JWR Productions Australia Pty Ltd v Gooding

1. The parties file within 7 days short minutes of order giving effect to these reasons for judgment. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THAWLEY J: 1 The applicants' claims against the respondent, Mr Gooding, were dismissed on 5 March 2020 at the same time as the applicants' claims in separate proceedings against Mr Duncan-Watt: JWR Productions Australia Pty Ltd v Duncan-Watt (No 2) [2020] FCA 236. The two proceedings were heard together. 2 On 22 April 2020, the Court made an order that the respondent's costs of the proceedings be paid on a party and party basis. On 24 August 2020, an order was made by consent that the respondent's costs be awarded on a lump sum basis. Orders were made for the amount of those costs to be determined on the papers. 3 The respondent relied on an affidavit of Mr Kelvin Tang dated 11 September 2020 which annexed an expert report of a cost consultant, Ms Peta Solomon, dated 11 September 2020. The applicants relied on an affidavit of Mr Damian Sturzaker dated 28 September 2020 which annexed an expert report of Mr Michael Dudman dated 10 August 2020. 4 Ms Solomon expressed the opinion that, if the claim had proceeded to taxation, the respondent would have recovered costs of $425,195.52, comprising: $198,962.49 in professional fees; $215,049.10 in disbursements for counsel's fees; $11,183.93 in external disbursements other than counsel's fees. 5 The respondent has already received an amount of $210,958.10 by way of security. 6 Ms Solomon's methodology in relation to professional fees was as follows. First, Ms Solomon removed costs which were not covered by the order for costs and corrected an error in claimed hourly rates. Secondly, Ms Solomon converted three of six invoices such that they reflected charges in accordance with the scale in Schedule 3 to the Federal Court Rules 2011 (Cth) (Scale). In this process, Ms Solomon determined it appropriate to allow a 15% loading on account of skill, care and responsibility. Although not entirely clear, it appears she added the 15% loading to the amounts as converted to scale. This analysis showed that, on average, the resulting amount was 74.92% of the invoiced amount. Thirdly, Ms Solomon extrapolated this percentage to the remaining three invoices. Fourthly, Ms Solomon considered it appropriate to reduce the total by a further 10% of the overall costs calculated at scale to take account of costs which would be likely to be reduced or disallowed for costs payable on a party and party basis. In this respect she gave the following examples: time spent that appeared to her, based on the information in the tax invoices and the pleadings, to be unreasonable for the work concerned; time claimed to review documents drawn for which a single item based scale allowance applied; duplication of work by more than one solicitor; costs claimed for internal conferences and emails; work which was of an administrative nature and performed by solicitors; claims for research. 7 As to counsel's fees, Ms Solomon noted that counsel's hourly charge was well within the range of rates for junior counsel's fees as set out in the National Guide to Counsel's Fees. Her experience indicated to her that no reduction would likely be made to the hourly rate in light of the complexity of the matter and the fact that consideration is also given to market rates which are sometimes in excess of the Guide, which was last amended in 2013. Ms Solomon next excluded certain costs, for example because they were not covered by the order for costs. Ms Solomon then reduced the amount of counsel's fees by 10%, although she considered the time claimed to be generally reasonable. 8 Mr Dudman was not instructed to determine an appropriate amount for costs. Rather, he was instructed to identify where he disagreed with Ms Solomon. The principal areas of disagreement were, in summary: (1) Mr Dudman would have allowed 7.5% loading for skill, care and responsibility rather than 15. (2) Mr Dudman considered that a significant number of the charges invoiced would be reduced from a solicitor's rate to that of a law graduate or clerk. He considered that a conversion to scale would result in a 30% reduction, rather than a 25.08% reduction. (3) After conversion to scale, Mr Dudman would have reduced the amount by a further 30% to reflect a party and party costs order rather than 10%. (4) Mr Dudman would have reduced counsel's fees by 20% rather than 10% because he considered that the solicitors relied too heavily on counsel and counsel's work was excessive. 9 As to professional fees, Mr Dudman calculated costs by: (1) applying a reduction of 30% to the invoice amount to convert to scale; (2) reducing that amount by a further 30% to reflect party and party costs; (3) allowing 7.5% to the resulting amount for skill, care and responsibility. Applying this methodology to the professional fees of $295,074 resulted in an amount of $155,430.23. That is, Mr Dudman would have allowed about 50% of the invoiced costs. Applying Ms Solomon's methodology to the professional fees of $295,074 resulted in an amount of $198,962.50. That is, Ms Solomon allowed about 67% of the invoiced costs. 10 In my view, the amount assessed by Ms Solomon for professional costs should be allowed. The amounts charged for professional fees reflect what would be expected for a matter of this kind, taking into account the complexity of the proceedings and what was involved in terms of case management hearings, preparation and hearing. Leaving aside the precise methodology employed by Ms Solomon, a reduction of the invoiced amount to 67% appears reasonable and is consistent with what would be expected to reflect a party and party costs order. It is consistent with what the Court would have ordered without the benefit of an expert report. 11 As to the principal areas of disagreement between the experts on professional fees: (1) I consider Ms Solomon's assessment of 15% loading for skill, care and responsibility to be reasonable taking into account, in particular, the complexity of the factual and legal issues in the proceedings. (2) I see no reason to doubt Ms Solomon's assessment that a conversion to scale resulted in an average 25.08% reduction rather than 30%. The assessment of both experts on this issue was necessarily imprecise. (3) I accept Ms Solomon's reduction of 10% to professional fees after conversion to scale to reflect party and party costs. It is evident from Ms Solomon's report that she applied her mind carefully to the question and that she had experience with respect to the results which might be achieved on a taxation of costs. Mr Dudman's assessment of a further 30% reduction, after a 30% reduction to scale, if correct, gives rise to party and party professional fees substantially below what would be expected for proceedings of this length and complexity, even taking into account the substantial involvement of counsel. 12 In my view, the amount assessed by Ms Solomon for counsel's fees should also be allowed. The fact that much work was conducted by counsel does not translate to 'excessive reliance' by solicitors on counsel with the result that counsel's fees should be reduced. Particularly in specialist areas of law such as defamation, but also more generally, reliance on counsel can result in a reduction in total fees, for example where counsel is instructed to draft a document of some complexity rather than settle a document. The amount assessed by Ms Solomon in respect of counsel's fees is consistent with what the Court would have ordered without the benefit of an expert report. 13 There was no dispute about external disbursements apart from counsel's fees. These should be allowed. 14 In summary, costs should be ordered in a lump sum in the amount of $425,195.52 (exclusive of GST), consistently with Ms Solomon's opinion. 15 The respondent indicated that it had incurred costs of $8,036 (exclusive of GST) with respect to the lump sum assessment since 14 August 2020. The applicants should be ordered to pay these costs. 16 The Court directs the parties to submit appropriate orders within 7 days to give effect to these reasons, taking into account the security already received, referred to at [5] above. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Thawley.