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  • Unreported Judgment

Iron Gates Pty Ltd v Richmond River Shire Council

 

[2006] QSC 141

 

SUPREME COURT OF QUEENSLAND

  

CITATION:

Iron Gates Pty Ltd & anor v Richmond River Shire Council & Ors [2006] QSC 141

PARTIES:

IRON GATES PTY LTD (IN LIQUIDATION)
(ACN 058 075 997)
(first plaintiff)
GRAEME ANGUS INGLES
(second plaintiff)
v
RICHMOND RIVER SHIRE COUNCIL
(first defendant)
WALKER NEWTON PTY LTD (ACN 003 815 174)
(second defendant)
LINDSAY WALKER
(third defendant)
DAVID ARDILL & ASSOCIATES PTY LTD
(ACN 002 400 526)
(fourth defendant)
DAVID ARDILL
(fifth defendant)
WP BROWN & PARTNERS PTY LTD
(ACN 004 327 164)
(sixth defendant)
GARY D SPENCE
(seventh defendant)
KEILAR FOX & MCGHIE PTY LTD
(ACN 010 162 197)
(eighth defendant)
PAUL RING
(ninth defendant)
IRON GATES DEVELOPMENTS PTY LTD
(ACN 005 002 791)
(tenth defendant)
HERBERT PATRICK MCCORMACK
(eleventh defendant)

FILE NO/S:

BS No 9495 of 1999

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court

DELIVERED ON:

14 June 2006

DELIVERED AT:

Brisbane

HEARING DATE:

21 February 2006

JUDGE:

White J

PROPOSED ORDERS:

  1. Within ... days the plaintiffs give security for the eighth and ninth defendants’ costs up to the commencement of trial in the sum of $727,700 in a form satisfactory to the Principal Registrar of the Court and in default further proceedings so far as they relate to the eighth and ninth defendants be stayed.
  1. The plaintiffs give security for the eighth and ninth defendants’ costs of the trial of these proceedings in the sum of $320,800 to be provided in a form satisfactory to the Principal Registrar of the Court one month from the date set for the commencement of trial.
  1. The first and second plaintiffs within ... days give security to the satisfaction of the Principal Registrar of the Court for the costs of the sixth and seventh defendants in these proceedings in the amount of $407,000 and in default further proceedings so far as they relate to the sixth and seventh defendants be stayed.
  1. The first and second plaintiffs one month before the date set for the commencement of the trial give security to the satisfaction of the Principal Registrar of the Court for the costs of the trial of the sixth and seventh defendants in the amount of $300,000. 
  1. The applicants have any necessary extensions of time to bring these applications. 

CATCHWORDS:

PROCEDURE – COSTS – SECURITY FOR COSTS – where six, seventh, eighth and ninth defendants apply for further security for costs from plaintiff / respondent –whether ‘special circumstances’ shown pursuant to r 675 of the Uniform Civil Procedure Rules 1999 (Qld) – where plaintiff / respondent offered applicants $300,000 as security for costs of trial – where applicants’ costs assessed on standard basis have exceeded amount of security already provided – whether costs where assessed at the appropriate quantum

Uniform Civil Procedure Rules 1999 (Qld) r 675, r 703(2)

Iron Gates Pty Ltd v Oshlack (NSWCA – 5 February 1998 BC 9800090), discussed

Oshlack v Iron Gates Pty Ltd (1997) 130 LGERA 189, discussed

COUNSEL:

G A Thompson SC and D Kelly for the applicants/eighth and ninth defendants

L Kelly SC and D de Jersey for the applicants/sixth and seventh defendants

D J S Jackson QC and R Jackson for the respondents/first and second plaintiffs

SOLICITORS:

Barry & Nilsson for the applicants/eighth and ninth defendants

Thynne & Macartney for the applicants/sixth and seventh defendants

Brian Bartley & Associates for the respondents/plaintiffs

  1. There are two applications before the Court seeking further security for costs. The applicants are the eighth and ninth defendants, Keilar Fox & McGhie Pty Ltd and Paul Ring and the sixth and seventh defendants, WP Brown & Partners Pty Ltd and Gary D Spence. Those applications are resisted – as against the eighth and ninth defendants absolutely and as to quantum and as against the sixth and seventh defendants essentially as to quantum.
  1. Justice Holmes ordered the plaintiffs to give security in respect of the fourth and fifth defendants’ costs on 12 December 2002 in the sum of $118,000, unreported decision No S9495 of 1999. Thereafter each group of defendants obtained an order by consent in that amount on various dates. Security was provided in the form of a bank guarantee.
  1. The eighth and ninth defendants’ application is brought pursuant to r 675 of the Uniform Civil Procedure Rules 1999 (Qld) to vary that order.  Rule 675 provides

“The court may set aside or vary an order made under this part [security for costs] in special circumstances.”

The sixth and seventh defendants’ application is brought pursuant to an order made by consent on 3 March 2003 which permitted a further application.  Whilst the respondents submit that no or insufficient “special circumstances” have been demonstrated the issue in reality is as to quantum.  In effect, Mr Jackson QC conceded that the jurisdiction to make orders was to this extent enlivened – that there is reason to believe that the corporate plaintiff will be unable to pay the costs of the defendants if the defendants are successful in their defence;  and there is no evidence to suggest that the litigation would henceforth be stifled if an order or orders were made.  There is no evidence about the means of the individual plaintiff and his capacity to meet orders for costs, nor, indeed as to who is presently funding the litigation for the plaintiffs.  The plaintiffs have offered each group of applicants $300,000 as security for the costs of the trial which costs were not encompassed in the original order for costs. 

  1. With so many defendants and a multitude of issues it is not fruitful to address the strength of the plaintiffs’ case although it may be noted that the plaintiffs’ case against the fourth and fifth defendants, the consulting engineers (NSW) was described by Holmes J (as her Honour then was) as “no higher than arguable” when considering their application for security in December 2002. This proceeding is on the supervised list of cases. Justice McMurdo gave leave to bring these applications. Any departure from his Honour’s timetable is slight and any necessary extensions of time are granted.

The litigation

  1. Graeme Ingles, who is the second plaintiff in the litigation and second respondent to these applications is a land developer who utilises corporate entities to carry out his projects – in this case the first plaintiff/first respondent, Iron Gates Pty Ltd (“Iron Gates”). In 1995 Iron Gates exercised an option and acquired certain land at Evans Head in NSW from the tenth defendant, Iron Gates Developments Pty Ltd (“Developments”). The land, of about 100 hectares in total, is bounded by national parks and Crown land and was to be utilised to develop residential lots. Developments had obtained development consent from the first defendant, Richmond River Shire Council (“the Council”) to construct an access road to the land in 1991. It carried out earthworks pursuant to that consent in 1991. A development application by Developments for subdivisional approval was consented to by the Council in 1993. There was a challenge in the NSW Land and Environment Court and the challenge dismissed.
  1. The development was highly contentious because of the environmentally sensitive nature of the land and the presence of culturally significant objects and trees. The road consent and the subdivision consents had a number of express conditions in respect of consistency with the approved plans for overall development and specific conditions addressing lot creation, civil engineering, sediment control, earthworks and the retention and destruction of native fauna. The consent also contained implied conditions concerning drainage, wildlife corridors, road widths and allotment size.
  1. Developments carried out earthworks pursuant to the road consent in 1991. Iron Gates undertook substantial development in 1996 involving, inter alia, the clearing of land. There was a further challenge in the NSW Land and Environment Court to the legality of this work. In 1997 Stein J held that the work had been carried out in contravention of certain NSW environmental legislation and in breach of certain conditions of the development consent such that the cumulative result was that the development as carried out was radically different from that which had been approved. The critical areas involved perimeter access, reserves and drains, wildlife corridors and buffer zones, road widths and allotment sizes. It was found that substantially everything done by Iron Gates was with the knowledge and approval of the Council or its officers.
  1. His Honour granted injunctions restraining Iron Gates from carrying out further development on the land pursuant to the existing consents and from completing certain roads, Oshlack v Iron Gates Pty Ltd (1997) 130 LGERA 189.  Pearlman J made subsequent orders for remediation and reinstatement of the land.  The NSW Court of Appeal dismissed the appeal upholding Stein J’s findings (and necessarily those of Pearlman J), unreported decision 5 February 1998 BC 9800090.  As a consequence, Iron Gates was restrained from carrying out any development pursuant to the existing development consent and other orders and declarations were made. 
  1. Iron Gates and Mr Ingles have sued the defendants in negligence (and contract against the sixth and eighth defendants) to recover the losses allegedly actually incurred and the loss of expected profits from the successful sale of the building allotments. The defendants are, apart from the Council, the surveyors (NSW): second and third defendants; the engineers (NSW): fourth and fifth defendants; the surveyors (Qld): eighth and ninth defendants; and the engineers (Qld): sixth and seventh defendants. The defendants broadly contend that Iron Gates deliberately failed to comply with the requirements of the development approval and the overall plan and could still have developed the land had it been prepared to comply with the provisions of the relevant NSW legislation and fresh planning approvals even after the orders made by Stein J in 1997.
  1. The claim is in the vicinity of $30 million.

Financial position of the plaintiffs

  1. Iron Gates was placed into liquidation on 15 July 1998. It is the trustee of a discretionary trust. Its sole director is Mr Ingles. He is also a shareholder with a company, Manorthorpe Pty Ltd. He is one amongst a number of beneficiaries. Iron Gates’ assets are subject to a registered fixed and floating charge to Esanda Finance Corporation Limited registered 14 November 1995. The liquidator has received proofs of debt from creditors totalling in excess of $10 million. The company’s assets are negligible. Esanda extended a $7.655 million loan facility to Iron Gates. Mr Ingles had guaranteed, at least in part, the Esanda loan. Iron Gates pleads that it is impecunious because it has been unable to complete the development and it cannot seek fresh consents because it cannot carry out the remediation because it is impecunious. It is clear that the litigation is most likely being funded by the entity who will most gain from its success. An offer of $300,000 as security for the costs of the trial has already been made to these applicants.

Eighth and ninth defendants

  1. An order for security for costs in favour of the eighth and ninth defendants was made by consent on 1 April 2004 in the amount of $118,000. The parties had regard to the order made earlier in favour of the fourth and fifth defendants and the contents of the affidavits in support of that application of Jennifer Crowther and Fred Monsour deposing to the financial position of the plaintiffs and to the costs assessor’s opinion.
  1. It is the eighth and ninth defendants’ position that circumstances have changed since the bank guarantee securing the costs which was provided on 9 May 2004. The original order for security for costs was based on two witnesses of fact and two expert witnesses appearing at trial for the plaintiffs and each of the defendant companies with the trial lasting approximately three weeks. After a two day mediation held on 17 and 18 November 2005 with all the parties the eighth and ninth defendants’ solicitors appreciated that the litigation had become more complex. In preparing for the mediation and in the course of preparation for trial they have reviewed documents on a database containing almost 24,000 documents of some 60,000 pages, met on numerous occasions with expert witnesses relating to both liability and quantum, conferred with senior and junior counsel, reviewed the documents with a view to advising on contribution and third party claims (the costs of which may not be the subject of a security order) and considered the pleadings, including recent amendments to the plaintiffs’ statement of claim.
  1. Mr Robert Samut of the eighth and ninth defendants’ solicitors’ firm deposes that there is still considerable preparation for trial including considering the plaintiffs’ further amended pleadings (yet to be received), finalising proofs of evidence from lay witnesses, perusing documents not yet considered and other preparation for trial. The eighth and ninth defendants have instructed Mr Graeme Robinson, a barrister and legal costs assessor, to provide an opinion on the amount of costs and outlays incurred to the date of instruction (to February 2006) and to be incurred thereafter to the completion of trial to be assessed on a standard basis within the meaning of r 703(2) of the UCPR.  Mr Robinson expresses the opinion in his report that the eighth and ninth defendants’ ultimate likely standard costs including for a 35 day trial are in the order of $1,280,807.00. 
  1. The plaintiffs/respondents have filed by leave an affidavit from Mr Stephen Hartwell, a solicitor who has practiced almost exclusively as a legal costs assessor in Queensland since 1990. That affidavit was provided late to the applicants. He was cross-examined by telephone by both the eighth and ninth and sixth and seventh defendants’ counsel. Mr Hartwell is a very experienced costs’ assessor but was admittedly hampered by his late instructions and not having access to the defendants’ solicitors’ files which informed Mr Robinson’s assessment (and Mr Roland Matters who prepared a report for the sixth and seventh defendants). Mr Hartwell accepted Mr Robinson’s methodology and differed with him largely in matters of emphasis or simply that his estimate was “too high”. He estimates at $403,800 the assessed costs for each of the two applicants, not having differentiated between them, to trial. He did not include any amount for the trial presumably accepting the $300,000 proposed by the plaintiffs’ solicitors.
  1. By letter dated 9 December 2005 the plaintiffs’ solicitors indicated that the plaintiffs were prepared to offer security in the amount of $300,000 for the costs of a six week trial at $10,000 per day, such security to be provided not later than one month prior to the commencement of the trial.
  • Mr Robinson’s approach and, where possible, comparison with Mr Hartwell’s assessment
  1. The eighth and ninth defendants changed solicitors in August 2005. They had incurred legal costs in the sum of $237,436. Mr Robinson had no breakdown of those costs but made some adjustment to that figure to take account of the standard basis of assessment. He allowed a recovery rate of 70 per cent of the costs incurred prior to August 2005 producing an adjusted figure of $166,205. From April 2005 the Supreme Court Scale for solicitors’ professional costs was increased by approximately 45 per cent. Mr Robinson made no further allowance for this in order to take account of the “doubling up” involved in changing solicitors. Mr Hartwell suggests, broadly, that a firm could expect to receive no more than half of its professional fees billed after assessment on the standard basis.
  1. Mr Robinson was supplied by the solicitors with details of professional fees and outlays charged since they assumed responsibility for the defence of the eighth and ninth defendants from August 2005. Mr Robinson undertook an analysis of what would be likely to be allowed on the standard basis in connection with those costs. The monthly professional fees from September 2005 to February 2006 totalled $230,160.70. He was given the times worked and the rate charged by each fee earner in the three months to 30 November 2005 and converted those figures to a rate per hour and adjusted the professional fees. The adjusted professional fees for that period are $188,556.36. Mr Hartwell conceded that he was hampered by not having these details but suggested that hourly rates will not necessarily correspond to the Supreme Court scale. Overall, Mr Hartwell thought the fees high.
  1. Counsel’s (senior and junior) fees for the period were charged in the sum of $111,908.50. Mr Robinson opined that those rates were higher than he believed would be allowed on a standard basis of assessment. He adopted a rate of $4,500 per day for senior counsel and $3,000 per day for junior counsel excluding GST. Mr Hartwell agreed with those figures. The adjusted amount for counsel’s fees is $89,446.87.
  1. For the same period experts’ fees and other outlays were paid in the sum of $63,494.77. The majority of those fees were for experts. The most significant cost was for the expert management of documents in electronic format. Mr Robinson examined the details of those outlays and accepted them as claimed. He made no adjustment.
  1. Mr Robinson added the professional fees of $188,556.36, counsel’s fees of $89,446.87 and other outlays of $63,494.77 arriving at an adjusted total cost for the period ended 3 February 2006 of $341,498.
  1. Mr Robinson adjusted the professional fees to allow for care and consideration (item 1 on the Supreme Court Scale) of 25 per cent which he described as “very conservative” taking into account that the trial was estimated to last some 6-8 weeks, the complexity of the issues pleaded, the likely number of witnesses, the volume of documents already disclosed and other factors. He allowed $47,000 for care and consideration. Mr Hartwell does not deal with care and consideration as a separate item but makes a global assessment of $200,000 for professional costs for the whole period. When the figure for care and consideration was added to the adjusted professional fees it gave a figure of $235,556 some $5,500 more than the actual figure charged to the eighth and ninth defendants. Since a party may not profit from litigation Mr Robinson confined the figure for professional fees to those actually charged. He added GST to counsel’s fees giving a total cost of $392,048. The amount actually charged to the clients was $405,564.
  1. Mr Robinson suggested that this high rate of recovery was attributable to the major revision in the Supreme Court Scale which took effect from 22 April 2005 whereby the hourly rate for a solicitor reflected a 45 per cent increase and 57 per cent of these costs incurred were solicitors’ professional fees. The fees to August 2005 of $166,205 and from August 2005 to 3 February 2006 of $392,048 amounted to $558,253.
  1. Mr Robinson assessed the costs from February 2006 to trial.
  1. His calculations are based on the ninth defendant and four other lay witnesses being called in the eighth and ninth defendants’ case together with five expert witnesses: a surveyor, valuer, subdivision expert, town planner and botanist. Mr Robinson allowed 54 hours of conference time for the purpose of taking statements from the ninth defendant and the lay witnesses amounting to $12,528 at an hourly rate of $332 and the time a competent solicitor would take. He calculated the total cost of producing those statements at $7,560. He allowed a total time of 68 hours for pre-trial conferences with witnesses at which either or both counsel would be present which amounted to $15,776 using the hourly scale rate for a solicitor. Mr Robinson has allowed 30 hours in total relating to conferences with expert witnesses with different figures for the various specialities which at scale amount to $6,900.60.
  1. Mr Robinson then assessed the costs of retaining the various experts nominated whose hourly rate depends upon the particular expertise. Those rates were supplied to him by instructing solicitors. For the surveyor he allowed $26,950; for the expert valuer (the cost to be shared on a 50-50 basis with another party), $17,600; the subdivision expert, $20,130; the town planner, $16,088.60; and the botanist, $10,340.
  1. Mr Robinson allowed for one appearance by senior counsel and three appearances by junior counsel on interlocutory applications and / or case reviews in a total figure of $6,100 which is not challenged. He allowed for advice on evidence for senior counsel in the sum of $13,500 and junior counsel at $15,000. Mr Hartwell allowed $8,000 in total for these items.
  1. Mr Robinson has allowed an average length of conference between counsel and the non-expert witnesses of two hours except for the ninth defendant, Mr Ring, for whom he has allowed two days of 20 hours in total. He allowed 40 hours for the five experts giving a total of 68 hours of conference time between counsel and witnesses. He allows $30,600 for senior counsel and $20,400 for junior counsel.
  1. Mr Robinson allowed $4,500 for senior counsel and $6,000 for junior counsel to advise on quantum. Mr Hartwell allowed $12,500 for senior counsel and $3,000 for junior counsel.
  1. Whilst the plaintiffs’ lawyers’ estimation is for a six week trial those for the eighth and ninth defendants estimate 6-8 weeks given the number of parties, the range of issues and the number of witnesses likely to be called. Experience of multi-party civil litigation suggests that it tends to expand rather than contract although negotiations are being undertaken with some of the other defendants. Against a background of a substantial volume of documentation and lengthy reports produced by expert witnesses for the various parties Mr Robinson estimated that preparation for trial should be allowed at 18 days of 10 hours each day. For this he allowed $81,000 for senior counsel and $54,000 for junior counsel. In total he has allowed $254,210 for counsel’s fees. Mr Hartwell contends that with long familiarity with the proceedings preparation time of one week is sufficient and allows $37,500. There is something to be said for this observation although his proposal of a week seems rather spare.
  1. Mr G A Thompson’s submission that Mr Robinson’s assessment of the costs of perusal and electronic disclosure reveals the conservative nature of his approach to these costs may be accepted as not merely a forensic flourish. Mr Robinson noted that of the approximately 50,000 pages disclosed approximately 10,000 remain to be perused or scanned. Of those 10,000 pages he concluded that 20 per cent would need to be perused and the balance merely scanned. He noted that perusals at this level are usually allowed on a time basis rather than per folio and adopted a rate of 100 units per hour. He allowed 40 hours at $232 per hour for perusals amounting to $9,280. For the balance 8,000 pages Mr Robinson adopted a scanning rate of 180 pages per hour giving an allowance of 44 hours or $10,208. The total allowance which he made for perusing or scanning the documents is $19,488. He made no further allowance for the reconsideration of documents. Such a requirement goes to the allowance for care and consideration.
  1. He noted that there would be hundreds of telephone attendances, letters, emails and the like but made no further allowance for those items. Presumably these costs, if allowed for by Mr Hartwell, are taken up in his global figure of $200,000 for professional fees. Mr Robinson estimated the total costs for professional fees and disbursements at $439,050.
  1. Mr Robinson’s estimate of the likely costs of trial is based on 35 sitting days. He assumed that counsel would work only on the sitting days and that only one solicitor will be in court instructing. He allowed three hours per sitting day over the five hours per day for which the court would likely sit for a solicitor to be engaged in other work relating to the trial. The total amount which he allowed for the trial including counsel’s fees and the cost of transcripts as well as expert witness fees and electronic document management is in the amount of $411,585. This is to be compared with the $300,000 offered by the plaintiffs.
  1. In summary the subtotal of costs incurred and expected to be incurred to the commencement of trial is $997,303. The addition of the trial costs gives a figure of $1,408,886.
  1. Since the parties can claim an input tax credit for the GST component of their costs Mr Robinson reduced by one-eleventh the final figure leading to a final estimate of $1,280,807.

Conclusion

  1. The eighth and ninth defendants have discharged their onus of showing special circumstances. Whilst it is usual for multi-party complex litigation to become longer and more complex as it progresses toward trial it is not appropriate to penalise a defendant for failing to predict the way in which the proceedings will unfold over years as a fuller understanding of the issues is absorbed. It is instructive to note that Mr Hartwell observed

“The flow of litigation in any matter, the work likely to be done in the future, the length of trial, etc, can be no more than mere guesswork ... In short, it is impossible to predict with any degree of accuracy the costs likely to be incurred in litigation.” 

On the whole I accept Mr Robinson’s approach and analysis which Mr Hartwell himself has done.  I take into account Mr Hartwell’s comments, that 18 days of trial preparation for counsel seems too great so far as standard costs assessment is concerned.  Given that Mr Robinson has allowed for counsel’s involvement with the witnesses pre-trial this estimate should be halved to $67,500.  There is some suggestion that the number of defendants may be reduced.  The plaintiffs ought not be burdened with finding security where there is a likelihood that the length of trial may be reduced.  The costs for the trial, accepting Mr Robinson’s figures should be for six weeks, that is 30 days, duration.  Mr Robinson’s calculations are for 35 days.  Reducing his figures accordingly gives an amount of $352,880. 

  1. The figures as adjusted are
  • Costs incurred prior to change of solicitors in August 2005 $166,205
  • Costs from August 2005 to February 2006$392,048
  • Costs anticipated from February 2006 to commencement of trial$372,050
  • Anticipated trial costs$352,880

Total$1,283,183

  1. It is accepted that since the parties all possess an Australian Business Number (ABN) they can claim an input tax credit for the GST component of their costs. The final total is reduced by one eleventh to reflect that adjustment giving a total of $1,166,530. The proportion of that figure which relates to the commencement of the trial is $845,730. The appearance of exactitude with such a precise figure is misleading, it should be rounded to $845,700.
  1. The security of $118,000 already provided must be deducted from the amount to trial.
  1. The parameters of the orders which can be settled as to form so far as they relate to the eighth and ninth defendants are
  1. Within ... days the plaintiffs give security for the eighth and ninth defendants’ costs up to the commencement of trial in the sum of $727,730 in a form satisfactory to the Principal Registrar of the Court and in default further proceedings so far as they relate to the eighth and ninth defendants are stayed.
  1. The plaintiffs give security for the eighth and ninth defendants’ costs of the trial of these proceedings in the sum of $320,800 to be provided in a form satisfactory to the Principal Registrar of the Court one month from the date set for the commencement of the trial.

The sixth and seventh defendants

  1. The order for security for the sixth and seventh defendants’ costs was made by consent on 3 March 2003 in the following terms:
  1. The First and Second Plaintiff, within 90 days, give security to the satisfaction of the Registrar for the costs of the Sixth and Seventh Defendants in this proceeding in the amount of $118,000.
  1. The Sixth and Seventh Defendants have liberty to apply for further security when their costs, assessed on the standard basis have exceeded or will exceed the security given pursuant to paragraph 1 ...”
  1. The parties were unable to reach agreement about security up until the commencement of the trial. The plaintiffs took the view that notwithstanding the order of 3 March 2003 the sixth and seventh defendants were not entitled to seek further security for their costs prior to the trial. Although that position was maintained at the hearing it was argued faintly in light of the terms of the consent order.
  1. The sixth and seventh defendants’ costs assessed on the standard basis have exceeded the amount of security already provided. Mr John Moore, the solicitor for the sixth and seventh defendants, notes the inherent difficulty in assessing preparation and trial costs for complex construction disputes such as this action and that expert evidence is proving to be very expensive and time consuming with considerable trial preparation still to be undertaken.
  1. The sixth and seventh defendants retained Mr Roland Matters, a legal practitioner who is a principal of Monsour Legal Costs which provides services exclusively in the field of legal costs. Mr Matters has been continuously involved in the provision of such services since 1985. He had access to correspondence and attendance notes of his instructing solicitors over the six years from November 1999 to November 2005 from the inception of the proceedings, memoranda of fees for legal services, tax invoices for outlays, experts’ reports, transcripts of supervised case reviews and the pleadings. Those documents were contained in 24 ring binder folders.
  1. In reaching his opinion about the standard costs from the date of institution of the proceedings to the commencement of the trial Mr Matters has excluded any costs associated with contribution and third party notices, costs which lay outside the scope of the issues raised by the proceedings and costs associated with the liquidators of the plaintiff company. He has noted that disclosure has been undertaken electronically in accordance with an order of the Court. He sets out various matters yet to be attended to including the examination of 10,000 documents, preparation of experts’ reports, preparation of statements of lay witnesses, attendance at supervised case reviews, the briefing of senior and junior counsel to confer, advices, draft or settle documents and to appear at trial, pre-trial conferences with witnesses and preparation during three weeks prior to the first day of trial. Mr Matters has assumed that the plaintiffs will settle their claim against the second to fifth defendants.
  1. He noted that it is proposed to call seven lay witnesses and four expert witnesses to give evidence at the trial and that the trial will be of six weeks duration. Like Mr Robinson he has made an allowance of 25 per cent for care and consideration for the conduct of the defence in the proceedings. He, too, reduces the fees as assessed by one eleventh on the basis that the receiving parties are entitled to an input tax credit in respect of GST.  Mr Matters has concluded that the total of the sixth and seventh defendants’ costs from the commencement of the retainer to the end of trial is $836,293.76.  That includes $300,000 for the costs of the trial as proposed by the plaintiffs’ solicitors. 
  1. Mr Hartwell did not disagree with Mr Matters’ approach. The limitations on his preparation of a report have been mentioned when discussing the eighth and ninth defendants’ application and need not be repeated here. He estimated the costs to trial at $403,800. As with the analysis of Mr Robinson’s report and opinion Mr Hartwell relied upon his experience in the assessment of costs in such matters when reviewing Mr Matters’ report. He took a “global approach” in his estimates.
  • Mr Matters’ approach and, where possible, comparison with Mr Hartwell’s assessment. 
  1. Mr Matters assessed professional fees on the standard basis up to and including 30 November 2005 after the reduction of one eleventh in respect of the GST allowance at $135,050.16. Mr Moore deposed that the work in progress for that period was approximately $200,000. Mr Hartwell commented that there would be recovery of no more than one half of a firm’s work in progress after that work was converted to scale and assessed on the standard basis. This would be approximately $100,000. It is likely, given the exigencies of time, that Mr Hartwell did not take into account the substantial increase in solicitors’ scale fees from April 2005.
  1. Mr Matters considered the outlays for that period. Amongst fees singled out for comment by Mr Hartwell is a fee of $4,500 to Mr Keane QC for settling the defence and Mr L Kelly, then junior counsel, of $6,000 for drawing the defence. Mr Kelly became senior counsel in the proceedings from January 2006. Mr Hartwell described those fees as “extraordinarily high”. He makes the same comment on the amount of $4,500 which Mr Kelly charged for settling a joint opinion. Similarly in respect of $27,000 charged by Mr Kelly for settling a position paper and preparing and attending the mediation together with $4,800 charged by Mr de Jersey for the same item. He doubted the recoverability for two counsel on the mediation. Mr Hartwell considered that the fee paid to Mr de Jersey of $11,124 for examining disclosure documents at the employee rate in schedule 1 with a 25 per cent for care and consideration loading would not be allowed on assessment at all since this is work that would be done by the solicitors and the perusal of documents forms part of counsel’s fee on brief.
  1. The experts’ reports on liability are set out as one item at $116,787.95. Mr Hartwell commented that these fees seemed “extraordinarily high”. Mr Moore noted in his affidavit the high costs of experts. Mr Matters included a relatively modest $1,400 for postage, telephone, fax and email charges. The total costs for this period for outlays amount to $203,823.19. Accordingly the total for that period from retainer to 30 November 2005 is $338,873.35.
  1. Mr Matters assessed the standard costs likely from 1 December 2005 to the conclusion of the trial. Professional costs are particularised and amount to $36,732.91. This sum does not include the actual figures for professional costs of instructing counsel at trial and conferences in the course of trial and so on which are taken up in the $300,000.
  1. Mr Matters assessed the outlays anticipated from 1 December 2005 to the conclusion of trial. Mr Hartwell challenged the preparation for trial costs for senior counsel and suggested that the costs should be limited to 12 hours of conferencing with the six lay witnesses and 30 hours of conferencing with the five expert witnesses. He noted the further experts’ reports fees which he describes as “at the higher end”. The expert fees for conferring and preparing the reports are in the vicinity of $18,000-$20,000 each. In Mr Hartwell’s opinion they should lie between $6,000 and $12,000 for each expert. Mr Matters’ figures include conferring with those experts. The total of these outlays is $160,687.50. The total of those costs of $497,420.41. This includes the $300,000 which the plaintiffs have offered as security for the costs of the trial. Mr Matters’ total, including those costs, is $836,293.76.
  1. Mr Matters was not required for cross-examination but his allowances for counsel do need some moderation where there is a perception that there may be some over preparation. The total figure should be rounded down to $825,000 to take account of this.
  1. The $118,000 security already provided needs to be deducted.
  1. The proposed orders in respect of the sixth and seventh defendants are:
  1. The first and second plaintiffs within ... days give security to the satisfaction of the Principal Registrar of the Court for the costs of the sixth and seventh defendants in these proceedings in the amount of $407,000.
  1. The first and second plaintiffs one month before the date set for the commencement of the trial give security to the satisfaction of the Principal Registrar of the Court for the costs of the trial of the sixth and seventh defendant in the amount of $300,000. 
  1. The sixth and seventh defendants have sought leave in the application to apply for further security should that become necessary. I am of the view that the parties are now seized of the issues and if anything unforeseen occurs they have the benefit of r 675 which permits a further application where “special circumstances” can be demonstrated.
  1. The proposed orders which may be settled by the parties are:
  1. Within ... days the plaintiffs give security for the eighth and ninth defendants’ costs up to the commencement of trial in the sum of $727,700 in a form satisfactory to the Principal Registrar of the Court and in default further proceedings so far as they relate to the eighth and ninth defendants be stayed.
  1. The plaintiffs give security for the eighth and ninth defendants’ costs of the trial of these proceedings in the sum of $320,800 to be provided in a form satisfactory to the Principal Registrar of the Court one month from the date set for the commencement of trial.
  1. The first and second plaintiffs within ... days give security to the satisfaction of the Principal Registrar of the Court for the costs of the sixth and seventh defendants in these proceedings in the amount of $407,000 and in default further proceedings so far as they relate to the sixth and seventh defendants be stayed.
  1. The first and second plaintiffs one month before the date set for the commencement of the trial give security to the satisfaction of the Principal Registrar of the Court for the costs of the trial of the sixth and seventh defendants in the amount of $300,000. 
  1. The applicants have any necessary extensions of time to bring these applications.
Close

Editorial Notes

  • Published Case Name:

    Iron Gates Pty Ltd & anor v Richmond River Shire Council & Ors

  • Shortened Case Name:

    Iron Gates Pty Ltd v Richmond River Shire Council

  • MNC:

    [2006] QSC 141

  • Court:

    QSC

  • Judge(s):

    White J

  • Date:

    14 Jun 2006

Litigation History

No Litigation History

Appeal Status

No Status