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CITE

Unreported Judgment
Appeal Determined (QCA)

Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd[2007] QDC 57McGill DCJ
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Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd[2007] QDC 57

DISTRICT COURT OF QUEENSLAND

CITATION:	Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd [2007] QDC 057
PARTIES:	HENNESSEY GLASS AND ALUMINIUM PTY LTD Plaintiff v WATPAC AUSTRALIA PTY LTD Defendant
FILE NO/S:	D523/00
DIVISION:
PROCEEDING:	Review of costs assessment
ORIGINATING COURT:	District Court, Brisbane
DELIVERED ON:	30 March 2007
DELIVERED AT:	Brisbane
HEARING DATE:	23 June 2006
JUDGE:	McGill DCJ
ORDER:	Adjourned for further submissions
CATCHWORDS:	COSTS – Assessment – review – former item 27 – approach to assessment – unusually complex matter. COSTS – Assessment – fees to expert witness – whether properly reduced. COSTS – Assessment – fees to counsel – preparation time – difficulty of work. COSTS – Assessment – GST – relevant party entitled to input credit – no reduction on scale items or untaxed outlays. UCPR r 742. Australian Coal and Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 – cited. Re Bain Gasteen and Co’s Bill of Costs [1990] 1 Qd R 412 – cited. Bawden v ACI Operations Pty Ltd [2003] QCA 293 – cited. “The Channel Queen” [1928] P 157 – cited. Cole v Gardner Bros. (Qld) Pty Ltd [1971] QWN 32 – cited. Crystal Dawn Pty Ltd v Rudruth Pty Ltd [1998] QCA 373 – cited. Fat‑sel Pty Ltd v Brambles Holdings Ltd (1985) 6 FCR 440 – applied. Francis v Francis and Dickerson [1956] P 87 – cited. Frankenburg v Famous Lasky Film Service Ltd [1931] 1 Ch 428 – cited. General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 1 WLR 1231 – cited. W. A. Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWLR 527 – applied. Hill v Peel (1870) LR 5 CP 172 – cited. House v The King (1936) 55 CLR 499 – cited. Keen v Telstra Corporation Ltd [2006] FCA 834 – considered. Re Malleson, Stewart, Stawell and Nankivell [1931] VLR 127 – cited. Martin v Rowling [2005] QCA 128 – cited. McCoombes v Curragh Queensland Mining Ltd [2001] QCA 379 – cited. Merringtons Pty Ltd v Luxottica Retail Australia Pty Ltd and Anor (No. 9435 of 2005, 16 June 2006, Supreme Court of Victoria, Master Wood, unreported) – followed. Mifsud v Campbell (1991) 21 NSWLR 725 – cited. Mills v Clifford-Ames [1963] QWN 28 – followed. Naumann v Clarke and Robertson Radiology [2002] QDC 69 – not followed. Pecheries Ostendaises SA v Merchants’ Marine Insurance Co [1928] 1 KB 750 – cited. Peel v London and North Western Railway Co [1907] 1 Ch D 607 – cited. Schweppes Ltd v Archer (1934) 34 SR (NSW) 178 – cited. Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 – cited. Stanley v Phillips (1966) 115 CLR 470 – considered. Thornton v Apollo Nominees Pty Ltd [2005] TASSC 38 – distinguished. Walker v Law Society of Tasmania [1991] Tas R 121 – applied.
COUNSEL:	D. Atkinson for the plaintiff G. J. Robinson for the defendant
SOLICITORS:	Phillips Fox for the plaintiff Dibbs Barker Gosling for the defendant

[1]
This is a review pursuant to UCPR r 742 of the decision of a Senior Deputy Registrar^[1] on a reconsideration under r 741 of decisions made in the course of an assessment of a costs statement filed on behalf of the plaintiff. This is the latest, and hopefully the last, stage in what has been a remarkably hard fought dispute between the parties. As will be apparent, it seems to me that some time ago it became, for practical purposes, more a dispute about costs than a dispute about the underlying merits of the plaintiff’s claim.

History of the action

[2]
The action was commenced by a claim and statement of claim filed on 10 February 2000, by which the plaintiff claimed from the defendant, a building contractor, money alleged to be owing under a subcontract between the parties, or in the alternative on restitutionary grounds for work done by the plaintiff and accepted by the defendant, or under the Trade Practices Act. The plaintiff’s claim at that stage was for $172,563, plus GST, under the contract or as damages for breach, $7,171 for wrongful deduction, and (necessarily in the alternative) claims on a quantum meruit, or by way of restitution, for $183,162.31, or $175,822.72 pursuant to the Trade Practices Act. A request for trial date was filed in November 2000, but in January 2001 there was a consent order referring the matter to mediation to be conducted on 2 February 2001. The matter was not settled on that day, and on 20 June 2001 I gave the defendant leave to amend its defence, gave directions about further pleadings, for a bundle of documents to be prepared for the trial, and for each party to provide to the other by 3 August 2001 documents containing the substance of the evidence (including the qualifications) of any expert whose evidence was to be relied upon at the trial. The costs of that day were made costs in the cause.

[3]
The action was set down for trial to commence on 3 September 2001, but on 24 August 2001 a settlement agreement was entered into by the parties under which some issues were resolved, and arrangements were put in place to resolve other issues.^[2] It was agreed that the dispute in relation to certain variations would be submitted to an independent quantity surveyor appointed jointly who would determine as an expert the extent of certain work done and hence the amount payable in respect of certain claims. The parties agreed to be bound by the result of the measurement and determination. The parties also agreed that I would determine separately in advance of the trial two particular questions, and agreed that the questions would be decided on the basis of certain agreed facts, together with any additional facts found on the basis of evidence which I would hear in relation to the determination of those separate questions.

[4]
On 5 September 2001 this matter came before me for the purpose of receiving that evidence, and hearing the submissions of the parties in relation to the preliminary questions. I made an order for the separate determination of those questions, and that the trial otherwise be adjourned to a date to be fixed. The plaintiff was represented by Mr Hastie of counsel, and the defendant by Mr Bond of senior counsel and Mr Schulte of counsel. The only oral evidence received was from the plaintiff’s quantity surveyor, Mr Callaghan. Reports by him were also put in evidence. He was cross-examined, and the relevance of a couple of limited aspects of his reports was objected to and not pressed. Neither his expertise nor any of his evidence was disputed in cross‑examination, which was limited to eliciting further information about the work done by the plaintiff.^[3] After receiving submissions orally and in writing, I delivered a reserved judgment on 11 September 2001 answering the two questions in a way which was favourable partly to the plaintiff and partly to the defendant.

[5]
The defendant applied for leave to appeal which was granted by the Court of Appeal: [2002] QCA 24. The matter as heard on 30 January 2002, with the same counsel appearing for the defendant, while Mr Hastie was led by the then solicitor‑general. On 15 February the court ordered that the answer to one of the questions, insofar as it was favourable to the plaintiff, be set aside, and the matter adjourned for further consideration back to the District Court. The joint judgment of the Chief Justice and Davies JA noted that the appeal was complicated by the fact “that the parties, and at their instigation the judge, erroneously proceeded on the basis that the subcontract provided that the subject doors would be unframed. Properly construed…the subject contract required them to be framed.” The parties were in agreement on the hearing that the doors were installed in unframed condition, and that they were shown as unframed in the drawings; however, there was a “door schedule” which described the doors as framed doors, and the contractual priority of the documents meant that that was the operative provision. Accordingly, my analysis had been “based on the erroneous factual assumption that the subject doors were contractually required to be installed unframed.”

[6]
Their Honours went on to say at [15]:

“It is not a sufficient answer to the consequent problem to say that the parties were willing to conduct the case before the learned judge on a false basis, to which the parties wish the court to continue to hold. The correct position having been established, the court must, we consider, dispose of the case recognising that true position. Regrettably this will produce a result inconvenient for the parties, but it will now fall to them to seek an appropriate resolution, preferably by negotiation in view of the comparatively limited amount involved and the substantial amounts no doubt already expended upon costs.”

[7]
The third member of the court, Ambrose J, arrived at the same conclusion but by a somewhat different route, and one that involved some consideration about just what was meant by a “framed” glass door and hence an “unframed” glass door. In the course of this, his Honour made fairly extensive, and it seems to me essentially uncritical, reference to the evidence given by the quantity surveyor. He also expressed the opinion that it was “undesirable to attempt to construe this contract in disregard of extrinsic background evidence of the events which led to its execution and indeed the extrinsic evidence as to the way in which the contract was performed by the parties to it – both before and after the dispute arose concerning its meaning.” His Honour referred to authority, and discussed the scope of such evidence, including by saying at [79]:

“Comparison of market valuation of all materials supplied and work performed under the subcontract (disregarding variations and extras) with the market valuation of the materials supplied and work performed which is in issue in this commercial building dispute will be relevant as background or contextual evidence.”

[8]
Accordingly, the question ought not to have been answered, and the matter was adjourned back to the District Court. Because both parties had effectively contributed to the false assumption upon which I had proceeded, there was no order as to costs of the appeal. The matter was mentioned before me again on 19 July 2002, when I gave directions for further amendments to the pleading, and adjourned the matter for further directions on 25 October 2002. On that day there were further directions, and the matter was adjourned until 5 December, when I ordered that it be set down for trial commencing on 17 March 2003, with a review on 29 January. On that date the matter was still proceeding to trial, but it was settled by a deed dated 7 March 2003, under which it was agreed that the defendant would pay the plaintiff $103,000 on the claim together with $9,167 for retention monies, and the defendant would pay the plaintiff’s costs of and incidental to the proceeding to be assessed on the standard basis.^[4] On 3 October 2003, on application by the plaintiff, I certified pursuant to item 27(3) of Schedule 2 to the UCPR that the registrar might allow, under item 27, a higher amount than the amount specified in sub-item (1) that the registrar considered proper in the circumstances.

History of the assessment

[9]
On 7 October 2003 the plaintiff filed an application for costs assessment and costs statement. It ran to 219 pages, and included 1,820 items. The total amount claimed was $141,054.14, including $81,587.54 for outlays. The outlays included fees paid to the quantity surveyor, Mr Callaghan, totalling $46,218.13, and counsel’s fees totalling $21,450. The amount claimed under item 27 (item 1799) was $26,711. On 17 November 2003 the defendant filed a notice of objection to the costs statement which set out 550 objections, some of which covered more than one item. Following an assessment the registrar allowed the plaintiff’s costs including outlays at a total of $41,708.99.^[5] The amount allowed for the quantity surveyor’s fees was $4,455, the amount allowed for counsel’s fees was $7,408.50, and the amount allowed under item 27 was $6,711.

[10]
By a notice filed 15 December 2004 the plaintiff applied for reconsideration in respect of a number of items, including these. On 27 July 2005 the registrar, for reasons that he gave, increased the amount allowed in respect of the fees to the quantity surveyor by $3,575. Otherwise, all of the plaintiff’s objections were dismissed. The written reasons run to some 54 close-typed pages. The plaintiff seeks review of that decision under r 742. I gave some directions by consent on 6 April 2006, written submissions were filed on behalf of each party, and the matter came on for hearing on 23 June 2006, when oral submissions were made on behalf of each party. On that occasion I invited some further written submissions in relation to one of the matters raised in the review, and those submissions were subsequently forthcoming.

Item 27

[11]
The first matter argued was as to the amount allowed at item 1799 in the costs statement, the amount under the then item 27 in schedule 2 to the UCPR, the scale of costs in the District Court. At the time the action was commenced, item 27 provided:

“(1) Instructions for brief for counsel, or brief notes for solicitor if no counsel employed on trial, including –

(a)
all attendances on, and correspondence with, the party and the party’s witnesses; and

(b)
all necessarily perusals and work in relation to preparation for hearing,

not more than $3,013.”

There was then a reference to the registrar’s allowing necessary out-of-pocket expenses on top of this, and in sub-item (3) provision for a judge to certify the registrar may allow a higher amount, where the maximum allowance is not enough for the work actually done. As noted earlier, I gave such a certificate in this case. By the time the action was finally settled, item 27 had been amended three times, but each time only by increasing the amount allowed, ultimately to $3,651.

[12]
Item 27 was, in my opinion, always an unsatisfactory item, because of the breadth of the work covered by it, and because of the great capacity for variation between actions. Happily it is no longer with us, the District Court costs schedule having been brought into line with the Supreme Court costs schedule, which never had the equivalent of item 27. It has been criticised in the past.^[6] The applicant in this case had a costs assessor prepare a schedule which sought to deal with all of the work covered by item 27 as if the matter had proceeded in the Supreme Court. The schedule ran for some 92 pages and came to $26,711.^[7] The registrar, however, rejected reliance on the schedule.^[8]

[13]
Apart from the fact that the structure of the costs schedule to the UCPR was then different for the District Court, even where items corresponded on the two schedules, a larger amount was generally allowed for work in the Supreme Court. In addition, there was no examination of the individual items of work in the schedule to determine whether all of them would have been allowed, and if allowed in what amount, had the assessment occurred in respect of a Supreme Court action on the standard basis. The registrar noted that there had been a large number of attendances on the client in the course of the proceeding.^[9]

[14]
It may be that, if a determination had been made as to what amount would have been properly allowable on the standard basis if the matter had proceeded in the Supreme Court, this would have been a factor deserving of some weight, though I suspect that its principal significance would have been to demonstrate just how unsatisfactory in a case such as this item 27 really was. But there was no such assessment, and in these circumstances it seems to me that the only significance of this schedule was to illustrate the volume of work in fact done by the solicitors which they claimed fell within item 27. It follows that the particular amount derived by this process was necessarily not a relevant consideration in making the assessment under item 27.

[15]
The difficulty with the registrar’s approach is that, having got to that point, it appears that the amount in fact allowed under item 27 was based on the figure obtained from that schedule, since the amount allowed, $6,711, is simply the total derived from that schedule with $20,000 taken off. A figure of $6,711 seems an odd figure to arrive at; it is close to, but less than, double the scale amount under item 27 between 30 July 2001 and 31 August 2002, but it was obviously not derived by doubling that figure. Although the registrar gave copious reasons, one thing he did not explain was how it was that he arrived at that particular figure as the amount to allow under item 27. In these circumstances, the inference is fairly open that that figure was arrived at simply by taking $20,000 off the amount in the schedule.

[16]
Such an approach was plainly wrong. Apart from the fact that it used as its starting point something which was, and was properly considered to be, irrelevant, it then proceeded to an outcome by a process which was arbitrary. Counsel for the defendant before me, properly, did not seek to support the proposition that allowance of an arbitrary amount could be a proper exercise of the discretion of the registrar when fixing an amount under item 27. Any discretion required to be exercised under the rules must be exercised properly, taking into account relevant considerations and disregarding irrelevant ones. The difficulty is that the decision of the registrar appears to have been arbitrary and based, so far as it was based on anything, on an irrelevant consideration, which are both errors of law. If there was some other, arguably proper, basis for his having arrived at that figure, he did not give reasons for it. Failure to give reasons can itself amount to an error of law^[10], and if there were good reasons for arriving at that particular figure, the present case is in my opinion a good example of a situation where the failure to give reasons was an error of law. Accordingly, it is clear that the registrar’s discretion miscarried when allowing $6,711 under item 27.

[17]
Under r 742(5) the court on review may exercise all of the powers of the registrar in relation to the items in the costs statement under objection, and vary the decision of the registrar. For reasons that I will give later, I do not propose to send any part of this assessment back to the registrar, and will therefore exercise this power and determine for myself the appropriate allowance under item 27.

[18]
There is one other matter which the registrar determined, which is relevant to this consideration, which I should deal with. The registrar held that the proceeding was not inordinately difficult from a legal point of view, the claims could be compartmentalised, and some of them were simple.^[11] I do not agree with this analysis of the matter. The action in my opinion was an unusually complex one by the standards of the District Court, both legally and factually. Legally, the matter was complicated by the fact that there was a claim under the contract, or in the alternative on a quantum meruit, or in the alternative under the Trade Practices Act. Factually, there were a number of items claimed, and the documentation for the contract was voluminous and very complicated, and as the Court of Appeal ultimately determined, not all consistent. Although some of the things which the plaintiff was seeking to establish were conceptually straightforward, working them through in appropriate detail was quite a complicated exercise. That part of the dispute which came on for consideration before me was certainly quite complicated, as indeed ought to be apparent from my reasons for judgment. The matter was sufficiently complicated that, when it got to the Court of Appeal, that court was able to point out an issue of significance which had apparently not occurred to anyone until that time.

[19]
The matter proceeded for a relatively long time, and even after the partial settlement there were substantial matters still in dispute, which led to a hearing which lasted one full day, although there were extensive written submissions. There were two attempted mediations. The matter was case managed in the District Court, something which is unusual in itself. The case was virtually prepared for trial twice, since the plaintiff was getting the matter ready for a full trial at the time of the initial partial settlement, and was again getting the matter ready for a full trial in March 2003, that trial being due to commence 10 days after the action was finally settled. It had been set down to last five days and the plaintiff intended to call six witnesses.

[20]
Apart from these factors, there is the circumstance that on the application under sub‑item 27(3) I commented that the variations “cover a great deal of work and there was a good deal of factual complexity and legal complexity about the issues. There were some significant questions of construction both explored during the preliminary hearing and revealed by the perspicacity of the Court of Appeal … and a number of factual issues.” In the circumstances therefore I had found, for the purposes of that application, that there was a good deal of factual and legal complexity and that there were significant questions of construction.

[21]
Whether or not that finding gave rise to an issue estoppel in a technical sense, in circumstances where that finding had been made by the judge who had been involved in the determination of the preliminary questions, in the course of an application under item 27(3), in my opinion it was not proper for the registrar, when exercising his discretion under that item, to have departed from the view of the case set out in those reasons. It is unnecessary to rely on this basis, but that in my opinion is a further justification for setting aside the registrar’s decision concerning item 1799.

[22]
The registrar essentially proceeded on the basis that this was not a complex case. I do not agree. By the standard of the District Court, which is the relevant standard to apply in the circumstances, this was quite a complex case. I regard the finding to the contrary by the registrar in these circumstances as surprising, and as reflecting adversely on the registrar.

Assessment on the standard basis

[23]
It is necessary to bear in mind that costs are being assessed on the standard basis. Under UCPR r 703(2), this requires the registrar to “allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.” The expression is one which is well established, and was formerly used to describe “party and party” costs. For most items under the District Court scale what has to be determined is whether the work done was necessary or proper; if it was, the scale will ordinarily specify the amount recoverable. In some cases, however, it may be necessary to consider how much such work was necessary or proper, or in the case of an outlay what amount of outlay was necessary or proper. Costs on the standard basis are not confined to the bare minimum necessary to enable the party to conduct the litigation and no more, the test adopted in Smith v Buller (1875) LR 19 Eq 473 at 475.

[24]
In this respect, it must be borne in mind that the words “or proper” do add something to the scope of the test: W. A. Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWLR 527 at 534.^[12] The words “or proper” connote a wider ambit of charge than the word “necessary”: Francis v Francis and Dickerson [1956] P 87 at 95, where it was said that the approach was to be that appropriate for a client whose resources were adequate, neither “barely adequate” nor “super-abundant”. Costs are “necessary” if the litigation could not have been carried on reasonably without them. Costs are “proper” if it was reasonable for a client with a competent solicitor to have incurred those costs in carrying on the litigation.

[25]
The matter has been expressed as whether it was necessary or proper if a prudent person, endeavouring to get justice, but endeavouring to get justice without any undue expenditure of money, would incur the expense in question.^[13]

[26]
There was some discussion of the application of “necessary or proper” in Stanley v Phillips (1966) 115 CLR 470. Barwick CJ at p 478 referred with apparent approval to the comments in Peel v London and North Western Railway Company (supra) and Re Malleson, Stewart, Stawell and Nankivell (supra), and said:

“The emphasis throughout is upon obtaining an adequate presentation to enable justice to be done: it is not upon the propriety of the steps taken by a litigant to ensure the maximum of success in his own cause. That, of course, he may do, but not, in my opinion, at his opponent’s expense. As the question is whether the presentation of a case to ensure a just determination reasonably requires the services of more than one counsel, it is the nature and circumstances of the case which provide the determinants. … [p 479] … The question is whether the services of more than one counsel are reasonably necessary for the adequate presentation of the case.”

[27]
Those comments were in the context of consideration of whether the fees of two counsel should be allowed on a party and party taxation, but it is apparent that the test was framed in terms of what was reasonably necessary for the adequate conduct of the case. It was not upon the bare minimum necessary in order to enable the case to be carried forward. What was excluded was expenditure which was more than reasonably necessary for adequate conduct of the case, incurred to maximise the prospect of success. Taylor and Owen JJ at p 486 said:

“If reasonable prudence made the briefing of senior counsel appropriate, the expenditure incurred by the briefing of junior counsel would also be both necessary and proper.”

[28]
Further down the page their Honours distinguished between “a prudent course” and “an over-cautious course”. Menzies J at p 489 also spoke of the test by reference to what “a man who could afford to do so would reasonably and prudently in his own interests [do] notwithstanding the expense.” The fifth member of the court dissented. It seems to me, with respect, that these statements are consistent with the approach in Gilbey (supra).

[29]
A registrar assessing costs should not adopt an approach which is restricted or rigid and narrow in its operation.^[14] It has been suggested that an assessment on the standard basis must be expected to occur on a parsimonious scale: Naumann v Clarke and Robertson Radiology [2002] QDC 69 at [16]. With respect, I do not agree. In my opinion, such authorities as there are on the subject are to the contrary, and there is no justification in reading the words in the rule in a restrictive sense.

Reassessment of item 1799 (under item 27)

[30]
The question remains as to how an amount under item 27 ought to be determined. I do not want to say a great deal about this, because hopefully there will not be many more occasions on which anybody will have to consider how assessments under item 27 are to be approached. Item 27 fixes a maximum lump sum to cover a large number of items of work, and in that respect involves a departure from the ordinary approach to the assessment of costs under these schedules in the District Court. In McCoombes (supra) I referred to an approach to an assessment under item 27, which involved comparing the nature of the matter and the amount of work involved in the incident case with the amount of work which would have been involved in a matter which justified the maximum amount allowed under the item, in a case where no certificate was given. In a case where a certificate is given, an analogous approach would involve making a similar comparison, although in the other direction.

[31]
Although item 27 focuses on the preparation for trial, on its conventional interpretation the work covered by it can extend throughout the period from the time the solicitor is first retained until the matter is resolved. The modern rules and principles of case management generally mean that preparation work is not left until just before trial, but a good deal happens at a much earlier stage.

[32]
The plaintiff submitted that I should adopt an approach which provided a more reasonable allowance for the work done by the plaintiff’s solicitors which fell within item 27; in circumstances where a certificate had been granted under sub‑item (3), there was no reason to perpetuate the defects in the item, particularly the excessively low maximum which applied to it. It was also submitted that in circumstances where a large amount of work had been done, to allow only a relatively small amount under this item would mean that there would be an excessive difference between the amount which the plaintiff would have to pay on a solicitor and own client basis and the amount recoverable. Although it was accepted that an assessment on the standard basis is not a full indemnity, it is intended to be a partial indemnity or a limited indemnity^[15], and the greater the disparity between the standard basis of assessment and what the client will actually have to pay the less the amount assessed will be effective as an indemnity. It was also submitted that because of the unusual nature of this case it was not appropriate to approach the matter by reference to the amount laid down in item 27.

[33]
I concede that there is some force in these submissions, but in my opinion in circumstances where the scale was structured in the way in which the District Court scale was structured, and the way in which item 27 operated in the ordinary case, it would not be appropriate to disregard the amount nominated as the maximum amount under the item, and the basic approach when making an assessment under the item, just because the certificate has been granted. In my opinion, the structure and wording of item 27 suggested that the intention was simply that the granting of a certificate would mean that the maximum no longer operated as a maximum, but was not intended to change the basic structure of the item, or the basic approach to allowing costs under it.

[34]
In those circumstances, in my opinion the approach to assessment of item 27 with a certificate should be analogous to the approach to assessment of item 27 without a certificate that I identified in McCoombes (supra). One of the virtues of that approach is that it does not involve a detailed assessment of all of the work which had to be done, or all of the work which it was claimed was done, which fell within the item. If the old item 27 had any virtue, it was the practical virtue of a broad-brush approach to assessment. That is an advantage which I think should not be too readily discarded. Accordingly I will apply that approach to this assessment.

[35]
Applying that approach, in my opinion because of the particular difficulties in this matter, to which I have referred, an appropriate allowance to cover the necessary or proper work undertaken by the plaintiff’s solicitor in the course of this action and falling within the scope of item 27 should be three and a half times the applicable maximum under item 27. This is arrived on the basis that the basic difficulty and complexity of fact and law associated with the matter justified an allowance of double the scale maximum, and the considerations that in the early part of the proceeding there was relatively little reliance on counsel for pleadings and matters of that nature,^[16] and the unusual course of the matter, with a partial settlement, the submission of a relatively substantial dispute for determination of preliminary questions, the preparation again almost for a full trial, and two mediations, both of which failed, justify an allowance of a further one and a half times the scale maximum.^[17]

[36]
The registrar determined that the scale should be applied on the basis of the percentages of time over the whole of the action for which various maximum amounts were allowable being weighted by reference to the time involved, to produce a maximum amount of $3,254.32: para 353. I have not checked this calculation but there was no specific challenge to it and I assume it is appropriate. That produces an amount of $11,390.12, which I will round off to $11,390. I allow that amount for item 1799 in the bill in substitution for the amount allowed by the registrar.

Quantity surveyors fees

[37]
The next issue which was argued was in relation to the fees allowed by way of outlays to the quantity surveyor retained as an expert witness in the matter. This relates to items 905, 1074, 1124, 1362 and 1776, five invoices submitted by the quantity surveyor, totalling $46,218.13. The quantity surveyor was called as a witness at the hearing before me, and was to have been a witness at the trial had it proceeded. There was no dispute before me as to his expertise, and only some minor objections to a small number of matters in his reports which were not pressed on behalf of the plaintiff; except for these matters, two reports of his were admitted in evidence, he gave some additional oral evidence, and he was cross‑examined for some time, essentially to elicit further information about the work done rather than to challenge anything he had said. In the circumstances, it could scarcely be said that he was not a necessary witness, and indeed, no objection was taken to his being retained, or to his expertise, for the purposes of the assessment.

[38]
There was no objection to his rate of charge, initially $135 per hour and for the latter part of the work $140 per hour: reasons para 166. There were, however, numerous other objections to these charges. It was submitted^[18] that there was no detail given on the activities spent in relation to the time that had been charged, and that the outcome in terms of reports did not justify the amount of time claimed. It was suggested that a lot of the time may have been spent liaising with representatives of the client and obtaining source material on which to perform an assessment, and it was submitted that those costs were not costs properly allowed because the plaintiff as a commercial company ought “to keep its records in a way that enables them to be located without difficulty and, should litigation occur, to be able to provide the expert with all necessary documentation.” It was said that therefore costs associated with time spent locating and providing documents was not costs of the litigation.

[39]
There are two problems with this. The first is there is no factual basis on the evidence that there was anything wrong with the way in which the plaintiff was keeping its records. There is no particular reason to think that commercial concerns would ordinarily keep their records in a way which would happen to be convenient to something a quantity surveyor might want to investigate if litigation arose at some time in the future. One would expect records to be kept in a way which was convenient for the ordinary operation of the business. The quantity surveyor was not cross-examined on his affidavit. If an assertion of this nature was to be put on behalf of the defendant, the appropriate basis for it should have been laid for it in cross-examination. In the absence of cross‑examination or some other evidence to support it, this is mere speculation that should have been disregarded by the registrar.

[40]
It was also submitted that there was some inappropriate use of his resources in his having to talk to the plaintiff’s accountants to determine overheads and profits used in the calculations, both face‑to‑face and in some telephone discussions. It was submitted that these ought to have been figures which could have been extracted by the plaintiff and provided to the quantity surveyor, from analogy with the previous point. However, I think the position here is different. The people who would be the best source of reliable information in relation to these matters would be the accountants, and it was reasonable for the quantity surveyor to speak directly to the accountants in order to ensure that he was getting the particular information that he wanted, or perhaps in order to have a clear understanding of just what it was that he was being provided with, so that he could ensure that his calculations were based on an appropriate understanding of the relevant facts. In my opinion, that was an appropriate way for the quantity surveyor to operate. As well, insofar as it is suggested that there was excessive time involved in this, that is not a matter which ought to have been pursued in the absence of cross-examination of the quantity surveyor or evidence to the contrary.

[41]
It was then submitted that a claim for a fee note dated 10 September 2001 for 17 hours, which was said to include meetings with the solicitor and the representatives of the plaintiff, meetings on site to obtain data and preparation for trial and evidence of trial, was unjustified. There was no item claimed in the costs statement in relation to a conference with the solicitor, and it was suggested on this basis that the quantity surveyor was mistaken. There is an obvious alternative explanation, and the matter ought to have been put in cross-examination if it were to be advanced.

[42]
In his reasons, the registrar began by noting that the quantity surveyor had billed for in excess of 304 hours of work which he described as an extraordinarily long period of time to take in the valuation of the plaintiff’s simple variation claims. This was an unpromising start, because, as explained earlier, I did not regard the action as simple and I do not regard the plaintiff’s variation claims as simple, or at least not all of them. It seems that the registrar has approached the matter on the assumption that no great amount of work by the quantity surveyor was required. There was then some discussion of the various reports, although it appears that some of these were in the nature of draft reports or preliminary reports rather than documents which were actually put into evidence, or in a state where they could have been put into evidence.

[43]
There was then in paragraph 180 a comment on some inconsistency between these various documents as to a particular calculation, which leads to the comment that the plaintiff “provided no explanation as to the variable quality of the reports.” Why inconsistency should lead to the assumption of variable quality is not apparent; I would have thought the obvious explanation is that additional work was being done and the process of estimating (which is what was involved in the reports) was being refined all the time. The changes do not suggest to me that there was some deficiency in the work, but rather that the work was continuing.

[44]
There was then criticism that a considerable amount of unnecessary work was undertaken because the best source of component prices was the one which had been used in the most recent report, which ought therefore to have been the commencement point. That conclusion appears to be pure hindsight; there was nothing to indicate that the quantity surveyor had simply overlooked that quotation at an earlier stage as a source when it ought to have been considered at that point.

[45]
The registrar noted that, in relation to the report of 10 February 2003, one of the matters the quantity surveyor was to do was “to identify and catalogue the evidence used to prove up the various claims for variations.” As to this, the registrar said that “it was the responsibility of the plaintiff’s solicitors to have ensured the plaintiff had properly complied with its obligations regarding disclosure. Any evidentiary inadequacies relating to material necessary to prove the plaintiff’s claims ought to have been drawn to the attention of the plaintiff to confirm disclosure was complete. Thereafter any deficiencies in relation to value would help the solicitors to identify and specify what it was the quantity surveyor had to do. There ought to have been no good reason why Mr Callaghan would have to do any work in respect of the basis of the claims.”

[46]
That in my opinion was putting the cart before the horse. Obviously when the quantity surveyor is being asked to determine the value of a particular work, one of the things that is within the expertise of the quantity surveyor to decide is what material he needs in order to be able to support his valuation. It is not a matter for the solicitors (or for that matter the plaintiff) to be telling the quantity surveyor what evidence it is appropriate for him to be using for the purpose of the valuation; it is a matter for the quantity surveyor to be telling the solicitors or the client what evidence he needs for that purpose. It is obviously appropriate for the plaintiff to be in a position to prove all the original evidence on the basis of which the quantity surveyor has formed his opinion, as a basis for his opinion. But only the quantity surveyor can tell what it is that has to be proved in this way, and that was, appropriately, what the quantity surveyor was being asked to do. Rather than this indicating that the quantity surveyor was doing inappropriate work, it seems to me that it demonstrates that the quantity surveyor was being asked to perform an appropriate, indeed necessary, role in the preparation for trial. The registrar has apparently drawn the conclusion from this that the quantity surveyor was doing unnecessary work, and that is a conclusion which I reject.

[47]
The registrar then set out a section headed “Mr Callaghan – the commentary”, which was essentially an exercise in asserting that Mr Callaghan has done a whole lot of unnecessary work, or has spent too much time doing what the registrar regarded as work which was necessary. In paragraph 197 he asserted that “one might have expected the task of checking door hardware for one door not to require a lengthy period of time.” It is not immediately apparent on what basis the registrar arrived at that conclusion. I have no idea what is involved in a quantity surveyor checking the door hardware on one door, and I suspect that in truth neither does the registrar, though he may think he does. There was certainly no evidence from an appropriately qualified expert (ie a quantity surveyor) that this ought not to have required any lengthy period of time.^[19]

[48]
It is dangerous ground for a registrar simply to assert what is an appropriate period of time for an expert to undertake his expert function. Although a registrar is supposed to be an expert in relation to legal costs, and is therefore able to assess on the basis of his expertise about the way in which legal practitioners are expected to perform their functions, there is no reason to think that a registrar has any expertise in relation to any other field of expert knowledge, such as quantity surveying. He was therefore not in a position to make a judgment (in the absence of evidence) about whether or not a quantity surveyor had taken too long to do a piece of quantity surveying. That is the major difficulty with this part of the registrar’s reasons; he appears to have accepted, without any evidentiary basis, the mere assertion of the defendant’s solicitors that the quantity surveyor has taken too long to do his work.

[49]
There are other matters. In paragraph 199 he said that “it is not known whether other work was performed in relation to his earlier instructions at the time of his attendances at the site, but, if this was the case, no costs should be allowed for this purpose.” That may be the case, but in circumstances where he did not know whether other work was performed, then there was no basis for a conclusion that other work was performed and that that was responsible for some of the time spent on the site on that occasion.

[50]
At paragraph 204 the registrar said that he would allow an amount of $2,524.50 “as being representative of the time occupied by Mr Callaghan to undertake this work and to give his evidence to the court. It would take account of the time in August associated with the hardware inventory.” It is not clear what is meant by “this work”, but it seems to relate to the work including site attendances associated with the preparation of material which was the subject of the evidence at the hearing before me. For all the criticism of Mr Callaghan, there was no explanation as to how the figure of $2,524.50 was arrived at. At the then current charging rate, $135 per hour plus GST, this is the equivalent of 17 hours work, and it appears to be the amount claimed in an invoice dated 10 September 2001.

[51]
The registrar appears to have proceeded on the basis that that invoice covered all the work done in relation to these matters including work before 1 September 2001, despite the fact that the evidence before him was that the invoice of 3 September 2001 included work up to and including 31 August 2001.^[20] This discrepancy was noted but there was no finding, except perhaps the suggestion that the invoice of 10 September 2001 was wrong. If so, it was a curious basis for the amount which was allowed. But the true situation is that there was no explanation of how the figure of 17 hours work was arrived at here. More importantly, it seems to me that there was no proper explanation as to how the other fees charged by the expert and paid by the client have been disallowed. The various criticisms by the registrar of Mr Callaghan were not translated into disallowing any particular parts of any of the fees charged by him.

[52]
The registrar then undertook a review of the various variations, in effect a critique of the process undertaken by Mr Callaghan in his report of 18 February 2003, the report prepared in anticipation of the trial on the second occasion.^[21] In relation to overheads, one of the comments of the registrar (para 211) was that “it appears Mr Callaghan has not properly calculated the overhead rate” to which he added in a footnote (125) that the calculation ought to have produced a figure of 20.11 per cent as the percentage of the intangible overheads bear to total overheads, with the comment that Mr Callaghan had failed to add “the intangible overheads to the labour and material costs to obtain a total for the tangible overheads from which he would have been able to derive the percentage the intangible overheads bear to the total overheads.”

[53]
I cannot understand this criticism. What Mr Callaghan said in his report he was seeking to derive was “the percentage overheads addition on cost”, which is a figure which is derived in order to add overhead costs to the direct input costs of labour and materials to obtain a realistic figure for the total cost to the business of doing any particular item of work. Obviously such an approach is appropriate. The registrar appears to have attempted to derive an entirely different percentage, a percentage which overhead costs would bear to total costs. It is obvious even to me that that was not an appropriate figure to be derived at this point; the object of the exercise was to be able to convert labour and material costs (derived elsewhere) to a figure which would make appropriate allowance for a contribution towards overhead cost, overhead costs being by their nature not directly attributable to any particular piece of work. To be able to produce a useable figure, one needs to know the mark‑up rate on labour and materials to accommodate overheads to produce a figure for total costs, not the percentage of total costs attributable to overheads, which (if I understand his terminology correctly) is what the registrar was talking about. This criticism of Mr Callaghan was misplaced,^[22] and I think reflects badly on the registrar.

[54]
The registrar went on to criticise Mr Callaghan’s methodology further in relation to the process by which he derived relevant material prices by reference to a current catalogue: para 216. The plaintiff did not have contemporaneous documentation in relation to the cost of some of the material used, and this cost was derived by calculating back from a later price catalogue and applying a discount rate to derive what would in the circumstances have to be an estimate of the equivalent prices at the relevant time. In order to do this, he was provided with three invoices which contained a series of other components from which he was able to derive a contemporaneous charge per unit, and then he compared those charges with the charges in the current catalogue for the same items in order to determine a discount rate to convert current prices to relevant prices.

[55]
The registrar was critical of Mr Callaghan’s having obtained a percentage discount for each individual unit, and taking an average to determine the average discount rate. He suggested that it would have been appropriate to add the contemporaneous prices, and the current prices, subtract the totals and divide the difference by the current total to derive a percentage discount rate. He asserted that this would produce the same result as the process undertaken by Mr Callaghan:

“Clearly, both results will be the same but the latter exercise involves more calculations with a longer period of time being engaged to do so. The additional time ought not to be taken into account.”^[23]

[56]
Well, actually, no. It is a fallacy that the two processes will produce the same result, except in the special cases where they do so by coincidence, or where the discount rate is uniform (which would be obvious from the table anyway). If the discount rate is not uniform for all items over the period, performing the calculations will produce two different estimates of an appropriate discount rate. It would be then a matter of expert judgment to determine which was the more appropriate. That can be seen from the following hypothetical example.

TABLE A

Item	Price 1998	Price 2003	Difference	Discount %
A	900	1000	100	10
B	94	100	6	6
C	76	80	4	5
D	57	60	3	5
E	48	50	2	4
TOTALS	1175	1290	115	X

[57]
It can be seen that if X is arrived at in a way Mr Callaghan used, by averaging the figures in the discount column, the result is six per cent, which is quite different from the result arrived at in the way suggested by the registrar, by taking the percentage of the total difference to the total price in 2003, which is approximately 8.9 per cent. It follows that the registrar’s proposition that both results will be the same was wrong, and therefore his conclusion based on that proposition, that the additional time involved in performing the exercise Mr Callaghan undertook ought not to be taken into account, was also wrong.

[58]
For a non‑expert to second guess an expert correctly is a good trick, but only if it works. But if it does not work, it merely serves to demonstrate the inappropriateness of a non‑expert attempting a critique of the appropriateness of the way in which the expert went about his work. That it seems to me is the fundamental problem of the registrar’s reasons. It was not for him to determine how a quantity surveyor should engage in a quantity-surveying task. That is not a matter within his expertise, or rather, such expertise as an assessing registrar is expected to have. His reasons do not suggest that this registrar knows anything about quantity surveying. In the absence of evidence that Mr Callaghan went about what he did as an expert quantity surveyor in an inappropriate manner, which was not before the registrar, there was no proper basis on which the registrar could find that he had not gone about what he was required to do in a proper way. The approach of the registrar to the assessment of what was done by Mr Callaghan in my opinion reflects badly on the registrar.

[59]
The registrar was next critical of the way in which Mr Callaghan obtained information from the plaintiff’s staff, suggesting (para 217) that “clearly the most efficient use of the quantity surveyor’s time would have been for the plaintiff’s staff to have prepared short schedules of the nature of the materials and work.” There was no evidentiary basis for that conclusion, and it is certainly not obvious to me; it seem to me frankly that it is incontrovertible that the most efficient way for Mr Callaghan to ascertain how the plaintiff’s staff would actually go about the particular tasks involved would be to talk to them, and find out from them directly what they have to say about the matter. Direct communication of this kind is obviously more efficient, because it reduces the risk of some misunderstanding arising as a result of indirect communication of the kind suggested by the registrar. The registrar’s reasoning in paragraph 217 in my opinion was just wrong.

[60]
The next point raised by the registrar was that one of the matters taken into account in relation to variation number 2 was installing a top sill in addition to a sub‑sill. What Mr Callaghan’s report of 18 February 2003 referred to was the plaintiff’s also installing a top sub‑sill comprised of Capral sub‑sill section. The registrar took the view that until the plaintiff amended its pleading to include a claim for such material and extra work, the cost of having Mr Callaghan undertaking further calculations was neither unnecessary nor proper: para 219. I do not agree. Once the pleading was amended, then that became a proper part of the claim, and the amended pleading justified the work which had been done to prepare the report so that the report would support the amended pleading. The idea that nothing can be done to gather evidence to support an aspect of a claim until that aspect is included in the existing pleading is in my opinion clearly wrong.^[24] What matters is whether it ultimately came to be reflected in the pleading. Once it did, it was appropriate to do that work, the time when it was done was irrelevant (unless the timing added to the cost, which was not the registrar’s point) and the cost of doing the work was necessary or proper. This conclusion of the registrar was wrong.

[61]
When dealing with variation 17, the registrar seems to have taken the view that work was done in relation to variation 17 at a time when that work was not appropriate, that is, after the first partial settlement.^[25] In paragraph 249, he asserted that Mr Callaghan observed in paragraph 3.3.2 of his report dated 28 August 2001 that “it was necessary for him to attend the site to confirm the nature of the components on each door before he undertook any work”, but that was not what Mr Callaghan said in paragraph 3.3.2. What he said was he visited the site and identified the specific hardware installed on each of the framed aluminium doors. He had already obtained information about what hardware had been supplied, and it seems to me that the natural reading of paragraph 3.3.2 is that the process of checking the situation at the site was essentially to confirm just what material had been provided in relation to each door. It does not to my mind establish that this was something that had to be done before any other valuation work was undertaken, and it certainly does not say so expressly. The basis for the reasoning set out in paragraph 249 was therefore absent.

[62]
One would have expected that Mr Callaghan would have been doing work in relation to variation number 17 prior to the date when the settlement agreement was entered into,^[26] and that paragraphs reflecting this work would continue to appear in later drafts of his report where they contain information that was relevant to those drafts. That does not demonstrate that work was done in relation to variation 17 at a time when that was no longer an issue. There was simply no rational basis for arriving at such a conclusion, and this finding by the registrar was wrong.

[63]
When dealing with variation number 18, there was some comment which seems to be directed to the merits of the plaintiff’s claim. It is not apparent to me that this was a matter which was relevant for the registrar to be taking into account when determining the costs to be allowed in relation to engaging a quantity surveyor. In paragraph 262, he said in relation to some of the work that Mr Callaghan did that “the quantity surveyor has undertaken his work based upon supposition and guesswork.” It seems to me that that statement applies more accurately to the approach of the registrar rather than anything that the quantity surveyor did, on the evidence that I have seen. Having in that paragraph himself speculated about whether some work the quantity surveyor did was unnecessary, he proceeded to take that into account when disallowing what he identified as “additional costs … incurred in such speculation”.

[64]
At one point in relation to variation 19, the registrar appears to have concluded that the task undertaken by Mr Callaghan was so simple and straightforward that in relation to this part there was no need to engage a quantity surveyor at all: para 266. But plainly Mr Callaghan was a necessary witness, and it would have been absurd for a quantity surveyor to be giving evidence in relation to some of the matters, but to be leaving out some aspects of the matters in dispute simply on the basis that the calculation of them was relatively straightforward (assuming that that was the case, a proposition which, as I have indicated, the registrar was in no position to assess). Plainly, if a quantify surveyor was to be engaged to prepare a report of this nature, it should be comprehensive. This aspect of the reasoning of the registrar was wrong.

[65]
I need not deal in detail with the further reasons of the registrar in relation to the variations. They repeatedly show criticism by the registrar of Mr Callaghan’s work, either on the basis that the registrar did not think that the work needed to be done at all, or that the registrar thought he knew a quicker and easier way to do it. None of this was supported by evidence from a properly qualified person who was in a position to know whether this was so. None of this was put to Mr Callaghan by way of cross‑examination, so there was no opportunity for him to enlighten the registrar as to any good reasons that might well have existed, in terms of the proper process of quantity surveying, for doing what he had done in the way he had done it. The criticisms appear to me to be essentially uninformed speculation on the part of the registrar, unsupported by any evidence.

[66]
In the conclusions at paragraph 281, the statement, that it was not necessary or proper for the quantity surveyor to be identifying and cataloguing evidence required in order to support the opinions he was expressing, to which I have already referred, was repeated. There was then the suggestion that, because a request for trial date had been filed prior to Mr Callaghan’s engagement, it followed that the matter was ready for trial already, and therefore the solicitors should have held all the documents which Mr Callaghan subsequently relied on to form his opinion. I do not think that the signing of the certificate of readiness leads to that conclusion at all. Obviously Mr Callaghan’s evidence was not available at the time when that certificate was signed, but that does not mean that it was unnecessary. But I cannot see how the solicitors are to be expected to know what documents they are going to require in order to support the expert’s opinion before the expert works out what he is going to need and tells them. This criticism of supposed lack of proper preparedness on the part of the plaintiff’s solicitors was unjustified.

[67]
This misconception continued through the subsequent reasoning which seems to assume that the plaintiff was going to know in advance just what Mr Callaghan was going to want to look at so that it would all be set out ready for him. That involves making assumptions about the way in which this work was done, and about the way in which the plaintiff’s business operates, which it seems to me was entirely unsupported by evidence before the registrar, and which was really no more than speculation. They do not strike me as natural assumptions to draw; on the contrary, I would rather assume that the most efficient way to operate would be for Mr Callaghan to do what he said he did in the affidavit. But in any case, it was not a matter for either of us to make assumptions; Mr Callaghan is the expert, and the appropriate assumption is that an expert had gone about a matter within his expertise in the appropriate way. If someone wishes to challenge that proposition, it is necessary to lay a proper evidentiary foundation for that challenge, and that was not done here.

[68]
The registrar has then concluded in paragraph 289 that a reasonable allowance “for Mr Callaghan’s report” would be an amount of $5,505.50. Again, the registrar has given no indication whatever as to how this figure was arrived at; it appears to be a figure plucked from the air. At the hourly rate of $140 per hour plus GST, it is the equivalent of 33.75 hours, but how that figure was arrived at was not explained. Again, in spite of the very lengthy criticism of Mr Callaghan and the way he went about things, and to some extent criticism of the plaintiff’s solicitors and even the merits of the plaintiff’s case, there were no actual reasons given to explain how the amount which was allowed has been derived, or to explain what parts of the amounts claimed had been disallowed and for what reason. In the circumstances, this was a further error on the part of the registrar, in failing to give proper reasons.

[69]
It does appear, however, that this amount was treated as an amount in addition to the amount of $2,524.50 referred to in paragraph 204, which appears to be the amount attributable to the work associated with the determination of separate questions. The effect of this is that it appears that the registrar has allowed that amount in respect of the work associated with the evidence on that occasion, and an amount of $5,505.50 in respect of the report of 18 February 2003. That appears to make no allowance whatever for any work which was done in relation to the whole of the claim prior to the time when the settlement agreement was entered into. Prior to that time, nothing could have been done in relation to preparation for evidence at the separate hearing, but the fact that some not insignificant time later it was necessary for a good deal of work to be redone, because the action had as it were come back to life, did not mean that no costs should be allowed for any work in relation to this in fact done prior to the time of the first settlement agreement. That appears to have been completely overlooked by the registrar, and that in my opinion involved a further error on his part.

[70]
The defendant also advanced an argument that none of the costs associated with the work done in 2003 should have been allowed because the plaintiff at that time was seeking to go behind the settlement agreement which had earlier been made, and the plaintiff was not entitled to do that. Whether or not the plaintiff was entitled to do it was an issue which was then alive on the pleadings, but if the whole matter was proceeding to trial, plainly the plaintiff had to, and was entitled to, prepare for trial on the assumption that it would succeed in relation to that issue. This objection on the part of the defendant was entirely without substance, and was correctly rejected by the registrar in paragraph 293.

[71]
I can, however, find nothing else about the registrar’s consideration in relation to the fees for the quantity surveyor which was not in my opinion wrong. No proper basis has been shown in my opinion for disallowing any part of the quantity surveyor’s fees. There was certainly no proper basis recorded anywhere in the registrar’s reasons. I accept that the onus was on the plaintiff to establish that the fees paid to the quantity surveyor were necessary and proper. Prima facie that onus was discharged by the affidavit from the quantity surveyor and the affidavit of the solicitor. That evidence was uncontradicted, and there was no proper evidentiary basis for criticising any aspect of the quantity surveyor’s work.

[72]
Such criticism was speculation on the part of the registrar, which was unjustified. He is not a quantity surveyor, and he was not in a position to decide from his own knowledge how a quantity surveyor should undertake his work. Apart from this, to make findings of this nature without their having been put in cross‑examination to the deponent, either by the defendant or even the registrar,^[27] and to do so in these circumstances was a breach of fundamental rules of procedural fairness. That is a further reason why the approach of the registrar was wholly misconceived. No good reason has been shown to disallow any part of the fees paid to the quantity surveyor.^[28] The registrar’s decision in relation to items 905, 1074, 1124, 1362, and 1176 is set aside, and those items are allowed in full. This involves an increase from $8,030 to $46,218.13.

Counsel’s fees

[73]
The plaintiff seeks reconsideration of the registrar’s decision in relation to a number of items of counsel’s fees. Some of these were disallowed, and others were allowed but reduced in amount. The plaintiff’s objection was dismissed on reconsideration. The items in the bill in question, the work for which the fee was claimed, the amount of the fee and the result appear in the following table:

TABLE B

ITEM	Description	Amount Paid	Result
940	Conference with solicitor and client	$825.00	Disallowed
1060	Drafting preliminary draft submissions	$594.00	Disallowed
1065	Conference with solicitor and client	$891.00	Disallowed
1067	Drafting further submissions	$594.00	Disallowed
1072	Preparation for trial including conferences with client	$1,633.50	Disallowed
1078	Appearing at hearing re: separate questions	$2,750.00	Allowed
1310	Conferring with solicitor and client and appearing at directions hearing	$605.00	Reduced to $247.50
1318	Advising on variation claims and proof of claim	$907.50	Disallowed
1337	Drafting amended statement of claim	$907.50	Reduced to $687
1440	Drawing and settling further and better particulars	$990.00	Reduced to $545
1519	Conference with solicitor and client discussing and settling reply	$330.00	Disallowed
1530	Settling reply	$990.00	Reduced to $600
1552	Conference with client concerning reply	$660.00	Disallowed
1554	Appearing on directions hearing	$990.00	Reduced to $330
1560	Conference with solicitor and client discussing amendments to reply and particulars	$990.00	Disallowed

Item 940

[74]
The conference at item 940 was on 10 August 2001. Counsel had just been retained, at that stage all matters were in dispute, and the action was proceeding to trial on 3 September 2001. A brief which was treated as the brief on the hearing of the preliminary matters, was delivered to counsel apparently on 7 August 2001.^[29] The affidavit of the barrister which was used before the registrar said his initial instructions were to consider the contractual argument advanced by the plaintiff, whether any other claim should have been advanced, whether the matter should be mentioned again before me in relation to a new amended defence, and to advise generally.

[75]
There was a conference on 10 August, for which the fee at item 940 was paid. A solicitor was engaged for three hours in connection with it, so it was a substantial conference. The barrister said that the conference was necessary to enable him to get up to speed quickly with some of the issues that concerned his instructing solicitors, and because the matter was set down for trial in the near future. The registrar disallowed that this fee and the solicitor’s costs associated with this conference, which were treated was being of a solicitor and client nature.^[30] According to the reasons of the registrar, the solicitor sought to advance the argument in support of the bill on the basis that the function of the conference was to provide counsel with an understanding of the material and to determine the prospects of the plaintiff’s claims.^[31] As the registrar said, the latter issue was not a matter of party and party costs.

[76]
The argument on behalf of the plaintiff before me was essentially that these costs should be seen as part of the process of counsel preparing for trial, and that, in circumstances where counsel had been briefed only at a relatively late stage, this was reasonably necessary in order to enable proper preparation for what was at that stage a trial of all the issues set down to commence in less than a month. The fact that counsel was briefed relatively late is not a factor which ought to increase the costs payable by the defendant. But in circumstances where counsel has not previously been involved in the matter, it is reasonable to expect that the costs of preparing for the trial, particularly the cost of preparing for such a substantial trial as this would have been prior to the settlement agreement being entered into (which was after this conference was held), would reasonably include time with the solicitor and the client. The registrar does not seem to have made any allowance for this aspect of the matter, probably because of his view (which I have already held was wrong) that this was a relatively straightforward matter.

[77]
At that stage, it was certainly reasonable for the plaintiff to be working up the matter for trial on 3 September, and to be incurring costs in relation to that process, so the real issue in my opinion in relation to these fees (apart from the question of whether some of them are attributable to the provision of legal advice, which is a solicitor and client matter), was whether part of the costs should be allowed as part of the overall process of preparation for counsel for trial. Before addressing that question, it is necessary to have regard to the other items in respect of which fees were claimed in relation to what was to be the trial and subsequently became the hearing in relation the preliminary questions on 3 September 2001.

Items 1060-1078.

[78]
The next item in dispute, 1060, was a fee for drafting preliminary submissions in relation to what had by then become the hearing in relation to the separate questions. The registrar properly treated items 1060, 1067, 1072, and 1078 together as representing the costs for the work by counsel in connection with the hearing on 5 September.^[32] Item 1065 was for a further conference with the solicitor and client, in respect of which the solicitor was engaged for three hours; 1067 was for drafting further submissions; 1072 was for preparation for trial, including conferences with the client; and 1078 was the fee for actually appearing at the hearing. The registrar has treated the fees for conferences separately, but treated items 1060, 1067, 1072, and 1078 as being in effect counsel’s fee on brief. These total $5,571.50, which the registrar regarded as clearly excessive for a number of reasons.

[79]
The first was his view, which I have already held was wrong, that the matter was relatively straightforward; indeed, he regarded it as being a dispute at the lower level of a range of actions which, for some reason, included building disputes in the Supreme Court; I do not understand why that should be regarded as a relevant comparison for District Court fees. No doubt the fees in relation to a major building dispute in the Supreme Court would be of an entirely different order from the sort of fees under consideration here. He referred to the trial occupying only one day, and only one witness being called, but this was in connection with the particular limited factual basis for what were essentially issues in relation to the interpretation and application of the various contractual documents. That the hearing only occupied one day was really a tribute to the extent to which it had been carefully prepared in advance.

[80]
Full written submissions had been prepared by both sides. Although counsel did speak to them, they were far more than a brief outline of the argument to be advanced. That so much of the arguments were set out in writing no doubt contributed to the shortness of the matter, and was certainly of great assistance to me in the preparation of my reasons. A large part of the afternoon was occupied in taking me through the relevant parts, or at least what the two parties submitted were the relevant parts, of the various contractual documents, which were quite voluminous. As it was, the oral submissions lasted for the rest of the afternoon. In my opinion, where the preparation of detailed written submissions has the effect of shortening the trial, it is wrong in principle to treat the shortness of the trial as a factor which justifies allowing a lesser fee; rather, the fact that detailed written submissions have been prepared is a factor which would justify allowing a larger fee, if one is to treat the preparation of submissions as being part of the fee for the trial.

[81]
I suspect that the original notion of a fee on brief was based on the idea that a barrister was essentially paid for his work in court,^[33] on the assumption that relatively little in way of preparation for the trial would be necessary beforehand, although there would usually be a conference as well. That was no doubt reasonable enough in the old days when most litigation was so simple that all a barrister had to do was read his brief and go into court, but it is an entirely inappropriate approach when dealing with modern litigation with the complexity of the issues which were involved in the hearing of this matter. Accordingly, it was quite wrong for the registrar to say as he said (para 311) that one of the reasons why the fees were excessive were that “the work for which the fees have been incurred occurred on 5 September 2001”. That in my opinion is an attitude to the assessment of fees which is obsolete and should be abandoned.^[34] In such a matter, counsel is expected to work in preparation for trial before the day of trial, it is reasonable or proper for that to be paid for, and it is part of costs assessed on the standard basis. To say that all that was recoverable on a standard assessment was remuneration for the work counsel did on 5 September 2001 was clearly wrong, and involved a serious error on the part of the registrar.

[82]
That it was reasonable to retain as counsel a relatively senior junior counsel was amply justified in my opinion by the complexity of the matter, and in any event by the fact that the defendant had briefed senior counsel. It is unnecessary to consider whether that fact justified the briefing of senior counsel on the part of the plaintiff, but it undoubtedly justified the briefing of at least a senior junior. In those circumstances, the issue was whether the fees paid to the counsel concerned were excessive having regard to the fees which would have been charged for doing such work by senior juniors generally. There was no finding on the part of the registrar to the effect that senior juniors generally would charge of the order of the amount allowed, and there was therefore not that basis for the reduction of the fees to that amount.

[83]
The plaintiff submitted that it was not a matter for the registrar to decide what barristers should charge for a particular piece of work, but to assess fees by reference to what they generally do charge. If the fee charged by a particular counsel were out of line with fees that counsel of that calibre would ordinarily charge for such work (something the registrar is expected to know in the course of his work), then it was reasonable to reduce the fees, but if it was reasonable to brief counsel of a particular calibre, it was reasonable to pay market rates for counsel of that calibre prevailing at the time.

[84]
I have a good deal of sympathy with this submission, but it appears that such authorities as there are on the subject are against it. The matter is discussed in Del Pont “Law of Costs” (2003) paragraphs 17.65 and 17.66, which suggest that it is part of the function of an assessment of costs on a standard basis to take into account what it is reasonable for an unsuccessful litigant to have to pay by way of counsel’s fees, other than simply on the basis of the market rate for counsel of the seniority which it was appropriate to brief. Reference was made there to the decision of Walker v Law Society of Tasmania [1991] Tas R 121, especially at 142, which suggested that, even in a situation where it was appropriate to brief particularly eminent counsel, it remained a matter for the registrar to determine what should be allowed by way of fees to that counsel. I must say I have difficulty with this approach; it seems to me that if it is necessary or proper to brief counsel of a particular standing in a matter, then it must logically be necessary or proper to incur whatever fee has to be paid in the market place in order to engage counsel of that standing, so that a fee is only “excessive” in the relevant sense if it is more than had to be paid in order to secure counsel of that standing. That seems to me to be more consistent with the more general authorities on party and party costs, but not with the authorities specifically in this area. However, in the circumstances I will defer to those authorities, and approach the matter on that basis.

[85]
Counsel in his affidavit said that he considered his fees were probably at the lower end of the range of fees charged by his contemporaries in commercial matters of the kind, and that the WorkCover schedule of fees which came into force on 2 September 2002 provided a fee of $300 per hour plus GST for conferences, for work which counsel said, plainly correctly, was generally less complicated than the matters involved in this action. There was no finding that that proposition was wrong, nor did the registrar set out any proper basis in his reasons for concluding to the contrary.

[86]
Apart from this, even on the basis of what I know myself about the level of barrister’s fees, I regard a fee of $2,750 for appearing on the hearing of the preliminary questions, against senior counsel with a junior, with all the preparation work properly involved in such a matter, including the preparation of detailed written submissions, as manifestly inadequate. It is obvious even to me that the registrar did not allow a sufficient fee in relation to this hearing.

[87]
With regard to the conferences, in my opinion the conferences were plainly appropriate as part of preparation for trial, and are recoverable on assessment on a standard basis subject to the consideration of whether the conferences included advices on prospects. In relation to the conference on 10 August, that was part of the function of the conference, and it was reasonable for the registrar to reduce the fees charged in respect of the conference on that basis. But it was not appropriate to disallow the conference fees entirely, since the conference was in part justified as part of the preparation for trial.

[88]
There was a further conference on 28 August 2001, which was after the partial settlement agreement: item 1065. Again, the solicitor claimed three hours in relation to attending the conference. In relation to this, it appears that the registrar has misinterpreted something which was said in the barrister’s affidavit. As he said at paragraph 116, the conference referred to in paragraph 6 of the affidavit, which was concerned with the terms of a draft of the agreement which became the partial settlement agreement of 24 August, was obviously a conference which was held not later than 24 August, and was therefore not the conference held on 28 August. There was no fee claimed in the cost statement in respect of any conference between 22 and 24 August, because no doubt that conference was a cost of a solicitor and client nature and therefore properly not claimed. But paragraph 7 was concerned with a different, later conference, after the agreement had been entered into. Insofar as the registrar was treating paragraph 6 as an attempt to justify the conference of 28 August, in my opinion it involved a misinterpretation of the barrister’s affidavit. It is true that paragraph 7 of that affidavit was not directed just to the conference on 28 August, because it also referred to something happening or being done on 4 September 2001. There was a fee charged for that conference included in item 1072, which was treated as part of the preparation for trial.

[89]
It is not at all clear to me why the earlier conference on 28 August should not be in the same category. It seems to me that what one gets from paragraph 7 is that this was part of the process of working out what evidence ought to be prepared for the hearing (from Mr Callaghan), hence was part of the general preparation for the hearing. It appears that item 1065 was disallowed essentially because the solicitor was unable to provide a contemporaneous note containing sufficient details of what took place at the conference: para 120. It seems to me that in the light of the affidavit from the barrister there was sufficient information as to what happened at this conference to demonstrate that it was properly part of preparation for trial.

[90]
In my opinion, the hearing on 5 September was of sufficient difficulty and complexity, and the volume of the material being relied on at the hearing sufficiently large, to justify two full days preparation on the part of counsel, as well as the day of the hearing itself. Accordingly, if one treats preparation for the hearing as being part of the fee on brief, then all of that should be covered by the fee on brief, although in practice I think it was reasonable for counsel to charge separately, as he did, for preparation, drafting submissions, and conferences. The period of two days that I have in mind would allow for reasonable conferences with the client to assist in preparation. If one treats the registrar’s allowance of $2,750 as reasonable remuneration for the work done on one day (5 September 2001),^[35] it follows that reasonable remuneration for work done on three days comes to $8,250. That, however, is more than the total of items 940, 1060, 1065, 1067, 1072, and 1078. If one apportions half of the conference fee of item 940 to preparation for the hearing, that produces a total charged of $6,875.^[36]

[91]
Overall, in my opinion the fees claimed under items 1060, 1065, 1067, 1072, and 1078 should have been allowed in full. The reasons given by the registrar for disallowing these items (other than item 1078 which was allowed in full) were wrong. In my opinion they are properly recoverable on the standard basis as counsel’s fees properly incurred in connection with the hearing and preparation for hearing. In relation to the conference on 10 August, item 940, part of that conference was properly involved in preparation for the hearing, but part of it was for a solicitor and client purpose, the quantum was reasonable, and accordingly half the fee should have been allowed. In respect of item 940, I will allow half of the claimed fee, $412.50.

Item 1310

[92]
The next item in dispute was item 1310, the fee for a conference with the solicitor and client on 19 July 2002, and for appearing on a directions hearing that day. The deputy registrar reduced this to $247.50, which was to cover just the directions hearing: para 313. The registrar disallowed that part of the fee which he attributed to the conference on the basis of an advice from counsel which he said dealt with matters which were properly solicitor and client items, or were covered by rule 728, and there was no special reason for a conference as well as the fee to settle the amended document. This was part of the process of amending the statement of claim in the light of matters raised by the Court of Appeal, and it was certainly appropriate for there to be an amended pleading in the light of that decision, although whether this conference was justified in connection with that is another matter. The registrar has in paragraph 64 of his reasons gone in some detail through the matters referred to in the advice, and identified most of them as matters which either were specifically of a solicitor and client nature, or did not justify a conference. It is unnecessary for me to deal with those in detail, because I am not persuaded that the reasons given by the registrar in relation to this conference were wrong. Insofar as this fee covered the conference on 19 July, the registrar was entitled to disallow it.

[93]
One matter that concerns me, however, is the amount which the registrar has allowed for appearing on the direction hearing. Counsel appeared for the defendant on 19 July 2002 as well, and according to my notes the matter took most of half an hour. Someone, presumably counsel for the plaintiff, had prepared a draft order which was the basis of the directions that I made. This was the first directions hearing after the matter came back from the Court of Appeal, and I set up the timetable for the amendments to the pleadings and adjourned the matter for further directions to 25 October.

[94]
There were then further directions and the matter was adjourned to 5 December when it was set down for trial, with a review on 29 January. Counsel did not appear on 25 October, the directions being made by consent, but counsel did appear on 5 December^[37] and on 29 January 2003, when he charged $990, and the registrar allowed $330: item 1554, para 348. On 29 January 2003, both parties had counsel, and the matter was mentioned in the course of an ordinary chamber day, rather than at a fixed time before 10 am. It was the seventh matter that I dealt with that day, and by the time it came on it was a consent order and was dealt with in five minutes. No reason was given by the registrar for this variability in the amounts allowed for counsel appearing at direction hearings. Plainly if $330 was an appropriate amount to allow at item 1554, there was no good reason to allow only $247.50 at item 1310. If anything, the earlier directions hearing involved consideration of more matters.

[95]
At paragraph 306, when dealing with item 1045 (fee for appearing at a directions hearing on 24 August 2001, not the subject of review), the registrar said that a fee of $275 was appropriate for counsel to charge to appear on a directions hearing in the District Court.^[38] That may be so for a reasonably straightforward matter where nothing very much was going to happen on a directions hearing, but it strikes me as quite inadequate for an appearance at a directions hearing in a matter such as this at which something of any significance might be expected to happen. It really makes no proper provision for preparation for the hearing, and assumes that the hearing is essentially a formality. If a hearing really is just a formality, then perhaps counsel ought not to be briefed to appear on it anyway, but if counsel of this barrister’s standing is to be briefed to appear on a directions hearing in this matter, a fee of $275, let alone $247.50, seems quite inadequate for the purpose.

[96]
It seems to me that the approach of the registrar to the assessment of the fees for directions hearings was not properly undertaken. There seems to be a degree of arbitrariness involved in fixing three separate fees for three separate direction hearings, and, more importantly, the fees appear to have been based on the proposition that all that was appropriate was a fee for an ordinary directions hearing in an ordinary District Court action. As I have already said, I did not regard this as an ordinary action, the matter was much more complicated, and to some extent that affected the directions hearings as well, and it seems to me that for this particular action a fee of $275 for a directions hearing was just manifestly inadequate. It does not make proper allowance for the time appropriately involved in preparation for the hearing as well as the actual hearing itself. In my opinion, the appropriate allowance for the two direction hearings which are subject to review, items 1310 and 1554, was $495,^[39] and I will vary the amount allowed for item 1310 to $495.

Item 1318

[97]
The next item in dispute was item 1318, a fee for an advice provided by counsel, which was the document discussed by the registrar at paragraph 64 of his reasons.^[40] As I indicated in paragraph [93] above, the registrar identified most of the matters in that advice as being of a solicitor and client nature, and I am not persuaded that that was wrong. The registrar said in relation to item 1318 that the fee could not be sustained “in view of the conclusions that have been reached in respect of the conferences and the report under objection number 3”: para 315. That was a reference to the analysis which I mentioned earlier. That analysis was directed to the question of whether a conference was justified, rather than the question of whether the advice was something for which a charge could properly be made. The first item listed in paragraph 64 was a statement as to what work Mr Callaghan, the quantity surveyor, had been asked to undertake, which was said not to justify a conference. Accepting that that did not justify a conference, it is not clear why it was not appropriate for counsel to record in this way his advice as to what work the quantity surveyor should be doing, and to charge for having provided that advice, presumably originally conveyed orally at the conference. Assuming that a conference was not justified for the purpose, it does not follow that it was not appropriate for counsel to provide advice as to what work the quantity surveyor should undertake.

[98]
Apart from this, however, the registrar in paragraph 64 has dealt with the question of whether it was appropriate for the advice to be obtained at all in relation to the various matters in respect of which advice was provided, in the context of standard costs, so that with this exception the reasoning provided justified the conclusion at paragraph 315. In all the circumstances, I am not persuaded that sufficient justification has been shown for interference with the registrar’s decision to disallow the fee at item 1318.

Item 1337

[99]
The next item in dispute was 1337, relating to drafting the amended statement of claim. Counsel dealt with the amended statement of claim in paragraph 13 of his affidavit, saying that the amendments “dealt with the issues in dispute in the way that responded to the matters raised by and the approach of the Court of Appeal, and claimed the retention.” That is the retention moneys which had by then become due under the contract. The registrar in his reasons at paragraph 318 said:

“As the result of the decision by the District Court some of the allegations in the plaintiff’s amended statement of claim became unsustainable. To the extent the defendant had been successful in the proceeding upon the issues resolved by the short trial, any amendment of the plaintiff’s amended statement of claim as a result of the findings adverse to the plaintiff would seem to be regulated by r 692 UCPR and the plaintiff should bear the costs. Similarly, any amendments solely the result of the plaintiff refining its claims (see for example the amendment of the amendment of variations 14 and 18) at a late stage in the litigation would attract the application of the provisions of r 692. The part of counsel’s fee attributable to those aspects cannot be allowed to the plaintiff.”

[100]
He added at paragraph 319 that the plaintiff had been allowed a reasonable amount to prepare the claim for payment of the retention moneys.

[101]
The difficulty with these reasons is that they do not address the first of the particular issues identified by counsel as requiring amendments to the statement of claim. The pleading became the further amended statement of claim filed on 29 August 2002. Looking at that pleading, the only significant changes to the body of the pleading were the insertion of paragraphs 4A to 4F which were directly responsive to the decision of the Court of Appeal, and the insertion of paragraphs 27 to 38 which were the claim for the retention moneys. The details of the variation claims were set out in Schedule A to the statement of claim. Most of Schedule A is in the same terms as in the previous pleading. Part of variation 15, and all of variation 17, were appropriately deleted, consequent upon the decisions in the District Court and the Court of Appeal, but obviously there was no significant amount of time and effort involved in making those changes. There was a minor change to variation 14, variation 18 was quite different but there was very little in the way of drafting involved in making the change, variation 20 was modified fairly substantially, and variation 22 was also deleted. In the light of this, it seems to me that the changes to the statement of claim consequent upon such success as the defendant had had in the District Court required no significant work, and that little was involved in anything which might be characterised as refining the claims at a late stage of the litigation.

[102]
The registrar’s reasons are inadequate because they fail to address what was obviously the principal reason for counsel’s work associated with the amendment to the statement of claim, the insertion of paragraphs 4A to 4F. What was expressly referred to in paragraph 318 would not, it seems to me, have involved any substantial part of the effort involved in drawing the amended statement of claim. This did not justify a reduction in the fee claimed of almost 25%. The claim for the retention money was relatively straightforward. On the other hand, in relation to the earlier paragraphs, paragraph 4A sought to challenge the conclusion as to the interpretation of the contract drawn by the Court of Appeal.^[41] There was then a plea that the contract had been subsequently varied, or alternatively one of waiver, and there was then a claim for variation in relation to variation 15, which had previously been pleaded along with the other variation claims.

[103]
If the registrar’s intention was that paragraph 319 was to cover both the claim for the retention moneys and the claim in paragraphs 4A to 4F, then I consider that the amount deducted because of the factors in paragraph 318 was manifestly excessive. I accept that in principle the matters referred to in that paragraph are correct, and justify some deduction, but obviously far more than 75% of the fee was attributable to the other matters. If the registrar was intending to say that the matters referred to in paragraphs 4A to 4F were in some way covered by paragraph 318, then I do not agree, and consider that that was an error of principle in the way the assessment was undertaken. On either basis, and because the reasons were inadequate and therefore there was an error of law on that basis also, I propose to reassess this fee myself, though having due regard to what was said by the registrar about it. What was said in paragraph 318 I think justifies making some reduction to the total fee claimed, but my assessment of the significance of the amendments in the new pleading is that a deduction not more than 10% should be made on that basis. That produces a figure of $816.75 and I will allow that amount.

Item 1440

[104]
The next item in dispute was 1440, the fee for drawing and settling further and better particulars. The matter is complicated by the fact that the registrar considered this fee in conjunction with the fee counsel charged at item 1445 for drawing a second set of particulars pursuant to a request on 1 October 2002: paras 320-328. Essentially, the registrar found that, although there were some additional particulars sought after the first document had been prepared, the request of 1 October 2002 was largely a repetition of the earlier request, so that little more needed to be done in order to finalise the document which was then provided in response, and covered both requests. The registrar considered that it was appropriate to look at both fees by reference to the total amount of work properly required to draw and settle that document, and allowed $545 under item 1440 in respect of that amount of work, disallowing in full the amount claimed under item 1445. Item 1445 is not subject to review.^[42] Strictly speaking, all I am reviewing is the decision to reduce the amount claimed under item 1440 to $545. There was nothing in the affidavit by counsel which indicated or suggested that the approach adopted by the registrar was wrong. Overall, in relation to this item, it has not been shown that circumstances exist which would justify my interfering in the assessment of the registrar.

Item 1519

[105]
The next item in dispute is item 1519. Item 1519 was one of those addressed by the registrar in that part of his reasons where he was dealing with the objections 3 and 5 in relation to solicitor’s work, and it was obviously related to item 1518, which was the charge made by the solicitor for attending the conference with counsel for which counsel’s fee was item 1519. Both were disallowed. In relation to this,^[43] it appears that essentially the registrar disallowed the conference on 17 December on the application of r 728, on the basis that costs had been allowed to settle a reply, and there was no special reason to justify a conference in addition.^[44]

[106]
At first glance, r 728(2) does not apply, because counsel was briefed merely to settle the reply, not to draw and settle it. However, counsel’s affidavit indicated that the reply was drafted as a result of the conference that occurred on 17 December 2002 (the item 1519 conference). I cannot identify a different item in the cost statement by the solicitor (or for that matter counsel) for drawing the reply, and, as the registrar noted at para [91], the plaintiff’s submissions before him in support of the fees for inter alia the conference on 17 December 2002 referred to the advantage of there being a meeting between the client, solicitor and counsel on the one occasion “particularly where counsel was responsible for the drafting and settling of the amended statement of claim.”

[107]
On the whole, the registrar seems to have proceeded on the basis that, notwithstanding that counsel’s fee and the cost statement only referred to counsel settling the reply, in fact it was also drawn by counsel. Plainly, the sub‑rule cannot be avoided simply by counsel refraining from charging in terms for drawing the document, or by omitting to refer to drawing the document in the costs statement, if counsel did in fact draw the document and the registrar allowed costs to counsel for doing so. The registrar at paragraph 329 referred to item 1530 as relating to a fee paid to counsel to draw a reply, although in terms he claimed a fee for settling the reply. It does appear therefore that in allowing such amount as was allowed under item 1530, the registrar has allowed costs to counsel to draw and settle the reply, and accordingly the sub‑rule applied. The registrar was not persuaded that there were special reasons making the conference necessary, and I am not persuaded that his decision to that effect is one with which I can and should interfere.

Item 1530

[108]
With regard to the amount for drawing and settling the reply, item 1530, that was reduced from the amount claimed to $600, on the basis that the fee of $990 was excessive. There was nothing in the affidavit of counsel specifically addressing the difficulty or complexity of the reply. I have read the reply, which was filed on 20 December 2002, and much of it was of essentially a formal nature. There was, however, one part which is quite substantial, paragraph 10 of the reply which responded to paragraph 10 of the relevant defence.^[45] In order to understand the situation, I need to refer first to the then current statement of claim, which provided in paragraphs 11 and 12 that the defendant had wrongfully and without authorisation made deductions from the amounts payable to the plaintiff pursuant to the contract. Two deductions were relied on, one of $875 and one of $6,296, deducted in respect of variation number 14.^[46] The defendant’s response to these claims was set out in paragraph 10 of the relevant defence. That paragraph ran for four pages of single line spacing in a relatively small font, incorporating 12 subparagraphs, some of which included some sub‑subparagraphs.

[109]
As to the amount of $875, it was alleged that this represented a valid deduction, on grounds allegedly particularised in a facsimile referred to earlier in the pleading, and on the basis that the defendant made a valid charge for cleaning under the subcontract, particulars of which had also already been provided. In relation to the larger claim, it was admitted that there was a variation which was carried out by the plaintiff, but alleged that a deduction of the amount referred to was a reasonable price for the changes (both positive and negative) to the area of windows and doors supplied and installed by the plaintiff as a result of the variation. There was a further plea that this variation and a dispute in relation to it were the subject of a remeasure agreement in 1999 alleged to have been partly written, partly oral and partly by conduct; detailed particulars were incorporated of each of these aspects of the alleged agreement. It alleged that as a result of that agreement there was a remeasure which produced essentially the same result. There was then a further claim pleaded in the alternative, to the effect that if the earlier agreement had not been performed in a way which produced a result justifying the deduction which had been made, that was because of the fault of the plaintiff, and had the plaintiff not been at fault the plaintiff would not have been any better off from the working out of that agreement.

[110]
Obviously, this involved detailed factual matters in respect of which instructions had to be obtained, and which would have required careful consideration in relation to the formulation of a reply. Paragraph 10 of the reply, which was the response, ran for almost two and a half pages, and in a number of respects put forward specific alternative factual matters relevant to the allegations pleaded by the defendant. It obviously would have required careful consideration of the factual issues surrounding the alleged agreement in 1999. On the other hand, the registrar in paragraph [332] said that it was evident that the reply did not require extensive research in the course of its preparation, and that beyond reading the earlier pleadings “there was no reason to consider a wide range of other material.” There was a reference in a footnote to the fact that a lot of the reply consisted of adoption of admissions, and “several paragraphs relate facts that ought to have been pleaded in the further amended statement of claim.” It is not clear whether this comment was intended to be directed towards paragraph 10 of the reply, which was only one paragraph, but there was little else in the reply which to any significant extent related facts. If it was, then insofar as the registrar was of the view that this was a matter which should have been included in the amended statement of claim rather than the reply, I do not agree.

[111]
In my opinion, the course of pleading in this matter was correct. The plaintiff alleged that there had been a wrongful reduction by the defendant from the amount payable under the contract. That was all that the plaintiff needed to plead at that stage. If the defendant asserted that it was entitled to make the deduction, it was a matter for the defendant to plead facts justifying the deduction made. It was then a matter for the plaintiff, properly by way of reply, to respond to those factual allegations. That was particularly applicable in circumstances where the defence relied heavily on an agreement which was obviously no part of the plaintiff’s claim, and which ought not to have been included in the statement of claim. It was a matter for the defendant to plead that agreement, and then a matter for the plaintiff to respond to that pleading in the reply.

[112]
If paragraph 10 was the subject of this criticism, the registrar’s criticism was misplaced, and it follows that his approach to the assessment of counsel’s fee for the reply was wrong. If that comment was not directed to paragraph 10, the reasons are unclear because it is by no means obvious what it was directed to. There was no recognition in the reasons of the registrar that paragraph 10 in the reply involved substantial new factual issues which required careful consideration. In these circumstances, the assessment of counsel’s fee in relation to the reply was undertaken by the registrar on a wrong basis. The amount claimed was $990. It appears that by then counsel was charging $300 an hour plus GST, and on this basis three hours was spent on the reply, which I think was reasonable, indeed modest, in the circumstances. Accordingly, the amount claimed is allowed in respect of item 1530.

Items 1552 and 1560

[113]
The next item in dispute is item 1552, a conference with the client on 28 January 2003, which can be taken in conjunction with item 1560. The former was an occasion on which further instructions were obtained in conference as a result of some criticism on the part of the defendant of the terms of the reply which was filed and served in December 2002, as appears from paragraph 17 of counsel’s affidavit. There was, however, a separate fee, item 1560, in respect of a conference with the client and solicitor on 3 February 2003 discussing amendments to the reply and particulars. As a result of that conference, an amended reply (and amended further particulars to the further amended statement of claim and the reply) were filed on 6 February 2003. The registrar examined that document and concluded that, having regard to the nature of the amendments which were identified in his reasons, there was no need for instructions from the plaintiff’s representative to make these amendments: para 338‑340.

[114]
He then said, somewhat curiously, that the charge for the work was excessive and the allowance that was made on the assessment was more than the work justified: para 341. As far as I can see, the full amount of the fee for item 1552 was disallowed on assessment. The full amount of the fee at item 1560 was also disallowed. This was said to have been because of the reasons given in response to objections 3 and 5, which would have been in relation to item 1559, the amount claimed by the solicitor for attending that conference, which was also disallowed. The registrar disallowed the conference with counsel on the basis the rule 728(2) applied and there was no special reason justifying a conference as well as the fee for drawing and settling the amended reply,^[47] and on the basis that the length of the conference of the client was excessive; an amount of 45 minutes was said to have been allowed under item 27: para 89.

[115]
The problem with these reasons in relation to item 1560 is that it does not appear that there was any separate fee paid to counsel for drawing and settling the amended reply, so sub‑rule 728(2) did not apply in this case. But I think the substantial difficulty for the plaintiff here is that there was really no significant or substantial difference between the amended reply and the original reply, and insofar as any further work was done on the reply, it was because of deficiencies in the original reply rather than because of anything that happened after service of the original reply which made the amendment appropriate. The position appears to have been simply that the reply ought to have been in the form of the amended reply when it was originally drawn and settled and filed, and insofar as that did not occur, the additional costs involved were of a solicitor and client nature and are not recoverable on an assessment on the standard basis. In respect of items 1552 and 1560, therefore, it has not been shown that there is any proper basis upon which I could interfere with the decision of the registrar.

Item 1554

[116]
Finally, in relation to item 1554, the fee for appearing on the directions hearing on 29 January 2003, I have already discussed the position in relation to counsel’s fees for directions hearings.^[48] The reasons the registrar^[49] canvassed the history of the action in a way which does not seem to me to have anything to do with the amount of work required for the directions hearing on 29 January, noted that the hearing in court was brief and the orders were made by consent, and concluded that it would not be onerous for experienced representatives and would not entail lengthy preparation. On that basis, the objection was disallowed. There is nothing obviously wrong about this reasoning in isolation, but for the reasons given earlier, it seems to me that the approach of the registrar generally to the fees for appearance on directions hearings was unsatisfactory, and for those reasons, I will reassess in relation to item 1554 and allow $495. Accordingly, overall the amount allowed for counsel’s fees is increased by $5,496.75 to $12,905.25.

Solicitor’s attendances

[117]
The next matter addressed in the submissions were the attendances and attendances requiring skill of legal knowledge, in relation to the items listed at numbers 3 and 4 in Annexure A to the application. Those listed at number 4 were matters which support the item 27 claim, as indeed were most of those listed at number 3,^[50] and these do not need to be separately addressed.

[118]
The remaining items listed at number 3 of the application can be fairly quickly dealt with. Item 645 was the amount claimed for attending a mediation, which was reduced on the basis that the mediation did not last the whole day. The solicitor claimed by reference to item 58(1) then in schedule 2 for conducting a trial without counsel, which was reasonable enough, but that item is at an amount “per day” and the registrar reduced the amount because the full day was not occupied with the mediation. There are obviously different ways on which this can be approached, but the approach adopted by the registrar was certainly an approach which can be adopted, and is not obviously wrong, though it occurs to me that there are at least some reasons why a different approach might have been adopted. However, no specific submissions were advanced in relation to this item on behalf of the plaintiff, and no authorities were relied on as showing the registrar’s approach was wrong, and although I do not specifically endorse it, in the circumstances I am not persuaded that it was wrong. No basis has been shown therefore on which I could properly interfere in the assessment of item 645.

[119]
The next item, 775, was not disallowed, and there is no basis for reviewing the registrar’s decision, and item 777 was not an attendance, so the same situation applies. Item 779 is referable to item 781, and both were disallowed as a solicitor and client cost.^[51] It is sufficient to say that having considered the reasons given by the registrar, I am not persuaded that any basis has been shown on which it would be appropriate for me to interfere with the registrar’s decision on items 779 and 781.

[120]
Item 939 is the attendance of the solicitor at the conference with counsel on 10 August 2001, for which counsel’s fee was item 940. It is sufficient to say that for the reasons given earlier in relation to item 940,^[52] it is appropriate to allow half the amount claimed in respect of this conference, so I will allow $199.50 for this item. Item 1064 is the solicitor’s attendance at the conference with counsel on 28 August 2001, counsel’s fee for which was claimed at item 1065. For the reasons given in relation to item 1065,^[53] this conference ought to be allowed, and therefore the solicitor’s fee was also properly claimed and I will allow the amount claimed of $399.

[121]
According to the registrar’s reasons, the claim in relation to item 1069 was withdrawn in submissions to the registrar: para [42]. It has not been shown that this was not correct. Item 1071 is a claim in respect of the solicitor’s attendance at the conference with counsel on 4 September 2001. I have allowed counsel’s fee in item 1072 in respect of preparation and conferences on that day, but the registrar also found that it was not shown that the solicitor had attended a conference on that day, or for how long. There has been no basis shown on which I could properly interfere with either of these findings by the registrar, and either was a sufficient ground to disallow item 1071, so the decision on that item must stand.

[122]
Item 1096 was disallowed by the registrar essentially on the basis that this was properly a solicitor and client charge. Nothing has occurred which provides any proper basis to interfere with the registrar’s conclusion to this effect. Item 1302 is attendance at a conference with counsel on 17 July 2002 in respect of which counsel’s fee was item 1303. This item was decided by the registrar together with item 1309, which involved attendance at a conference with counsel on 19 July, for which counsel’s fee at 1310 included both the conference and attendance at the directions hearing. For reasons given in relation to item 1310, I am not persuaded that insofar as the conferences were concerned there is any proper basis on which to interfere with the registrar’s decision, in relation to items 1302 and 1309. The solicitor would have been entitled to claim for an attendance instructing counsel at the directions hearing on 19 July, but it does not appear that that was advanced as an alternative basis to justify a charge before the registrar. In those circumstances, I do not think I can allow anything on that basis at this stage.

[123]
Item 1416 was an attendance at a conference with counsel on 1 October 2002. Counsel’s fee in relation to this was claimed at item 1417, was disallowed by the registrar, and that decision is not subject to this review. In relation to item 1416, the reasons of the registrar from paragraph [129] indicates that this was disallowed on the basis that the involvement of counsel was not required in relation to these matters. No basis has been shown on which I can properly interfere with the registrar’s decision in this regard.

[124]
Item 1429 was a claim for attendance inspecting documents on 7 October for a total of 3 hours 36 minutes, which is mentioned in paragraph [7], but so far as I can see was not otherwise addressed in his reasons. There is a note on the costs statement suggesting that the diary note in respect of the inspection did not demonstrate that the time claimed had in fact been occupied, and one hour only was allowed. The absence of reasons in this regard is unsatisfactory, but there is some indication from the note on the costs statement that there was some basis for making this reduction, and in the circumstances I do not think it is worthwhile to send the matter back to the registrar seeking further reasons. No sufficient basis has been shown to justify my interfering in the registrar’s decision.

[125]
Item 1518 is the item for the solicitor’s attendance at a conference with counsel on 17 December 2002. Counsel’s fee for the conference was item 1519, which is also subject to the review. For the reasons given in relation to that item,^[54] no basis has been shown on which I could properly interfere with the registrar’s decision. Item 1559 is for attendance at a conference with counsel on 3 February 2003. Counsel’s fee for the conference was item 1560, which was also subject to the review. For the reasons given in relation to that item,^[55] no proper basis has been shown on which I would be entitled to interfere with registrar’s decision. Accordingly, in relation to such of these items as are not simply referable up to the item 27 claim, the result is that the decisions on two of them are set aside, and the amount allowed increased by a total of $598.50.

GST on legal costs

[126]
Finally, the plaintiff submitted that the registrar erred in reducing the amount allowed by one-eleventh on the basis that this represented the GST component of costs, and it was necessary in order to limit the amount recovered to an indemnity, since the plaintiff was entitled to an input credit in respect of GST paid by it on amounts paid to the solicitors and others. After the costs statement was assessed, the registrar reduced the amount arrived at by one‑eleventh, on the basis that one‑eleventh of the amount paid by way of legal costs was GST, and the plaintiff was not entitled to be reimbursed in respect of that, because the plaintiff had already obtained an input tax credit in respect of it.

[127]
Broadly speaking, whenever goods or services, including legal services, are provided for consideration, there is a taxable supply, and the supplier has to pay GST of one‑eleventh of the amount paid. However, when the supply is to a business which is itself registered for the purposes of GST, and when the supply is of an input for the purposes of that business, it is entitled to an input credit in respect of that input representing the amount paid by way of GST, which can be set off against its own GST obligations. In effect, although it pays GST on the bill to the solicitor, it obtains credit for the amount so paid. This will not apply if the client is not registered as a business for GST purposes, for example, where the client is an individual who is not in business, as will normally be the case with the plaintiff in an action for damages for personal injury. It was accepted that the plaintiff in this case was registered for GST purposes and obtained input tax credits in respect of any GST paid by it. That would include any amount paid by the solicitors as outlays and reimbursed by the client.

[128]
The Commissioner of Taxation has issued a public ruling, GSTR 2001/4, in relation to GST consequences of court orders and out of court settlements which, among other things, deals with the GST treatment of an award of costs or a negotiated costs amount. Costs are discussed from paragraph [145]. Paragraph [149] says:

“Accordingly, the payment of court ordered costs or costs negotiated in a settlement in the circumstances described will not be consideration for an earlier or current supply. It does not matter that the payment of the costs order or settled amount is made by an entity other than the unsuccessful party. The costs order or settled amount should take account of any entitlement to an input tax credit of the parties to the original supply.”

[129]
Two examples are then given, the first concerning an unsuccessful party who is not registered for GST; it was said that the actual cost to that party was a GST inclusive amount. A second example involving a registered entity, was given, and it was said that the actual cost to that entity was a GST exclusive amount (para [154]):

“Consequently, the parties should take this into account when negotiating the amount that will be paid in respect of costs.”

[130]
The registrar seems to have treated this as justifying a blanket one‑eleventh reduction in the costs recovered from the plaintiff. This matter was one of the issues raised in relation to the review, and on the hearing of the review it seemed to me that this involved an assumption that the payment of the costs pursuant to the order would have no effect on the input credit which had previously been allowed in respect of the legal costs and outlays. I suspected that this was something which really depended on the terms of the Commonwealth legislation, and invited counsel to consider that and make submissions. Neither party referred to any particular provisions of the legislation, either to confirm or exclude this analysis. It is not a matter addressed in the public ruling, although there is a reference in paragraph 125 to an increasing adjustment which could arise in circumstances where the amount of the consideration for a taxable supply on which an input credit had been obtained had subsequently been reduced as a result of an award of damages in respect of that supply. Presumably, if the payment of costs to the party who had paid the solicitor and obtained an input credit resulted in an increasing adjustment, the Commissioner would have noted that in the ruling, so I will proceed on the assumption that the Commonwealth legislation does not provide to that effect, although I have not actually checked it.

[131]
It seems to me, however, that there are problems with the approach of the registrar. In the first place, GST only applied from 1 July 2000.^[56] The costs statement begins on 12 August 1999. Although it does seem that quite a lot of the early items have been disallowed, not all of them have and the amount prior to 1 July 2000 is not insignificant. I would have thought that GST was only payable on the services supplied on or after 1 July 2000, so that any deduction for GST should not apply prior to that date anyway. It seems on the face of it that the registrar’s deduction of one‑eleventh did apply to the whole of the period, and that was an error.

[132]
The second difficulty is that the sweeping application of a one‑eleventh reduction to everything in the cost statement ignored the fact that some of the outlays were not subject to GST. The plaintiff identified two, items 73 and 455, filing fees, which are GST exempt, totalling $382.90, and the defendant conceded in its submissions in response that no reduction should have been made in respect of GST on these items. It follows that the registrar’s reduction was in this way $34.81 too high.

[133]
A third difficulty arises in view of the fact that the professional costs were claimed and allowed in accordance with the District Court scale in Schedule 2 to the UCPR. A different approach to GST is apparently adopted in Victoria. The plaintiff provided me with a copy of the reasons of the taxing master in the Supreme Court of Victoria, Master Wood, in a matter where this was considered in June 2006: Merringtons Pty Ltd v Luxottica Retail Australia Pty Ltd and Anor.^[57] The master noted that the court costs scales were adjusted to make allowance for the impact of the GST,^[58] and that the “bill of costs is drawn on scale in relation to work performed by the solicitor”.^[59] He noted that there was no general discretion to allow less than the scale amount for scale items except in instances where there was an express power to do so, citing Fat‑sel Pty Ltd v Brambles Holdings Ltd (1985) 6 FCR 440 and the cases there cited.^[60] On the basis of this authority, he concluded that, in relation to professional costs where costs were allowed according to the scale, no reduction could be made. His reasoning was summarised in paragraph [34]:

“In my view, the question of the impact of GST in relation to the costs items in the scale is clear‑cut. Put simply, the scale is the scale and although it was adjusted at the relevant time to include a component for GST, it does not take into account the impact upon the individual in the sense that scale items are not capable of reduction due to any entitlement that the recipient may have in relation to input tax credit unless the scale or rules outline a discretion or power to do so.”

[134]
Accordingly, he refused to make a reduction of the kind made by the registrar in the present case in respect of items allowed at scale for professional costs, though he did make a reduction in respect of the amounts of disbursements in the way adopted by the registrar. In arriving at this conclusion, he had regard to the tax ruling to which I have referred, and also distinguished a decision of the Supreme Court of Tasmania in Thornton v Apollo Nominees Pty Ltd [2005] TASSC 38. That decision was distinguished on the basis that in that case the party with the benefit of the costs order was not registered for GST purposes. In that case the issue was whether it was appropriate for the amount paid by the appellant to his solicitors as GST on their costs and outlays to be passed on to the respondent under the costs order. There was no consideration of the effect on this of input credits, and it was apparently assumed that GST was recoverable on top of the amount allowed for professional costs. That may have been the case then in Tasmania, but has not been the case in Queensland.

[135]
That issue was subsequently considered by Rares J in Keen v Telstra Corporation Ltd [2006] FCA 834. In that case, the party with the benefit of the costs order, who was not registered for GST purposes, was seeking to add as a disbursement, in addition to the amount of costs allowed under the scale, the amount paid as GST on the bill from the solicitors, and that was rejected. It seems to me that on the present issue his Honour followed Master Wood. His Honour quoted the terms of Federal Court order 62 r 12(1), the equivalent of UCPR r 690(1), and said at para [39]:

“Whatever may be the position in Victoria, the provisions of O62 r 12(1) are quite clear. In their natural and ordinary meaning, they provide that the only amounts allowable are those fees set out in the second schedule.”

[136]
His Honour said that an amount charged in accordance with the scale included GST as part of the charge and the solicitor became liable to pay GST, being one‑eleventh of that amount.^[61] In that case, his Honour was not concerned with the situation where the party with the benefit of the costs order was able to claim an input credit, since Ms Keen was not so entitled, but rejected the idea that she was entitled to recover the GST paid in addition to the scale amounts.^[62] The issue which I have to consider as not directly addressed, though his Honour did note at para [47]:

“One possible injustice in this scheme has been shown by the present case. That is where, as here, the party entitled to costs is an individual who does not have the benefit of his or her own input tax credits against which to offset the GST which he or she is liable to pay to their solicitors. A business conducting litigation which recovers costs, will have already had the benefit of being able to net off the payment of GST it was obliged to make to the suppliers of taxable supplies, including solicitors for legal services in connection with the business, against receipts of GST which the business will have obtained from its own supplies of goods or services. Individuals who are not conducting a business will not be able to effect that accounting and taxation consequence and will, to that extent, be worse off when receiving the benefit of an order for costs under the current provisions of the rules. However, that is a matter for the Rules Committee to address and is not one which the court can recognise in a case like the present.”

[137]
Those remarks were of course obiter, but his Honour proceeded on the basis that the effect of the rule that costs were to be allowed according to scale was that a party without the benefit of an input tax credit was treated unfairly compared with the position of a party who had that benefit. That can only have been on the basis that both parties were entitled to recover professional costs in accordance with the scale, the difference between them being that the party with the benefit of the input tax credit obtained that additional benefit. That reasoning is consistent with the reasoning of Master Wood, and the view that professional costs allowed according to scale are not to be reduced because the scale items include an allowance for GST in respect of which an input tax credit has been obtained.

[138]
These were the only authorities to which I was referred, and the only authorities which I have been able to find, but the proposition that, where costs are being allowed in accordance with a scale and the scale fixes a particular amount, it is that amount which is to be allowed is certainly well established, and the effect of these authorities is that the operation of the GST system and the input tax credit system is not a basis for reducing the scale amounts. The registrar relied on the “indemnity principle”, on the basis that a party was not entitled to recover more by way of party and party costs than the party had actually had to spend. The reasoning is that if in respect of some particular work done by the solicitors the party has already received one‑eleventh of the solicitor’s bill back from the tax commissioner by way of an input credit, if the full amount of the bill is then paid by the other side, the party will actually make a profit.

[139]
I can see the sense in that, but it seems to me that it is a fairly hollow argument when one is talking about party and party costs in accordance with scale in circumstances where the actual amount paid to the solicitors by the client was more, in this case undoubtedly much more, than the costs assessed on the standard basis. To suggest that in some way the plaintiff is making a profit out of the costs paid by the defendant under this assessment is fatuous. Accordingly, insofar as professional costs according to scale are concerned, there is no substance to the assertion that the plaintiff was “double‑dipping”. In my experience, costs assessed on a standard basis usually amount to about half what the average solicitor actually charges the average client, so that if the approach adopted by Master Wood is applied in such a situation, there is no risk of the client in fact making a profit out of the costs, and in that way infringing the indemnity principle.

[140]
It may be that, if the effect of an input tax credit meant that costs assessed on the standard basis plus the input tax credit came to an amount greater than the plaintiff had in fact paid the solicitor in respect of professional costs, the costs would have to be abated under the indemnity principle so that the client did not recover in total more than was actually paid.^[63] That principle, however, should be applied in respect of professional costs by comparing the amount in fact paid less an input credit with the amount allowed on assessment, not in the way applied by the registrar. There would be double‑dipping only if the amount in fact paid by the plaintiff to the solicitor were no more than the amount recovered on the assessment of costs on the standard basis, and that would not have been the case here. Accordingly, costs allowed in accordance with the scale, that is the professional costs rather than the outlays, should not have been reduced by one‑eleventh. That is consistent with such authorities as I have been able to find, and in my opinion a proper application of the indemnity principle.

[141]
It was submitted on behalf of the plaintiff that the approach in relation to outlays was also incorrect, on the basis that the question of whether outlays such as counsel’s fees were excessive and ought to be reduced ought to have been assessed by reference to the amount charged net of GST rather than the amount charged inclusive of GST. It seems to me, however, that, so long as the approach adopted is consistent, this is not a difficulty. A difficulty would only arise if the registrar were to lose track of the question of whether GST was or was not included in a particular fee, and there is no indication that that has occurred.^[64] It seems to me that the registrar was looking at the fee inclusive of GST and was no doubt assessing whether that was a reasonable fee as a reasonable fee inclusive of GST. That is certainly the approach that I have adopted. Accordingly, this submission on the part of the plaintiff is rejected.

[142]
In respect of outlays I think it is reasonable to apply the indemnity principle by reference to a particular outlay, because that is a discrete expenditure which ordinarily is fully covered by the amount recovered from the other side under costs on the standard basis.^[65] This was the approach adopted by Master Wood, and I respectfully agree. Accordingly, it is I think appropriate to apply the indemnity principle in respect of outlays individually, and where GST has been passed on and claimed as an input tax credit, as would have been the case here, the amount recovered under an assessment on the standard basis from the other party should be the amount of the outlays net of GST.

[143]
Therefore, in my opinion what the registrar ought to have done was reduce by one‑eleventh only outlays in respect of which GST was paid (which will be I think all of them except filing fees). I will invite further submissions as to the quantification of the appropriate reduction in the bill for GST on this basis, and substitute this reduction for the one made by the registrar.

Conclusion

[144]
I will also invite submissions as to what consequential effects the changes I have made would make to the assessment, and to the costs of the assessment and the reconsideration, and as to the costs of the review. There has already been too much argument about costs in this matter, and I propose to fix the costs of the review myself to avoid any further dispute, so far as I can.

[145]
There is one further matter that I should address. In conducting this review, I have applied the authorities which warn against too ready interference in the decisions of registrars conducting costs assessments.^[66] These reflect a traditional strong reluctance of courts to intervene in the decisions of taxing officers,^[67] for which there were a number of reasons. The decisions generally involved matters of discretion, or perhaps analogous matters of judgment, and were therefore subject to the ordinary restrictions on appeals from the exercise of discretion.^[68] Apart from that, taxing officers have always been regarded as a form of expert tribunal, and decisions of expert tribunals have always been treated with particular respect by non‑expert courts, given appellate functions in relation to them. I do not doubt that that consideration has in practice been reinforced by the substantial regard in which taxing officers have generally been held in relation to their expertise in taxing costs, and in the proper determination of what should be allowed by way of costs on a party and party basis, or as the case may be.

[146]
I have attempted to apply the traditional approach when dealing with this review, but even applying that approach it seems to me that there is a great deal in the reasons of the registrar which was wrong, or involved a wrong principle, or which produced a result which was just manifestly unreasonable. Indeed, more than once I have noted that, in relation to some particular aspect of his reasons, I considered that those reasons actually reflect badly on the registrar.^[69] His reasons on this reconsideration do not inspire in me the sort of confidence which traditionally courts have displayed for the work performed by taxing officers. I have not heard argument as to whether in such circumstances the traditional approach to decisions of a registrar on review should be modified, and as I say I have assumed that it should not, but it seems to me that in the light of these reasons that assumption may be questioned.

[147]
The practical significance of this is that this is the reason why, when I concluded that it was necessary for some items to be reassessed, I reassessed them myself rather than sending the matter back to the registrar. I would certainly not send them back to the same registrar, and it seemed to me that there was no particular advantage, and it would put the parties to additional and unnecessary expense, if I sent the reassessment back to a different registrar. It is also a further reason why I propose to deal myself with any consequential matters which arise as a result of such alterations as I have made, including in relation to the costs of the assessment and reconsideration, and why I intend to fix myself any costs ordered in relation to the review.

Footnotes

[1] I shall for convenience refer to him hereafter as “the registrar”.

[2] Affidavit of Savage filed 30 September 2003, Exhibit AES1.

[3] His evidence‑in‑chief took 1 hour 8 minutes, occupied 22 pages of transcript, and cross‑examination about 45 minutes and 18 pages.

[4] Affidavit of Savage, Exhibit AES2.

[5] See order filed 10 March 2005.

[6] McCoombes v Curragh Queensland Mining Ltd [2001] QDC 142 at [149], [150], leave to appeal refused [2001] QCA 379 esp at [14]; and by Judge Robin: Boral Resource (Qld) Pty Ltd v Trim (6.5.97, unreported) cited in McCoombes at [149].

[7] Affidavit of Savage, Exhibit AES3.

[8] Reconsideration para [375]. The reasons of the registrar were not numbered, either by page or paragraph, but someone has helpfully put paragraph numbers on the copy provided to me.

[9] Reconsideration para [14].

[10] Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247; Mifsud v Campbell (1991) 21 NSWLR 725; Crystal Dawn Pty Ltd v Rudruth Pty Ltd [1998] QCA 373 at [15]; Bawden v ACI Operations Pty Ltd [2003] QCA 293 at [29]; Martin v Rowling [2005] QCA 128 at [3] per McMurdo P, [80] per Mullins J. This applies to reasons on a reconsideration of objections to an assessment: UCPR r 741(1)(b); Cole v Gardner Bros. (Qld) Pty Ltd [1971] QWN 32.

[11] Reconsideration paras 356, 357.

[12] This case was followed by Williams J (as he then was) in Stubberfield v Kilner and Black [1997] QSC 42 at p 5.

[13] Peel v London and North Western Railway Co [1907] 1 Ch D 607 at 614 per Parker J, adopted in Re Malleson, Stewart, Stawell and Nankivell [1931] VLR 127 at 134 per McArthur J, and in W. and A. Gilbey v Continental Liqueurs (supra) at p 533.

[14] Francis v Francis and Dickerson (supra) at p 95. See also Pecheries Ostendaises SA v Merchants’ Marine Insurance Co [1928] 1 KB 750 at 762 per Atkin LJ.

[15] Cachia v Hanes (1991) 23 NSWLR 304 at 318 per Handley JA; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 226 per Sheppard J.

[16] This was a mater referred to by the registrar: para 376.

[17] I am conscious that these costs do not include the costs of the appeal.

[18] The defendant’s submissions are taken from the submissions dated 21 July 2004 relied on before the registrar.

[19] The registrar appears to have ignored paragraphs 5 and 6 of Mr Gallaghan’s affidavits, where he explained that, in the case of the framed doors, there was considerable difficulty in positively identifying the doors the plaintiff had worked on. That was a necessary step before he actually examined a door.

[20] Affidavit of Callaghan sworn 8 June 2004 para 12, Exhibit SC2.

[21] Reconsideration paras 202-279.

[22] It was also gratuitous: I can think of no basis on which it was properly part of what the registrar had to decide to consider the correctness of Mr Callaghan’s calculations.

[23] Reconsideration paragraph 216, emphasis added.

[24] Compare “The Channel Queen” [1928] P 157 and Frankenburg v Famous Lasky Film Service Ltd [1931] 1 Ch 428 at 436 per Hanworth MR, 440 per Lawrence LJ, concerned with costs incurred prior to the commencement of proceedings.

[25] It was true to say that once that agreement had been made there was no reason for more work to be done on the valuation of variation 17 until after the decision of the Court of Appeal.

[26] According to his affidavit, he was originally retained on about 9 July 2001, and “was able to proceed immediately with the investigation and valuation process.” (para 2).

[27] I am not of course suggesting that it is a proper function of the registrar in these circumstances to cross‑examine the deponent. But that simply underlines the fact that it was not proper for the registrar to treat work done by the quantity surveyor as unnecessary simply on the basis that he thought it was unnecessary without that matter having been put in cross‑examination.

[28] On the standard basis, once an expert is a necessary or proper witness, prima facie the fees charged by that witness and paid should be allowed: Mills v Clifford-Ames [1963] QWN 28 per Wanstall J.

[29] Reconsideration para 33.

[30] Reconsideration para 35, 296.

[31] Reconsideration para 34. Paragraphs 32-38 deal with item 940.

[32] Reconsideration paras 311-12.

[33] See Dal Pont “Law of Costs” (2003) p 569.

[34] cf Re Feez Ruthning’s Bill of Costs [1989] 1 Qd R 55 at 78 line 30.

[35] It appears from counsel’s fee note for this work that he charged at the rate of $270 per hour plus GST. At that rate, this comes to a little over 9 hours; I would be surprised if counsel spent any less than this time on the matter on that day.

[36] This is also less than three days of eight hours each at $270 per hour plus GST, which comes to $7,128.

[37] He does not seem to have charged for this appearance.

[38] Presumably $250 plus GST. Somewhat inconsistently, he then allowed $600 for item 1045, to cover attendance at the directions hearing and “some time for limited discussions”: para 310.

[39] At $300 per hour plus GST, this is only 1½ hours for all preparation and discussions with the other side, as well as the actual hearing.

[40] See paragraphs 315, dealing with item 1318, and 63.

[41] Arguably that course was open, on the basis that the Court of Appeal had not decided that a particular interpretation of the contract was correct, but that it was not clear that that interpretation was not correct.

[42] See the items listed in Annexure A to the application filed 24 March 2006.

[43] Reconsideration paras 68-92.

[44] UCPR r 728(2) provides: “If the registrar allows costs for counsel to draw and settle a document, the registrar must not allow the costs of a conference with counsel in relation to the document, unless there were special reasons making the conference necessary.”

[45] The further further amended defence filed 27 November 2002.

[46] It appears that the plaintiff claimed that as a result of variation number 14 it was entitled to an additional $21,388, whereas the defendant claimed that as a result of that variation the contract sum was to be reduced by $6,296.

[47] The reasons deal together with items 1518 and 1559: para 91.

[48] Paras [94]-[97].

[49] Reconsideration paras 342-348.

[50] Items 783, 833, 1000, 1009, 1014, 1017, 1027, 1097, 1118, 1119, 1164, 1213, 1248, 1265, 1270, 1271, 1286, 1367, 1375, 1381, 1437, 1477, 1481, 1489.

[51] See reconsideration paras [108]-[111]. Item 779 was for delivering the brief for the conference, which was item 781.

[52] Paras [74]-[77], [91] above.

[53] Paras [78]-[91] above.

[54] Paras [105]-[107] above.

[55] Paras [113]-[115] above.

[56] A New Tax System (Goods and Services Tax) Transition Act 1999 s 7(1).

[57] No. 9435 of 2005, 16 June 2006, Master Wood, unreported.

[58] Para [18]. As I recall, Queensland was rather tardy in this regard.

[59] Para [14].

[60] Price v Clinton [1906] 2 Ch 487; Russo v Russo [1953] VLR 57; Re: Ermen; Tatham v Ermen [1903] 2 Ch 156.

[61] Para [43]. The same applies in Queensland, as is made clear in Schedule 2.

[62] Para [46].

[63] General of Berne Insurance Co v Jardine Reinsurance Management Ltd [1998] 1 WLR 1231 at 1242, 1243.

[64] Except perhaps for item 1530, which I have reassessed anyway.

[65] To some extent, counsel’s fees are an exception to this, but that exception should not distort the general approach.

[66] McCoombes v Curragh Queensland Mining Ltd [2001] QCA 379 at [17]; Australian Coal and Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 627-8.

[67] Hill v Peel (1870) LR 5 CP 172; Schweppes Ltd v Archer (1934) 34 SR (NSW) 178.

[68] House v The King (1936) 55 CLR 499 at 507; Re Bain Gasteen and Co’s Bill of Costs [1990] 1 Qd R 412 at 416.

[69] See paras [22], [53], [59].

Editorial Notes

Published Case Name:
Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd
Shortened Case Name:
Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd
MNC:
[2007] QDC 57
Court:
QDC
Judge(s):
McGill DCJ
Date:
30 Mar 2007

Litigation History

Event	Citation or File	Date	Notes
Primary Judgment	[2001] QDC 206	11 Sep 2001	Claim for money owing under a sub-contract; determination of separate questions in advance of trial: McGill DCJ.
Primary Judgment	[2007] QDC 57	30 Mar 2007	Costs: McGill SC DCJ.
Appeal Determined (QCA)	[2002] QCA 24	15 Feb 2002	Application for leave to appeal against District Court's determination as to the proper construction of a sub-contract [2001] QDC 206; leave granted; question stated set aside; no order as to costs: de Jersey CJ, Davies JA, Ambrose J.

Appeal Status

Appeal Determined (QCA)

Cases Cited List of Cases Cited by this judgment

Case Name	Full Citation	Frequency
Australian Coal and Shale Employees' Federation v The Commonwealth	View on:JADE(1953) 94 CLR 621	2 citations Jump To Cite 1 - (1953) 94 CLR 621 Cite 2 - (1953) 94 CLR 621
Bawden v ACI Operations Pty Ltd	[2003] QCA 293	2 citations Jump To Cite 1 - [2003] QCA 293 Cite 2 - [2003] QCA 293
Cachia v Hanes	View on:NSWLR(1991) 23 NSWLR 304	1 citation Jump To Cite 1 - (1991) 23 NSWLR 304
Cole v Gardner Bros (Qld) Pty Ltd	[1971] QWN 32	2 citations Jump To Cite 1 - [1971] QWN 32 Cite 2 - [1971] QWN 32
Colgate-Palmolive Company v Cussons Pty Ltd	(1993) 46 F.C.R 225	1 citation Jump To Cite 1 - (1993) 46 F.C.R 225
Crystal Dawn Pty Ltd v Redruth Pty Ltd	[1998] QCA 373	2 citations Jump To Cite 1 - [1998] QCA 373 Cite 2 - [1998] QCA 373
Francis v Francis and Dickerson	View on:ICLRUK(1956) P 87	2 citations Jump To Cite 1 - (1956) P 87 Cite 2 - (1956) P 87
Frankenburg v Famous Lasky Film Service Ltd	View on:ICLRUK[1931] 1 Ch 428	2 citations Jump To Cite 1 - [1931] 1 Ch 428 Cite 2 - [1931] 1 Ch 428
General of Berne Insurance Co v Jardine Reinsurance Management Ltd	View on:ICLRUK[1998] 1 WLR 1231	2 citations Jump To Cite 1 - [1998] 1 WLR 1231 Cite 2 - [1998] 1 WLR 1231
Hennessey Glass & Aluminium Pty Ltd v Watpac Australia Pty Ltd	[2002] QCA 24	3 citations Jump To Cite 1 - [2002] QCA 24 Cite 2 - [2002] QCA 24 Cite 3 - [2002] QCA 24
Hill v Peel	(1870) LR 5 CP 172	2 citations Jump To Cite 1 - (1870) LR 5 CP 172 Cite 2 - (1870) LR 5 CP 172
House v The King	View on:JADE(1936) 55 CLR 499	2 citations Jump To Cite 1 - (1936) 55 CLR 499 Cite 2 - (1936) 55 CLR 499
In Re Ermen; Tatham v Ermen	View on:ICLRUK[1903] 2 Ch 156	1 citation Jump To Cite 1 - [1903] 2 Ch 156
John Stubberfield v Ronald Kilner & Anor	[1997] QSC 42	1 citation Jump To Cite 1 - [1997] QSC 42
Keen v Telstra Corporation Ltd	View on:JADE[2006] FCA 834	3 citations Jump To Cite 1 - [2006] FCA 834 Cite 2 - [2006] FCA 834 Cite 3 - [2006] FCA 834
Malleson, Stewart, Stawell & Nankivell	View on:VR[1931] VLR 127	2 citations Jump To Cite 1 - [1931] VLR 127 Cite 2 - [1931] VLR 127
Martin v Rowling	[2005] QCA 128	2 citations Jump To Cite 1 - [2005] QCA 128 Cite 2 - [2005] QCA 128
McCoombes v Curragh Qld Mining Ltd	[2001] QCA 379	3 citations Jump To Cite 1 - [2001] QCA 379 Cite 2 - [2001] QCA 379 Cite 3 - [2001] QCA 379
McCoombes v Curragh Queensland Mining Limited	[2001] QDC 142	1 citation Jump To Cite 1 - [2001] QDC 142
Merringtons Pty Ltd v Luxottica Retail Pty Ltd & Anor	View on:JADE[2006] VSC 525	1 citation Jump To Cite 1 - [2006] VSC 525
Mills v Clifford-Ames	[1963] QWN 28	2 citations Jump To Cite 1 - [1963] QWN 28 Cite 2 - [1963] QWN 28
Misfud v Campbell	View on:NSWLR(1991) 21 NSWLR 725	2 citations Jump To Cite 1 - (1991) 21 NSWLR 725 Cite 2 - (1991) 21 NSWLR 725
Naumann v Clarke & Robertson Radiology	[2002] QDC 69	2 citations Jump To Cite 1 - [2002] QDC 69 Cite 2 - [2002] QDC 69
Pecheries Ostendaises (Soc. Anon.) v Merchants' Marine Insurance Coy	View on:ICLRUK[1928] 1 KB 750	2 citations Jump To Cite 1 - [1928] 1 KB 750 Cite 2 - [1928] 1 KB 750
Peel v London and North Western Railway Co	[1907] 1 Ch D 607	2 citations Jump To Cite 1 - [1907] 1 Ch D 607 Cite 2 - [1907] 1 Ch D 607
Price v Clinton	View on:ICLRUK[1906] 2 Ch 487	1 citation Jump To Cite 1 - [1906] 2 Ch 487
Pty Ltd v Brambles Holdings Ltd	(1985) 6 FCR 440	2 citations Jump To Cite 1 - (1985) 6 FCR 440 Cite 2 - (1985) 6 FCR 440
Re Bain Gasteen & Co's Bill of Costs	[1990] 1 Qd R 412	2 citations Jump To Cite 1 - [1990] 1 Qd R 412 Cite 2 - [1990] 1 Qd R 412
Re Feez Ruthning's Bill of Costs	[1989] 1 Qd R 55	1 citation Jump To Cite 1 - [1989] 1 Qd R 55
Russo v Russo	View on:VR[1953] VLR 57	1 citation Jump To Cite 1 - [1953] VLR 57
Schweppes Ltd. v Archer	(1934) 34 SR NSW 178	2 citations Jump To Cite 1 - (1934) 34 SR NSW 178 Cite 2 - (1934) 34 SR NSW 178
Smith v Buller	(1875) LR 19 Eq 473	1 citation Jump To Cite 1 - (1875) LR 19 Eq 473
Soulemezis v Dudley (Holdings) Pty Ltd	View on:NSWLR(1987) 10 NSWLR 247	2 citations Jump To Cite 1 - (1987) 10 NSWLR 247 Cite 2 - (1987) 10 NSWLR 247
Stanley v Phillips	View on:JADE(1966) 115 CLR 470	4 citations Jump To Cite 1 - (1966) 115 CLR 470 Cite 2 - (1966) 115 CLR 470 Cite 3 - (1966) 115 CLR 470 Cite 4 - (1966) 115 CLR 470
The Channel Queen	View on:ICLRUK[1928] P 157	2 citations Jump To Cite 1 - [1928] P 157 Cite 2 - [1928] P 157
Thornton v Apollo Nominees Pty Ltd	View on:JADE[2005] TASSC 38	2 citations Jump To Cite 1 - [2005] TASSC 38 Cite 2 - [2005] TASSC 38
W. A. Gilbey Ltd v Continental Liqueurs Pty Ltd	View on:NSWLR[1964] NSWLR 527	3 citations Jump To Cite 1 - [1964] NSWLR 527 Cite 2 - [1964] NSWLR 527 Cite 3 - [1964] NSWLR 527
Walker v Law Society of Tasmania	[1991] Tas R 121	2 citations Jump To Cite 1 - [1991] Tas R 121 Cite 2 - [1991] Tas R 121

Cases Citing List of cases on Queensland Judgments citing this Judgment

Case Name	Full Citation	Frequency
Amos v Monsour Pty Ltd	[2008] QDC 194	2 citations
Carver v Hill	[2012] QDC 43	1 citation
ChongHerr Investments Ltd v Titan Sandstone Pty Ltd	[2007] QCA 278	2 citations
Civil Mining & Construction Pty Ltd v Wiggins Island Coal Export Terminal Pty Ltd	[2024] QSC 28	3 citations
Dawson v State of Queensland (Department of the Premier and Cabinet)	[2022] QIRC 482	2 citations
Fletcher v Demag Cranes and Components Pty Ltd	[2020] QMC 9	2 citations
Harrison v Meehan	[2018] QCATA 191	2 citations
Lee v Abedian	[2017] QSC 22	1 citation
Menegazzo v PricewaterhouseCoopers (a firm)	[2017] QSC 172	2 citations
Naidoo v State of Queensland	[2015] QDC 68	1 citation
Nashvying Pty Ltd v Giacomi	[2009] QSC 31	2 citations
Pinehurst Nominees Pty Ltd v Coeur De Lion Investments Pty Ltd	[2015] QSC 122	2 citations
The Beach Retreat Pty Ltd v Mooloolaba Yacht Club Marina Ltd	[2009] 2 Qd R 356; [2009] QSC 84	2 citations
Wiltshire v Amos	[2018] QSC 224	2 citations

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Hennessey Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd[2007] QDC 57