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Kickbush v Lehane[2022] QDC 166

DISTRICT COURT OF QUEENSLAND

CITATION:

Kickbush v Lehane [2022] QDC 166

PARTIES:

STEVEN JAMES KICKBUSCH

Plaintiff

v

JASON THOMAS LEHANE

First Defendant

ALLIANZ AUSTRALIA INSURANCE LIMITED

(ABN 15 000 122 850)

Second Defendant

FILE NO/S:

BD 4599/2019

DIVISION:

Civil

DELIVERED ON:

14 July 2022 (ex tempore)

DELIVERED AT:

Brisbane

HEARING DATE:

14 July 2022

JUDGE:

Barlow QC DCJ

ORDERS:

  1. 1.The plaintiff provide the insurer with a copy of any costs agreement between himself and his solicitors.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – NATURE OF COSTS: INDEMNITY DOCTRINE – GENERALLY – judgment was awarded against a defendant for costs on the indemnity basis –plaintiff provided a costs statement – defendant sought to see the costs agreement between the plaintiff and his solicitors before preparing a notice of objections – whether disclosure of costs agreement is necessary to enable the party liable to pay the costs to be sufficiently informed to make objections – whether application premature

Uniform Civil Procedure Rules 1999 r 703, r 706, r 722

Allan v O'Donnell [2021] QSC 149, considered

Harold v Smith [1860] 157 ER 1229, cited

Shaw v Yarranova Proprietary Limited [2011] VSCA 55, considered

Russells (a firm) v McCosker [2018] QDC 80, distinguished

COUNSEL:

M Larsen for the plaintiff

R C Morton for the second defendant

SOLICITORS:

Kilmartin Knyvett Lawyers for the plaintiff

McInnes Wilson for the second defendant

  1. [1]
    On 24 February this year, Judge Byrne QC gave judgment for the plaintiff against the second defendant (the insurer) and ordered that the insurer pay the plaintiff’s costs of the proceeding on the indemnity basis, with an exclusion that is not relevant for today’s purposes.  The plaintiff’s solicitors subsequently served a costs statement on the insurer.  By an application today, the insurer applies for an order that the plaintiff provide it with a copy of any costs agreement between himself and his solicitors, including copies of any variations to that agreement from the time of his original instructions to the date of this application.  The insurer also seeks an order that the time within which it is required to serve a notice of objection to the plaintiff’s costs statement be extended to 21 days after the insurer receives the plaintiff’s costs agreement in accordance with the first order sought.
  2. [2]
    The application is supported by an affidavit from the insurer’s solicitor, Mr Lavercombe, who deposes essentially to correspondence between him and the plaintiff’s solicitor, in which he has asked for the costs agreement and explained in short form why it is required in order for the insurer to prepare a notice of objections.  In particular, Mr Lavercombe says, at paragraph 14 of his affidavit, that without reference to the costs agreement on which the costs statement has been based, he is unable adequately to advise his client as to whether the costs agreement is valid and enforceable, whether any items claimed pursuant to the costs agreement are objectionable, or to properly raise objections pursuant to rules 706 and 722 of the Uniform Civil Procedure Rules, and the proper assessment of the costs and liabilities of the insurer. 
  3. [3]
    Mr Morton, who appears for the insurer, submits that the terms of the costs agreement will clearly be relevant to any assessment of the plaintiff’s costs.  Rule 703 of the UCPR requires in subrule (3) that, when assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount having regard, among other things, to any costs agreement between the party to whom the costs are payable and the party’s solicitor.  As it is relevant to the assessment of the costs sought in the costs statement that has been provided by the plaintiff’s solicitors and which is exhibited to Mr Lavercombe’s affidavit, it must be necessary, Mr Morton submits, for the plaintiff to provide a copy of that costs agreement together with the costs statement, so that the insurer can be properly advised and make proper and adequate objections.
  4. [4]
    Reference has been made in submissions to a number of cases involving a question of whether costs agreements have to be produced.  In particular, in Shaw v Yarranova Pty Ltd [2011] VSCA 55 at [26], Justices Redlich and Mandie said that there must be a legitimate forensic purpose for which access to a particular document is sought, establishing that it is on the cards that the document would materially assist the applicant’s case. 
  5. [5]
    In Allan v O'Donnell [2021] QSC 149, Justice Crow was considering whether the party liable for costs, in accordance with an order that his Honour had made in giving judgment, was entitled to receive a copy of the costs agreement of the other party on the basis that, to properly formulate any offer to settle costs, the plaintiff, namely the party liable for the costs, must be in a position to understand the liability as between the insurer in that case and its solicitors.  The costs for which the plaintiff was liable in that case were ordered to be paid on the standard basis.  Justice Crow considered cases concerning the indemnity principle as identified in Harold v Smith [1860] 157 ER 1229 at 1231 and as considered by the Victorian Court of Appeal in Shaw v Yarranova.  In the latter case at paragraph [9], which is quoted by Justice Crow in paragraph [9] of his Honour’s reasons, the court referred to an earlier decision of the Court of Appeal, that an unsuccessful party may wish to investigate the scope of the successful party’s obligation to pay their solicitors’ costs by reference to the retainer of the successful party’s solicitors.  The primary judge in that case had ordered that retainer letters and costs agreements be provided, if there were any, for the purpose of establishing whether the respondents had no liability to the solicitors who acted for them or had a liability that was less than might be calculated by a standard party-party taxation. 
  6. [6]
    At paragraph [18], Justice Crow noted that the allegation made by the plaintiff in that case was that the defendant insurer may not have been liable on a full fee basis for some of the costs which it now sought to recover.  His Honour said:

This complaint cannot be addressed by appealing the cost statement produced by a cost assessor who’s [sic] only consideration was the cost schedules; the liability under the cost agreement as between RACQ and CGW is relevant and ought to be investigated.

  1. [7]
    His Honour also noted that rule 703 of the UCPR requires a costs assessor to have mind to any costs agreement between a party and the party’s solicitor.  And his Honour, with respect, of course quite correctly at paragraph [21] noted that liability as between a party and a solicitor is essentially a question of contractual interpretation.  His Honour also, by reference to Shaw v Yarranova, appears to have accepted the proposition in that decision that, as Justice Crow said at paragraph [27]:

In situations such as this, an applicant must identify a legitimate forensic purpose for which access is sought and establish that it is “on the cards” that the documents will materially assist his case.

  1. [8]
    His Honour went on at paragraph 29 to say that: 

The material must show that the costs agreement is sought for more than just a fishing expedition, but need only be “sufficient to suggest” that the assessed costs are actually greater than the liability. 

  1. [9]
    Mr Morton submitted that, where an assessment is on the indemnity basis, UCPR rule 703 makes the costs agreement relevant, as it forms the fundamental basis of the plaintiff’s claim for costs, without seeing which the insurer cannot properly formulate any objections or do what else is required of the party liable to costs. 
  2. [10]
    Mr Larsen, who appears for the plaintiff, referred me to the decision of Judge Farr SC of this court in Russells (a firm) v McCosker [2018] QDC 80, in which his Honour said at paragraph [38] that correspondence apparently relevant to invoices upon which the costs statement was based, together with the costs statement, comprehensively provided sufficient detail to enable the plaintiff to understand the basis for the costs.  Nevertheless, the plaintiff continued to complain that it did not know whether costs had been claimed under a costs agreement or a scale.  His Honour noted that, in fact, the plaintiff had been told that the defendant’s costs were based upon a costs agreement.  At paragraph [39], his Honour said:

The plaintiff also submits that “to provide sufficient detail as to enable the plaintiff to understand the basis for the costs”, the defendant ought to have provided a copy of the costs agreement to the plaintiff.  Yet in the circumstances of this matter that would appear to be unnecessary.  Whilst a costs agreement is necessarily a document that a costs assessor would have regard to when conducting the assessment as to whether costs are reasonably incurred and are of a reasonable amount, it does not, in these circumstances, better assist the plaintiff in understanding the basis for the costs

  1. [11]
    His Honour went on at paragraph [42] to find that the costs statement, when read in conjunction with the information contained in correspondence, constituted a costs statement that was substantially compliant with the provisions of rule 705 of the UCPR, which requires that a costs statement must contain sufficient details to enable the party liable to pay the costs to understand the basis for the costs, prepare an objection to the costs statement, and obtain advice about an offer to settle the costs. 
  2. [12]
    Mr Larsen submitted that the costs statement in this case provides a substantial amount of information, including invoices for all the disbursements claimed, and enough information to enable the insurer to determine whether or not to make any objections to any of the items in the costs statement, so it is unnecessary for the insurer at this stage to receive a copy of the costs agreement between the plaintiff and his solicitors. 
  3. [13]
    He submitted that the plaintiff could make an objection, as I understand it, to the effect that the costs agreement was not valid or that the plaintiff was not liable under the costs agreement to pay any costs or that any item was not charged in accordance with the costs agreement.  With respect, I do not see how the insurer could possibly make any objections on any such bases without first seeing the costs agreement. 
  4. [14]
    Mr Larsen appeared to concede that the costs agreement will become relevant in the process of the assessment of the costs statement by the assessor.  I do not recall him expressly conceding it, but it must be the case, in that case, that at some stage the insurer would be entitled to see the costs agreement.  However, that might be putting the cart before the horse because, in the absence of seeing it in order to determine the notice of objections, as I have said, it would not be possible properly for the insurer to make any objection based upon the costs agreement and, therefore, there would be no need for the assessor to consider whether the costs agreement was valid at all, nor would there be any basis on which the insurer could later object to items as not being charged in accordance with the costs agreement properly construed, because it had not objected on that basis to an item in the costs schedule.
  5. [15]
    Mr Larsen submitted that, if it were necessary for a party claiming costs, particularly on the indemnity basis, to provide a copy of the costs agreement with the costs statement, then the rules would have provided for that.  They have not done so and therefore, particularly in the light of Judge Farr’s decision, it is not necessary for the costs statement to contain a copy of the costs agreement in order to comply with rule 705(2A). 
  6. [16]
    The costs assessment is not a trial of the proceeding.  The rules for pretrial steps such as disclosure do not directly apply to costs assessments, but a costs assessment must be undertaken fairly and justly for both parties.  It seems to me that, where a costs statement is based upon a costs agreement and is claiming indemnity costs pursuant to that costs agreement, as this costs statement expressly is, then, in order to contain sufficient details to enable the party liable to pay the costs to understand the basis for the costs, to prepare an objection to the costs statement and to obtain advice about any offer to settle the costs, the costs statement must have attached to it the costs agreement upon which it is based.
  7. [17]
    It would be entirely unfair to a party such as the insurer in this case, who is liable to pay costs, to have to prepare a notice of objection without the material upon which the costs claimed in the costs statement are based.  The rules must be construed in a way that is fair to both parties and enables an assessment to be conducted with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of the rules: see rule 5(2).  And of course, rule 5(1) says that the purpose of the rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense. 
  8. [18]
    At least in the circumstances of this case, but it seems to me in the circumstances of any case in which indemnity costs are sought on the basis of a costs agreement, it is merely basic justice that the costs statement contain, or have attached to it or provided with it, the costs agreement upon which it is based.  In my view, that is necessary in order for the costs statement to comply with rule 705(2), at least in the circumstances of this case. 
  9. [19]
    Accordingly, I will order that the plaintiff provide the insurer with a copy of any costs agreement between himself and his solicitors. 
Close

Editorial Notes

  • Published Case Name:

    Kickbush v Lehane

  • Shortened Case Name:

    Kickbush v Lehane

  • MNC:

    [2022] QDC 166

  • Court:

    QDC

  • Judge(s):

    Barlow QC DCJ

  • Date:

    14 Jul 2022

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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