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[2021] FCA 441
Federal Court of Australia
2021-04-30
Smith J
Original judgment source is linked above.
Counsel for the Applicant: The Applicant did not appear
Counsel for the Third Respondent: Mr AP Rumsley
Solicitor for the Third Respondent: Alan Rumsley, Commercial Disputes Lawyer
Counsel for the First, Second and Fourth to Ninth Respondents: Ms CM Guy
Solicitor for the First, Second and Fourth to Ninth Respondents: HWL Ebsworth Lawyers
Counsel for the Tenth and Eleventh Respondents: Mr CP Blaxill and Mr JP Rich
Solicitor for the Tenth and Eleventh Respondents: Allens
Counsel for the Applicant: Mr AP Rumsley
Solicitor for the Applicant: Alan Rumsley, Commercial Disputes Lawyer
Counsel for the First Respondent: The First Respondent did not appear
Counsel for the Second to Ninth Respondents: Ms CM Guy
Solicitor for the Second to Ninth Respondents: HWL Ebsworth Lawyers
Counsel for the Tenth and Eleventh Respondents: Mr CP Blaxill and Mr JP Rich
Solicitor for the Tenth and Eleventh Respondents: Allens
Counsel for the Appellant: Mr AP Rumsley
Solicitor for the Appellant: Alan Rumsley, Commercial Disputes Lawyer
Counsel for the First Respondent: The First Respondent did not appear
Counsel for the Second to Ninth Respondents: Ms CM Guy
Solicitor for the Second to Ninth Respondents: HWL Ebsworth Lawyers
Counsel for the Tenth and Eleventh Respondents: Mr CP Blaxill and Mr JP Rich
Solicitor for the Tenth and Eleventh Respondents: Allens
Counsel for the Appellant: Mr AP Rumsley
Solicitor for the Appellant: Alan Rumsley, Commercial Disputes Lawyer
Counsel for the Third Respondent: The Third Respondent did not appear
Counsel for the First, Second and Fourth to Ninth Respondents: Ms CM Guy
Solicitor for the First, Second and Fourth to Ninth Respondents: HWL Ebsworth Lawyers
Counsel for the Tenth and Eleventh Respondents: Mr CP Blaxill and Mr JP Rich
Solicitor for the Tenth and Eleventh Respondents: Allens
BETWEEN: ZAFRA LEGAL PTY LTD (ACN 611 458 489) Applicant
AND: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT LIQUIDATORS OF GH1 PTY LTD (RECEIVER & MANAGER APPOINTED) (IN LIQUIDATION) First Respondent
WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT LIQUIDATORS OF MNWA PTY LTD (IN LIQUIDATION) Second Respondent
ALLEN BRUCE CARATTI (and others named in the Schedule) Third Respondent
order made by: BANKS-SMITH J DATE OF ORDER: 30 April 2021
AND: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE First Respondent
GH1 PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 099 191 714) Second Respondent
WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (and others named in the Schedule) Third Respondent
order made by: BANKS-SMITH J DATE OF ORDER: 30 April 2021
AND: COMMISSIONER OF THE AUSTRALIAN FEDERAL POLICE First Respondent
GH1 PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 099 191 714) Second Respondent
WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF GH1 PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 099 191 714) (and others named in the Schedule) Third Respondent
order made by: BANKS-SMITH J DATE OF ORDER: 30 April 2021
AND: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT LIQUIDATORS OF GH1 PTY LTD (RECEIVER & MANAGER APPOINTED)(IN LIQUIDATION) First Respondent
WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT LIQUIDATORS OF MNWA PTY LTD (IN LIQUIDATION) Second Respondent
ZAFRA LEGAL PTY LTD (ACN 611 458 489) (and others named in the Schedule) Third Respondent
order made by: BANKS-SMITH J DATE OF ORDER: 30 April 2021
BANKS-SMITH J: 1 The applicant, Allen Caratti, seeks a review of lump sum costs assessments made by the District Registrar on 15 July 2020 following judgments delivered in four actions and appeals: (1) Zafra Legal Pty Ltd v Harris [2018] FCA 908 (Barker J) (Interpleader Action); (2) Caratti v Commissioner of the Australian Federal Police [2018] FCA 907 (Barker J) (Injunction Action); (3) Caratti v Commissioner of the Australian Federal Police [2019] FCAFC 123 (Kerr, Steward and Banks-Smith JJ) (Injunction Appeal); and (4) Caratti v Harris & Kirman as Joint Liquidators of GH1 Pty Ltd [2019] FCAFC 124 (Kerr, Steward and Banks-Smith JJ) (Interpleader Appeal). 2 On 5 December 2019 the Full Court in the Injunction Appeal ordered that all the applications for costs of the four actions and appeals were to be assessed on a consolidated lump sum basis by a registrar of this Court. 3 Accordingly, it is appropriate to deal with all review applications together and to publish one set of reasons. The parties agreed that I should deal with the reviews on the papers. 4 The review applications are brought under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) and r 3.11 of the Federal Court Rules 2011 (Cth). It is not in issue that such reviews are hearings de novo, and the parties may rely upon materials that were before the registrar in addition to affidavits filed for the purpose of the reviews. 5 It is convenient to group the parties in the convention utilised by the respondents to these reviews: (a) the review applicant, Mr Caratti, was the applicant in the Injunction Action and the third respondent in the Interpleader Action, and was the appellant in both appeals; (b) the second to ninth respondents in the Injunction Action and Injunction Appeal and the first, second and fourth to ninth respondents in the Interpleader Action and Interpleader Appeal are referred to collectively as the Liquidators; and (c) the tenth and eleventh respondents in the proceedings are referred to as the Whitby Parties. 6 Mr Caratti was ordered to pay the costs of the Liquidators and the Whitby Parties in each of the four actions and appeals on various terms.
Summary of proceedings 7 In this action, the former lawyers for (relevantly) Mr Caratti applied by interpleader proceedings for orders relating to disputed property, being hard drives containing electronic copies of documents that were seized under search warrants executed by the Australian Federal Police (AFP) at premises associated with Mr Caratti. Mr Caratti asserted that the hard drives belonged to him. Liquidators of various companies associated with Mr Caratti asserted that the hard drives or electronic files on them constituted property of the companies and pressed for their possession. The hard drives were delivered into the custody of the Court pending determination of the issues. Separately, the liquidators of some of the companies issued notices under s 530B of the Corporations Act 2011 (Cth) requiring production of the hard drives. Justice Barker determined that a request made by Mr Caratti for copies of the seized documents that led to production of the hard drives by the AFP was made on behalf of Mr Caratti personally and on behalf of the relevant companies. His Honour subsequently ordered that each of Mr Caratti and the respondent companies, in relation to documents that belonged to each respondent, had a right to possession of the hard drives or the electronic files contained on them. A regime was put in place that allowed for Mr Caratti to object to the inspection of specified documents. 8 In addition to the primary reasons, Barker J published reasons with respect to costs: Zafra Legal Pty Ltd v Harris (No 2) [2018] FCA 1236. 9 Relevantly, Barker J ordered that: The third respondent [Mr Caratti] pay the costs of the first, second and fourth to eleventh respondents to be assessed, if not agreed, as to 90% of the total assessed costs.
Registrar's assessment 10 The registrar assessed costs and made orders on 15 July 2020 as follows: 1. [Allen Caratti] pay the [Whitby Parties'] costs assessed in the amount of $33,000.00. 2. [Allen Caratti] pay the [Liquidators'] costs assessed in the amount of $97,000.00. 11 Mr Caratti seeks that on review the costs payable to the Liquidators and the Whitby Parties be assessed at $68,343 and $24,095.57 respectively, being the same amounts he promoted before the registrar.
Liquidators 12 The Liquidators rely upon a costs summary affidavit of Samuel Dundas (at the time a partner of HWL Ebsworth Lawyers (HWL)) sworn 18 December 2018, and what follows records that evidence. 13 Mr Dundas has over 11 years of experience specialising in commercial litigation. 14 All amounts claimed in the Liquidators' lump sums claims are exclusive of GST. 15 All amounts claimed are verifiable through source material. HWL retained Mr Ross Nicholas, a costs consultant, to assist in preparing the application for the Liquidators' costs. Mr Nicholas is a costs consultant with Costs Plus Pty Ltd. 16 The total legal costs (exclusive of GST) incurred by the Liquidators between 4 July 2017 to 17 August 2018 in relation to the proceeding are in the amount of $117,178.80. This is made up as follows: (a) $64,936 in the HWL's fees; (b) $21, 112.50 in fees for junior counsel; (c) $27,869.79 in fees for senior counsel; and (d) $3,260.51 in disbursements. 17 The Liquidators sought a lump sum costs order in the total amount of $97,622.60, being 90% of $108,469.52. The figure of $108,469.52 is made up as follows: (a) $52,598.16 in HWL's fees; (b) $43,028.44 in Counsels' fees; (c) $3,260.51 in disbursements; (d) $2,629.91 in skill, care and responsibility provision; and (e) $6,952.50 for preparing the application before the registrar. 18 Mr Dundas explained how each component of that figure was calculated. I add at this point that Mr Dundas' affidavit ran to some 10 pages explaining the manner in which costs were claimed, and attached excel spreadsheets summarising source materials. 19 HWL's claimed rates fall within the hourly rates allowed under Schedule 3 of the Federal Court Rules Scale of Costs (Scale). Mr Dundas applied a 10% discount to those fees to reflect the actual costs incurred on a time basis which are not recoverable on a time basis under the Scale, resulting in a figure of $58,442.40. 20 Mr Dundas then applied a further 10% discount to reflect the solicitor own client time and costs which may not be recoverable between party and party, resulting in the claimed figure of $52,598.16. 21 Mr Dundas considered the key categories of work undertaken during the proceedings, and estimated that the work done in relation to: (a) drafting pleadings (statements of facts issues and contentions), submissions and preparing evidence constituted approximately 50% of the total amount claimed (noting that although all affidavits were filed in the Injunction Action, fees for this work was split equally between the proceedings as the evidence was relied on for both proceedings at trial); (b) trial preparation and attending trial constituted approximately 40% of the total amount claimed; and (c) correspondence with parties regarding the proceeding constituted approximately 10% of the total amount claimed. 22 Mr Dundas identified the persons from HWL who were involved in the proceedings and considered their level of experience and expertise. He provided evidence of hours billed and the percentage of the total claim attributed to those persons. 23 In order to prepare the lump sum costs application on behalf of the Liquidators, HWL reviewed its invoices and disbursement records, drafted the supporting affidavit and briefed Mr Nicholas as an expert as to costs. The amount of the estimate of costs for the application $13,905 was divided 50% between the Interpleader Action and the Injunction Action. 24 As to the disbursements, two counsel were retained by HWL. Sam Vandongen SC reviewed and settled court documents prepared by HWL and appeared for the Liquidators at the trial of the proceeding. Mr Dundas said that Mr Vandongen SC's fees are within the range in the National Guide to Counsel Fees, published by the Court. Mr Dundas applied a discount of 10% to the invoices issued by Mr Vandongen SC on the basis that some of his attendances may have been disallowed on a party and party basis. This exercise resulted in a claimed figure of $25,082.81. 25 James Scovell was briefed as junior counsel. Mr Scovell reviewed and settled court documents prepared by HWL and appeared for the Liquidators at the trial of the proceeding. Mr Dundas said that the hourly rates charged to the Liquidator parties by Mr Scovell are within the range in the National Guide to Counsel Fees but he considered that some of Mr Scovell's fees could be disallowed as between party and party, and so Mr Scovell's fees should be claimed and allowed with a 15% discount to what was charged. This exercise resulted in a claimed figure of $17,945.63. The sum of this amount and $25,082.81 for Mr Vandongen SC is $43,028.44. 26 The other disbursements claimed are for routine transcript, company search and court book preparation costs. 27 Mr Dundas then deposed that due to the complexity of law and fact in the proceeding, and the extent of the disputes, he considered that the proceeding was a matter that required substantial skill, care and responsibility. He considered that for the purposes of a lump sum order, the figure of $2,629.908, which is approximately 5% of HWL's professional costs after reductions as already identified, is fair and does justice between the parties. 28 Mr Dundas noted that the proceedings were of importance to the Liquidators, as through the proceedings they sought access to documents that were likely of significant importance to the Liquidators in being able to perform their statutory functions, including to investigate and take recovery action for the benefit of the unsecured creditors of the relevant companies.
Whitby Parties 29 The Liquidators and the Whitby Parties were separately represented by Allens because a creditor of the Whitby Land Company Pty Ltd was a client of HWL at the time. Whitby Land Company was placed into liquidation after HWL had already been engaged to act for the other respondents in the various proceedings. 30 The Whitby Parties rely upon a costs summary affidavit of Philip Blaxill (partner of Allens) sworn 2 December 2019, and what follows records that evidence. 31 Mr Blaxill has over 22 years of experience in the area of commercial litigation and dispute resolution. 32 For the purposes of preparing the costs application, Allens also sought the assistance of Mr Nicholas. 33 Mr Blaxill said that the total legal costs (exclusive of GST) incurred by the Whitby Parties between 8 December 2017 to 17 August 2018 in defending the proceeding are in the amount of $41,189. This comprises $37,339.50 in Allens' fees and $3,849.50 in Counsel's fees. 34 However, for the purpose of the application, the Whitby Parties sought Allens' fees and Counsel fees in the discounted lump sum of $33,416.18, consisting of: (a) $25,000 (Allens fees); (b) $3,416.18 (Counsel fees); and (c) $5,000 for preparing the application. 35 Mr Blaxill said that in claiming that figure, he had taken into account the usual rate of recovery in contested applications as compared with actual costs incurred, the application of the Scale and appropriate reductions to be applied to reflect the difference between the hours spent on a solicitor and client basis and the likely recovery of those hours for costs between party and party, and to reflect the difficulty of adjusting the costs to items in the Scale which are not based on an hourly rate. 36 In accordance with the Federal Court's Costs Practice Note (GPN-Costs), for each category of work Mr Blaxill attempted to provide an estimate of the proportion of that category of work compared to the total amount claimed. He made these estimates by considering: (a) how much Allens invoiced the Whitby Parties in each month; (b) the most significant categories of work performed in each month; and (c) the Allens personnel who worked on different aspects of the proceeding. 37 Mr Blaxill provided detailed evidence in this regard, and I include the following extract from his affidavit: 19. Work done in relation to taking instructions, reviewing the Court file and preparing the Whitby Parties' initial Court documents to allow the Whitby Parties to become a party to the proceeding (in particular, the affidavit of Linda Methven Smith sworn 11 December 2017), and attending the case management hearing on 11 December 2017: (a) constituted approximately $9,300 of Allens' fees which is approximately 25% of Allens' total fees; and (b) the Whitby Parties claim $6,000 which is approximately 24% of the total amount claimed for Allens' fees. 20. Work done in relation to drafting pleadings (namely, the statement of facts, issues and contentions dated 1 February 2018) and giving further consideration to the proceeding: (a) constituted approximately $700 of Allens' fees which is approximately 2% of Allens' total fees; and (b) the Whitby Parties claim $500 which is approximately 2% of the total amount claimed for Allens' fees. 21. Work done in relation to filing evidentiary affidavit material (namely, the affidavit of Robert Michael Kirman sworn 1 March 2018): (a) constituted approximately $8,000 of Allens' fees which is approximately 22% of Allens' total fees; and (b) the Whitby Parties claim $6,000 which is approximately 24% of the total amount claimed for Allens' fees. 22. Work done in relation to the submissions dated 9 March 2018: (a) constituted approximately $1,000 of Allens' fees which is approximately 3% of Allens' total fees; and (b) the Whitby Parties claim $800 which is approximately 3% of the total amount claimed for Allens' fees. 23. Work done in relation to the amended pleadings (namely, the amended statement of facts, issues and contentions dated 9 March 2018): (a) Constituted approximately $2,500 of Allens' fees which is approximately 7% of Allens' total fees; and (b) the Whitby Parties claim $1,700 which is approximately 7% of the total amount claimed for Allens' fees. 24. Work done in relation to preparing for and attending trial: (a) constituted approximately $12,000 of Allens' fees which is approximately 32% of Allens' total fees; and (b) the Whitby Parties claim $8,000 which is approximately 32% of Allens' total fees. 25. Work done in relation to post-hearing correspondence, receiving and considering the judgment (including considering the appropriate form of costs order and attending the hearing on 23 July 2018: (a) constituted approximately $3,500 of Allens' fees which is approximately 9% of Allens' total fees; and (b) the Whitby Parties claim $2,000 which is approximately 8% of Allens' total fees. 38 Mr Blaxill also identified the solicitors from Allens who were involved in the proceedings and considered their level of experience and expertise. He provided evidence of hours billed and the percentage of the total claim attributed to those persons. Where applicable, he adjusted rates to ensure the rates were within the Scale allowances. 39 Mr Blaxill explained the manner in which he had decided to apply reductions to the overall level of Allens' fees for the purpose of the costs assessment. 40 First, he took into account any adjustments to accommodate the Scale. This left a total of $34,766.50. Second, he applied a 10% discount to reflect the difficulty of adjusting costs to accommodate items of work in the Scale that are not chargeable at an hourly rate. This gave a figure of $31,298.85. Third, Mr Blaxill applied a reduction to the figure of $31,246.65 of 10% to reflect the work which might not be recoverable between party and party. This resulted in a figure of $28,168.97. 41 In accordance with Barker J's costs order, Mr Blaxill then applied a further discount of 10%, resulting in a figure of $25,352.07, which Mr Blaxill rounded to $25,000. Mr Blaxill said that having regard to the commercial significance of the matter, and notwithstanding that there were factors which would justify an uplift for skill, care and responsibility, he considered the figure of $25,000 to be fair and to do justice between the parties, having regard also to the 10% discount imposed by the Court. That constitutes 68% of the actual professional fees incurred by the Whitby Parties of $41,189 (referred to above). 42 Mr Scovell was briefed to act for the Whitby Parties. Mr Blaxill explained that Mr Scovell's fees on this and the Injunction Action were apportioned evenly. A 10% discount was then applied to reflect Barker J's costs order, leaving a claim for Mr Scovell's fees of $3,416.18. 43 A schedule was provided providing a breakdown of the costs of the assessment process before the registrar for this action and the Injunction Action, with the estimate of $10,000 allocated equally between those matters, explaining the $5,000 claim for such costs. 44 Accordingly, each component of the costs claimed of $33,416.18 was explained by Mr Blaxill, together with the manner in which discounts had been applied to the actual costs incurred. 45 Mr Blaxill also deposed to the significance of the matter for the Whitby Parties. In the proceeding, Mr Caratti applied for orders for the delivery up or possession of property, being the relevant hard drives. The hard drives likely contained documents that were important to the Liquidators (including the liquidators of Whitby Land Company) in being able to perform their statutory function as liquidator, including to investigate and take recovery action for the benefit of unsecured creditors.
Mr Caratti 46 Mr Caratti relies on three affidavits of his solicitor, Alan Rumsley. The first was sworn 4 March 2020 for the purpose of the assessment before the registrar (First Rumsley Affidavit). Additional affidavits of Mr Rumsley were sworn on 7 August 2020 (Second Rumsley Affidavit) and 13 August 2020 (Third Rumsley Affidavit). Mr Rumsley was not retained by Mr Caratti in any of the four relevant proceedings, other than with respect to costs. 47 In short, Mr Rumsley's affidavits contain submissions as to why the amounts claimed by the Liquidators and the Whitby Parties respectively should be reduced. The following table reflects the claims by the Liquidators and the Whitby Parties, the registrar's assessment and the amounts that Mr Caratti, through Mr Rumsley, submits are reasonable. Party Actual costs Claimed costs Registrar's assessment Caratti proposal Liquidators $117,178.80 $97,622.60 $97,000 $68,343 (excludes $6,952.50) (includes 90% of $6,952.50) Whitby $41,189 $33,416.18 $33,000 $24,095.57 (excludes $5,000) (includes $5,000)
48 It should also be noted that the costs claimed for the assessment process before the registrar are not included in the 'actual costs' estimate, but have been included in the 'claimed costs', and as a result some caution is required in drawing comparisons between those figures. The position is different in relation to the Liquidators' indication of actual costs for the appeals (see below), where the Liquidators have included the assessment costs, and because of that distinction, in each matter I have noted in the applicable table whether the assessment costs are included or excluded from the relevant figures. 49 In summary, Mr Rumsley asserts that there are four issues with the Liquidators' claimed costs: (a) there is insufficient discount applied for the difference between total costs incurred and costs recoverable on a party and party basis; (b) there is no adequate reduction to allow for duplication of work as between the 'seven solicitors acting'; (c) there is no adequate reduction to allow for duplication of work between the solicitors acting and counsel; and (d) the decision to appoint two counsel was not sufficiently necessary or, alternatively, there is no adequate reduction to allow for duplication of work. 50 Mr Rumsley submitted by the First Rumsley Affidavit that a recovery of 65% of costs on a party and party basis would provide a more reasonable result, reduced by a further 10% in accordance with Barker J's orders. Alternatively, Mr Rumsley provided a figure of $68,343 which he calculated on the basis of a 20% discount to actual solicitors' costs to allow for solicitor duplication; a further 10% discount to actual solicitors' costs to allow for solicitor/counsel duplication; a 50% discount of counsels' fees; no allowance for skill care and responsibility and a reduced allowance of costs of the assessment of $2,500. The 10% discount would then be applied in accordance with Barker J's orders. 51 As to the Whitby Parties' claims, Mr Rumsey contended that: (a) there is insufficient discount applied for the difference between total costs incurred and costs recoverable on a party and party basis; (b) there is no adequate reduction to allow for duplication of work as between the 'eight solicitors acting'; (c) there is no adequate reduction to allow for duplication of work between the solicitors acting and counsel; and (d) there is no adequate reduction to allow for the common interest of the parties, and the fact that there was separate representation by Allens and HWL as a result of a conflict between the clients which was not caused by Mr Caratti. 52 Mr Rumsley submitted in the First Rumsley Affidavit that a discount should be applied to the claimed costs of $41,189, so that 65% is allowed, before a further 10% discount is applied to allow for the orders of Barker J, resulting in the figure of $24,095.57.
Summary of proceedings 53 In this action Mr Caratti sought injunctions on the basis that the various liquidators and companies were not 'persons' entitled under s 3N of the Crimes Act 1912 (Cth) to make requests for documents seized under the AFP warrants, contending that only natural persons could make such a request. The standing of Mr Caratti to seek such relief was successfully challenged. 54 The trial of this matter was heard together with the Interpleader Action. 55 Mr Caratti's applications for injunctions were dismissed. 56 Justice Barker made orders that Mr Caratti pay the costs of the respondents, save for the first respondent, to be assessed if not agreed. 57 Separate reasons were published with respect to the costs of the Commissioner of the AFP as first respondent (Caratti v Commissioner of the Australian Federal Police (No 2) [2018] FCA 1237), and they are not relevant to these applications.
Registrar's assessment 58 The registrar assessed costs and made orders on 15 July 2020 as follows: 1. [Mr Caratti] pay the [Whitby Parties'] costs assessed in the amount of $70,000.00. 2. [Mr Caratti] pay the [Liquidators'] costs assessed in the amount of $140,000.00. 59 Mr Caratti seeks that on review the costs payable to the Liquidators and the Whitby Parties be assessed at $57,258.18 and $104,578.53 respectively, being the same amounts promoted before the registrar.
Liquidators 60 The Liquidators rely upon a costs summary affidavit of Mr Dundas of HWL sworn 18 December 2018 and relied upon before the registrar. The affidavit follows a similar format as that relied upon in the Interpleader Action, and it not necessary to repeat matters such as Mr Dundas' expertise and the detailed methodology implemented in considering and assessing the claims for costs that he considered were appropriate. Mr Nicholas was again retained. Mr Dundas again considered the expertise and role of all lawyers who worked on the action. The additional 10% discount ordered by Barker J in the Interpleader Action was not applicable to the Injunction Action. 61 The total legal costs incurred by the Liquidators between 13 December 2017 and 18 July 2018 in relation to the proceeding are in the amount of $160,890.04. This consists of: (a) $96,169 in the HWL's fees; (b) $41,092.50 in fees for junior counsel; (c) $19,986.15 in fees for senior counsel; and (d) $3,642.39 in disbursements. 62 In this proceeding, the Liquidators seek a lump sum costs order in the total amount of $145,302.75 (excluding GST) being: (a) $77,896.89 in HWL's fees; (b) $52,916.17 in Counsels' fees; (c) $3,642.39 in disbursements; (d) $3,894.80 in skill, care and responsibility; and (e) $6,952.50 for preparing the application. 63 Mr Dundas explained his methodology in arriving at those figures. As with the costs of the Interpleader Action, Mr Dundas applied a 10% discount to the HWL costs to reflect the actual costs incurred on a time basis but which are not recoverable on a time basis under the Scale, giving a figure of $86,552.10. He then applied a further reduction of 10% to reflect the solicitor own client time and costs which may not be recoverable between party and party. This explains the figure of $77,896.89. 64 Mr Dundas formed a different view in this matter to the position in the Interpleader Action as to the categories of work, estimating that: (a) drafting pleadings (statements of facts issues and contentions), submissions and preparing evidence constituted approximately 40% of the total amount claimed; (b) trial preparation and attending trial constituted approximately 30% of the total amount claimed; (c) preparation for and attending an interlocutory hearing on 22 December 2017 constituted approximately 20% of the total amount claimed; and (d) correspondence with parties regarding the proceeding constituted approximately 10% of the total amount claimed. 65 Mr Dundas provided a schedule indicating the proportion (in percentage terms) of the total actual costs attributed to HWL's fees and each HWL team member. 66 I note that seven affidavits, various iterations of a statement of facts, issues and contentions, and four sets of submissions were prepared for the purpose of defending the two relevant proceedings. 67 Costs allocated for the review application consisted of the balance 50% of the $13,905 referred to above with respect to the Interpleader Action. 68 Mr Vandongen SC was again briefed as senior counsel. His fees were $19,986.15 and Mr Dundas applied a 10% discount to those fees, consistent with the approach in the Interpleader Action. Mr Scovell was junior counsel, and his fees were in the amount of $41,092.50. A 15% discount was applied, again consistent with the approach in the Interpleader Action. 69 Mr Dundas considered that a figure of $3,894.80 (5% of HWL's fees after the discounts were applied) was an appropriate sum to reflect the skill, care and responsibility required. Mr Dundas again noted the significance of these matters for the Liquidators in terms of their statutory duties.
Whitby Parties 70 The Whitby Parties rely upon a costs summary affidavit of Mr Blaxill. It follows a similar format to his affidavit in the Interpleader Action. Again, Mr Nicholas was retained to assist. 71 Mr Blaxill gave evidence that the total legal costs incurred by the Whitby Parties between 13 December 2017 and 18 July 2018 in defending the Injunction Action are in the amount of $88,089.50. This comprises $84,240 in Allens' fees and $3,849.50 in counsel fees. 72 The Whitby Parties seek a lump sum costs order in the total amount of $71,795.75 being: (a) $63,000 in Allens fees; (b) $3,795.75 in Counsel fees; and (c) $5,000 for preparing the application. 73 Mr Blaxill explained that he applied the same methodology as with respect to the Interpleader Action and provided similar evidence as to the consideration of solicitors' expertise, their rates, the allocation of their work to the various categories of work undertaken and the significance of the matter to the Whitby Parties. It is not necessary to repeat that methodology. I have set it out in detail with respect to the Interpleader Action in order to show the level of detail generally contained in Mr Blaxill's costs affidavits. 74 Addressing in particular the discounts that were applied, Mr Blaxill explained that he first adjusted the rates of Allens' solicitors to accommodate the Scale. This led to a figure of $78,181. He then applied a 10% discount to reflect work that might not have been recoverable between party and party. This resulted in the figure of $63,326.61, which he rounded to $63,000, being approximately 75% of Allens' actual fees, and being a figure he considered fair as between the parties. 75 Mr Blaxill explained that Allens retained both Mr Vandongen SC and Mr Scovell for the hearing of this matter. Mr Vandongen SC's fees were paid by the Liquidators and he did not invoice Allens. Mr Scovell invoiced the Whitby Parties for $11,000. Mr Blaxill examined Mr Scovell's invoices and deducted three items that he did not think were related to this proceeding. He then applied a 10% discount, resulting in the figure of $7,591.50. As the invoice also related to the Interpleader Action, the cost was apportioned between the two evenly, resulting in a claim in this proceeding of $3,795.75. 76 The estimated costs of the assessment process before the registrar ($10,000) were allocated $5,000 as to this matter. 77 Accordingly, Mr Blaxill addressed each component of the costs claimed.
Mr Caratti 78 Mr Caratti relied on three affidavits filed in this proceeding that were in the same form (save as to the specific dollar amounts of costs) as the First, Second and Third Rumsley Affidavits referred to above and relied upon in the Interpleader Action assessment and review. The methodology and complaints were repeated. The same discounts were contended for. It is not necessary to set out Mr Rumsley's contentions in detail again. 79 The following table summarises the respective claims and includes the amount that Mr Caratti asserts is reasonable. Party Actual costs Claimed costs Registrar's assessment Caratti proposal Liquidators $160,890.04 $145,302.75 $140,000 $104,289 (excludes $6,952.50) (includes $6,952.50) Whitby $88,089.50 $71,795.75 $70,000 $57,258.18 (excludes $5,000) (includes $5,000)
Summary of proceedings 80 The Injunction Appeal and the Interpleader Appeal were heard together. 81 The appeal from Barker J's decision that Mr Caratti did not have standing to bring the injunction application was dismissed. It was necessary for the Full Court to consider issues such as whether or not Mr Caratti had a 'special interest' in the subject matter. In light of the conclusion on the standing issue, it was not strictly necessary for the Full Court to address the operation of s 3N of the Crimes Act, but as the matter had been fully argued, it proceeded to do so, concluding that the reference to an occupier of premises, where used in the context of s 3N was a reference to a natural person. 82 The Full Court ordered that the appeal be dismissed with costs, and subsequently made the order referred to at [2] above.
Registrar's assessment 83 The registrar determined that: 1. The Applicant pay the [Whitby Parties'] costs assessed in the amount of $9,300.00. 2. The Applicant pay the [Liquidators'] costs assessed in the amount of $29,000.00. 84 Mr Caratti seeks that on review the costs payable to the Liquidators and the Whitby Parties be assessed at $6,435 and $17,636.86 respectively, being the same amounts promoted before the registrar.
Liquidators 85 The Liquidators rely on this review on an affidavit of Thomas Langdon that was filed 3 December 2019 for the purpose of the registrar's assessment. 86 At the time Langdon was a senior associate employed by HWL. He deposed to having provided to Mr Nicholas copies of the Full Court's reasons, together with all HWL and Counsel invoices and a draft affidavit, and seeking an opinion from Mr Nicholas as to the proposed methodology and amounts claimed. 87 Mr Langdon explained that HWL's costs and counsel's fees for both the Injunction Appeal and the Interpleader Appeal were charged together and there was no relevant delineation of those costs between those appeals. The Liquidators therefore seek recovery of costs apportioned equally between the appeals. 88 Between 13 December 2017 and 18 July 2018, the Liquidators incurred the total legal costs of $58,604.50 (exclusive of GST) in defending this appeal and the Interpleader Appeal (with 50% of this amount being $29,302.25). Those costs consist of: (a) $21,155.50 in HWL fees (with 50% of this amount being $10,577.75); and (b) $37,449 in Counsel fees (with 50% of this amount being $18,724.50). 89 Before the registrar and in this review, the Liquidators seek a lump sum costs order for the total sum of $51,829.25 (excluding GST) (with 50% of this amount being $25,914.62), namely: (a) $15,887.74 for HWL fees (with 50% of this amount being $7,943.87); (b) $35,941.50 for Counsel fees (with 50% of this amount being $17,970.75). 90 In addition, the Liquidators also seek a lump sum costs order for HWL's fees and Mr Nicholas' fees for preparing the assessment application, being $5,000 (with 50% of this amount allocated to each appeal), so resulting in a total claim of $28,414.62 in each appeal ($7,943.87 + $17,970.75 + $2,500). 91 Mr Langdon provided a table of the personnel, their rates and the time spent on the appeals, including Counsel. The following are to be noted, based on Mr Langdon's evidence: (a) although eight lawyers from HWL are listed in the schedule, there was a change of personnel in February 2019 (with Sam Dundas and another solicitor departing HWL, for example, and being replaced on the team), and so not all solicitors worked on the matter concurrently. There was no charge to the client for new members of the HWL team to read into the matters; (b) it was also the practice of HWL and Counsel in the appeals to meet informally and regularly to discuss the appeals. Such meetings were not charged to clients of HWL and given Counsel from the original proceedings and the appeals were the same, the meetings were used to assist the new HWL staff to read into the appeals; (c) approximately 31% of overall fees relate to HWL work, and 69% to Counsel; (d) a graduate solicitor assisted the team but no charge was made for her time for the purpose of the assessment, and it has been deducted from the actual charges incurred; and (e) otherwise the hourly rates for the solicitors involved were within the Scale. 92 Mr Langdon's methodology in calculating the amounts to be claimed was to start with HWL adjusted fees of $19,614.50 and Counsels' actual costs of $37,449. He then applied a 10% discount to the HWL fees (to $17,653.05) to reflect the application of the scale to the costs actually incurred. He then applied a further 10% discount to reflect the difference between the hours spent on a solicitor own client basis and the likely recovery of those hours for costs between party and party and which might not be recoverable, resulting in a figure of $15,887.74. 93 Mr Langdon explained that Counsels' total fees invoiced to the Liquidators were: (a) $16,899 by Mr Vandongen SC. Mr Vandongen's fees also relate to the Interpleader Appeal, therefore only 50% of this amount ($8,44.55) applies to this appeal; and (b) $20,575 by Mr Scovell. Mr Scovell's fees also relate to the Interpleader Appeal, therefore only 50% of this amount ($10,287.50) applies to this appeal. 94 Copies of Counsels' invoices were in evidence. Some items and amounts were redacted. Mr Langdon explained that he reviewed the invoices and redacted items that did not relate to the appeals, and did not include those costs in the total claimed for Counsels' fees. He also considered that there is a possibility that if there were a detailed investigation into the narratives on certain of Mr Scovell's invoices, there would be reductions for work not recoverable on a party and party basis. Mr Langdon made a 10% deduction against those particular invoices to accommodate this. This exercise resulted in a total claim for Counsels' fees for the purpose of the assessment of $35,941.50 across the two appeals ($17,970.75 claimed in each). 95 In considering whether the total to be claimed was appropriate, Mr Langdon also undertook and disclosed the task of setting out the categories of work undertaken by HWL and the percentage of total claimed fees allocated to those tasks.
Whitby Parties 96 Mr Blaxill also provided a costs affidavit sworn 2 December 2019 for the purpose of the assessment before the registrar relating to the Injunction Appeal. 97 The level of detail provided and the methodology was analogous to that provided for the purpose of the previous costs assessments referred to above and relied upon in these reviews. It is not necessary or efficient to repeat that detailed evidence. Mr Nicholas was again retained by Allens. 98 Mr Blaxill deposed to the total legal costs incurred by the Whitby Parties between 13 December 2017 to 18 July 2018, being $9,900, and provided a breakdown of those costs. Those costs do not include the costs of the assessment. 99 Mr Blaxill explained that the Whitby Parties seek a lump sum costs order of $9,300, made up by way of $7,300 in fees and $2,000 for the cost of the assessment process. 100 Mr Blaxill explained that he first adjusted Allens' fees to reflect the Scale (ignoring an increase in Scale amounts that occurred during the relevant period), a process that reduced the fees to $9,039. He then applied a 10% discount to that figure to reflect the difficulty of adjusting to accommodate items of work in the Scale that are not claimable at an hourly rate. This gave a figure of $8,135.10. He then applied a further reduction of 10% to reflect the work which might not be recoverable between party and party. This gives a figure of $7,321.59. He then rounded that figure down to $7,300. 101 He then included an allowance for $2,000 for the work of a senior associate, Mr Nicholas and himself that he considered reasonable for preparing the lump sum cost application in this appeal.
Mr Caratti 102 Mr Caratti again relied on three affidavits filed in this proceeding that were in the same form (save as to the specific dollar amounts of costs) as the First, Second and Third Rumsley Affidavits. The methodology and complaints were repeated. Similar discounts were suggested. 103 The following table reflects the claims by the Liquidators and the Whitby Parties, together with the amounts that Mr Rumsley seeks in Mr Caratti's review application (noting that for both appeals the Liquidators' actual costs figure includes the $2,500 amount claimed for the costs assessment, as does the claimed costs figure): Party Actual costs Claimed costs Registrar's assessment Caratti proposal Liquidators $31,802.50 $28,414.62 $29,000 $17,636.86 (includes $2,500) (includes $2,500) Whitby $9,900 + (excludes $2000) $9,300 $9,300 $6,435 (includes $2,000)
Summary of proceedings 104 The Full Court upheld Barker J's finding that the request made to the AFP for copies of documents was made on behalf of Mr Caratti personally and the relevant companies. The Full Court was also required to address in detail the question of whether Barker J had erred in failing to find that documents held on the hard drives were the subject of overarching legal profession privilege claims by Mr Caratti. The Full Court considered that Barker J had dealt with that question in a manner that preserved the potential for Mr Caratti to pursue any such specific claims for privilege. The Full Court also upheld a finding to the effect that the companies were entitled to delivery up of copy documents under s 530A of the Corporations Act, and in so doing, considered in some detail the construction of s 530A. The appeal was dismissed.
Registrar's assessment 105 The registrar determined that: 1. [Mr Caratti] pay the [Whitby Parties'] costs assessed in the amount of $6,900.00. 2. [Mr Caratti] pay the [Liquidators'] costs assessed in the amount of $29,000.00. 106 Mr Caratti seeks that on review the costs payable to the Liquidators and the Whitby Parties be assessed at $4,910.75 and $17,636.86 respectively, being the same amounts promoted before the registrar.
Liquidators 107 Mr Langdon filed an affidavit in this appeal that repeats the approach for the Injunction Appeal, having regard to the allocation of fees equally between those matters. It is therefore not necessary to say anything further about Mr Langdon's affidavit.
Whitby Parties 108 Mr Blaxill provided a costs affidavit sworn 2 December 2019 for the purpose of the assessment before the registrar relating to the Interpleader Appeal. 109 Again, the level of detail provided and the methodology was analogous to that provided for the purpose of the previous costs assessments referred to above and relied upon in these reviews. It is not necessary or efficient to repeat that detailed evidence. Mr Nicholas was again retained by Allens. 110 Mr Blaxill deposed to the total legal costs (exclusive of GST) incurred by the Whitby Parties between 13 December 2017 to 18 July 2018, being $7,555, and provided a breakdown of those costs. Those costs do not include the costs of the assessment. 111 Mr Blaxill explained that the Whitby Parties seek a lump sum costs order of $6,900, made up by way of $5,900 in fees and $1,000 for the cost of the assessment process. 112 Mr Blaxill explained that he first adjusted Allens' fees to reflect the Scale (ignoring an increase in Scale amounts that occurred during the relevant period), a process that reduced the fees to $7,367. He then applied a 10% discount to that figure to reflect the difficulty of adjusting to accommodate items of work in the Scale that are not claimable at an hourly rate. This gave a figure of $6,630.30. He then applied a further reduction of 10% to reflect the work which might not be recoverable between party and party. This gives a figure of $5,967.27. He has rounded that figure down to $5,900. 113 He then included an allowance for $1,000 for the work of a senior associate, Mr Nicholas and himself that he considered reasonable for preparing the lump sum cost application in this appeal.
Mr Caratti 114 Mr Caratti again relied on three affidavits filed in this proceeding that were in the same form (save as to the specific dollar amounts of costs) as the First, Second and Third Rumsley Affidavits referred to above. The methodology and complaints were repeated. Similar discounts were contended for. 115 The following table reflects the claims by the Liquidators and the Whitby Parties, together with the amounts that Mr Rumsley seeks in Mr Caratti's review application: Party Actual costs Claimed costs Registrar's assessment Caratti proposal Liquidators $31,802.50 $28,414.62 $29,000 $17,636.86 (includes $2,500) (includes $2,500) Whitby $7,555 $6,900 $6,900 $4,910.75 (excludes $1,000) (includes $1,000)
PRINCIPLES TO BE APPLIED 116 In Hislop v Paltar Petroleum Limited (No 4) [2017] FCA 1632 Gleeson J set out the following principles relevant to lump sum costs assessments: [6] The usual rule, which applies in this case, is that costs are payable on a party and party basis: rr 40.01 and 40.02. Costs as between party and party are defined in the Dictionary (Sch 1 to the Rules) as 'only the costs that have been fairly and reasonably incurred by the party in the conduct of the litigation'. In contrast, an award of costs on an indemnity basis is intended to compensate a party fully for costs where it was unreasonable for the party to be subject to any expenditure of costs, such as where a hopeless proceeding is brought: see Bitek Pty Ltd v iConnect Pty Ltd [2012] FCA 506; (2012) 290 ALR 288 ('Bitek') at [12]. [7] Specification of a lump sum is not the result of a process of taxation or assessment of costs; the sum can only be fixed broadly having regard to the information before the Court; the approach taken to estimate costs must be logical, fair and reasonable: Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 at [22]. The task is one of estimation or assessment and not of arithmetic: Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17(e)]. The sum of costs fixed should be proportionate to the nature, including the complexity, of the case: Bitek at [18]. [8] The starting point for the fixing of costs is the charges rendered by Mr Hislop's solicitors. Then, there may be an 'impressionistic discount of the costs actually incurred or estimated, in order to take into account the contingencies that would be relevant in any formal costs assessment': Bitek at [18], citing Hamod v New South Wales [2011] NSWCA 375 at [820]. However, the court must be 'astute not to cause an injustice': Bitek at [23]. [9] In Hancock v Rinehart (Lump sum costs) [2015] NSWSC 1640, Brereton J made the following observations concerning the application of a discount in determining a lump sum costs order, where costs were ordered to be paid on an indemnity basis: [56] The first defendant submits that there should be a further global percentage reduction of 15%, for two main reasons: first, because on assessment, even on the indemnity basis, a successful party invariably recovers something less than its actual costs, typically 15% where the assessment is on an indemnity basis; and secondly, the necessarily broad-brush approach of the court to assessment on a lump sum basis - involving some risk that the sum includes costs that would not be recovered on assessment - coupled with the savings to the costs creditor in time and costs through avoiding a detailed assessment, and the loss to the costs debtor of the opportunity to scrutinise and object to a detailed bill, has resulted in a practice of applying a discount on lump sum assessments. [57] While it is undoubtedly the usual practice of the court when making a lump sum costs order to apply a discount for the reasons mentioned, that does not mean that the Court must apply a percentage discount to the sum sought by the successful party and the Court 'must be astute not to cause an injustice to the successful party' by applying 'an arbitrary 'fail safe' discount on the costs estimate submitted to the court'. Thus if the court can be confident that there is little risk that the sum includes costs that might be disallowed on assessment, the case for a discount is seriously undermined. (footnotes omitted) 117 Another useful extract is the following from Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506 where Kenny J stated: [23] It must also be borne in mind that, in making a lump sum costs order, the Court is not required to undertake a detailed examination of the kind that would be appropriate to taxation or formal costs assessment: see Harrison v Schipp (2002) 54 NSWLR 738 per Giles JA at 743 [21]-[22]; Hadid v Lenfest Communications Inc [2000] FCA 628 at [35] per Lehane J; and Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 5 per O'Loughlin J. Indeed, to do so would defeat the purpose of making a lump sum costs order. Adopting a less exacting approach than would be applied on taxation, but bearing in mind that there is only Mr Tye's evidence before the Court and that the Court must be astute not to cause an injustice to anyone including the respondents, I am satisfied that Mr Tye has not calculated costs in an excessive amount. 118 A useful summary of principles was also collated by Markovic J in Fewin Pty Ltd v Burke (No 3) [2017] FCA 693 at [7]-[14]. Her Honour also noted that 'the Court is entitled to take into account the evidence that is before it; its own observations of the proceeding and the judge's own experience' (at [61]). 119 Although the detailed examination involved in a taxation is not required, the Court should be conscious not to cause injustice to the applicants by adopting an arbitrary failsafe discount across-the-board on the costs claimed, but at the same time be careful not to prejudice the respondents by over estimating the costs: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 123, citing Leary v Leary [1987] 1 WLR 72; [1987] 1 All ER 261 at 265, and as cited in Geneva Laboratories Limited v Prestige Premium Deals Pty Ltd (No 5) [2017] FCA 867 at [86]. 120 In Australian Mud Company Pty Ltd v Coretell Pty Ltd (No 7) [2017] FCA 1469 McKerracher J reviewed the relevant authorities and recorded submissions concerning lump sum costs orders made by this Court: at [34]. The submissions made by the parties in that matter were that lump sum costs orders are typically in excess of 65% of total costs with a number being of the order of 70%-75%. In Geneva Laboratories, Bromwich J endorsed the view of a costs consultant who suggested a broad brush assessment of 80%: at [106]-[107], [112]. However, as Markovic J noted in Crescent Capital Partners Management Pty Limited v Crescent Funds Management (Aust) Limited [2019] FCA 1082 at [62], it is not the case that the court is able to simply apply a percentage recovery in one particular case to another set of circumstances. Each case is to be determined based on its own circumstances. 121 The Court's guidelines are a relevant benchmark: LFDB v SM (No 4) [2017] FCA 753 at [9]; and Bitek at [20]. Regard should also be paid to the Scale and the National Guide to Counsel Fees. Although the Court is not obliged to apply strictly the Scale, it may provide assistance and may be influential: Geneva Laboratories at [86].
CONSIDERATION 122 For context, I note that I was a member of the Full Court that decided the Injunction Appeal and the Interpleader Appeal, and so I am familiar with the issues that were the subject of the various proceedings. 123 I now turn to the assessment of the costs, considered against the backdrop of those principles and starting with general comments applicable to all matters. In doing so I have had regard to the matters raised in the Third Rumsley Affidavit and the submissions filed on behalf of the parties. 124 The Liquidators and the Whitby Parties by their solicitors went to considerable effort in their costs affidavits to comply with the GPN-Costs. This is not a case where a claimant has simply disclosed actual costs and suggested a global discount or left it to the court to allocate a global discount. The solicitors have undertaken a process that commenced with a consideration of actual costs, included reductions to Scale rates where applicable, and considered and applied discounts before indicating a figure that is in fact claimed. This is highly relevant in the context of a submission from Mr Rumsley that the amounts assessed by the registrar ranged between 96% and 101% of the amounts claimed by the parties. That submission does not accurately reflect the position. The amounts claimed had already been discounted by the Liquidators and Whitby Parties, and the basis of such discounts fully disclosed in the affidavit evidence. 125 The starting point for an assessment is actual costs incurred. There is no reason in theory why an assessment may not differ greatly from a claimed amount, if the actual costs are not prima facie unreasonable, and if the parties seeking payment have gone to considerable trouble to come to the claimed amount based on Scale rates, and incorporating fair and reasonable discounts. To assume a default position that a further discount should be applied to a claimed amount is to fail to give credit to a careful and responsible consideration of costs undertaken by, in this case, solicitors with some guidance from a costs expert. 126 As to the Liquidators' calculation of claimed costs, the following matters are of particular relevance. 127 A 10% discount was applied to all solicitor's fees to recognise that not all actual costs incurred were recoverable on a time basis under the Scale. 128 It is not unusual, where it is appropriate that such a discount be imposed, that there be a compensating skill care load to account for the complexity and importance of work (see, for example, Geneva Laboratories at [100]), and the Liquidators sought such an allowance in the primary actions. 129 A 10% discount was applied to all solicitors' fees, to recognise that not all work would have been recoverable on a party and party basis. The fees were within Scale, in any event. However, it is relevant to recognise that in these matters the clients were sophisticated (experienced liquidators) and, as the Liquidators submitted, there were not significant solicitor and own client costs by way of obtaining instructions that might be the case in other matters. 130 The level and spread of solicitors involved in the matters was to my mind appropriate. For example, in the Interpleader Action, Mr Dundas was the only partner involved, and the majority of the work was done either by him (61 hours) or a junior solicitor James Nagle (117 hours). A mid-range solicitor undertook a limited amount of work (Tanika Matic - 14 hours). Whilst it is true that eight HWL lawyers were involved, between them the other five lawyers account for only about 16 hours of work. In short, there was a core team of two lawyers, one of whom was very experienced. Based on my experience, significant efficiencies often result from the appropriate deployment of senior, skilled practitioners, and as Mr Dundas not only supervised the actions but instructed counsel and attended at the hearings, I do not find the number of hours of work that he recorded during the relevant period to be excessive. Nor do I consider the hours recorded by the respective solicitors to be surprising, when one has regard to the fact that there were three case management hearings and a two day trial, one witness whose evidence was lead in chief and two witnesses who were cross examined on their affidavit evidence by the Liquidators and the matters before the Court related to questions of both fact and law. I am not satisfied on the evidence before me and based on my own experience that there was inappropriate duplication or delegation of work by HWL although as will be seen, I have provided for a small discount to address the potential for such duplication in a matter of this type. The spread of work appears to have been fair and reasonable. 131 Further, the spread of work as between solicitors and counsel appears to have been fair and reasonable. This is particularly apparent, for example, in the context of preparation of written submissions in the appeals. HWL has charged for the drafting of submissions, Mr Scovell has charged for reviewing and settling them, and Mr Vandongen SC has charged for only one hour across both appeals for settling them. This indicates that it is unlikely there has been duplication of work between solicitors and counsel of any real significance. Rather, it suggests there has been a sensible allocation of work, having regard to the nature of the submissions required. 132 I am satisfied that it was appropriate for the Liquidators to retain junior and senior counsel. Indeed, Mr Caratti did the same in each of the Interpleader Action and the Injunction Action, and was represented by two counsel in each of the appeals. The outcome of the proceedings was of importance to the Liquidators and the unsecured creditors of the various companies. It is fundamental in liquidations that liquidators have access to the books and records of the company. That Mr Vandongen SC and Mr Scovell were retained for all matters will, I infer, have led to efficiencies as to their costs. Some of Mr Scovell's work was charged at a discounted rate to his ordinary hourly rate. The Liquidators have in any event applied a 10% discount to Counsels' fees for the purpose of the claimed amounts. 133 Having reviewed the hours of work claimed by both Mr Vandongen SC and Mr Scovell in all of the matters, and having regard to the matters in issue in the proceedings, I have no reason to consider the amounts billed by them were other than fair and reasonable. For example, for the preparation for and concurrent hearings of the two appeals, Mr Vandongen SC has charged for 28.6 hours. Those appeals raised a number of novel issues, including the construction of s 3N of the Crimes Act. Mr Vandongen SC's fees are in my view fair and reasonable and indicate considerable efficiency in the allocation of work as between Mr Vandongen SC and Mr Scovell. 134 I accept the Liquidators' submissions that the reliance on and use of junior counsel is likely to have operated to reduce overall costs: Mr Vandongen SC's fees would no doubt have been significantly higher but for the assistance of Mr Scovell. To the extent there was any unwarranted duplication of work as between counsel (and there is no evidence of that), that potential seems to be to be provided for by the 10% discount already applied by the Liquidators for the purpose of the assessment. 135 I do not consider the fact that there was separate representation leads to a deduction in the costs assessments. The Liquidators were respondents to the actions and to the appeals. They were entitled to appear and be represented separately or by the same legal team with respect to each company, depending upon circumstances including internal group conflicts or external conflicts. 136 I have taken into account that the Liquidators retained Mr Nicholas to assist them in preparing for the assessment. In my experience, costs consultants who have experience gained over conducting and drafting papers for many taxations and assessments, are able to provide advice that results in that process being undertaken more efficiently by solicitors. Therefore, I consider it appropriate that Mr Nicholas was retained and that there be an allowance to the Liquidators for the work required in the costs assessments. 137 However, I do not think the Liquidators require an additional allowance for HWL's skill, care and responsibility in this matter. 138 Item 11 of Schedule 3 is for skill, care and responsibility and provides that an additional amount may be allowed, having regard to all the circumstances of the case, including: (a) the complexity of the matter; (b) the difficulty or novelty of the questions involved in the matter; (c) the skill, specialised knowledge and responsibility involved and the time and labour expended by the lawyer; (d) the number and importance of the documents prepared and read, regardless of their length; (e) the amount or value of money or property involved; (f) research and consideration of questions of law and fact; (g) the general care and conduct of the lawyer, having regard to the lawyer's instructions and all relevant circumstances; (h) the time within which the work was required to be done; (i) allowances otherwise made in accordance with this scale (including any allowances for attendances in accordance with item 1.1); and (j) any other relevant matter. 139 In addition, the Court's Guide to Discretionary Items in Bills of Costs is a guide for parties as to how the discretion available to taxing officers in relation to claims made in a bill of costs for, among other things, 'skill, care and responsibility' is commonly exercised. It provides that for item '11.1 - Skill, care and responsibility': A percentage of the amount allowed for items 1-10, in the range of 0-15%, is commonly allowed. 140 As the Liquidators state in their submissions, the matters at trial level were not factually complex and many of the issues of fact were addressed by an agreed statement of facts, issue and contentions. Whilst the matters did involve complexities, particularly complexities of law, to my mind they were addressed by the involvement of Mr Dundas and experienced counsel. I consider all of the types of matters referred to that are relevant in this case have been provided for in the costs otherwise claimed. In saying that, I do not suggest that such an allowance should be denied simply because counsel are involved - my view is based on the particular circumstances of the relevant actions. 141 Turning to the claims of the Whitby Parties, the above comments generally also apply (save for the reference to a claim for skill, care and responsibility). 142 Mr Blaxill's affidavits are detailed and comprehensive, and meet the requirements of GPN-Costs. It is clear that Mr Blaxill did not simply approve disbursements but considered them: this is evidenced by his excision of certain charges from Mr Scovell's invoices. 143 Mr Blaxill has also ensured Scale rates were charged and that a discount of 10% was applied to Mr Scovell's fees (the only counsel who billed the Whitby parties). Mr Blaxill has applied a first and second 10% discount for Allens' fees for the reasons already articulated. Such discounts are in addition to the 10% discount to be imposed pursuant to Barker J's costs order in the Interpleader Action. 144 Mr Blaxill was involved in overseeing and running the litigation on behalf of the Whitby Parties and so has first-hand knowledge of what was involved (and the same applies, I should add, with respect to both Mr Dundas and Mr Langdon). 145 Mr Blaxill clearly took care to guard against charging for duplicated work: for example, according to his evidence he has not claimed costs for non-admitted lawyers; new lawyers reading in; or lawyers covering him during his absence from the office. 146 As to the size of the team representing the Whitby Parties, it is true that, for example, for the Interpleader Action eight lawyers were involved. However, Mr Blaxill explains a lack of concurrent involvement of some of those persons (for example, senior associate Kai Francis took over from senior associate Rebecca Collins). Further, by far the majority of the work was undertaken by two core team members at any one time, being a senior associate and an associate. The involvement of the other members of the team was limited. So, to speak of a large team of persons, as Mr Rumsley does in his Third Affidavit, rather obscures the true position.
General 147 There are three comments that apply across all assessments. First, I will make a separate order in each matter dealing with the claimed costs of the assessments before the registrar. Those costs were clearly contemplated by the assessment process. Second, I consider those assessment costs to be on the high side for the Interpleader Action and the Injunction Action, having regard to the consistent methodology employed across the matters. I have therefore reduced the allowance for costs from that claimed by the parties. I consider the costs sought in the Injunction Appeal and the Interpleader Appeal for the assessments to be reasonable. Third, I have used rounding of figures where convenient, having regard to the fact that this is an intuitive, rather than mathematical, exercise, and a 'broad brush' approach is appropriate.
Liquidators 148 The starting point is the actual costs of $117,178.80. 149 I then take into account the items in the discounted amounts sought by the Liquidators, but excluding the allowance for care and responsibility and assessment costs, leaving costs of $98,887 ($52,598.16 + $43,028.44 + $3,260.51). That comprises approximately 84% of actual costs. Despite the care with which the materials have been prepared by the Liquidators for the assessment, having regard to the risk of some duplication across matters that were ultimately heard together, I consider a further small discount is appropriate to fairly acknowledge such risk, and so would assess the cost at approximately 80% of the actual costs, resulting in a figure of $93,700. Having considered all of the circumstances, I consider that sum to be logical, fair and reasonable. 150 In accordance with the orders of Barker J, a further 10% discount is to be applied to that figure, so that the costs payable are $84,330. 151 I would allow costs of the assessment before the registrar at $5,000.
Whitby Parties 152 The starting point is the actual costs of $41,189. 153 I then take into account the items in the discounted amounts sought by the Whitby Parties, but excluding the allowance for the assessment costs, leaving costs of approximately $32,000 ($28,168.97 + $3,795.75). That comprises approximately 78% of actual costs. I do not consider a further discount is required having regard to the more confined role of Allens in the litigation as against HWL, and so the lower prospect that there are risks of duplication that have not been accommodated by the discounts already allowed for by Allens. Having considered all of the circumstances, I consider the sum of $32,000 to be logical, fair and reasonable. 154 In accordance with the orders of Barker J, a further 10% discount is to be applied to that figure, so that the costs payable are $28,800. 155 I would allow costs of the assessment before the registrar at $4,000.
Liquidators 156 The starting point is the actual costs of $160,890.04. 157 I then take into account the items in the discounted amounts sought by the Liquidators, but excluding the allowance for care and responsibility and assessment costs, leaving costs of $134,455 ($77,896.89 + $52,916.17 + $3,642.39). That provides a guide of approximately 84% of actual costs which I will again reduce to allow approximately 80% of costs, for the same reasons given above. Accordingly, I assess the costs at $128,700. Having considered all of the circumstances, I consider that sum to be logical, fair and reasonable. 158 I would allow costs of the assessment before the registrar at $5,000.
Whitby Parties 159 The starting point is the actual costs of $88,089.50. 160 I then take into account the items in the discounted amounts sought by the Whitby Parties, but excluding the allowance for the assessment costs, leaving costs sought of approximately $66,795 ($63,000 + $3,795.75). That claim comprises approximately 76% of actual costs. I do not consider a further discount is required, as that figure seems to me in all of the circumstances to be appropriate. I therefore assess those costs at $66,795. 161 I would allow costs of the assessment before the registrar at $4,000.
Liquidators 162 The starting point is the actual costs of $29,302.25 as apportioned to this matter (which excludes the assessment costs). 163 I then take into account the discounted amounts sought by the Liquidators, leaving costs of $25,914.62 ($7,943.87 + $17,970.75). That provides a guide of approximately 88% of actual costs. Intuitively that appears to be on the high side having regard to all of the circumstances, despite the care with which the claim has been made by the Liquidators. I will again reduce the claim to allow approximately 80% of costs. Accordingly, I assess the costs at $23,400, a figure I consider to be fair and reasonable to the parties. 164 I would allow costs of the assessment before the registrar at $2,500.
Whitby Parties 165 The starting point is the actual costs of $9,900. 166 I then take into account the discounted amount sought by the Whitby Parties, but excluding the allowance for the assessment costs, leaving a claim for costs of approximately $7,300. That comprises approximately 74% of actual costs. I do not consider a further discount is required, as that figure seems to me in all of the circumstances to be appropriate. I therefore assess those costs at $7,300. 167 I would allow costs of the assessment before the registrar at $2,000.
Liquidators 168 The costs are assessed in the same manner as in the Injunction Appeal. Accordingly, I assess the costs at $23,400, a figure I consider to be fair and reasonable to the parties. 169 I would allow costs of the assessment before the registrar at $2,500.
Whitby Parties 170 The starting point is the actual costs claimed by the Whitby Parties of $7,555. 171 I then take into account the discounted amount of $5,900 sought by the Whitby Parties, but excluding the allowance for the assessment costs. That comprises approximately 78% of actual costs. I do not consider a further discount is required, as that figure seems to me in all of the circumstances to be appropriate. Indeed the costs of the assessment and review of that assessment are no doubt disproportionate to any benefit Mr Caratti might have sought with respect to such reasonable costs claims. I therefore assess those costs at $5,900. 172 I would allow costs of the assessment before the registrar at $1,000, as requested.
Orders 173 I will make orders accordingly. Whilst the assessments vary by only relatively small amounts from the registrar's assessments, I will formally set aside the orders of the registrar made in each matter on 15 July 2020. There will be liberty to apply should there be any costs issue with respect to the costs of these reviews. I certify that the preceding one hundred and seventy-three (173) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.
SCHEDULE OF PARTIES WAD 329 of 2017 Respondents Fourth Respondent: WILLIAM JAMES HARRIS AND ROBERT MICHAEL KIRMAN AS JOINT AND SERVERAL LIQUIDATORS OF I.M.E. PTY LTD (ACN 107 942 059) (IN LIQUIDATION) Fifth Respondent: ROBERT MICHAEL KIRMAN AS LIQUIDATOR OF ACN 142 745 337 (ACN 142 745 337) (IN LIQUIDATION) Sixth Respondent: GH1 PTY LTD (ACN 099 191 714) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) Seventh Respondent: MNWA PTY LTD (ACN 101 717 177) (IN LIQUIDATION) Eighth Respondent: I.M.E. NOMINEES PTY LTD (ACN 107 942 058) (IN LIQUIDATION) Ninth Respondent: ACN 142 745 337 (ACN 142 745 337) (IN LIQUIDATION) Tenth Respondent: WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (ACN 115 233 193) Eleventh Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (ACN 115 233 193)
WAD 630 of 2017 Respondents Fourth Respondent: MNWA PTY LTD (IN LIQUIDATION) (ACN 101 717 177) Fifth Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF MNWA PTY LTD (IN LIQUIDATION) Sixth Respondent: I.M.E. NOMINEES PTY LTD (IN LIQUIDATION) (ACN 107 942 058) Seventh Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF I.M.E. NOMINEES PTY LTD (IN LIQUIDATION) Eighth Respondent: ACN 142 745 337 PTY LTD (IN LIQUIDATION) (ACN 142 745 337) Ninth Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF ACN 142 745 337 PTY LTD Tenth Respondent: WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (ACN 115 233 193) Eleventh Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION)
WAD 311 of 2018 Respondents Fourth Respondent: MNWA PTY LTD (IN LIQUIDATION) (ACN 101 717 177) Fifth Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF MNWA PTY LTD (IN LIQUIDATION) (ACN 101 717 177) Sixth Respondent: I.M.E. NOMINEES PTY LTD (IN LIQUIDATION) (ACN 107 942 058) Seventh Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF I.M.E. NOMINEES PTY LTD (IN LIQUIDATION) (ACN 107 942 058) Eighth Respondent: ACN 142 745 337 PTY LTD (IN LIQUIDATION) (ACN 142 745 337) Ninth Respondent: WILLIAM HARRIS AND ROBERT KIRMAN LIQUIDATORS OF ACN 142 745 337 PTY LTD (IN LIQUIDATION) (ACN 142 745 337) Tenth Respondent: WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (ACN 115 233 193) Eleventh Respondent: WILLIAM HARRIS AND ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF WHITBY LAND COMPANY PTY LTD (IN LIQUIDATION) (ACN 115 233 193)
WAD 403 of 2018 Respondents Fourth Respondent: WILLIAM JAMES HARRIS & ROBERT MICHAEL KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF I.M.E. PTY LTD (IN LIQ) (ACN 107 942 059) Fifth Respondent: ROBERT MICHAEL KIRMAN AS LIQUIDATOR OF ACN 142 745 337 PTY LTD (IN LIQ) (ACN 142 745 337) Sixth Respondent: GH1 PTY LTD (IN LIQ) (RECEIVERS AND MANAGERS APPOINTED) (ACN 099 191 714) Seventh Respondent: MNWA PTY LTD (IN LIQ) (ACN 101 717 177) Eighth Respondent: I.M.E. NOMINEES PTY LTD (IN LIQ) (ACN 107 942 058) Ninth Respondent: ACN 142 745 337 PTY LTD (IN LIQ) (ACN 142 745 337) Tenth Respondent: WHITBY LAND COMPANY PTY LTD (IN LIQ) (ACN 115 233 193) Eleventh Respondent: WILLIAM HARRIS & ROBERT KIRMAN AS JOINT AND SEVERAL LIQUIDATORS OF WHITBY LAND COMPANY PTY LTD (IN LIQ) (ACN 115 233 193)
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(1995) 57 FCR 119
(2012) 290 ALR 288
(2002) 54 NSWLR 738
(1999) 93 FCR 1