Nashvying Pty Ltd & Ors v Giacomi

[2] The plaintiffs' cost statement was filed on 27 October 2007 and claimed a total of $133,047.07. The defendants objected to a number of items and in respect thereof were successful in having many of them disallowed. This review is concerned only with the assessor's disallowance of six items, five of which relate to counsels' fees and the other to the cost of the solicitor's perusal of the reasons for judgment. This latter item was not the subject of any objection by the defendant either before the cost assessor or before this Court.

[3] Before dealing with each of these items I should state the principles which govern a review of this kind. The application is made pursuant to R. 742 of the Uniform Civil Procedure Rules (UCPR). By sub-rule (6) thereof the Court may do any of the following:-

(a) Exercise all the powers of the costs assessor in relation to the assessment;

(b) Set aside or vary the decision of the costs assessor;

(c) Set aside or vary an order made under R. 740(1);

(d) Refer any item to the costs assessor for reconsideration, with or without directions;

(e) Make any other order or give any other direction the court considers appropriate.

[4] The discretion conferred by the sub-rule is a wide one. But it is to be exercised with a consciousness that it is effectively an appeal against the exercise by the cost assessor of a discretion. In general, the Court will interfere only where the discretion appears not to have been exercised at all or to have been exercised in a manner which is manifestly wrong. Australian Coal and Shale Employees Federation v The Commonwealth[1]. The plaintiffs contend that the cost assessor's discretion miscarried because he failed to give due weight to the importance of the proceedings to the plaintiffs when considering what was "necessary or proper" within the meaning of R. 702. The defendant accepts that the proceeding raised important issues and did not object to senior and junior counsel being retained by the plaintiffs at the final hearing. The review questions whether the fees of both senior and junior counsel are recoverable on a standard basis assessment on the hearing of an interlocutory application and for settling of pleadings and what fees are appropriate for preparation for trial. I will turn then to the individual items in dispute.

[5] This item concerned the fees of junior counsel who was retained with senior counsel on the hearing of an application for an interlocutory injunction. The costs assessor allowed the fees of senior counsel, finding simply that "the matter of the subject of the interlocutory application did not require the attendance of two counsel".[2] The application was listed for an ordinary application day in circumstances where the initial pleadings had been exchanged and the background facts detailed in affidavits. There was no indication of serious threat of damage or inconvenience to either party by the grant of the interlocutory injunction and, in the end result, the application was uncontested. By it the plaintiffs were allowed to pursue a development application which was unlikely to be determined before the hearing. I therefore reject the plaintiffs' submission that this was a critical decision likely to affect the outcome of the proceeding.

[6] The issues arising on this application were not ones which were ever likely to require a prolonged hearing. The cost assessor's opinion as to the adequacy of the retention of senior counsel alone was, in my view, correct.

[7] This item relates to the fees of senior counsel, who was retained to settle the Reply and Answer for which junior counsel fee of $2,400 has been allowed. The pleading in the main simply traverses issues of fact raised in the earlier pleading and denies the defendant's claim to relief sought in the Defence and Counterclaim. This was not an exercise which, on a party and party basis, required the intervention of senior counsel. I am satisfied that the cost assessor was correct in disallowing this item.

[8] These items relate to fees charged by counsel for their preparation for trial and conferring with witnesses. For senior counsel three days of preparation were charged at $4,500 per day and a fee on brief at the same rate for the first day in court. Junior counsel charged for four days of preparation and conferences at $3,000 per day and a similar daily rate was charged for his first day in court.

[9] The cost assessor allowed one day's preparation for senior counsel and a fee on brief for $4,500, noting that the fees charged were "at the lower end of the scale commonly charged by senior counsel".[3] He allowed four hours of conference time additional to the first day's fee which he characterised as a fee on brief. For junior counsel he simply allowed one day's preparation time at $3,000 and allowed the same amount as though it were a fee on brief. The cost assessor's reasons drew attention to the tension between the practice of claiming a daily fee and the earlier paradigm of allowing a higher fee for the first day's hearing as a "fee on brief" to take account of time spent in preparation for trial. He relied upon the remarks of Higgins J in Bennett v Seaman[4] citing Ashley J in Prudential Finance Pty Ltd v Davander Nominees Pty Ltd quoting the following terms:-

"(a) A fee on brief should be taken to include "preparation" extending up to at least substantial part of the day before and the night before the hearing, as well as for time spent in court before the first refresher commences.

(b) In a particular case, remuneration for preparation beyond that which should ordinarily be included in a brief fee may be provided for by an increase in the brief fee (and consequently in the refresher fee).

(d) Cases in which it will be proper to allow preparation fees at a daily rate on party and party taxation are likely to be more common, numerous and less 'exceptional' in consequence than was the case a decade ago.

(e) The question whether separate preparation fees should be allowed on the party and party basis is whether such fees were necessary or proper to be incurred.

[10] The cost assessor noted that the practice of allowing preparation fees on a daily rate is now a common one but considered that anything more than one day's preparation would be excessive on a standard basis. In taking this approach it seems to me he failed to make any allowance for the fact that the fee claimed for the first day's appearance by counsel did not include any loading traditionally applied to a fee on brief. Thus he appears not to have adopted either of the approaches traditionally followed.

[11] The plaintiffs submit that the correct approach to counsel's fees in complex commercial litigation is that suggested by McGill DCJ in Hennessey Glass and Aluminium Pty Ltd v Watpac[5] who at para 81 said:-

"I suspect that the original notion of a fee on brief was based on the idea that a barrister was essentially paid for his work in court, on the assumption that relatively little in the way of preparation for trial would be necessary beforehand, although there would usually be a conference as well. That was no doubt reasonable enough in the old days when most litigation was so simple that all a barrister had to do was read his brief and go into court, but it is an entirely inappropriate approach when dealing with modern litigation with the complexity of the issues which were involved in the hearing of this matter...In such a matter, counsel is expected to work in preparation for trial before the day of trial, it is reasonable or proper for that to be paid for and it is to be part of costs assessed on the standard basis."

[12] I respectfully agree with those remarks of McGill DCJ and find that it was appropriate in this litigation for counsel to claim separately fees for preparation. The question then to be considered by a cost assessor is simply what allowance should be made for in the preparation and for conferences, having regard to the fact that no allowance has been claimed in this connection in the first day's fee.

[13] The time spent by counsel in conference as opposed to preparation has not been particularised but that is probably of no consequence. Much of the evidence had already been adduced in affidavits previously filed and the factual points of difference between witnesses were narrow in scope but did involve questions of credibility. Taking into account the importance of the plaintiffs' claim, the volume of material the contents of which had to be absorbed, the complexity of the legal issues and the fact that counsel already had some familiarity with the matters from earlier appearances, I have come to the view that it would be reasonable to allow two days for each counsel for conferences and preparation for the hearing.

[14] As a consequence, for the fees of senior counsel - Items 1111, 1136 and 1144 - there should be allowed two fees each of $4,500. I would therefore vary the cost assessor's certificate by reinstating Item 1136 at $4,500 rather than the $2,700 assessed and I would uphold the cost assessor's disallowance of Item 1144. In relation to junior counsel's fee - Item 1145 - the quantum of that item should have been reduced but only by $6,000.

[15] This item relates to the charge made by solicitors for perusing the reasons for judgment after the trial. The cost assessor deemed that task to have been unnecessary on a standard basis but, if undertaken, would have allowed it as part of the costs of any subsequent appeal. It is to be noted, firstly, that the defendant did not raise any objection to this item of charge, neither in her objections nor in her submissions on the review. Of course, not having raised it in her objections, the defendant would be precluded by R. 742(5) for doing so now.

[16] As it appears the cost assessor disallowed the claim on his own motion it is necessary to determine whether he was justified in so doing. In his reasons at p 4 he said:-

"It is unnecessary on a standard basis for solicitors to peruse the reasons for judgment. Judgment has been delivered, and the matter is largely at an end. There may be some incidental matters that will attract further costs, but the costs of perusing the reasons for judgment will only be allowed as part of the costs of any subsequent appeal."

[17] I reject this justification for the refusal of this item. Consideration of an allowance of this kind was undertaken by de Jersey J (as he then was) in Adsett v Berlouis[6] where his Honour had particular regard to the requirement to consider the alternative elements of "necessary or proper". His Honour said (at p 3):-

"It is proper in maintaining or defending a party's rights to read the judge's reasons in order to facilitate a proper understanding of the extent of the loss or victory and a sufficient explanation of why the party won or lost." (my emphasis)

[18] In my view the perusal of the reasons for judgment was a proper step in the conduct of this litigation. I consider that the cost assessor erred in principle in his rejection of this item and that it should now be allowed in full.

[19] Upon my review of the costs assessment I am satisfied that Items 1136 and 1188 should be allowed in full and that Item 1145 should be allowed in the sum of $6,000.

[20] As a consequence of the above findings the plaintiffs have been partially successful. They seek costs of the review based on that success on the basis that such costs should follow the event. The defendant argues against an order for such costs on the basis that, whether the plaintiffs were partly or even wholly successful, the amount of costs recovered would still be less than the figure at which they were prepared to settle before the undertaking of the costs assessment. I reject that argument, which was relevant to the issue of the payment of the costs of the assessment, but does not apply to the outcome of any review.

[21] I propose therefore to allow the plaintiffs the costs in part. It is necessary to exclude from the costs the small amount incurred in correcting the cost assessor's error in relation to the perusal of the reasons for judgment and there ought to be some further reduction to take account of the matters in which the plaintiffs did not succeed. I will therefore allow the plaintiffs to recover against the defendant 50% of their costs to be assessed on the standard basis.

[22] 1. The application for review is allowed in part.

2. I order that the decision of the costs assessor be varied as follows:-

3. I order that the defendant pay to the plaintiffs 50% of their costs of and incidental to the application to be assessed on the standard basis.

[1] [1953] HCA 25; (1953) 94 CLR 621 at 629

[4] [1992] VicRp 32; [1993] 117 ACTR 1; (1992) 1 VR 468

[5] [2007] QDC 57