1. [1]
   Years ago Mr Amos sued the National Australia Bank. He settled his claim on the basis that he pay the bank’s costs to be assessed by Mr Monsour. (It is convenient to refer to the three defendants that way. Mr and Mrs Monsour are the directors of Monsour Pty Ltd which carried on the business of assessing costs. Before April 2005, the company was called Monsour Legal Costs Pty Ltd). Mr Amos was unhappy with the assessment. He sued Mr Monsour in the Magistrates Court.  After a long day’s trial, he lost and had to pay indemnity costs.  Mr Amos appealed.  Judge Nase heard the appeal and reduced the costs from $49,996.00 to $45,506.00.  Mr Amos had to pay the costs.

2. [2]
   Mr Amos appealed against Judge Nase’s judgment, to the Court of Appeal. He lost and had to pay costs. He still had to pay the costs of $45,506.00, fixed by Judge Nase.

3. [3]
   Mr Amos then claimed in this court that Judge Nase’s decision was procured by counsel’s fraud on behalf of Mr Monsour. On 18 and 20 June this year I was the Judge who heard an application to summarily dismiss that claim. Mr Amos was ordered to pay indemnity costs, as he had made allegations which ought never to have been made, and unduly prolonged the case by groundless contentions.

4. [4]
   It was ordered that Mr Monsour file and serve a short form costs assessment by an approved costs assessor, together with any submissions. Mr Amos was given an opportunity to file and serve any submissions in reply. It was ordered that the costs be assessed by a judge.

5. [5]
   This judgment deals with the assessment of those indemnity costs. The assessment was heard, when court time and the parties were available, over three separate days. Overall, the hearing would have taken about a day and a half.

6. [6]
   Mr G R Ryan, a solicitor and costs consultant, provided his assessment on 04 July. He assessed the solicitors’ professional fees at $12,401.87, and the fees of junior and senior counsel at $29,183.00. The costs of his own assessment were charged at $1,360.00, together with an outlay of $12.40. With some sundry charges, the total of the assessment was $46,020.00.

7. [7]
   Included in that figure was GST of $3,056.24.

8. [8]
   On behalf of Mr Amos, it was submitted that there would be a denial of procedural fairness if he was not allowed to challenge the assessment. That was particularly so, it was submitted, because there was no bill of costs to show the detail of what had been done, nor was there access to the solicitors’ files. All he had was Mr Ryan’s short assessment.

9. [9]
   Therefore, Mr Ryan was called as a witness, and cross-examined at some length by Mr Tucker, who represented Mr Amos.  That was during the second of the three hearings.  Before that second hearing, the solicitors for Mr Monsour had provided further particulars of the work that they had done.  That included the tax invoice, addressed to Monsour Legal Costs Pty Ltd.  The invoice named the seven partners, solicitors or clerks who had devoted any time to the matter.  Their charge out rates were mentioned.  The total fees, before GST, were $18,161.00.  The total of counsel’s fees was $28,530.00, before GST.  They also provided a seven page time ledger.  It was, in form, somewhat like a bill of costs in long form.  That is, it set out the date that work was done, who did it, the number of six minute time units devoted to that work, and its value.

10. [10]
    Armed with those particulars, Mr Tucker cross-examined Mr Ryan, with the object of demonstrating that he had failed to consider whether or not the costs were reasonable, and that he had too readily accepted fees charged by the solicitors and by counsel. It was suggested that he ignored UCPR r 703(3), which says that:

“(3) When assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to –

1. (a)
   the scale of fees prescribed for the court; and

2. (b)
   any costs agreement between the party to whom the costs are payable and the party’s solicitor; and

3. (c)
   charges ordinarily payable by a client to a solicitor for the work.”

11. [11]
    Mr Tucker was doing his best to go behind the short form assessment, by investigating the details of the solicitors’ time ledger. The result was a final submission which attacked the appropriateness of the solicitors’ invoice, at $18,161.00, by submitting that the appropriate fee was $4,912.00. It was also suggested that counsels’ fees should be reduced.

12. [12]
    In recent times, the Court of Appeal has had to deal with similar issues arising out of contested assessments of indemnity costs. Reference here was made to Warren v Body Corporate for Buon Vista CTS 14325 [2007] QCA 160, ChongHerr Investments Ltd v Titan Sandstone P/L [2007] QCA 278, Amos v Monsour Legal Costs P/L [2007] QCA 235 and ASIC v Atlantic 3 Financial (Aust) Pty Ltd & Ors [2008] QSC 9.

13. [13]
    Mr Tucker was probably given more latitude than procedural fairness would have demanded. That being done, it is the court’s duty to fix the costs. That can be a robust exercise, taking into account the opinions of the costs assessor, and the need to avoid the order for indemnity costs being unduly diminished.

14. [14]
    Several conclusions can be reached, after considering the attacks on Mr Ryan’s assessment.

15. [15]
    Mr Monsour has paid solicitors’ fees of $18,161.00. Mr Ryan’s assessment allowed $12,401.87. That was a substantial reduction. Most of the reduction was the result of lower hourly rates applied by Mr Ryan. The tax invoice mentions hourly rates which were in excess of the client agreement. Mr Ryan made it clear that his assessment depended entirely upon the rates set out in the District Court scale of costs. The scale rates were very similar to the hourly rates in the client agreement. It is true that Mr Ryan did not have the costs agreement at the time he did his assessment. However, having relied on the scale of costs, he made appropriate reductions in the hourly charge out rates.

16. [16]
    It was then said that Mr Ryan did not take into account “charges ordinarily payable” by a client to a solicitor for the work, in considering if the costs were “reasonably incurred and of a reasonable amount”. It is true that Mr Ryan took a generous view, of the steps that the solicitors took, and of the amount of counsel’s fees. However, Mr Tucker’s cross-examination revealed only one matter of substance where he was overgenerous. That is to say, counsel having settled the documents for the application for summary judgment, there was no necessity for the solicitors to do the same work again. He had allowed $1,700.00, mainly for the solicitors to draft and produce documents dealt with by counsel. An attack was also made on the mention of a warrant of execution in the details of the costs, where that was not part of the costs here. However, it emerged that Mr Ryan had allowed nothing for that. On the other hand, it seems that nothing was allowed by him for a long affidavit prepared by Mr Keenan, an employed solicitor. Overall, a deduction of $1,500.00 from the solicitors’ account would be appropriate.

17. [17]
    Counsel’s fees were said to be too high, and that Mr Ryan was in error in thinking them reasonable, merely because counsel had chose to charge that amount, and Mr Monsour had paid without protesting.  It was submitted that such an attitude would not be an adequate test of reasonableness.  However, Mr Ryan went on to explain, at some length, why counsel’s fees were reasonable.  With one exception, that view should be accepted here.  The exception is the amount of $1,680.00 in junior counsel’s fees for drafting submissions to be settled by senior counsel.  It was pointed out that charging of a fee for such submissions is discouraged – see Practice Direction 6 of 2004, in the Supreme Court.  It concludes by saying “no additional charge is to be made for the preparation of a file index search, preparation of an outline, list of material or completion of an appearance slip”.  It is true that there seems to be no such practice direction in this court, but it can safely be taken to be a guide in all Queensland courts. 

18. [18]
    Something should be said about the proportionality of those fees to the issues in the litigation. It was submitted on behalf of Mr Amos that, at bottom, the litigation was all about the original costs of around $50,000.00, and that these proceedings were more of a nuisance than anything else.

19. [19]
    That submission fails to recognise the reality of what has been happening. Mr Amos has been responsible for a determined and prolonged series of legal attacks on Mr Monsour.  As was pointed out in the Court of Appeal, Mr Monsour, or the company of which he was a principal, was entitled to adopt a cautious, even an over-cautious approach to Mr Amos’ litigation, and that it was entitled to prepare its case thoroughly and carefully, and it was not unfair that Mr Amos pay for that preparation (at para 18).

20. [20]
    Here, an unfounded allegation of fraud was made against counsel, in an attempt to overturn Judge Nase’s judgment. That allegation was serious, and, unless defended, would have overturned that decision and, in effect, the subsequent decision of the Court of Appeal.

21. [21]
    Senior counsel appeared for both sides at the summary judgment hearing, and at the subsequent argument about costs. It was suggested here that the case did not warrant senior counsel. Ordinarily, that might well have been true. However, the overall history of this litigation, and the need to bring it finally to an end, were significant considerations. The involvement of senior counsel, and the fees charged, resulted in two things. First, everything possible was said, and well said, on behalf of Mr Monsour, in demonstrating that summary judgment should be given, even though that involved a considerable factual inquiry (including looking at the transcripts of what had happened). Secondly, after Mr Amos’ proceedings were dismissed, the lengthy affidavit sworn by Mr Keenan demonstrated that Mr Amos’ inclination to allege bias in those charged with assessing costs, should be met by an order that a judge of this court assess the costs directly. It was appropriate for Mr Monsour to have senior counsel.

22. [22]
    Finally, there is an issue about the GST component of the costs assessment. Mr Ryan included GST of $3,056.00 on the assumption that Mr Monsour would not be able to obtain credit for that amount.  That would be the case for example if Mr Monsour was not in business at the time, or a Monsour company was not registered as a business for GST purposes. 

23. [23]
    The impact of the GST legislation on the payment of legal costs was considered by Judge McGill SC in Hennessy Glass and Aluminium Pty Ltd v Watpac Australia Pty Ltd [2007] QDC 057 – see paragraphs 127 – 143.  In that case, it was accepted that the plaintiff was registered for GST purposes and would obtain an input tax credit in respect of any GST paid by it.  That would include any amount paid by the solicitors as outlays and reimbursed by the client.

24. [24]
    That decision was approved by the Court of Appeal in ChongHerr Investments Pty Ltd v Titan Sandstone P/L [2007] QCA 278 at para 9.  The input tax credit applies not to a solicitor’s professional fees, but to outlays which attract GST. 

25. [25]
    This issue needs to be decided without a further investigation of the facts. It is fair to say, that at the end of the third session here neither of the parties was keen to incur further costs and expense involving a relatively small amount of money, by exhaustively litigating a GST component of $3,056.00.

26. [26]
    A search on 05 August of the “ABN Lookup” site showed that Monsour Pty Ltd has had an active GST status from 01 April 2005 to the present time.

27. [27]
    An opinion was expressed by Ms Barbara Lazzarini, an accountant with 16 years experience in the provision of tax advice. She said that her firm, HLB Mann Judd, had acted for Monsour Pty Ltd for over ten years. She says the company stopped trading in about April 2005. She says that she has not received instructions from the company, or from Mr and Mrs Monsour, to claim an input tax credit for legal costs and expenses paid in respect of these proceedings by Monsour Pty Ltd. In her opinion, she says, Monsour Pty Ltd would not be entitled to claim those input tax credits. That is because the legal cost assessing enterprise that was carried on by Monsour Pty Ltd was sold several years ago, and obligations from carrying on the enterprise were satisfied. It is her opinion, that at the present time the company is not carrying on an enterprise for GST purposes, and is not entitled to claim any input tax credit for these legal expenses.

28. [28]
    Mr Keenan in an affidavit says that on 29 July he received from Monsour Pty Ltd a cheque in the sum of $52,720.10 providing payment in full of all fees and outlays payable to his firm. A trust account receipt of that date reflects the payment of those fees by that company. The critical thing is the fact that it was Monsour Pty Ltd which paid the fees.

29. [29]
    (The papers appear to show some confusion between the roles of Monsour Pty Ltd and Monsour Legal Costs Pty Ltd. Senior counsel sent a memorandum of fees in the name of Monsour Pty Ltd. Junior counsel referred to Monsour Legal Costs Pty Ltd. Mr Ryan, the cost assessor, referred to an assessment of costs for Monsour Legal Costs Pty Ltd. Also, the solicitor’s tax invoice was addressed to Monsour Legal Costs Pty Ltd. If the pleadings are accurate, then there has only been one company, which changed its name.)

30. [30]
    It was submitted on behalf of Mr Amos, that Monsour Pty Ltd remained actively involved in this litigation, and paid the fees, and has an active GST status. That would be enough, it was said, to give it an obligation to file a GST return, and be entitled to an input tax credit.

31. [31]
    Ms Lazzarini referred to paragraphs 140 – 147 of Miscellaneous Taxation Ruling MT 2006/1.  Relevantly, that ruling says this:

Termination of an Enterprise

140 Carrying on an enterprise includes doing anything in the course of the termination of the enterprise.  An enterprise terminates when the activities related to that enterprise cease.  Ordinarily, that occurs when all assets are disposed of or converted to another purpose or use and all obligations are satisfied.  Disposal of assets may include the sale, scrapping or other disposal of the assets.

141 In the course of terminating an enterprise, a number of obligations may need to be finalised.  These include finalising accounts, paying creditors, repaying loans, cancelling licences and business registrations.

…

144 In circumstances where assets have been sold or where they are no longer used in the enterprise there may still be some other activities undertaken to terminate the enterprise.  These activities may include the preparation of final accounts, activity statements and income tax returns and the cancellation of the ABN and GST registration.⁵⁴ 

 ⁵⁴ Simply maintaining the registration of a company with the Australian Securities and Investment Commission (ASIC) is not, by itself, sufficient to be considered to be carrying on an enterprise for GST purposes.

…

146 However, an entity is still entitled to an ABN where it has ended some activities that themselves would constitute a separate enterprise but it is still running at least one enterprise.  This is because an entity is entitled to an ABN while it is carrying on an enterprise.  The entity is also entitled to an ABN where the only activities performed are those that it does in terminating the enterprise, for example the sale of its business premises.  Those activities are done in carrying on an enterprise.

147 The question of whether the activities are done in terminating the enterprise or at some later point (and do not have a connection with the termination activities) is one of fact and degree depending on the circumstances of each particular case.

32. [32]
    Here, even though the cost assessing enterprise may have been sold several years ago, this litigation deals with an aspect of that business. The litigation has been forced on it, in the process of terminating the enterprise. It does have a real connection with the enterprise. It is a matter of fact and degree. The better conclusion would seem to be that, in resisting Mr Amos’ claims, the company has been carrying on an incidental aspect of the cost assessment business, while terminating the enterprise. That conclusion would follow from an application of the above extract from the tax ruling.

33. [33]
    So, with some caution because of the opinion of Ms Lazzarini, and in the absence of any cross-examination of her or further investigation of the position, it is my opinion that the company is entitled to claim an input tax credit on the GST component here. It follows that the GST should be deducted from the cost assessment. The $3,056.00 should be deleted from the amount payable by Mr Amos.

34. [34]
    The assessment of $46,020.00 should be reduced by:

1. (a)
   junior counsel’s fees for drafting submissions – $1,680.00, and

2. (b)
   solicitors’ account – $1,500.00, and

3. (c)
   GST – $3,056.00,

adding to a total reduction of $6,236.00.  The result is that Mr Amos must pay indemnity costs assessed at $39,784.00.

35. [35]
    Fortunately, both parties agreed that the costs of this hearing should not be the subject of any further assessment of costs. It is agreed that there should be no order as to those costs.

36. [36]
    The order of the court is that:

1. (a)
    the indemnity costs of these proceedings be fixed at $39,784.00; and

2. (b)
    there be no order with respect to the costs of this assessment.