbach did not draw attention to, nor sufficiently explain, the Costs agreement to Mr Nankivell or Mr Roncon. Its innocuous context was the transition of Mr Redenbach’s legal practice from Passer Par to Redenbach Group. Nor do I accept that Council accepted this Costs agreement by continuing to instruct the firm; again, that conduct was equivocal, as it was equally consistent with instructing on the Tender terms.
On 11 August 2022, Mr Nankivell wrote to Mr Redenbach in relation to the fees charged for Redenbach Group’s work on the bill of costs. Mr Redenbach responded, including “our costs will be less than the external costs experts”. This was the second representation Council relied on for its misleading or deceptive conduct case, detailed below.
In September 2022, Mr Nankivell queried Mr Redenbach’s charges for travel time from Sydney to Broken Hill, where Mr Redenbach had opened a practice. Within minutes, Mr Redenbach responded in a few emails, which appear defensive and petulant: He complained:
On the plane we were working in preparation for what is a very large exercise. I did not bill all of my time during that exercise. Nor did I charge for taxis, accommodation or airfares. Nor did I bill for the disruption to my practice. If this is challenged, then I will pursue all of these cost[s]!
… my costs agreement entitles me to pursue all of the costs that I have outlined above. Further, on this very project, council has regularly paid for airfares, accommodation and other costs of other Sydney based consultants. We are no different; and we do not appreciate the constant attempts to haggle with our costs when we are actually already giving massive discounts.
…We also note we are entitled to charge uplifts and increase our costs and to date have not done so for several years. And yes, I am completely and utterly sick and tired of the constant emails on our costs…
The entitlement to “charge uplifts and increase our costs” was not explained.
Mr Nankivell responded repeating his concern about legal costs “across the various cases … in excess of $10M”.
Within two minutes, Mr Redenbach fired back:
… I object to your continual inaccurate references to figures which bear no meaning to the truth – in particular the reference to $10 million below. This is completely untrue and false slurs or [sic] me and my firm that you are evidently intent on propagating. I should tell you I am close to forming a view that you have no confidence in me. If that is the case, and I finalise my view as to that, then I will cease to act and you can go and get somebody else.
Minutes later, Mr Redenbach “formally” requested Mr Nankivell withdraw unidentified “slurs and innuendo”. He also “reserved” his rights.
Had Mr Redenbach considered he was entitled to charge uplift fees, then he would have known that the total amount for the UUB/AJC litigation was around $10 million, and he would have had no reason to be offended by Mr Nankivell’s email. This further tells against any agreement for uplift fees.
Uplift Fee: In the event of a successful recovery or settlement of the claim then we are entitled to and will charge an uplift on our standard Professional Fees as outlined above. Our uplift fee is set at 25% in accordance with the Legal Profession Act 2004.
In their opening, the Redenbach parties accepted that the question of whose version of conversations were accepted was “black or white”, without a middle ground in terms of whether the uplift fees were orally agreed on 28 November 2017.
The Redenbach parties conceded that the conversations would determine whether the legislative requirements for an uplift fee were satisfied. I have found that the conversation did not take place as Mr Redenbach deposed; there was no oral agreement for uplift fees.
Even if Council accepted the 2020 and 2022 Costs agreements, entitling Passer Par and Redenbach Group to charge an uplift fee as a matter of contract law (if there was “success”, considered below), that entitlement was unenforceable by reason of s 185(3) Legal Profession Uniform Law 2014 (NSW) (LPUL) because of non-compliance with s 182 in four ways.
First, the 2020 and 2022 Costs agreements do not comply with s 182 because they were not “conditional costs agreements” within the meaning of s 181(1) for the purposes of s 182(1). The Costs agreements did not provide that any amount of legal costs would not be payable otherwise than in the event of a successful outcome of the matter to which those costs related.
Section 181(1) LPUL provides that a “costs agreement may provide that the payment of some or all of the legal costs is conditional on the successful outcome of the matter to which those costs relate”. Section 182(1) LPUL provides that a conditional costs agreement may “provide for the payment of an uplift fee”. For litigious matters, any uplift fee “must not exceed 25% of the legal costs (excluding disbursements) otherwise payable”: LPUL s 182(2)(a).
In Carter Capner Law v Clift (2020) 4 QR 600, the Queensland Court of Appeal considered ss 323-324 of the Legal Profession Act 2004 (Qld), which is materially identical to ss 181-182 LPUL. Fraser JA at [12], [19]-[22] explained that the term “uplift fee” is used in contradistinction to other “legal costs” payable under a Costs agreement, in such a way as to indicate that the charging of an uplift fee requires further “justification”. At [23], Fraser JA stated:
That statutory context and the consumer protection purposes of the relevant provisions combine to suggest the construction that the legal costs to which an uplift fee may be added are the legal costs that would be payable for the legal services to be performed by the law practice under the costs agreement if the costs agreement did not include the provision making payment of costs conditional upon a successful outcome. Upon this construction the addition to a law practice’s usual costs of a premium to take into account that the law practice will not become entitled to payment unless and until a successful outcome is achieved is an uplift fee.
Any uplift fee is intended to compensate a lawyer for the “risk” assumed by their entry into a conditional costs agreement: see eg Frost v Miller [2015] QSC 206 at [16] (Carmody CJ). Here, Passer Par and Redenbach Group assumed no risk under the 2020 and 2022 Costs agreements. They charged and were paid in full for the work they invoiced. The Costs agreements were not conditional for the purposes of s 181(1), and so Passer Par and Redenbah Group were not entitled to any uplift fee.
Secondly, the 2020 and 2022 Costs agreements do not identify the basis, upon which uplift fees were calculated for the purpose of s 182(3)(a). The basis of the uplift fee calculation requires “the clear identification of each and every starting point that provides or constitutes the ‘basis’ for the calculation”: Lynden Iddles v Fonterra Aust Pty Ltd [2023] VSC 566 at [236] (Delany J) (Lynden). The “objects of Part 4.3 of the LPUL as stated in s 169(a) include ensuring that clients are able to make informed choices - including about costs”: Lynden at [238] (Delany J).
The Redenbach parties submitted the uplift fee was retrospective in effect because the covering letter to the 2020 Costs agreement was part of the agreement, and that this meant that an uplift fee applied from the beginning until the end of the matter. That cover letter stated:
… in addition to the terms of the initial tender of 1 April 2016, we confirm that these are the terms that we are continuing to work under and are of retrospective effect as necessary
It also somewhat oddly stated “[w]e confirm you have accepted these terms from the outset of our agreement with you”.
To attempt to achieve retrospective operation of the uplift fee by such oblique statements is not to provide “clear identification of each and every starting point that provides or constitutes the ‘basis’ for the calculation”. I do not accept it satisfies the legal requirement.
Thirdly, the 2020 and 2022 Costs agreements do not provide any “estimate of the uplift fee” to satisfy s 182(3)(b). Estimates of the uplift fee were not otherwise provided, because I do not accept Mr Redenbach had any conversation where the uplift fee was discussed and agreed.
Fourthly, the uplift fee exceeds 25% of legal costs otherwise payable. The 2020 and 2022 Costs agreements related to a litigious matter. A Costs agreement can apply retrospectively with respect to legal costs for work already undertaken by virtue of s 6 LPUL, which defines “legal costs” as including costs a person “may be charged” in the future. This definition must be understood with regard to the purpose of s 182 LPUL. As previously noted, Passer Par and Redenbach Group have already provided and charged for legal services; there was no “risk” to the firm. The uplift fee exceeds 25% of the legal costs otherwise payable under the 2020 and 2022 Costs agreements, as it purports to apply to not only future costs, but also costs charged previously.
The parties agreed the trigger of “success” needed to be construed for its meaning, and accepted that every contract must be construed on its own terms.
Council submitted that the AJC litigation resulted in a net loss to Council of several million dollars, even before the uplift fees or further sums were charged in subsequent invoices, so there was no “successful event”.
Council took me to authorities for the proposition that “success” is considered from the client’s perspective; clauses are construed in favour of the client: see Baker Johnson Lawyers v Jorgensen [2002] QDC 205 at [15]-[16], [18] and [27] (McGill DCJ) (Baker); Brady v Bale Boshev Solicitors [2009] NSWDC 387 at [31]-[35] (Neilson DCJ); Players Pty Ltd (in liq*) v Clone Pty Ltd* [2019] SASC 186 at [123]-[133], [174]-[176] and [185] (Norman J) (Players). Most recently, in Hegarty v Keogh (No 2) [2023] SASCA 30 at [207], Livesey P, Doyle and Bleby JJ clarified that:
…cases on contingency costs retainers have generally been decided on the basis that they will be construed in favour of the client, or at least according to “what ordinary people in the position of the parties would have … understood” …
The Redenbach parties did not engage with these authorities, but submitted that “successful recovery or a settlement of the claim”, means that the uplift fee was payable if Council recovered any money or settled the claim. Reliance was placed on Legal Services Board v David Forster [2011] VSC 292, where Emerton J found at [32] that a Costs agreement that provided an entitlement to an uplift fee “if you recover any money from your case” sufficiently “set out the circumstances that constitute a successful outcome of the matter” for the purposes of s 97(4)(a) Legal Practice Act 1996 (Vic).
I do not accept that case was similar. The costs agreement in that case was clearly a “conditional costs agreement” as it provided for a “no win no fee”. This is distinguished from Passer Par and Redenbach Group’s Costs agreements, which I have found were not conditional costs agreements; the nature of an uplift fee in that context differs, as explained above. Further, Emerton J was not referred to any of the authorities above.
In any event, I prefer the approach explained in Council’s authorities, as being more consistent with the legislative purpose.
The Redenbach parties submitted I should have regard to Mr Redenbach’s characterisation of “success” during oral conversations with Council. I do not accept that the conversations assist in the “objective” construction of the clause. In any event, I do not accept Mr Redenbach’s evidence of oral conversations.
Further, case law indicates that a legal practitioner ought not be able to benefit from failing to advise a client that taking action would have the effect of triggering an uplift fee, which would lead to the practical result of the client suffering a bigger loss than if a worse settlement offer was accepted that did not trigger the uplift fee: Baker at [18], cited with approval in Players at [174].
Mr Redenbach never advised Council that it ought to factor in the uplift fee when considering accepting AJC’s offer. If it was payable, Council would have been better off accepting an offer to receive nothing by way of settlement, and only sought costs.
Even if the uplift fee was otherwise payable, which it is not for the above reasons, I would likely have exercised the Court’s inherent jurisdiction to supervise the conduct of officers of the Court in relation to fees to order its refund to Council: see Hartnett t/as Hartnett Lawyers v Bell as Executor of Estate of late Deakin-Bell (2023) 112 NSWLR 463 at [12]-[16], [19] and [123] (Bell CJ) (Hartnett).
Council seeks equitable and, or, statutory relief because Redenbach Group disbursed AJC settlement money received on trust for Council with no legal entitlement to do so.
On 28 March 2023, Redenbach Group paid to Council $1,893,367.56 of the $4,298,000 in settlement monies held in trust.
On 17 April 2023, Council directed Redenbach Group to pay the remaining $2,404,623.44 in trust to it, which Redenbach Group did not do.
On 20 April 2023, Redenbach Group undertook not to transfer the balance of the settlement monies without first providing 14 days’ notice. However, on 17 May 2023, Redenbach Group’s solicitors wrote to Council’s solicitors, stating:
… We hereby request that your client immediately consent to the payment of the trust fund to Mr Redenbach in satisfaction of his long outstanding professional fees.
In the event that we do not receive your client’s written consent to the payment of the trust fund to Redenbach Legal within 31 days from the date of this letter, our client will without further notice transfer the trust fund to himself. …
On 3 July 2023, Redenbach Group’s solicitors informed Council’s solicitors that they “will now withdraw from the controlled monies account the sum of $2,377,519” in payment of INV3050 and INV1132 (for uplift fees and previously uncharged time) and would apply the residue of interest monies accrued in the trust account to its office account in payment of further interest monies within 31 days.
On 4 July 2023, the trust money was dispersed as follows:
$130,000 to Broken Hill Legal in repayment of a bridging loan;
$46,010.89 to Redenbach Group’s office trading account;
$1,500,000 to Mr Redenbach’s direct investment account; and
$701,508 to various credit cards, sundry debtors and legal expenses of Redenbach Group or Mr Redenbach.
Council submitted and I accept that first, Redenbach Group’s payment to itself was a breach of its fiduciary duty involving the making of an unauthorised profit, because Redenbach Group was not entitled to charge the uplift fees or “time not charged”; Redenbach Group and Mr Redenbach are liable to reconstitute the trust fund and disperse the money as directed by Council, or pay equitable compensation to Council or account for its unauthorised profits.
The Redenbach parties submitted that there is no breach of fiduciary duty if Redenbach Group was entitled to withdraw the settlement monies held in trust. However, the reverse is also true.
Redenbach Group firm was only entitled to disperse the trust funds to an office account for due and payable legal costs: LPUL s 144(2)(b). The legal fees were not due and owing for the purposes of s 178 LPUL. That would not change even if the express lien in the 2022 Costs agreement was binding.
I reject the Redenbach parties’ submission that Council cannot obtain a remedy, because it took no steps to prevent the transfer of the balance of the settlement monies. Council had directed Redenbach Group to transfer all the settlement monies to it, which made it clear Council did not consent to Redenbach Group taking the money. Redenbach Group was required to comply with Council’s written directions as to how the trust monies were to be dealt: LPUL s 142(1). It was not for Council to take active steps against Redenbach Group to prevent it breaching fiduciary obligations; fiduciary obligations are proscriptive, not prescriptive: see eg Breen v Williams (1996) 186 CLR 71 at 113 (Gaudron and McHugh JJ).
Mr Redenbach made no submission against a finding being made that if the trust funds ought not to have been taken, then Mr Redenbach would also be personally liable. He owed Council fiduciary duties: see eg Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 96 (Mason J). Further, from 8 July 2020, and at all material times, Mr Redenbach was Redenbach Group’s directing mind and will. I consider that he was aware of Council’s non-consent to the withdrawal of the trust monies, and that dispersing the trust monies, including to himself, was not in Council’s best interest and was in breach of his duty of trust owed to Council, if the invoices were not due and payable.
Therefore, Council is entitled to an order that Redenbach Group and Mr Redenbach reconstitute the trust fund.
I accept that Council’s submission that Mr Redenbach and Broken Hill Legal are also liable as knowing recipients of the trust money they received.
The test for a “knowing recipient” of misapplied trust monies is covered by the first limb test in Barnes v Addy (1874) LR 9 Ch App 244 at 251-252 (Selborne LC). I consider Mr Redenbach and Broken Hill Legal (by virtue of Mr Redenbach) were knowing recipients of the misapplied trust monies.
First, for the reasons outlined above, the withdrawal and dispersal of the trust money involved a breach of fiduciary duty.
Secondly, the Redenbach parties did not provide any evidence or submissions to suggest that the monies were received by Mr Redenbach or Broken Hill Legal for anything other than “their own use and benefit”.
Thirdly, I am satisfied that Mr Redenbach and Broken Hill Legal (by virtue of Mr Redenbach) had the requisite knowledge that the trust monies were misapplied. For the reasons above, Mr Redenbach breached his fiduciary duty and was aware of Council’s direction to pay it the trust money. It follows that Mr Redenbach had actual knowledge, or at least wilfully shut his eyes to the obvious misapplication of the funds: see eg Baden v Société Générale pour Favouriser le Développment du Commerce et de l*’*Industrie en France SA [1993] 1 WLR 509 at [250] (Gibson J); Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296 at [261], [265] (Finn, Stone and Perram JJ).
Therefore, Council is also, or in the alternative, entitled to equitable compensation for those reasons. Equitable compensation seeks to restore a plaintiff, as close as possible, to the position it would have been in, had no equitable breach occurred: see Xiao v BCEG International (Australia) Pty Ltd (2023) 111 NSWLR 132 at [40]-[41] (Gleeson J, Griffiths AJA and Mitchelmore JA agreeing). But for the breach of fiduciary duty and trust, Council would have received the full amount of the trust monies.
However, Council is not entitled to equitable compensation from Redenbach Group’s various creditors who are alleged to have received $701,508 from the trust monies. Despite Council orally submitting that the creditors were “knowing recipients of trust funds” and “should pay the money back”, it was not suggested that I could make orders against them, where they are not parties to the proceedings, nor is there any evidence of their requisite knowledge.
Accordingly, I find that Council would be entitled to:
$46,010.89 in equitable compensation from Redenbach Group;
Council made only written submissions that Passer Par and Redenbach Group was not entitled to charge $186,240 for “time not [previously] charged”, giving two reasons.
First, Council submitted that the invoices issued by Passer Par and Redenbach Group were final bills for the periods they covered; there was nothing in the 2018 nor 2020 Costs agreements which contemplated that the firms would be able to revise invoices issued and paid by Council to add further time. However, I have found that the Tenders applied as the only contractual arrangement. No submission was made that invoicing for time not previously charged was inconsistent with the Tenders.
Secondly, Council submitted that Passer Par and Redenbach Group “waived” its right to bill for time not charged, and that this waiver was not retracted, citing Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 (2022) 277 CLR 445 at [28]-[29] (Kiefel CJ, Edelman, Steward and Gleeson JJ) (Allianz). The waiver was said to have occurred in Mr Redenbach’s 30 September 2021 email to Mr Nankivell:
I have worked an average of 8 hours a working week per day, almost every single day … but elected to charge Council only about half of that time in our recent account; I have done this as I am using my discretion, in good faith, to show Council I understand the costs concerns it has raised.
… However, if the costs I have incurred (but not charged) result in a successful costs order Council may recover against AJC, then I may elect to render an account for the time not charged, and seek payment from AJC for that time. I owe no good faith duty towards AJC and would not provide it the same “discount” I am prepared to offer Council!
At this point, as a gesture of my good will towards Council, I do not propose to charge Council for that unbilled time. …
However, no submission was made as to why the later invoice was not a revocation of the earlier waiver: Allianz at [29].
Also, Council did not include any relevant prayer for relief or give any indication in its List Statement that the $186,240 was in issue. The List Statement focused on the invoices concerning “uplift fees”, even though the $186,240 was also charged in one of those invoices. At no time did Council seek to amend its List Statement. In the circumstances, I am not prepared to make orders that Passer Par and Redenbach Group were not entitled to charge for “time not charged”.
In any event, Council is not entitled to recover for the “time not charged” as a statutory debt under s 185(5) LPUL. Council did not identify any exception applied to that provision.
The reconstituted trust would include the sum of $186,240 ex GST, which is dealt with further below.
Council paid the invoices rendered by Passer Par and Redenbach Group under the mistaken belief that it had a legally binding contractual obligation to do so. However, Passer Par and Redenbach Group charged Council higher hourly rates than those in fact agreed pursuant to the Tender process.
While no defence was pleaded to the restitution claim for higher rates paid, the Redenbach parties blamed to Council for not taking more care in checking invoices and paying them without double checking the Tender rates. Alternatively, they submitted that because some work was performed there was not a total failure of consideration and therefore a restitutionary claim cannot succeed. That is incorrect as a matter of law; total failure of consideration is but one factor which “makes retention of a benefit prima facie unjust”: Equuscorp Pty Ltd v Haxton*;* Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham*’*s Warehouse Sales Pty Ltd (2012) 246 CLR 498 at [31] (French CJ, Crennan and Kiefel JJ).
Council relied upon Mr Nankivell’s evidence that the invoices were paid on the mistaken belief of Council employees that the invoices complied with the Tender rates: see eg Australia and New Zealand Banking Group Ltd v Westpac Banking Corp (1988) 164 CLR 662 at 675 (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ); Rover International Ltd v Cannon Film Sales Ltd [1989] 1 WLR 912 at 925 (Kerr LJ).
Mr Nankivell “believed the invoices were accurate in that they billed for time actually worked at the agreed Tender rates such that the amounts charged were properly due.” He did not review line items, he did not check hourly rates, but accepted he could have done so. He trusted Passer Par and Redenbach Group:
as Council’s lawyers that each entry in an invoice issued to Council accurately reflected time … and was billed at the rate at which time for the relevant person was properly chargeable to Council in accordance with the tendered rates.
Mr Nankivell set out a schedule comparing the amounts charged based on Costs agreements rates and what ought to have been charged based on the Tender rates. The mathematics is not disputed and indicated that Council paid $767,693.15 more than the Tender rates and is entitled to restitution of that amount.
I therefore find Council is entitled to restitution of the following sums from Passer Par and Redenbach Group:
$712,129.15 incl GST, being the difference between the higher rates charged by Passer Par and the hourly rates it was actually entitled to charge; and
$55,564 incl GST, being the difference between the higher rates charged by Redenbach Group and the hourly rates it was actually entitled to charge.
Various invoices issued by Passer Par and Redenbach Group do not accurately record time actually spent by solicitors on the matters stated in them, and therefore Council is entitled to a remedy.
Mr Redenbach’s evidence about how an invoice was created was:
The process that I’ve adopted, and has been my practice for 30 years in the profession, is to either handwrite a timesheet, a piece of paper, and then provide that either to staff to enter, or, if it’s appropriate, for me to do it - perhaps this was the time, due to the time of year - enter it in the system, that then turns it into the tax invoice at a further point, subject to any audit, or bill of costs, or other partner settlement of bills. So, there’s a number of steps before we get to tax invoice is what I’m saying.
… I accept the premise of an idea that a principal solicitor is responsible for their timesheets and that if a system is in place for the entry of those timesheets into the billing system, and that it is then generated as a tax invoice, that ultimately the ILP is responsible for that tax invoice.
Obviously, an incorporated legal practice operates by way of human agents. Mr Redenbach, as principal solicitor, was required to consider and approve the invoices issued to Council.
Mr Redenbach was taken to examples of particular days, on which his time was charged across various invoices for more than 24 hours in a day. For example:
On 6 December 2018, across 4 invoices he charged 31.12 hours.
On 18 April 2019, across 4 invoices he charged 25.5 hours.
Across 8, 9 and 10 May 2019, he billed 103 hours of his time (36 on 8 May, 35 on 9 May and 32 on 10 May).
On 19 September 2019, he billed 34.5 hours.
Mr Redenbach denied the invoice entries were intentionally false, that he was recklessly indifferent to their accuracy or that he failed to take appropriate care in their preparation. Mr Redenbach was adamant that “the time was worked”. His unsatisfactory explanations for the impossible time recorded varied:
“…there’s international travel involved, international time zone involve[d]”.
“a billing system like this which is based on the Microsoft architecture is in the US. So the actual date can have a number of variables to it”.
There may have been “a minor clarification or discrepancy”.
Council had “approved” the invoices “by the bill of costs”.
The operator may have incorrectly entered the time into the system, “it’s an understandable slip”.
I include a lengthy passage from that cross-examination about Mr Redenbach’s time entries on 19 September 2019, because it exemplifies Mr Redenbach’s incredible explanations, which I do not accept as accurate:
[Redenbach] A. … Do you see that first date, 14 September, in the fourth last column? So, having gotten out of hospital and been at home, I worked from home. And the doctors suggested that, that I stay at home because I needed to recover and so on.
Unfortunately, the matter was still progressing at full pace, and Mr Lee, who received a handwritten time entry, gave it to the person, as I mentioned, the process was earlier, who put the entries that appear in the final column, 14 September, 15 September, 18 September, and 19 September when they came to him, into the system as according to the process that I mentioned yesterday.
What Mr Lee then did was issue that bill, which is why I was saying to you earlier that he kind of accused me in this occasion. I wasn’t even part of the issuance process. It was an operator error, which is why it’s been corrected in the last column. I literally put my body on the line for this client.
…
Q. The invoice entries for 19 September have been pulled from the system at the time that the invoice has been generated, and they’ve been attributed the dates that are in the first column?
A. Yes. So the - as I explained, the process is, operator gets handwritten time sheet, in this occasion it was me, because I’m at home and I sent the stuff and my wife was taking stuff in and out of the office. She delivers it to, I believe this one was, Albert Wong, but I might be wrong in that. But he did not click the correct - seemingly. I mean, I’m - I’m speculating, because I - I wasn’t there. I was at home, you know, suffering. But, he basically must have put, on that day, 19/09/2019, those entries in for the previous days that I mentioned in the table at 3003, whatever it is, in my KR3 affidavit.
So, it’s a - it’s an understandable slip. He - he was using a Microsoft system, which you would assume is easy. I - I know all about it, because I - I have developed an app on Microsoft, which - which is on the app store at the moment, .app.com Microsoft, and it, unfortunately, had a - had a glitch in it, which - which - which was fixed subsequent, which is that operator error could result in the - the wrong date appearing in that first column, which is why I was trying to explain to you earlier that when the operator presses that wrong button the time was done, the work was done.
I was on my sick bed doing it with boxes being delivered to my home. I know all about it. I remember that time vividly. And as I said earlier, it was a difficult time for me, because my dog died, and I couldn’t even - I couldn’t even lift her up to have her euthanised. So, I do remember it very, very well, that work, and that work was done on the days in the affidavit exhibit that I gave you.
He tended to blame others, including co-principal Mr Lee, and an administrator in accounts, who were not called to give evidence. I infer Mr Lee and the administrator’s evidence would not have assisted the Redenbach parties: Jones v Dunkel (1959) 101 CLR 298 at 308 (Kitto J), 312 (Menzies J), 320-321 (Windeyer J). I do not accept Mr Redenbach’s evidence is accurate. It is difficult to accept where no corroborating evidence was led concerning any “clerical error” or other explanation.
Mr Redenbach argued in cross-examination that he prepared a letter dated 12 February 2024, in which he purported to address queries of overcharging and proposed amended reconciliations. However, that letter was created after the litigation was commenced; it did not appear to be based on contemporaneous records or objective evidence, and in fact provided no explanation for the overcharging on 19 September 2019.
His affidavit in the proceedings attempted to reallocate time across other days to retrospectively avoid the uncomfortable fact that the invoices billed more than 24 hours of his time per day on many days. He explained it as “the date was reclassified, as - as I’ve explained, due to the administrative error”.
However, when the AJC litigation settled, AJC were to pay Council’s costs as agreed or assessed. Mr Redenbach prepared the bill of costs, and it appears during that process the issue with overcharging was identified, because he recorded a reduction in some time entries. Mr Redenbach volunteered for the first time in cross-examination that Council was aware of the errors in the invoices and yet approved them:
…They had a lot of time with respect to, to go through this stuff and we drew to their attention the discrepancies, and those matters were specifically raised with the client and he specifically said go ahead and lodge it. In fact they demanded it because they were wanting to get it done quickly. So I don’t agree. I absolutely reject any sense of dishonesty. There’s been nothing but transparency with this client. There’s been openness about minor administrative errors. I told you about that.
… How can they have more transparent. We can be - I’ve said there’s not Redenbach 34 hours in a day, here’s what happened. We explained it. We can’t - it’s bewildering that despite all of this, your client would persist with these baseless slurs, innuendo, in his own words suspicion, which has no - it’s misconceived. That’s what’s bewildering sir. …
It’s as transparent as we could possibly be in all of the circumstances, and that’s why it’s very upsetting for me as my business crumbles around me, as I sit here the only unpaid person in this courtroom, to be accused in the way you are.
I reject that Mr Redenbach was “transparent” with Council to the extent he claims he was entitled to uplift and deferred fees and that his invoices accurately recorded time worked. He provided no cogent explanation for the invoices.
I also find that Council paid for services not rendered by Passer Par and Redenbach Group because of a mistaken belief that the hours charged were actually worked.
I cannot be confident that the invoices issued by Passer Par and Redenbach Group were generally correct. This is further supported by:
Other persons within the law practice billed more than 20 hours per day on various days.
Costs consultant, Mr Kim Chapman, considered the amount claimed in the bill of costs was excessive and that the bill of costs had been “embarrassingly drafted”.
Because it is not possible to know the amount that Council overpaid without a detailed analysis, it is appropriate to refer that matter to a costs expert. This process would also consider whether any “time not charged” fees are recoverable by Council, noting that Council is not entitled to double recovery.
As I have found that Council is entitled to restitution from Redenbach Group for the amounts paid by way of mistake as to the inflated hourly rates and charges for services not rendered, it is not necessary to consider Council’s alternative claim for an account of profits, arising from a breach of fiduciary duties by the Redenbach parties.
As explained in detail in Hartnett, the Court has a broad inherent supervisory jurisdiction over solicitors, particularly concerning legal fees.
The Court’s inherent supervisory jurisdiction includes scrutiny of solicitors to ensure that they do not charge exorbitant fees or otherwise improperly take advantage of their clients: N**ew S**outh W**ales Crime Commissioner v Fleming (1991) 24 NSWLR 116 at 123 (Gleeson JA), affirmed in Hartnell v Birketu Pty Ltd [2021] NSWCA 201 at [145] (Gleeson JA, Basten and McCallum JJA agreeing). This power must be exercised with fairness to the affected party: Hartnett at [142] (Bell CJ, Adamson JA and Griffiths AJA agreeing).
A solicitor cannot avoid that inherent jurisdiction by his employment with an incorporated legal practice, particularly where that solicitor is practically responsible for approving and issuing invoices.
In Hartnett*,* the Court of Appeal held a costs assessment previously obtained was an appropriate basis for determining the amount of money repayable by the solicitor: at [107]-[109]. The Court upheld the award of damages, which was the differential between the amount charged by the solicitor and the assessed amount.
Here, I consider there is an insufficient basis for the Court to determine the range or extent of overcharging, in order to exercise the inherent jurisdiction.
Council also claimed against Passer Par, Redenbach Group and Mr Redenbach for contravention of s 18 ACL. Council sought compensation under s 236 ACL for loss and damage caused to it as a result of two written representations made by Passer Par and Redenbach Group regarding the preparation of the bill of costs for the AJC proceeding, which it claimed were misleading or deceptive or likely to mislead or deceive.
Under s 18(1) ACL, a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The first three elements (being a “person”, “trade or commerce” and “conduct”) are not in contention.
If a person makes a representation with respect to any future matter (including the doing of, or the refusing to do, any act), and the person does not have reasonable grounds for making the representation, the representation is taken to be misleading: ACL s 4(1).
The Redenbach parties made limited submissions other than a sweeping denial of the claims.
The first representation was made by Passer Par. The second representation was made by Redenbach Group. Council claimed it was entitled to recover loss or damage from Passer Par for the first and second representations, or from Redenbach Group for the second representation.
It also sought relief from Mr Redenbach as a “person involved” in the relevant contravention, relying on ss 2(1) and 236 ACL.
However, Council did not in its List Statement or oral or written submissions identify which of the four limbs of the definition of “involved” in s 2 ACL, upon which it relied. Different legal tests apply depending on whether the person is said to have: (a) aided, abetted, counselled or procured the contravention; (b) induced the contravention; (c) been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) conspired with others to effect the contravention. Further, a natural person alleged to have been involved in a representation as to a future matter bears no onus of proof: ACCC v Michigan Group Pty Ltd [2002] FCA 1439 at [303] (Dowsett J).
In circumstances where Council provided no assistance as to which type of “involvement” applied and the reasons why Mr Redenbach would be liable, I do not accept it is for the Court to attempt to deal with each possible combination and technicality.
On 22 April 2022, Mr Redenbach sent a letter with a covering email to Council providing his review of fee proposals from two external costs consultants for the preparation of the bill of costs. The letter stated:
Blackstone’s overall estimate ranged between $350,000 and $450,000 (based on professional fees of $5-$6 million) payable over four months (with the balance payable at completion); and
Costs Partners’ overall estimate was $470,000 (based on professional fees of $5.5 million) payable over 12 to 15 months.
The letter did not state that both external consultants capped its charges for the preparation of the bill of costs at a percentage of the professional fees claimed (Blackstone at 9.5% and Costs Partners at 8.5%).
The letter also set out a “third option”:
… the relatively high costs of both proposals moves us to suggest there may be a third option. This option involves ourselves preparing a draft bill and providing it to a senior or retired costs consultant to review and sign off. This option would likely take less time than the consultants, as we are already familiar with the matter and the invoices. We would be happy to obtain a further fee estimate if this is Council’s wish.
In the “Executive Summary” the letter stated “…Council may wish to retain our services to complete the draft, which we estimate would provide some costs savings to Council”.
The covering email included words I consider were to the same effect:
You will note in the final section that there is a third option, which is for ourselves to retain the task “in-house” and we would be happy to provide a further fee estimate if this is something Council is happy to entertain. I do think this will provide significant savings to Council as we are familiar with the matter and able to prepare a bill of costs.
I reject the Redenbach parties’ submission that the covering email should not be considered because Council’s pleading referred to “advice”, such as to confine it to the letter only. That is not a proper reading of Council’s List Statement, which states that: “On or about 22 April 2022, the third defendant, on behalf of the second defendant, wrote to the plaintiff providing advice…”. The paragraph does not distinguish between the email and the letter. Further, paragraph 38 makes it plain that the advice in question: “stated that the second defendant would likely be able to prepare the Bill of Costs at a lower cost to the plaintiff than the external costs consultants…”. That makes it clear that the 22 April 2022 representation comprised both the letter and covering email.
Passer Par and Redenbach Group also submitted that the 22 April 2022 advice “was not a representation but an estimate of fees”, without explaining why it was not both. It was possible for Council to rely on the representations, even if previous estimates had been unreliable. The estimates during the litigation were to some extent contingent on factors beyond Passer Par’s control, such as conduct by AJC. However, the advice as to fees for the bill of costs was in the context of quotes having been provided from other costs consultants and where Passer Par had the advantage of knowing the file and being able to cap costs, should they choose.
Following the 22 April 2022 representation, Council instructed Passer Par to prepare the bill of costs.
I note that the reasonable costs of drafting the Bill of Costs themselves will generally be recoverable at the end of the costs assessment process (along with interest on any unpaid and awarded sums). As such, and as our costs will be less than the external costs experts I anticipate the bulk of the costs will be recoverable items. As such, it is not correct that these costs are a non-recoverable item.
Our estimated fees remains [sic] as set out in my letter dated 22 April 2022, attached. To be clear, the upper estimates received from external experts to draft the Bill of Costs ranged from $450,000 to $470,000, noting that those experts advised that this work could take up to fifteen months to complete. Our fees will not likely exceed those fee estimates. I take this opportunity to note that by having our firm draft the Bill of Costs, Council has ensured that its costs are in-line or lower than the lowest estimate provided by the external companies. Further, as we are more familiar with the matter and the invoices, it will take a far shorter time to complete the invoices, as we have noted in our progress updates to Council.
Passer Par’s representation of 22 April 2022 and Redenbach Group’s representation of 11 August 2022 were misleading or deceptive or likely to mislead or deceive for the following reasons.
I am satisfied that both communications were representations as to future matters: ACL s 4(1)(a). Both concerned whether Passer Par and Redenbach Group would, in the future, be able to prepare the bill of costs at a lower cost to Council than the estimates provided by the external consultants.
I am not satisfied that Passer Par and Redenbach Group have discharged their evidential burden by “adduc[ing] evidence to the contrary of the proposition that they lacked reasonable grounds for making the future representation”: Kytec Pty Ltd v Prolearn Corporation Pty Ltd [2024] VSCA 23 at [59]-[61] (Macaulay JA, Ferguson CJ and Kennedy JA agreeing).
First, Mr Redenbach’s statements that the firm was already familiar with the matter and invoices did not provide a reasonable basis for the representation that the firm could prepare the bill of costs at a lower cost than the external consultants. This is particularly so given the hourly rates of those consultants ($395 ex GST and $290 ex GST) were materially lower than Passer Par’s hourly rates ($480 ex GST for Mr Redenbach; $350 ex GST for a solicitor; and $250 ex GST for an unqualified paralegal, before any uplift fees sought). Further, unlike the “caps” provided by the external consultants (at 9.5% and 8.5% of professional fees), Passer Par did not propose to “cap” the amount it might charge.
Passer Par did not have demonstrated expertise in the preparation of bills of costs to have a reasonable basis that it could carry out the work more cost effectively than costs experts. In fact, it appears there was double handling of work. Mr Ross Ianello, who was one year post admission, worked for Mr Redenbach at the time. He was not called as a witness in the Redenbach parties’ case. I accept his affidavit tendered by Council. Mr Ianello said he assisted Mr Redenbach to conduct “an analysis on each time entry and narrative”, and after he completed the “first-pass review” then Mr Redenbach completed the “second-pass review” including answering Mr Ianello’s questions. I accept, as submitted by Council, that “[t]he work was drying up” and Mr Redenbach “wanted the cash [from Council] to keep flowing for that bit longer”.
Secondly, I accept Council’s submission that where the external consultants’ fees for the preparation of the bill of costs would be treated as a disbursement and therefore likely to be mostly recoverable, Passer Par and Redenbach Group’s work on the bill of costs would have been treated as professional fees and therefore likely recoverable to a lesser extent. I find that Mr Redenbach knew this when making the 22 April 2022 and 11 August 2022 representations.
Council had to show a causal connection between the misleading or deceptive conduct and the loss or damage: ACL s 236(1)(a). The conduct need not have been the sole cause of Council’s loss or damage; it is sufficient if the conduct made some material contribution to it: Henville v Walker (2001) 206 CLR 459, 480 at [60]-[61] (Gummow J).
Mr Nankivell gave evidence of his reliance on the representations in engaging Passer Par to prepare the bill of costs; he was not effectively challenged on his evidence under cross-examination, which instead had the effect of reinforcing it.
In respect of the 22 April 2022 letter and covering email, Mr Nankivell was essentially asked if he relied on the representation and he said he did:
Q. You say that this letter was misleading in relation to the paragraph that you’ve quoted, paragraph 119 of your affidavit? …
A. Yes.
Q. The way that you say it was misleading is that you understood that Mr Redenbach could provide or can prepare the costs agreement cheaper than the two costs consultants that he had provided quotes to you for?
A. Yes. …
Q. Did you form a view that Mr Redenbach - that - so what part of this letter do you say you formed the view - that caused you to form the view that Mr Redenbach could prepare a bill of costs less than or cheaper than the consultants?
A. The, the reference to the third option, and then subsequent phone discussions.
Q. I’m just focusing on the 22 April letter. So you’re saying that it wasn’t just this letter that led you to that belief, is that right?
A. The, the 22 April letter, my interpretation was that the third option would be cheaper. …
Q. In paragraph 123 of your affidavit, you state, “I would not have caused council to instruct Mr Redenbach’s firm to prepare the bill of costs had I not been told by Mr Redenbach that it would be cheaper for council than using one of the external cost consultants.” Do you see that?
A. Yes. …
Q. On the assumption that it would’ve been cheaper to go with one of the cost consultants than with Mr Redenbach, would you have chosen one of those cost consultants?
A. Yes.
Mr Nankivell was not challenged as to the veracity of his answers, and I accept his evidence as honest and logically plausible. By this stage, Council had repeatedly raised concerns about legal costs, and I consider Council wanted to minimise the costs of the preparation of the bill of costs, and relied upon its panel solicitor’s advice as to minimising costs.
I am satisfied that Council relied on the 22 April 2022 representation in choosing to engage Passer Par instead of one of the external consultants for the preparation of the bill of costs. Therefore, it is not strictly necessary to determine if Council also relied on the 11 August 2022 representation, however, I consider it below.
In respect of the 11 August 2022 email, Mr Nankivell did not agree in cross-examination that he knew at the time that Redenbach Group’s costs would be greater than the estimate. He said: “At the time Mr Redenbach was still stating he was working within the upper estimates of what he’d given us”.
However, the following also passed in cross-examination:
Q. … what would you have done if you knew at the time of 11 August 2022 that Mr Redenbach wasn’t going to meet the cost range that he had put in that email, what would you have done?
A. I didn’t know at the time.
Q. Well you would have done nothing, you would have continued with him, correct, just like you did in the main proceeding?
A. Yes.
Council accepted a causal weakness with respect to the 11 August 2022 representation, stating it “falls in a different category” to the 22 April 2022 representation by reason of Mr Nankivell’s answers in cross-examination. In closing submissions, Council conceded it “may have continued to instruct [Redenbach Group]” on the basis that “costs had been sunk” but stated “the 11 August 2022 representation reinforce[d] Council’s reliance on the 22 April 2022 conduct”.
I agree that the 11 August 2022 representation falls in a different category to the 22 April 2022 representation. I find that, in circumstances where Council was already several months into the preparation of the bill of costs, it would have continued to engage Redenbach Group and Mr Redenbach even if the 11 August 2022 representation were never made.
It follows that Council is entitled to an award of damages for loss suffered because of the 22 April 2022 representation made by Passer Par, but not the 11 August 2022 representation made by Redenbach Group.
Council submitted orally that “… it was seen that liability is being in effect conceded on behalf of the Redenbach Group in respect of whatever has occurred in the context of Passer Par.” I disagree that liability was “conceded” by Redenbach Group for the actions of Passer Par, so that an order could be made against Redenbach Group rather than Passer Par. Passer Par’s rights had been assigned to Redenbach Group, but not its liabilities.
In determining quantum, the Court “assesses the degree of probability that an event would have occurred, or might occur,” and adjusts its award of damages accordingly: Malec v JC Hutton Pty Ltd (1990) 169 CLR 638 at 643 (Brennan, Deane, Dawson, Gaudron and McHugh JJ).
Courts have accepted that quantifying loss involves a degree of speculation and “guess work”: see eg Aristocrat Technologies Australia Pty Ltd v DAP Services (Kempsey) Pty Ltd (in liq*)* (2007) 239 ALR 702 at [35] (Black CJ and Jacobson J).
Where there is less than satisfactory evidence of some loss, the Court “will do its best to make an intelligent assessment of the loss”: Mills v Walsh [2022] NSWCA 255 at [152] (Brereton JA).
Council submitted Redenbach Group charged $973,131 ex GST to prepare the bill of costs.
Redenbach Group submitted that it only charged $576,539.25 to “draft” the bill of costs, because other fees charged were for other legal services, being “advising” of $314,940 and $83,811.75 for “other amount” such as reporting to Council. The Redenbach parties said Council would have incurred these fees even if Blackstone had prepared the bill of costs.
Mr Redenbach was taken to invoices that included his time entries he described as “settling”, which he said meant the same thing as “advising”. Despite maintaining this distinction, a review of some of the line-item descriptions in the invoices shows the narrative words are the same, irrespective of Mr Redenbach’s retrospective classification.
The costs experts could not agree on whether any distinction could be drawn between “drafting”, “settling” and “advising”. Council’s expert considered that “settling fees” should be considered as “drafting fees”. The Redenbach parties’ expert considered it was not possible to make a sweeping conclusion as to whether the “settling fees” would be distinct from “drafting fees” unless a more detailed review was undertaken.
The Redenbach parties did not provide any evidence to substantiate the distinction it asked the Court to make. While it was likely that Redenbach Group would have provided some legal services irrespective of whether another consultant prepared the bill of costs, the Redenbach parties provided no clear evidence of what those services would have been and why it has costed them the way it has.
I consider it appropriate to start from the position that Redenbach Group charged $973,131 ex GST to prepare the bill of costs. It is possible to factor in the possible cost of advice work by applying a discount at the end of the quantum exercise.
The Redenbach parties did not make any further submissions as to quantum, nor did it challenge the assumptions Council asked the Court to make in assessing quantum.
I have rounded down to the nearest dollar amount in the calculations. I find Council is entitled to loss or damage in the amount of $504,698 for the following reasons.
I accept an appropriate methodology is to compare the actual scenario of the fees paid to Passer Par and Redenbach Group for the preparation of the bill of costs to the likely cost of another consultant doing the work. I consider it more likely that Council would have engaged Blackstone, as it estimated completion within four months rather than the 12-15 months Costs Partners offered.
I reject Council’s assumption that Blackstone would have itemised only $5,000,000 ex GST in the bill of costs. I consider it more likely that Blackstone would have itemised the same $5,913,426 ex GST in professional fees as Redenbach Group did (after excluding the $973,131 ex GST Redenbach Group charged to prepare the bill of costs).
I accept that Blackstone would have charged 9.5% of the professional fees claimed to prepare the bill of costs (being the rate provided for in its estimate), which would have meant a charge of approximately $561,775 ex GST.
I accept Council’s submission that 80% of Blackstone’s fees (being approximately $449,420) would have been recovered from AJC. This is on the basis that Blackstone’s fee would have been characterised as a disbursement, and therefore likely mostly recoverable.
I reject Council’s assumption that, had Blackstone prepared the bill of costs, no filing fee would have been incurred, because AJC would have been more likely to make an offer of settlement prior to the filing of the bill of costs. That involves too much speculation.
Finally, I accept that, had Blackstone been engaged, it is likely Redenbach Group would have provided some legal services. While it is difficult to quantify with any precision, I accept Council’s submission that 10% is a reasonable quantum for that contingency.
Had Blackstone prepared the bill of costs, its fee would have been $561,775. Of this, I have found $449,420 would have been recovered from AJC, leaving Council out of pocket by $112,355. I have found Redenbach Group’s fee was $973,131. Of this, $300,000 was recovered from AJC, leaving Council out of pocket by $673,131. This was a difference of $560,776.
Applying a 10% discount, Passer Par is liable to Council for $504,698 because of the 22 April 2022 representation.
Because this remedy concerns invoices charged from April 2022 to December 2022, there is no requirement for those invoices to be assessed, as that might lead to double recovery.
Redenbach Group submitted that it was entitled to an indemnity in relation to the restitution claim and the misleading and deceptive conduct claim either because:
The Costs agreements contained a clause requiring clients to “release us from all claims arising in connection with your matter”; and/or
The Professional Standards Act 1994 (NSW) (Professional Standards Act).
I reject those arguments for the following reasons.
First, the indemnity in the Costs agreements does not operate because I have found that the Costs agreements are not binding on Council.
Secondly, the Professional Standards Scheme only applies to certain “occupational liability” claims for “damages”. It does not include claims arising from a breach of trust (see Professional Standards Act, ss 4 and 5).
Council’s claims in relation to the uplift fees paid seek to enforce Redenbach Group’s obligations as trustee (and those of Mr Redenbach and Broken Hill Legal as constructive trustees) or arise from breach of trust and fiduciary duty. They are also claims for recovery of the statutory debt created by the LPUL. They are not claims for “damages” within the meaning of the Professional Standards Act.
Council’s claims in respect of the overcharging are based on restitution and equity. They are not “damages” claims. Council’s only claim potentially the subject of the Professional Standards Scheme is that in respect of misleading or deceptive conduct, but it is unaffected as it for less than $1.5 million.
Therefore, there is no defence based on an indemnity that reduces Redenbach Group’s liability to Council as I have found it.
Passer Par and Redenbach Group’s cross-claims against Council concerning unpaid invoices must fail because of the findings above about the operative agreements.
The cross-claims against Mr Roncon and Mr Nankivell also fails for the following reasons.
Even if November 2017 conversations took place as Mr Redenbach alleged, they were so vague as to be unable to constitute a representation that fees could be increased to those set out in the January 2018 Costs Agreement. However, more importantly, Mr Redenbach himself acknowledged in cross-examination that the conversation did not give approval to increase fees. That required, on his own case, Council resolution, which never occurred. He could not have relied on his own version of conversations.
Mr Redenbach did not rely on the alleged conversation on 11 August 2020 for the simple reason that it post-dated the sending of the 2020 Costs agreement. Further, the conduct identified above is inconsistent with Mr Redenbach having relied upon an entitlement to charge any uplift fee. No later costs estimate from Passer Par or Redenbach Group referred to an uplift fee, suggesting that Mr Redenbach was not relying on any assertion that one could be charged. Further, Mr Redenbach must have known that any amendment to fees had to be agreed by Council and executed in writing: LG Regulations 2005 reg 165(2).
The alleged conduct, in 2020 and 2022, cannot have caused any loss connected with the performance of past work, because Passer Par and Redenbach Group had already provided Council with much of the work for the fees that they are now seeking to retrospectively alter.
I do not accept that Passer Par and Redenbach Group proved any loss flowing from the alleged misleading conduct. The only evidence was a bald assertion by Mr Redenbach that he would have looked for other work, had he not been promised uplift fees. It was submitted: “loss arising … is the amount of fees that [Passer Par and Redenbach Group] gave up from other matters that they could have acted on instead”.
However, there was no evidence, upon which it would be possible to determine the amount of such alleged loss. A party must provide as much certainty as is reasonable. When the evidence fails to provide a rational foundation for a proper estimate of damages, the Court will decline to do so: see eg State of New South Wales v Moss (2000) 54 NSWLR 536 at [72] (Heydon JA). The Redenbach parties submitted that sometimes a Court should “pluck a number out of the air”. There is no reason to do so when it was well within the Redenbach parties’ ability to prove the value of available other work. They chose not to.
Mr Roncon and Mr Nankivell defended the cross-claims on the basis that they acted in good faith in their duties for Council as Council’s employees, and were therefore protected by s 731 LG Act, which provides that where a Council employee does any act in good faith for Council, then they are not personally liable.
It was not suggested to either of them in cross-examination that they were not acting in good faith, nor for the purposes of executing his functions delegated to them under the LG Act. To overcome this, the submission was made:
[The want of good faith is] … by the conduct itself, it either falls within the scope of what they can do for Council or it doesn’t. If it doesn’t then they’re not acting in good faith.
Approached that way, the Redenbach parties’ case was that Mr Redenbach asked both men to agree to terms favourable to his firm, that he must have known were not within the scope of what they could do for Council, so that it was not in good faith and the immunity did not apply. Such conduct would be inappropriate for an officer of the Court, and I have not been asked to make such a finding against Mr Redenbach. I consider this further tells against the conversations having taken place.
The s 731 LG Act immunity applies for both Mr Roncon and Mr Nankivell.
I refused the parties’ original proposed tender into evidence of over 10,000 pages and an additional electronic exhibit. It is unnecessary to use a vernier scale to conclude there was noncompliance with paragraphs 4, 42 and 61 of the Practice Note SC Eq 3, which require only necessary documentation be included in a Court book, and warn that adverse costs orders may follow where there is non-compliance.
Despite providing the parties with further time to confer as to necessary documents, a further adjournment was required and Court time was taken dealing with various documents that were clearly irrelevant to the real issues in dispute.
I informed the parties that after this judgment was delivered, I would hear from them about any appropriate costs consequences of what appears to be a cavalier disregard of the Practice Note that caused a waste of time antithetical to the just, quick and cheap resolution of the matter: Civil Procedure Act 2005 (NSW) s 56.
For the reasons above, Council has been mostly successful in its case. Passer Par and Redenbach Group have been wholly unsuccessful in their cross-claims.
I require the parties to confer on appropriate orders that will give effect to the reasons above.
The appropriate orders are:
On or before 4pm on 31 March 2026, Council is to serve on the Redenbach parties short minutes of order it proposes, including in relation to costs together with any necessary explanation;
On or before 4pm on 2 April 2026, the Redenbach parties:
(a) If they agree with Council’s short minutes of order, are to notify Council and my Associate of their agreement, in which case the orders will be considered in chambers; (b) If they do not agree with Council’s short minutes of order, are to serve on Council a document (which may include alternative short minutes of order) setting out the matters on which they disagree and provide copies of Council’s short minutes of order and their document to my Associate, in which case the matter will be listed, initially for directions, at 9:00am on 10 April 2026, or such other date as is agreed with my Associate, to deal with all outstanding issues.
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Edit to 'Parties' and 'Representation' on cover sheet
Council of the City of Broken Hill
Redenbach Group Pty Ltd trading as Redenbach Legal [2026] NSWSC 262
(2022) 277 CLR 445
(2007) 239 ALR 702
(1988) 164 CLR 662
(1996) 186 CLR 71
(2012) 246 CLR 498
(2000) 172 ALR 346
(2012) 200 FCR 296
(2023) 112 NSWLR 463
Later in 2023, Redenbach Group issued further invoices for further uplift fees and almost $1,000,000 for an upward “adjustment” of the hourly rates said to be payable as “deferred fees” agreed by Council outside of the Tender agreements.
Further, Mr Redenbach never gave Council any warning or advice on their liability for deferred or uplift fees in any of his multiple estimate spreadsheets, presentations to Council, emails or letters, including at the critical time Council was considering settling with AJC. To that extent, there was no explanation why as a matter of logic and good practice Mr Redenbach would not have documented the alleged conversation about deferred fees in the context of the voluminous communications between him and Council about legal fees, and directives to contain legal costs.
Mr Redenbach accepted that he was intimately familiar with the LG Act and the regulations, which require any variation to a contract entered into with Council to be in writing and executed by Council: reg 165(2) Local Government (General) Regulations 2005 (NSW) (LG Regulations 2005). In effect, Mr Redenbach’s case amounts to him asking the Court to accept that he asked Mr Roncon to breach the regulations. Passer Par ought to have been aware of non-compliance with tendering requirements under s 55(1) and (2) LG Act and regs 166(1) or (2) and 178(2) LG Regulations 2005 in respect the Costs agreements. Passer Par was not, as the author of those Costs agreements, “an innocent party, who contracts in good faith with a council that is in breach”: Tonkin v Cooma-Monaro Shire Council (2006) 145 LGERA 48 at [91]. See also Secure Parking Pty Ltd v Woollahra Municipal Council [2016] NSWCA 154 at [14] (Meagher JA), where s 55 LG Act “form[ed] part of the context” of the contract.
Therefore, I do not accept Mr Redenbach’s evidence as to this critical conversation.
$1,500,000 in equitable compensation from Mr Redenbach;
$130,000 in equitable compensation from Broken Hill Legal.
Thirdly, Mr Redenbach gave evidence that in “about March 2023” he prepared a table favourably comparing Passer Par and Redenbach Group’s fees to the external consultants’ estimates. I rejected the table from the evidence, as it was not prepared until well after the 22 April 2022 and 11 August 2022 representations to Council were made, and could not demonstrate any reasonable basis for the representations.
Fourthly, I reject Passer Par and Redenbach Group’s submission that a reasonable basis was demonstrated because the joint expert report indicated it was not possible to answer whether the firm could have drafted a bill of costs cheaper than the external consultants. The onus was on Passer Par and Redenbach Group to prove a basis for the representation, not for Council to prove there was no basis: ACL s 4.
Finally, it was irrelevant that the Costs agreement included a limitation of liability clause; that agreement did not bind Council, and in any event, I was not taken to any authority that allows a person to exclude their liability under the legislation.
(2001) 206 CLR 459
(2015) 90 NSWLR 422
(1984) 156 CLR 41
(1959) 101 CLR 298
(1990) 169 CLR 638
(1991) 24 NSWLR 116
(1975) 132 CLR 270
(2006) 145 LGERA 48
(2023) 111 NSWLR 132
(2000) 54 NSWLR 536