Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 1163 | Case summary | Zoe

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Modtech Engineering Pty Limited v GPT Management Holdings Limited

[2013] FCA 1163

Federal Court of Australia|2013-11-07|Before: Mr P, Gordon J

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Source facts

Court

Federal Court of Australia

Decision date

2013-11-07

Before

Mr P, Gordon J

Source

Original judgment source is linked above.

Judgment (56 paragraphs)

[1]

Subject to further order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), and on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following documents are to remain confidential on the Court file and be sealed on the Court file in envelopes marked "NOT TO BE OPENED EXCEPT BY DIRECTION OF THE COURT OR A JUDGE" and they and any of their contents are not to be disclosed to any persons other than the authorised legal representatives of the Applicant in this proceeding and are not to be published: 1.1 The Confidential Report of the Assessment of the Applicant's Costs and Expenses dated 30 August 2013 prepared by Registrar Allaway and its annexures; 1.2 Paragraphs 7 to 10 (inclusive), paragraphs 60 to 70 (inclusive), and annexure "JMH1" to the Affidavit of James Michael Higgins affirmed on 16 September 2013; 1.3 Paragraph 3 and annexure "JMH1" to the Affidavit of James Michael Higgins affirmed on 18 September 2013; 1.4 Paragraphs 23 to 26 (inclusive), the heading preceding paragraph 79 and paragraphs 79 to 94 (inclusive), and Annexure 5 of the Applicant's submissions as to its application for approval of the Applicant's Costs, dated 16 September 2013 and the Applicant's corrected submissions dated 19 September 2013; 1.5 Paragraphs 5 to 9 (inclusive) of the Affidavit of Peter Gordon affirmed on 19 September 2013.
The Applicant is directed to bring in orders to give effect to these Reasons for Judgment by 4:00pm on 14 November 2013. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).

[2]

[6]

INTRODUCTION 1 Pursuant to s 33ZF of the Federal Court of Australia Act 1976 (Cth) (the Act), the Applicant seeks to have its costs and disbursements in conducting the proceedings (up to but not including 26 June 2013) approved. 2 The application for approval was listed for hearing on 20 June 2013. The history of the application is addressed in Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 626 at [1]-[5], [20]-[54] (the Reasons). The Applicant concedes that the material adduced at that first hearing in support of the application for approval was inadequate. 3 On 26 June 2013, the Court made orders (the Orders) that included: … 10. Upon receipt of the Settlement Sum in accordance with the Settlement Deed, the Applicant's solicitors shall, as soon as practicable: (a) deduct from the Settlement Sum the amount of $9,338,865.00 and place that sum into the Applicant's Costs Sum Account (as defined in the Settlement Distribution Scheme), until further order of the Court; and (b) deduct from the Settlement Sum the amount of $53,530.85 and place that sum into the Applicant's Expense Claim Account (as defined in the Settlement Distribution Scheme), until further order of the Court. 11. Subject to further direction, a Registrar (or Registrars) of the Court review and assess: (a) on a solicitor / own client basis, the costs and disbursements properly incurred by the Applicant in conducting the proceeding and in obtaining settlement approval (the Applicant's Costs Sum); and (b) the Applicant's claim for compensation for the time and expenses incurred by it in prosecuting the proceeding on behalf of Group Members (Applicant's Expense Claim). 12. As soon as reasonably practicable after the making of these orders, the Registrar (or Registrars) will advise the Applicant's solicitors of the form and content of the information the Registrar (or Registrars) require to review and assess the Applicant's Cost Sum and/or the Applicant's Expense Claim. 13. The Applicant's solicitors will provide such information in the form and content requested by the Registrar (or Registrars) within 7 days of receipt of that request. 14. If the Registrar (or Registrars) request further information to review and assess the Applicant's Cost Sum and/or the Applicant's Expense Claim, such request will be made as soon as reasonably practicable and the Applicant's solicitors will provide such further information within 7 days of receipt of that request. … (Emphasis in original.) The Orders then made provision for a copy of the Registrar's Report assessing the reasonableness of the Applicant's Costs Sum and the Applicant's Expense Claim (the Registrar's Report) to be provided to the Court and to the Applicant's solicitors (Slater & Gordon). The Registrar's Report was received on 30 August 2013. 4 The adjourned approval application was listed for further hearing on 19 September 2013. In addition to Counsel for the Applicant (not being Counsel who appeared at the trial), Comprehensive Legal Funding LLC (CLF) sought leave to intervene. CLF provided commercial litigation funding to the Applicant for the proceedings. Affidavit material was filed on behalf of Slater & Gordon in support of an order that, pursuant to s 33ZF of the Act, the costs and disbursements of Slater & Gordon in conducting the proceedings (up to but not including 26 June 2013) be approved in the amount of $9,018,474.60 (including GST). In addition to that order, the Applicant also sought an order, pursuant to s 33ZF of the Act that $10,000 be approved as the amount of the Applicant's Expense Claim for the purposes of the Settlement Distribution Scheme. 5 These reasons for judgment will address the Applicant's Expense Claim and then turn to consider the more difficult question of approval of Slater & Gordon's costs and disbursements. The reasons for judgment are structured as follows: INTRODUCTION 1 A. APPLICANT'S EXPENSE CLAIM 3 B. SLATER & GORDON'S PROFESSIONAL FEES AND DISBURSEMENTS 5 (1) Overview 5 (2) Professional Fees 10 (a) Pre-Agreement Costs 11 (b) LCA, LFA & CLF 16 (c) Unreasonable Rate 19 (d) Administrative Tasks 23 (e) Unreasonable / Excessive 27 (3) Disbursements 30 (a) Counsel Fees 31 (b) Pre-Agreement Disbursements 37 (c) Other Disbursements 37 C. CLF'S APPLICATION TO INTERVENE 39 OTHER MATTERS 41 CONCLUSION 42

[7]

A. APPLICANT'S EXPENSE CLAIM 6 The claim was initially described as a claim by the Applicant for compensation for the time or expenses incurred by the Applicant in prosecuting the proceeding on behalf of all group members (defined in the scheme as the Applicant's Expense Claim). The sum claimed was $53,530.85. The proposal was for that amount to be deducted from the Settlement Sum prior to individual group members' entitlements being calculated: cl 13.1(c) in the Settlement Distribution Scheme. The Applicant's Expense Claim was to be paid to the Applicant and / or reimbursed to CLF, "as the case may be". 7 The claim had been explained by Ben Phi of Slater & Gordon in the following terms: [38] In the present case, however, a claim is made for certain expenses on account of time devoted to the litigation by the Applicant's director, Mr Scott Robinson. In representative proceedings, expenses incurred by an Applicant in connection with common issues in the proceeding have been approved as expenses appropriate to be met out of group proceeding settlement proceeds. [39] Mr Robinson has devoted a considerable amount of time to this litigation over almost five years, from the time that [the Applicant] agreed to act as the representative applicant in late 2008, until the current date. He has spent this time: a) reviewing communications from Slater & Gordon as to the proceeding; b) conferring with Slater & Gordon and counsel as to the proceeding; c) providing instructions in relation to significant matters in the litigation, including instructions forming the basis of his affidavit, filed in the proceeding; d) identifying and collating documents to be produced via discovery, two separate tranches of which were requested by the Respondents; e) attending the private mediation between the parties in February 2013; f) preparing for his attendance at Court, and attending Court, to give evidence in the proceeding; and g) reviewing the terms of the proposed settlement and executing the Settlement Deed. [40] The majority of the time devoted by Mr Robinson to this litigation can properly be characterised as time expended on matters for the benefit of all group members. This level of attention far exceeds what would have been required of Mr Robinson, had the proceeding been advanced for the benefit of the Applicant alone. [41] The time expended by Mr Robinson undertaking tasks associated with this proceeding can reasonably be expected to have been devoted to other income-producing activities. [42] Mr Robinson is an experienced engineer, property developer and business owner. I am informed that he has calculated his hourly rate by reference to the taxable income of $930,347 that he earned in the 2005/2006 financial year, and on the assumption of a 40-hour working week over a period of 48 weeks, Mr Robinson's hourly rate is $485 (including GST). I have reviewed a copy of the relevant tax return and consider that this rate is reasonable. I am further informed by Mr Robinson that this was the last tax return filed by him prior to the commencement of the Applicant's trading in GPT securities, and that the taxable income attested to represents the source of the funds used by the Applicant to invest in GPT securities. … [44] The Applicant's Expense Claim totals $53,530.85. While the claim is at the high end of the range of similar expenses approved in other class actions, having regard to the particular features of Mr Robinson's involvement, including the duration of his involvement, and his position, I consider the Applicant's claim in respect of Mr Robinson's expenses to be reasonable, and properly referable to benefits received in the litigation by the represented group as a whole. 8 There were a number of issues with the claim: see [64]-[73] of the Reasons. Consistent with the Orders, the Registrar considered the claim. The Registrar's advice to the Court was that although it was described as an expense claim, it was primarily a claim for compensation for time devoted to the litigation by the director of the Applicant, Mr Robinson. 9 Slater & Gordon provided a confidential memorandum to the Registrar seeking to justify the Applicant's Expense Claim. That confidential memorandum sought to address the issues identified in the Reasons. It is sufficient for present purposes to record that the Registrar's advice to the Court was that he did not accept the claim as propounded by the Applicant. Instead, his advice to the Court (which I accept) is that "it is fair and reasonable that Mr Robinson receive some compensation for the time he has committed to the proceeding in the interests of group members as a whole" and that "a fair and reasonable amount for that commitment is $10,000 inclusive of the GST". The Applicant does not object to the Court making an order in those terms. 10 If a claim of this nature is to be made, then the claim cannot be reconstructed after the event. Consideration needs to be given at the commencement of the litigation as to how the claim might be made and, in particular, how the work undertaken might be contemporaneously recorded. If, for example, there is to be a claim based on hourly rates on the basis that the work on the litigation impacted on the earning capacity of the lead applicant, then not only will the time need to be recorded, but a proper foundation for the rate or rates will need to be provided as well as sufficient particulars of the work undertaken to justify the cost being imposed on all group members. Of course, the rate may change throughout the life of the claim. 11 In the circumstances, pursuant to s 33ZF of the Act, $10,000 will be approved as the amount of the Applicant's Expense Claim for the purposes of the Settlement Distribution Scheme. The balance standing to the credit of the Applicant's Expense Claim Account (as defined in the Settlement Distribution Scheme) shall be distributed to Group Members in accordance with the Settlement Distribution Scheme.

[17]

15 As is apparent, Slater & Gordon did not accept the balance of the professional fees and disbursements disallowed by the Registrar. Each of the headings set out in the left hand column of the table in [14] above will be considered. 16 Before turning to consider each category, it is important to say something about the Registrar's Report. Substantial material was provided by Slater & Gordon to the Registrar. In the Registrar's view, there was sufficient material and information provided to enable the Registrar to determine whether, and to what extent, the costs and disbursements claimed were unreasonable and whether, and to what extent, the Applicant's Expense Claim should be allowed. That material was not provided to the Court for the purpose of determining this application. 17 The material before the Court was limited to: 1. The application filed by the Applicant in support of the approval of its costs; 2. The Registrar's Report with annexures; 3. The submissions and further material filed by the Applicant subsequent to the delivery of the Registrar's Report. That further material consisted of: 3.1 two affidavits affirmed by James Higgins, the National General Manager of the Business & Specialised Litigation Services (BSLS) department at Slater & Gordon who, together with Ben Phi, had the care and conduct of the proceedings on behalf of the Applicant; and 3.2 one affidavit affirmed by Odette McDonald, a Senior Associate employed by Slater & Gordon, who worked on the proceeding under the supervision of James Higgins and Ben Phi (the McDonald Affidavit); and 4. Submissions and affidavits filed on behalf of CLF. 18 After the hearing, the Court requested the parties to provide submissions on the principles to be applied by the Court in considering the Registrar's Report. The Applicant submitted that the Registrar has, on direction of the Court in the exercise of its powers under s 33ZF of the Act, made an assessment of certain material to assist the Court in its determination of the Applicant's application for costs. The Applicant submitted that the implications of that are: 1. in order to form its own views on the evidence, the Court need not consider (and indeed ought not consider) whether the Registrar was in error; 2. the Court should not proceed on the basis that, unless it is proved otherwise, the Registrar's findings or conclusions should stand. The Court should not regard the Applicant as having an onus to demonstrate error; and 3. the Court should weigh the Registrar's observations, conclusions and reasoning as relevant material that the Court is entitled to take into account. In doing so, the Registrar's Report should be given no more or less weight than is justified having regard to: 3.1 the material that the Registrar took into account or failed to take into account (including in particular the material that is now before the Court); 3.2 the nature of the enquiries that the Registrar made or elected not to make; and 3.3 the cogency of the reasons provided by the Registrar in relation to the particular items in issue. 19 Accepting that to be the case, that leaves the Court with only the material listed at [17] to consider. It is on the basis of only those materials that this application for approval can be determined. Slater & Gordon did not contend otherwise. It is unnecessary in this case to decide whether the principles asserted by Slater & Gordon constitute a complete statement of the relevant principles. It may be that both the task undertaken by the Registrar and the issues which the Court must now decide are governed by principles closely analogous to those governing the preparation and implementation of a referee's report: see, by way of example, Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 266 at [48]-[51]. As these reasons will show, it is unnecessary to decide any disputed question of principle because, even applying Slater & Gordon's stated principles, subject to the limited exceptions noted subsequently, the Registrar's advice in this matter should be adopted. 20 It is necessary to make some comments about the material listed at [17]. First, in relation to each sub-category of Professional Fees set out at [24] below, Slater & Gordon filed what was described as a "common submission … made in support of the allowance of all of the items in the sub-category" and three affidavits. Those affidavits were sworn or affirmed by persons who had substantial involvement in the proceedings: see [17(3)] above. 21 Second, unlike other "assessments" of costs between lawyers and clients, Slater & Gordon did not seek to rely upon an independent experienced costs consultant: cf Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399 at [19]; King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980 at [15]; Guglielmin v Trescowthick (No 5) [2006] FCA 1385 at [16]; Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2011] FCA 671 at [129]-[130] and Taylor v Telstra Corporation Ltd [2007] FCA 2008 at [72]. In Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406 at [61], Sackville J observed that any report by an independent solicitor or costs consultant should address the reasonableness of the relevant fee and retainer agreements, whether the fees and disbursements actually charged had been calculated in accordance with those agreements, and whether the fees and disbursements had been appropriately and necessarily incurred in conducting the proceedings. Slater & Gordon concede that the work undertaken by the costs consultant originally retained was inadequate: see [2] above. The difficulty for Slater & Gordon is that, in many respects, they have failed to remedy those inadequacies. 22 Against that background, I turn to consider each of the Registrar's disallowances that Slater & Gordon maintain should not have been disallowed.

[20]

(i) The LCA 28 First, the LCA. That agreement was expressed as not being binding upon Slater & Gordon until a group member had returned both a signed LCA and LFA. The LCA provided that "[f]or the duration of this LCA, [Slater & Gordon] will charge for [their] Legal Work in accordance with the terms of the [LFA] and the Terms of Engagement": cl 7.7. "Legal Work" was defined in the LCA as follows: Legal Work means such advice, legal and administrative services as [Slater & Gordon] may consider reasonably necessary in relation to the conduct of the Litigation and the Claims. For the avoidance of doubt this includes but is not limited to the following: a) Gathering all necessary evidence to assess Your Claim including all relevant documents and records, expert reports, financial documentation and statements from witnesses b) Advising You about whether You should bring or defend a claim, the strengths and weaknesses of Your claim and the likelihood of success of any claim made by You or that may be made against You c) Conducting internal conferences to discuss claims and claim strategy d) Liaising with [CLF] e) Preparing and lodging Your claim with the opposing party or its insurers and engaging in negotiations on Your behalf f) Engaging in any necessary pre-issue dispute resolution processes g) Enlisting other clients and maintaining such records and databases as are reasonably required h) Seeking and responding to media enquiries in order to further the interests of Your claim and advance its resolution i) Making political representations on behalf of You and other clients to government and statutory bodies in the interests of Your claim j) Commencing court action if necessary to claim compensation on your behalf or defending any claim made against you k) Conducting negotiations, whether informally or through a case conference and/or mediation l) Performing all work reasonably necessary to prepare your matter for hearing m) Conducting the hearing of your matter before a Court/Tribunal n) Retaining a barrister (including senior counsel if appropriate) to advise, prepare Court documents, conduct negotiations and/or appear on your behalf at Court/Tribunal o) Undertaking work to ensure that settlement is effected p) Negotiating, resolving and collecting legal costs recoverable from another party q) Applying our special skill and expertise 29 As the Registrar noted in the Registrar's Report, while the definition of "Legal Work" in the LCA includes work which might precede the commencement of proceedings, such as gathering information to assess the claim and advising the prospects of any proposed claim, the agreement is not expressed to operate retrospectively. That is, there is no express provision in the LCA providing for the recovery of costs incurred before the effective date of the agreement. So much was accepted by Slater & Gordon.

[22]

(iii) Submissions and Analysis 34 Slater & Gordon submitted that the fact that the LCA and the LFA were intended to operate together, and to become effective contemporaneously, meant that expenses incurred prior to the commencement of the LFA were necessarily expenses incurred prior to the commencement of the LCA. Slater & Gordon submitted that on a correct reading of the LCA and the LFA, the necessary implication is that the client in each case (the group member) agreed to pay legal costs that may have been incurred prior to the effective date of the LCA. I reject that submission. 35 While the definition of "Litigation Costs" in the LFA may oblige CLF to reimburse Slater & Gordon for fees incurred before the effective date of the LFA, it does not entitle Slater & Gordon to recover, from the Settlement Sum, fees incurred before the effective date of the LCA. The LCA provided that Slater & Gordon would provide clients with advice on their claim(s) upon their acceptance of the terms of the LCA and from time to time thereafter: cl 5.5 of the LCA. In those circumstances, it could not be said that in executing the LFA, group members agreed to incur fees for work undertaken prior to the LCA. 36 That conclusion leads to a second matter raised by Slater & Gordon - whether 17 November 2008 should properly be taken as the "effective date" of the LCA. 37 Slater & Gordon submitted that the relevant date is 12 September 2008, being the earliest date on which a group member signed an LCA and LFA. In Slater & Gordon's submission, its professional fees should be allowed from 12 September 2008 because, from that date, Slater & Gordon was instructed by group members pursuant to LCAs and LFAs on terms that expressly authorised it to undertake work for the common benefit of all clients who retained Slater & Gordon. The fact that the Applicant's agreement was not signed until 17 November 2008 was said to be irrelevant because the Applicant did not become the representative party until on or about 27 May 2009. 38 That submission is rejected. Having regard to the express terms of the LCA and the LFA (see [28]-[33] above), Slater & Gordon is not entitled to legal fees incurred prior to the date on which a LCA was signed. Were Slater & Gordon to seek to rely upon a LCA signed by an individual group member, it would not be entitled to its fees incurred prior to the date of that particular LCA. Here, however, Slater & Gordon's legal fees are claimed as against all group members. For practical purposes, it is necessary to identify a single date upon which to assess Slater & Gordon's entitlement to its professional fees. As the representative party, the date of the Applicant's LCA is an appropriate proxy for this purpose. The fact that LCAs and LFAs were signed on 12 September 2008 is not an appropriate basis - those group members had no authority, actual or implied, to bind group members by their conduct at any stage of the proceedings. 39 That is not the end of the matter. Even if the amount claimed as Pre-Agreement Costs was able to be claimed by Slater & Gordon, the further questions remains - was that amount reasonable in the circumstances? Mr Higgins' evidence was that the work undertaken by Slater & Gordon before the Applicant executed a LCA related to the investigation of the claims subsequently brought on behalf of the Applicant and the group members in the proceedings. According to Mr Higgins: That work was undertaken after receipt of enquiries from potential claimants, in order, as far as was possible, to form a view about the prospects of a claim succeeding. Another important part of the work was to identify a suitable lead Applicant. It would not have been possible to determine who was suitable to assume that role without first investigating the claim (meaning the claims that may be brought on behalf of the members of the represented class). Without investigating the claim it would also not have been possible for us to give advice to Modtech or any other potentially suitable Applicant, about the implications of assuming the Applicant's role. 40 According to Slater & Gordon, the Pre-Agreement Costs covered: 1. work conducted by Slater & Gordon staff to assess the prospects of the claim against the respondents, including preparing a preliminary case analysis, memoranda on specific topics and formulation of a case theory including obtaining and reviewing relevant announcements made by the respondents to the Australian Securities Exchange, analyst reports concerning the respondents, and media articles; 2. attendances with potential group members about the legal aspects of the claim, the operation of the funding agreement, questions about the operation of representative proceedings, and preparing letters of advice; 3. briefing counsel, and conferences with counsel, in order to obtain advice and draft pleadings. Conferences took place on 15 September, 10 October and 7 November 2008; 4. attendances with CLF for the purposes of obtaining litigation funding; and 5. internal attendances - conferences about case strategy and file management. 41 Slater & Gordon submitted that because the Pre-Agreement Costs were incurred in assessing the prospects of a potential claim, the work was ultimately for the benefit of group members. Be that as it may, the group members were not the sole beneficiaries of that work. In a letter from Slater & Gordon to CLF sent on or about 15 October 2008, Slater & Gordon confirmed CLF's agreement to fund "50% of the investigation into a potential class action against [the respondents]". That letter detailed, amongst other things, the background to the matter, the nature of the proposed claim and the expected litigation budget. Slater & Gordon proposed that "if CLF were minded to proceed, then our full costs of investigation to date ought to be paid". That letter concluded with the statement: "We believe that this case represents an excellent opportunity and look forward to discussing this with you further." 42 As that correspondence shows, the decision for Slater & Gordon to incur costs prior to 15 October 2008 and for CLF to reimburse those costs, were commercial decisions made between Slater & Gordon and CLF before a decision had been made to commence the proceedings. That work was conducted by Slater & Gordon prior to obtaining signed LCAs and LFAs from group members and was primarily directed to identifying whether a class action would be commercially viable for both Slater & Gordon and CLF. Although group members ultimately obtained a derivative benefit from that work, it would be unreasonable for group members to bear that cost.

[23]

(i) Liaising with CLF 43 In assessing the reasonableness of the charges relating to Slater & Gordon's liaison with CLF, the Registrar disallowed time entries amounting to $13,334.79 (excluding GST). Those time entries were assessed by the Registrar as not being within the terms of the LCA, the LFA or the Terms of Engagement (being Sch 1 to the LFA). 44 Mr Higgins' evidence was that the time entries relating to communications with CLF disallowed by the Registrar largely concerned settlement of the proceedings, including mediation, group member loss and settlement approval. Otherwise, according to Mr Higgins, those costs were incurred in Slater & Gordon informing CLF about the proceedings and discussing funding with CLF. Mr Higgins deposed that: CLF undertook significant financial risk in funding the proceeding which, in my view, was unlikely to have been commenced without their financial support. Given that financial commitment, it was important and necessary for CLF to receive regular communication from Slater & Gordon in order to be able to scrutinise the costs incurred in the proceeding and inform itself about the quality of legal work produced in exchange for those costs. In this regard, I consider that CLF's interests aligned with the interests of group members in controlling costs, obtaining value for money, and progressing the claim to a resolution. 45 Slater & Gordon submitted that the time charged should not have been disallowed because it was specifically provided for under the LCA which defines "Legal Work" as including, relevantly, "Liaising with [CLF]": see [28] above. Slater & Gordon further submitted that as the disallowed amounts largely concerned settlement of the proceedings, those fees were also recoverable on the basis that the work was undertaken "to ensure that settlement is effected", also a category of "Legal Work": see [28] above. 46 It is apparent that the definition of "Legal Work" in the LCA is broad. However, the fact that a particular fee charged relates to work which falls within that broad definition is not determinative. Not only must the relevant fee fall within the scope of the "Legal Work" as defined in the LCA but the nature and extent of the liaison (as well as the fee charged) must not be unreasonable. 47 How then is the Court to assess the reasonableness of this category of fees? 48 As noted above, the Registrar helpfully identified, in an appendix to the Registrar's Report, each of the individual disallowed or discounted items. In a spreadsheet annexed to the McDonald Affidavit, Ms McDonald identified which of the Slater & Gordon sub-categories applied to each of the individual items discounted or disallowed by the Registrar (the Slater & Gordon Spreadsheet). Having read that material, it does not appear that the Registrar's conclusion to disallow or discount this category of fees was inappropriate. First, having reviewed the items identified by Ms McDonald as falling within the sub-category "Liaising with CLF" it appears that, contrary to Slater & Gordon's submission and the evidence of Mr Higgins at [44] above, the majority of those items did not, in fact, relate to settlement of the proceedings. In total, 53 items were labelled "Liaising with CLF" by Ms McDonald. The majority of those items were described in vague terms. For example, "Drafting update to CLF" on 22 December 2008 and "Review of funding terms" on 2 February 2009. On the basis of the limited information provided, only six of the 53 entries, accounting for $1,290.00 of the amount disallowed by the Registrar, appear to be able to concern settlement of the proceedings. 49 Secondly, the Slater & Gordon Spreadsheet does not provide a sufficient basis upon which the Court can be satisfied that the any of the "Liaising with CLF" amounts should be allowed. Put another way, there is no evidence upon which the Court can properly conclude, contrary to the Registrar's opinion, that the amounts were reasonably incurred. For those reasons, the amount is disallowed.

[24]

(ii) Client Advice & Agreements 50 The Registrar disallowed time entries amounting to $11,530.81 (excluding GST) which Slater & Gordon labelled as "Client Advice & Agreements". This amount represented a sub-category of the amounts disallowed by the Registrar on the basis that any costs relating to the preparation of the LCA or the LFA should not be allowed. In particular, the Registrar disallowed charges "concerned solely with the drafting, negotiation, amendment, circulation, execution or interpretation of those agreements". 51 According to Mr Higgins, the "Client Advice & Agreements" entries: are for time spent conferring with group members about the terms of funding agreements and legal costs agreements. Work recorded as 'amending LCA', or 'amending [LFA]' was work undertaken at request of group members in relation to variations to the agreements pertaining to them individually. The amendments principally concerned the incorporation of terms intended to protect confidentiality of particular clients' identities and signing clauses which properly reflected the legal structure of the relevant client. 52 Slater & Gordon submitted that, in some instances, the changes sought required Slater & Gordon to confer on behalf of the group member with CLF. The remainder of the disallowed time entries were said to concern emails and telephone calls from group members concerning the LCA and the LFA. Slater & Gordon submitted that that work fell within the meaning of "Legal Work", defined in the LCA to include "enlisting other clients", and accordingly should be recoverable. 53 As noted at [46] above, the fact that work the subject of a particular charge falls within the definition of "Legal Work" in the LCA is not determinative. What is required is an assessment of the reasonableness of the fee in question and that includes not only the nature of the work, but the time taken and the fee charged. 54 The difficulty faced by the Court is that there is insufficient evidence before it to enable it to assess each of those matters. Put simply, the Court cannot be satisfied that, contrary to the Registrar's opinion, the amounts claimed by Slater & Gordon were reasonably incurred. Those amounts are disallowed.

[27]

Andrew Baker 60 In relation to Mr Baker, the Registrar made reductions amounting to $7,770.97 (excluding GST). 61 Mr Higgins' evidence was that: 25. Rate reductions for Andrew Baker primarily related to his work on Slater & Gordon's discovery database, which he created, as well as the client information database, which he also created. 26. Mr Baker is a qualified lawyer, and holds a Bachelor of Computer Science. He used his technological and information systems expertise to quickly complete tasks that are ordinarily complex and/or time-consuming, such as the creation of hard copy cross-examination bundles and expert briefs, lists such as tender bundles, expert bundles and client trading data spreadsheets, and the compilation of statistics concerning discovered documents. This was often done by way of a customised script written by Mr Baker, which would automate the preparation of such documents or document sets. Mr Baker's involvement avoided the need for the engagement of costly external operators, who would also have required additional time to complete the necessary work. 27. Mr Baker also had responsibility for the expert evidence of Professor David Parker, as a result of which he undertook work relating to Professor Parker's brief, report and evidence. 28. Mr Baker's time has also been reduced or disallowed for attendance at a conference with Professor Parker in circumstances where Ben Phi recorded a lower amount. Mr Baker's time entry, unlike Mr Phi's, included travel time to Brisbane, along with early morning preparation time. 29. Some of the items of work disallowed by [the] Registrar were performed on Sundays during trial, where no graduates or legal assistants were available. 30. Some of Mr Baker's time has been written down for editing and proofing submissions and for considering potential expert witnesses to be engaged by the Applicant. We considered that Mr Baker had the appropriate level of experience and knowledge of the proceeding to do this work.

[37]

(iii) File Management 82 The Registrar disallowed $36,993.55 (excluding GST) in respect of fees relating to file management. 83 Slater & Gordon submitted that file management fees are recoverable under the terms of the LCA. As set out at [28] above, the definition of "Legal Work" includes "such … legal and administrative services as [Slater & Gordon] may consider reasonably necessary in relation to the conduct of the Litigation and the Claims". Sub-paragraph (g) of that definition includes "… maintaining such records and databases as are reasonably required". 84 Slater & Gordon submitted that the file management fees should be approved for the reasons explained by Mr Higgins. Mr Higgins' evidence was as follows: 43. This was large scale litigation involving over 2000 group members, and a large team of lawyers. It is important to have adequate file management procedures and practices in place. Slater & Gordon moved to an electronic filing system from mid-2009. The time billed by legal assistants as 'saving emails' denotes the electronic filing of relevant correspondence, which was a task without which the file could not have been maintained. 44. Given the volume of email correspondence relating to the proceeding it was necessary for lawyers to have ongoing involvement in file management. This is particularly the case during trial, where it is important to have key documents and emails properly filed to the appropriate electronic repository, to enable use by other members of the legal team. 85 Effective file management is essential for the conduct of all litigation. That is particularly so for litigation of the scale and complexity of these proceedings. It is, however, a separate question as to whether the costs associated with file maintenance should reasonably be borne by clients. 86 File management fees are properly characterised as a component of a firm's fixed overhead costs. Such costs are built in to the rates charged by lawyers and are recoverable by law firms on that basis. In the circumstances of these proceedings, it could not be said that charging $36,993.55 (excluding GST) for file management would be reasonable. That amount is not approved.

[41]

(ii) Conferences & attendances 97 The Registrar disallowed $10,890.21 (excluding GST) for certain conferences and attendances. 98 Mr Higgins summarised the relevant disallowed charges as follows: a) Ms Zhang's time for attendances at mediation, [Standard & Poor's] application to set aside the subpoena (at which [Standard & Poor's] were represented by a solicitor, junior Counsel and Senior Counsel), and the settlement approval hearing. Mr Zimet's time for attending the settlement approval hearing was also disallowed; b) Mr Baker's travel time to Brisbane and attendance at a conference with Professor Parker, on the basis that Mr Phi recorded less time for this conference (however, Mr Phi has not recorded travel time in that entry, and Mr Baker's entry included preparation time); c) A staff member attending the Registry to file a subpoena and having lengthy conversations about return dates; d) A conference with Mr Robinson at the Federal Court prior to his evidence; e) Discussions with Counsel in respect of mediation preparation; f) Preparing electronic and hard copy materials for subpoena hearings and mediation, and time recorded for a Graduate working on the case to attend that hearing; g) Preparing litigation and mediation plans; h) Attendances to Blackstone, Counsel, the Court, and within Slater & Gordon prior to the settlement approval hearing; i) Compiling issues chronologies for the purpose of preparing cross-examination memoranda for Counsel. 99 Mr Higgins' evidence was that the charges disallowed by the Registrar were "considered necessary work". Ms McDonald's descriptions of each of the relevant items in the Slater & Gordon Spreadsheet also sought to justify why those amounts should be approved. Again, however, those descriptions provide little assistance to the Court in assessing whether the charges are unreasonable in the circumstances. For example, in relation to a charge for Mr Phi's time for "[d]rafting revised litigation plan", the only explanation was "BP planning out the litigation". Similarly, a charge for an attendance at a subpoena hearing, was accompanied by the following description: "[t]he graduate working on case attended subpoena hearing with the lawyer doing the appearance". Those explanations are of little or no assistance in determining whether the amount should be approved. 100 The evidence proffered by Slater & Gordon does not provide a sufficient basis for the Court to conclude that, contrary to the Registrar's opinion, the amounts in question were reasonably incurred. For that reason, those amounts are not approved.

[42]

(iii) Practice Group Leader 101 The Registrar disallowed $12,031.25 (excluding GST) for time entries recorded by Mr Higgins and Mr Ken Fowlie. Slater & Gordon submitted that, on the strength of Mr Higgins' evidence, that amount should be allowed. I disagree. 102 In total, $9,281.25 (excluding GST) was disallowed for Mr Higgins' fees. The disallowed fees relate to time spent on mediation and settlement issues, and conferring with Mr Robinson about his evidence in the weeks prior to the trial. 103 Mr Higgins deposed that after Mr Phi was promoted to Practice Group Leader on 16 September 2010, Mr Higgins had carriage of the matter at times when Mr Phi was unavailable. Mr Higgins had been involved with the proceeding since 2008 and had carriage of the matter until Mr Phi was promoted. However, neither Mr Higgins' evidence, nor the descriptions provided in the Slater & Gordon Spreadsheet provide sufficient information as to why it was necessary for Mr Higgins to attend to matters in Mr Phi's absence, as opposed to another member of Slater & Gordon's staff. Accordingly, the amounts for Mr Higgins' fees disallowed by the Registrar are not approved. 104 In total, $2,750.00 (excluding GST) was disallowed for fees charged for Mr Fowlie's attendance at a mediation on 17 December 2010. Those fees were disallowed by the Registrar on the basis that Mr Phi also attended the mediation. Mr Higgins deposed that Mr Fowlie "is currently the Head of Slater & Gordon's Australian operations, and at the time of the relevant work he had overarching responsibility for Class Actions at Slater & Gordon". According to Mr Higgins, Mr Fowlie "also has significant experience in complex and large scale litigation, including representative proceedings". 105 Mr Higgins' evidence does not address why it was necessary for Mr Fowlie to also attend the mediation when Mr Phi was also in attendance. Mr Phi (along with Mr Higgins) had the care and conduct of the proceedings: see [17(3.1)] above. It is not clear why Mr Fowlie's presence was required. For those reasons, those amounts are not approved.

[48]

(i) Trial Preparation Costs 108 The Registrar disallowed $227,625.00 (excluding GST) relating to fees charged by counsel for preparing for trial from 1 December 2012. Several counsel were retained on behalf of the Applicant in the matter. For trial, Slater & Gordon retained two senior counsel and two junior counsel. 109 The Registrar concluded in the Registrar's Report that, assessed overall, the amount charged by counsel for preparation was excessive and therefore unreasonable. In making that assessment, the Registrar took into account the fact that this was a representative proceeding with all the complexities that typically involves, including a significant number of documents and sources of data, a large member group, a wide array of witnesses including numerous experts, and a trial occupying 16 sitting days. The Registrar placed particular emphasis on the number of counsel and solicitors involved in the matter and the fact that several of the more senior solicitors were also involved in pre-trial preparation. 110 In the Registrar's Report, the Registrar acknowledged that "there are no hard and fast rules for the amount of preparation allowed to counsel for costs assessed on a solicitor/own client basis". However, as a "general guide", the Registrar considered that two days' preparation for each day of trial represented a "reasonable upper limit for the allowance". The Registrar went on to note (at page 32) that: A further allowance might be justified on account of the added size and complexity of a representative matter. For counsel with no advocacy role … the allowance in each case would be less. Where multiple counsel are retained, generally speaking one would expect that the time spent by the lead counsel in preparation for trial would be less and that of other counsel more, particularly where there is a second senior counsel involved, such as here. 111 Having regard to each of those matters, the Registrar considered that counsel fees for preparation should be reduced as follows: Claimed (days) Allowed (days) Senior Counsel 1 68.8 50 Senior Counsel 2 30.5 30.5 Junior Counsel 1 39.6 35 Junior Counsel 2 41.25 30

[49]

Slater & Gordon submitted that no discount was warranted in relation to any of the trial preparation costs. 112 At a general level, Slater & Gordon submitted that taking an a priori approach to how much preparation is reasonable, particularly to a complex matter, is not an appropriate approach. It was submitted that to impose a pre-determined "upper limit" on trial preparation would be inappropriate because the amount of work reasonably required for any case will depend upon the particular circumstances pertaining to that case. While I do not disagree with that submission at a general level, it is based on an incorrect premise. The Registrar did not apply a pre-determined "upper limit". The Registrar merely indicated that two days' preparation for each day of trial may represent a reasonable starting point for an assessment. That figure was subject to adjustments based on relevant factors. Here, those factors included the size and complexity of the proceedings, the number of counsel retained, the role undertaken by each counsel, and the division of work between counsel and their instructing solicitors. There is no error in that approach. 113 One further matter should be addressed. Contrary to Slater & Gordon's submissions, there is no reason why the approach adopted by the Registrar in assessing counsel fees should truncate, or dictate, the funded preparation time for counsel in future cases. There is no basis to conclude that disparities in preparation time may readily develop between representative applicants (whose fees are subject to approval by the Court as part of the settlement approval process) and the fees of respondents. It must be recalled that the basis of this assessment is on a solicitor / own client basis: see the Reasons at [26]-[37]. 114 Slater & Gordon's submissions addressed the reductions made by the Registrar in respect of each counsel retained by the Applicant. 115 First, the reduction of 18.8 days of fees for Senior Counsel 1. Slater & Gordon submitted that no discount was warranted in relation to those fees for the following reasons: a) That reduction is predicated principally on the reasoning stated on page 32 of the Report, that "where multiple counsel are retained, generally speaking one would expect that the time spent by the lead counsel in preparation for trial would be less and that of other counsel more, particular where there is a second senior counsel involved such as here". The Registrar has allowed all of [Senior Counsel 2's] time, but significantly discounted [Senior Counsel 1's] time. That reasoning does not take account of the following facts. b) [Senior Counsel 1] was the Applicant's lead senior counsel at trial. c) [Senior Counsel 1] was retained in September 2012 but he was not available to undertake any substantive work on the matter until late December 2012. The trial was fixed for, and commenced on 6 March 2013. [Senior Counsel 1] therefore had a short and concentrated period of time within which to read into the case and prepare for a very substantial advocacy role in a complex matter in which very significant damages were sought. d) The brief provided to [Senior Counsel 1] comprised approximately 150 lever arch folders. At [Senior Counsel 1's] request he was provided with a substantial number of discovered documents. A large part of the brief also comprised expert reports and associated documents. e) In-court work and associated preparation was divided between [Senior Counsel 1] (with [Junior Counsel 1]) and [Senior Counsel 2] (with [Junior Counsel 2]). [Senior Counsel 1], in consultation with [Senior Counsel 2], decided upon the allocation of issues and lay and expert witnesses between as between counsel. f) Preparation for trial was document intense. The Applicant did not have access to any 'insider' lay witnesses from whom it could obtain an account of [the respondents'] conduct. g) During the pre-trial preparation period the work attended to by [Senior Counsel 1] (and included in the 68.8 days charged) included several amendments to the Applicant's pleadings, preparing to call witnesses from Moody's and Standard & Poor's, "cold", as it were, and participating in a mediation before the Honourable Kevin Lindgren AM QC. h) [Senior Counsel 1] assumed responsibility for the "Australian" aspects of [the respondents'] conduct (among other things) and [Senior Counsel 2], the "European" aspects (also among other things). However witnesses cross-examined by [Senior Counsel 1] were involved in both Australian and European operations, as a result of which [Senior Counsel 1] had to understand and consider both jurisdictional aspects and prepare accordingly. i) [Senior Counsel 1] was "on his feet" for about 10 ½ days of the 15 day trial. He delivered the Applicant's oral opening and closing submissions. Assisted by [Junior Counsel 1], he was responsible for preparing the evidence of, and examining two of the Applicant's three lay witnesses, the examination of the two lay witnesses subpoenaed by the Applicant (Parker of [Standard & Poor's] and Cahill of Moody's) and cross-examination of four of the six lay witnesses for the respondent. [Senior Counsel 1] was also responsible for preparing the evidence of three of the Applicant's five experts (two of whom gave evidence led by [Senior Counsel 1] and one of whom was not required to appear) and cross-examining four of the Respondents' experts. Witnesses Parker, Sammut, and Frino gave evidence in a 'hot tub' format, as did Houston, Holzwath and Samuel. j) In the pre-trial period [Senior Counsel 1] conducted conferences with experts including out of court experts to prepare for the event study called by [the respondents], and preparation for opening and extensive cross-examination of lay and expert witnesses. 116 Second, the reduction in relation to Junior Counsel 2 of 11.25 days of fees. Slater & Gordon submitted that no reduction was warranted for the following reasons: a) [Junior Counsel 2] was retained and briefed in this matter in December 2012. She performed some work in December 2012 and undertook the majority of the work in February 2013. Like [Senior Counsel 1], she had a short and concentrated period of time within which to read into and the case, master the material and undertake substantive preparation in the period immediately leading up to trial. b) [Junior Counsel 2] worked with [Senior Counsel 2] preparing for the trial. [Senior Counsel 2] and [Junior Counsel 2] were responsible for preparing the evidence of one of the Applicant's lay witnesses, cross-examination of two of the Respondents' lay witnesses, two of the Applicant's experts, and cross-examination of three of the respondents' experts. Those experts (Wist, Psaltis, Richardson, Lizieri and Priest) gave evidence in two 'hot tub' sessions. c) In the circumstances the Registrar's conclusion that [Junior Counsel 2's] time should be discounted because she did not have an advocacy role was erroneous. It was more than reasonable for the Applicant to incur the costs of having two counsel prepare for the aspects of the case for which [Senior Counsel 2] performed the advocacy role. d) It was necessary for [Junior Counsel 2], like the other three counsel retained by the Applicant, to consider and understand documentary material and witness evidence pertaining to the case generally, and to be fully conversant with the legal, forensic and tactical framework for the Applicant's case, in order to undertake the preparation of the witness related work specifically allocated to her and [Senior Counsel 2]. e) [Junior Counsel 2] also undertook work relevant to the litigation generally (not specifically concerned with the witnesses allocated to her and [Senior Counsel 2]), including drawing objections to evidence, considering [the respondents']objections to the Applicant's evidence, advising on and resolving a dispute between the parties about the registration of group members, attending mediations before Registrar Lagos, assisting [Senior Counsel 1] from time to time, advising on documents to be tendered and conferring with [the respondents'] counsel to resolve objections to the tender of documents, and drawing final submissions. 117 Finally, the reduction in relation to Junior Counsel 1 of 4.6 days of preparation. Slater & Gordon submitted that the observations made above in relation to Junior Counsel 2 applied equally to Junior Counsel 1. 118 It must be recalled that the task for the Court is to assess the reasonableness of the relevant fees and retainer agreements, whether the fees actually charged had been calculated in accordance with those agreements and, finally, whether the fees had been appropriately and necessarily incurred. That assessment is to be made on a solicitor / own client basis: see the Reasons at [26]-[37]. In the assessment of the reasonableness of trial preparation costs charged by counsel, I am not satisfied on the basis of the evidence filed and the submissions made by Slater & Gordon that the Registrar's assessment was not appropriate. Accordingly, those amounts disallowed by the Registrar are not approved.

[50]

(ii) Counsel Rate 119 This category related to the rates charged by one of the junior barristers retained by the Applicant. The Registrar concluded that the rates charged were above what he would consider to be reasonable in the circumstances. The sum of $52,850 (excluding GST) was disallowed as a result of the Registrar applying a discounted rate which was, in his opinion, reasonable. 120 Slater & Gordon's submissions regarding this category were made on a confidential basis. Those submissions sought to address the matters identified by the Registrar as justifying a reduced rate. The barrister whose rate was reduced by the Registrar was retained in December 2012 and undertook trial preparation in December 2012 and January 2013. 121 The Registrar discounted the fees to $2,500 per day and $250 per hour (excluding GST). The fees had, in fact, been charged at $3,150 per day and $315 per hour (excluding GST) for work undertaken in 2012 and at $3,500 per day and $350 per hour (excluding GST) for work undertaken in 2013. The Registrar stated in the Registrar's Report that the rates charged were above what he would consider to be reasonable for a barrister of that standing and given the secondary role of that counsel in the matter. While recognising that counsel's experience in class action litigation, the Registrar concluded that given the role played by that counsel in the matter and that that member of the team had been admitted to the Bar at about the same time as the other junior counsel retained by the Applicant, the daily and hourly fee for both juniors should have been the same. 122 Slater & Gordon submitted that the Registrar erred in applying a discounted rate. Slater & Gordon provided a detailed list deposed to by Mr Higgins in support of that contention. That list contained matters personal to both junior counsel. It is inappropriate to set those matters out. It is sufficient to record that by reason of the matters addressed in the affidavit material filed by Slater & Gordon and referred to in their submissions, I do not consider that the rates charged by the junior counsel in the circumstances of this case to be unreasonable.

[53]

(c) Other Disbursements 126 Four other disbursements disallowed by the Registrar were disputed by Slater & Gordon. Those disbursements totalled $2,099.50 (plus GST). Mr Higgins addressed those items in his first affidavit as follows: 16. An amount of $115.41 was incurred to purchase a textbook, 'Introduction to Corporate Finance', which was cited in the report of Professor David Parker, one of the Applicant's expert witnesses, as the basis of his statements concerning the pricing efficiency of capital markets. This book was co-authored by Professor Alex Frino, one of the Respondents' expert witnesses responsive to Professor Parker. The textbook was purchased in order to check the accuracy of Professor Parker's statements, and to determine whether the book's contents contained any statements contrary to the opinions set out in Professor Frino's report. 17. An amount of $135.46 was incurred to purchase a prepaid wifi modem just prior to trial for the purposes of enabling the Applicant's counsel and solicitors to access internet during the trial. This was required for the use of the electronic court book. It also assisted counsel, solicitors and expert witnesses in working from the Court during the trial, and with communications to and from instructing solicitors during the trial. 18. An amount of $339.74 was incurred for mobile phone expenses for Ben Phi, for a one-week period in late August to early September 2012 when he was in the UK, accompanied by counsel, conferring with Professor Colin Lizieri, the Applicant's UK-based expert on the Respondents' European operations. 19. An amount of $1,508.89 was incurred for catering, for lunch during trial for counsel, solicitors, and any experts or witnesses in court. This enabled counsel and solicitors to work at Court during the lunch break. As Slater & Gordon do not have internal kitchen staff, lunch was ordered from a nearby cafe each day for this purpose. Lunch would typically be provided for 8 to 10 people on each day. 127 What is the position in relation to those disbursements? 128 First, it should be recognised that a lawyer's hourly rate includes a component for the fixed overheads of the firm. Those overheads will ordinarily include, inter alia, the costs associated with utilities bills, internal printing and photocopying, information technology systems and employee wages. In the absence of any specific agreement to the contrary, it is inappropriate for lawyers to seek to "double-dip" by charging clients for those overhead costs as disbursements. Secondly, costs of an unusual sum or nature are not allowed as between solicitor and client unless they have been authorised by the client after full disclosure, including the fact that they might not be allowed as between party and party: see, by way of example, Re Blyth and Fanshawe (1882) 10 QBD 207 at 210 and 212 and Dal Pont GE, Law of Costs (3rd ed, LexisNexis Butterworths, 2013) at [5.26]-[5.32]. 129 While it can be accepted that the $135.46 paid to purchase a prepaid Wi-Fi modem and the $339.74 of mobile phone expenses may have been reasonably incurred by Slater & Gordon in conducting the litigation, those expenses are clearly in the nature of overhead costs and an unusual expense. The same may be said in relation to the "Introduction to Corporate Finance" text. A thorough critique of Professor Parker's report may have required access to that text, but the cost of maintaining a professional library is not normally a cost charged directly to a client. 130 As to the claim for catering costs, it cannot be said that it was necessary or reasonable for the cost of providing lunch to be charged pursuant to the LCA. While it may have been more efficient for counsel and solicitors to remain at Court during the hearing and work through the lunch break, one's lunch is a personal expense. Moreover, if Slater & Gordon had been in the position to provide catering using internal facilities, that expense would properly be described as an overhead. 131 The disbursements set out at [126] above are effectively recoverable, if at all, as a component of the hourly rates charged by the Slater & Gordon. Accordingly, those amounts are not approved because they are unreasonable in the circumstances.

[54]

C. CLF'S APPLICATION TO INTERVENE 132 It is appropriate at this point to deal with CLF's application to intervene. As noted at [4] above, CLF sought leave to intervene pursuant to r 9.12 of the Federal Court Rules 2011 (Cth) (the Rules). That rule provides: (1) A person may apply to the Court for leave to intervene in a proceeding with such rights, privileges and liabilities (including liabilities for costs) as may be determined by the Court. (2) The Court may have regard to: (a) whether the intervener's contribution will be useful and different from the contribution of the parties to the proceeding; and (b) whether the intervention might unreasonably interfere with the ability of the parties to conduct the proceeding as the parties wish; and (c) any other matter that the Court considers relevant. (3) When giving leave, the Court may specify the form of assistance to be given by the intervener and the manner of participation of the intervener, including: (a) the matters that the intervener may raise; and (b) whether the intervener's submissions are to be oral, in writing, or both. 133 For a non-party to be granted leave to intervene, it must broadly show that (i) it has an interest directly affected in the requisite sense by the proceeding and (ii) the Court ought to exercise its discretion to grant leave, having regard to the matters set out in r 9.12(2): see Roadshow Films v iiNet Ltd (2011) 86 ALJR 205 at [2]-[3]. 134 CLF's submissions in support of its application for leave were made on a confidential basis. CLF submitted that it has two interests which justified leave being granted to it to intervene in the proceeding. First, it said that CLF has a reputational interest in the matter given that the Registrar's Report makes various comments regarding CLF's role in scrutinising legal costs and setting funding limits. Secondly, CLF submitted that it has a direct legal and financial interest in the outcome of the application for approval of legal costs. That direct interest was put on two bases; pursuant to cl 9.1 of the LFA, CLF has paid Slater & Gordon $8,985,186 for invoices submitted and CLF stands to be reimbursed out of the Settlement Sum for the legal costs it has paid. 135 Having regard to the discretionary considerations in r 9.12(2) of the Rules, CLF submitted that it sought leave to intervene on a limited and discrete basis - to address those matters raised in the Registrar's Report concerning it. CLF also submitted that its contribution would be useful and different from the contribution of the parties to the proceedings in relation to those discrete issues. I am satisfied that in the circumstances, it is appropriate to grant CLF leave to intervene. 136 What then were the substantive matters sought to be addressed by CLF? I have read the affidavits filed on behalf of CLF. In assessing the various disallowed claims, I have considered the matters raised by CLF in those affidavits and in its oral and supplementary written submissions. 137 For present purposes, it is sufficient to record that the evidence now discloses that CLF not only had an interest, but a role, in reviewing the fees and disbursements charged by Slater & Gordon. That is not unsurprising. That role and task is undertaken by any client, especially a sophisticated client. But, in the present proceedings, the Applicant and the other group members, not CLF, were the clients. Although the Court can, and should, in appropriate circumstances assess the reasonableness of the fees and disbursements charged by a solicitor in light of the role and task of an entity such as CLF, the existence of them and the role played by them does not replace the function of the Court. The existence of a litigation funder and the steps taken by that funder in reviewing the fees and disbursements to be charged by a firm of solicitors do not of themselves provide a complete answer to the Court's assessment of the fees and disbursements to be charged by a firm of solicitors and deducted from a settlement sum: see [33] above. The task of the Court is to assess the fees and disbursements in the interests of all group members, not the litigation funder. 138 That last proposition (in terms of its existence and its importance) is put into stark reality when one considers CLF's submission that where "market forces are operating", the Court should in the absence of something strikingly unreasonable or requiring explanation assume properly that the litigation funder who has "all the skin in the game" is ensuring that bills are reasonable. I reject that submission. It is contrary to the Court's statutory task under s 33ZF of the Act. It is contrary to the authorities: see the Reasons at [26]-[37] and the authorities cited therein. And, no less importantly, it is contrary to common sense and the practical realities of the "market forces". 139 Market forces should be permitted to operate when the participants in the market (the consumers) have the opportunity to decide whether or not to purchase the product. Here, the participants in the market with which we are concerned (the group members) were not afforded that opportunity. They were not a participant in the market in which the funder and the solicitors participated, a market where the objectives of the litigation intersect with but are necessarily different from those of the group members. The decisions made by Slater & Gordon and CLF were made without input from the group members. Put another way, the decisions that the funder and solicitors take are decisions in the context of a different market, their own market. The facts and matters that are relevant to the funder again intersect with but are necessarily different from those of the group members. The dichotomy of perspectives and interests is resolved, at least at present, by requiring the Court to consider and approve the fees and disbursements on behalf of all group members. That is the task that has been undertaken here.

Modtech Engineering Pty Limited v GPT Management Holdings Limited

At a glance

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Judgment (56 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (9)

Cited By (11)