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Wiesac Pty Ltd v Insurance Australia Ltd (No 3)[2021] QSC 69

Wiesac Pty Ltd v Insurance Australia Ltd (No 3)[2021] QSC 69

SUPREME COURT OF QUEENSLAND

CITATION:

Wiesac Pty Ltd v Insurance Australia Ltd (No 3) [2021] QSC 69

PARTIES:

WIESAC PTY LTD

ACN 112 764 584

(first plaintiff/first respondent)

and

MURPHY SCHMIDT SOLICITORS (A Firm)

(second plaintiff/second respondent)

v

INSURANCE AUSTRALIA LIMITED

ACN 000 016 722

(defendant/applicant)

FILE NO:

No 538 of 2015

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

16 April 2021

DELIVERED AT:

Brisbane

HEARING DATE:

19 February 2021

JUDGE:

Flanagan J

ORDER:

1. The certificate of Mr Lawrence Clarence Ronald Hallam dated 10 December 2020 (Assessor’s Certificate) is varied to allow the following additional amounts for disbursements:

(a) $3,800 of the amount claimed at Item 2016 of the defendant’s amended costs statement dated 2 March 2020 (Costs Statement);

(b) $3,800 of the amount claimed at Item 2052 of the Costs Statement;

(c) $3,800 of the amount claimed at Item 2087 of the Costs Statement;

(d) $3,800 of the amount claimed at Item 2149 of the Costs Statement.

2. The decision at Item 3 of the Assessor’s Certificate is set aside and referred to Mr Lawrence Clarence Ronald Hallam for reconsideration consequential upon the variation in paragraph 1 above.

3. The decision at Item 6 of the Assessor’s Certificate is set aside and referred to Mr Lawrence Clarence Ronald Hallam for reconsideration consequential upon the variations in paragraphs 1 and 2 above.

4. The plaintiffs pay the defendant’s costs of the application on the standard basis.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – PARTICULAR ITEMS – COUNSEL FEES – NUMBER OF COUNSEL – TWO COUNSEL – where there was a three-day trial of a claim under an insurance policy arising out of the 2011 Brisbane floods – where liability and quantum were live issues at trial – where the defendant engaged senior and junior counsel at trial – where both counsel examined and cross-examined witnesses – where the defendant was successful at trial – where the costs assessor disallowed junior counsel’s fees for the entirety of the trial – whether the costs of junior counsel were  necessary and proper for the attainment of justice or for enforcing or defending the defendant’s rights – whether the costs assessor’s decision to disallow those costs was manifestly wrong

Uniform Civil Procedure Rules 1999 (Qld), r 702, r 721, r 738, r 742

Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Supreme Court of Queensland, Dowsett J, 19 March 1993), considered

Pinehurst Nominees Pty Ltd v Coeur De Lion Investments Pty Ltd [2015] QSC 122, applied

Stanley v Phillips (1966) 115 CLR 470; [1966] HCA 24, applied

W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWR 527, cited

COUNSEL:

P Franco QC for the applicant

M P Williams for the respondents

SOLICITORS:

Carter Newell Lawyers for the applicant

Synkronos Legal for the respondents

  1. [1]
    By amended application, the defendant seeks a review of a decision included in a costs assessor’s certificate of assessment pursuant to r 742(1) of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR).
  2. [2]
    The trial of the proceeding giving rise to the relevant costs order was heard in the Supreme Court before Davis J over three days in December 2017.  The plaintiffs were represented by senior counsel only and the defendant by both senior and junior counsel.
  3. [3]
    On 1 June 2018, Davis J gave judgment dismissing the plaintiffs’ claims.[1]
  4. [4]
    On 9 August 2018, his Honour ordered that the plaintiffs pay the defendant’s costs of the proceeding on the standard basis.[2]  On 21 January 2019, the defendant delivered its Form 60A Costs Statement.[3]  On 18 February 2019 the plaintiffs provided a Form 61 Notice of Objection to the Costs Statement.[4]  On 15 November 2019, the defendant provided a response to the plaintiffs’ Notice of Objection to the Costs Statement.[5]  The costs assessor was appointed on 28 February 2020[6] and delivered his Certificate of Assessment to the parties on 10 December 2020.[7]
  5. [5]
    The decision that is sought to be reviewed is the costs assessor’s decision to disallow the cost of the defendant’s junior counsel for appearance at the trial.  The defendant seeks to vary the certificate by allowing junior counsel’s fees, which are items 2016, 2052, 2087 and 2149 in the Costs Statement.  If that relief is granted, it is accepted that the discretion in relation to the costs of the assessment will also need to be revisited.[8]

The relevant rules of the UCPR

  1. [6]
    The costs assessor was required to assess costs on the standard basis.  Rule 702(2) provides that, when assessing costs on the standard basis, a costs assessor must 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.  A distinction is drawn between the words “necessary” and “proper”; they are not interchangeable.[9]  The test is to be applied by reference to the circumstances that existed when the costs were incurred,[10] and the defendant should not be penalised for incurring costs that were reasonable and proper at the time but which, with the benefit of hindsight, may not have been strictly necessary given the eventual course of the proceeding.[11]
  2. [7]
    Rule 721 provides:

“In assessing costs, a costs assessor must consider the following –

  1. (a)
     any other fees and allowances payable to the solicitor or counsel for other items in the same proceeding;
  1. (b)
     the nature and importance of the proceeding;
  1. (c)
     the amount involved;
  1. (d)
     the principle involved;
  1. (e)
     the interests of the parties;
  1. (f)
     the person who is to pay the costs, or the fund or estate out of which the costs are to be paid;
  1. (g)
     the general conduct and cost of the proceeding;
  1. (h)
     any other relevant circumstances.”
  1. [8]
    Rule 731(1) deals with refresher fees and provides that if a trial or hearing occupies more than one day, when assessing costs on the standard basis, a costs assessor may allow fees for counsel at a reasonable amount for each day or part of a day of the trial or hearing after the first day.
  2. [9]
    Rule 738(1) permits a party, within 21 days after receiving a copy of a costs assessor’s certificate of assessment, to make a written request to the costs assessor for reasons for any decision included in the certificate.  In the present case, the defendant did not make any such request.[12]  The present review therefore proceeds on the basis that the costs assessor has not provided written reasons for the decision to disallow the cost of junior counsel for appearance at the trial. 
  3. [10]
    The review of the costs assessor’s decision is pursuant to r 742.  Rule 742(1) permits a party dissatisfied with a decision included in a costs assessor’s certificate of assessment to apply to the court to review the decision.  Rule 742(3) provides that:

“The application must –

  1. (a)
     state specific and concise grounds for objecting to the certificate; and
  1. (b)
     have attached to it a copy of any written reasons for the decision given by the costs assessor; and
  1. (c)
     state any other matter required by a practice direction made in relation to this rule.”
  1. [11]
    In accordance with r 742(3)(a), the defendant’s amended application identifies the following grounds of review:

“(a) The Costs Assessor erred in considering that the relevant decision was whether ‘Queens Counsel could have adequately presented the case at the hearing without having a junior counsel’;

  1. (b)
     further or alternatively, the Cost Assessor’s exercise of discretion was manifestly wrong in light of the following matters:
  1. (i)
     the fact that the matter was factually and legally complex;
  1. (ii)
     the delivery of a written judgment of 54 pages that demonstrated the factual and legal complexity;
  1. (iii)
     the conflict of evidence in relation to quantum presented by the two experts for the Defendant and Plaintiffs;
  1. (iv)
     the volume of the material filed in court consisting of 589 pages of documents tendered at trial pursuant to the agreed bundle of documents dated 28 November 2017;
  1. (v)
     the fact that junior counsel was principally responsible for conducting (and undertook preparation for and the cross-examination on) the issue of quantum, which was ultimately decided against the Plaintiffs;

(va) the fact that quantum issues occupied more time at trial than liability issues;

  1. (vi)
     the extent of the preparation required for trial warranted the retention of both senior and junior counsel;
  1. (vii)
     the requirement for two counsel for preparation justified the retention of two counsel for trial;
  1. (viii)
     the practice of employing two counsel on matters of significant importance to the insurance industry;
  1. (ix)
     the Cost Assessor’s exercise of discretion in not allowing the disbursements for junior counsel’s fees for the trial, while simultaneously and substantially reducing disbursements for senior counsel’s fees for the trial, was unreasonable and unjust.”
  1. [12]
    Rule 742(6) relevantly provides that, on the review, the court may set aside or vary the decision of the costs assessor and refer any item to the costs assessor for reconsideration, with or without directions.
  2. [13]
    The nature of a review under r 742 was considered by Martin J in Pinehurst Nominees Pty Ltd v Coeur De Lion Investments Pty Ltd:[13]

“The ambit of this rule was considered by Jones J in Nashvying Pty Ltd v Giacomi where his Honour said:

[4] The discretion conferred by the sub-rule is a wide one.  But it is to be exercised with a consciousness that it is effectively an appeal against the exercise by the cost assessor of a discretion.  In general, the Court will interfere only where the discretion appears not to have been exercised at all or to have been exercised in a manner which is manifestly wrong.’

In Australian Coal & Shale Employees’ Federation v The Commonwealth Kitto J reviewed a number of authorities concerning the review of decisions of taxing officers.  He concluded his analysis by adopting the summary of the law on this matter which was made by Jordan CJ (with the concurrence of the other members of the court) in Schweppes’ Ltd v Archer where Jordan CJ said:

‘In appeals as to costs, the principles to be applied are these.  The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed.  Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere.  It has undoubted jurisdiction to review the Taxing Officer’s decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances … but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.’ (citations omitted)

On an application such as this, the applicant carries the onus.  In Australian Coal & Shale Employees’ Federation v The Commonwealth, Kitto J adopted the following expression of principle:

‘A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the Court that he is wrong.’ (emphasis added).”

  1. [14]
    The Court may therefore interfere with a costs assessor’s exercise of discretion where it is demonstrated that the costs assessor has either acted upon a wrong principle, failed to exercise a discretion, or exercised a discretion in a way that was manifestly wrong.  The onus of establishing such an error rests with the applicant.
  2. [15]
    It is convenient at this stage to deal with the principles concerning whether the cost of two counsel should be allowed.  The principles were considered by Barwick CJ in Stanley v Phillips.[14]  The relevant rule considered in that case contained the same test as stated in r 702 of the UCPR, namely that a costs assessor should 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.  Barwick CJ, with whom Taylor, Menzies and Owen JJ agreed, considered that the relevant test was not satisfied because the case did not involve any special difficulty.  The proceeding concerned an infant suing by his next friend in the County Court of Victoria for £2,500 damages in respect of injuries and consequential loss suffered by the child in a motor vehicle collision.  Barwick CJ observed:

“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.  The matter cannot as a general rule be determined by reference to the court in which the proceedings are taken, though the position of that court in the hierarchy of a judicial system may well be such that only cases of a complicated nature are generally litigated before it.”[15]

  1. [16]
    After considering the decision of the High Court in Kroehn v Kroehn,[16] Barwick CJ further observed:

“In my opinion, the result of the authorities and the meaning of the regulation is that the taxing master is to allow the fees of more than one counsel where he is satisfied that the nature and circumstances of the case are such that the services of two counsel are required if the case is to be presented to the court in such a manner that justice can be done between the parties.”[17]

  1. [17]
    The Chief Justice continued:

“… The question for the taxing master is whether the case by reason of any of its features, the volume of the material to be handled, the number or character of the witnesses to be examined, the nature or extent of the cross-examination required, the anticipated length of the case, the complexity of its issues of fact or of law, the extent of the preparatory research of fact or of law to be undertaken, the involvement of charges of fraud, or other serious imputations of personal reputation or integrity, the complexity of the required presentation and so on, make it reasonably necessary or proper that the services of two counsel be engaged in order that the court may do justice between the parties.”[18]

  1. [18]
    Therefore, whether the cost of two counsel is necessary or proper for the attainment of justice or for enforcing or defending the rights of the defendant in the present case must be assessed having regard to the nature and circumstances of the proceeding.

The nature and circumstances of the proceeding

  1. [19]
    The circumstances of the case are set out in the 54-page judgment of Davis J.[19]  The first plaintiff is a corporate trustee and was the registered proprietor of a commercial building on Mary Street, Brisbane.  The second plaintiff is a firm of solicitors that occupied the building.  The defendant was the plaintiffs’ insurer. 
  2. [20]
    During the January 2011 floods, water entered through the wall of the basement of the building, damaging the second plaintiff’s fitout and causing disruption to the second plaintiff’s legal practice.  As a result of the damage, rent payable to the first plaintiff by the second plaintiff was abated and the lost rent formed the basis of the first plaintiff’s claim.[20]
  3. [21]
    The first plaintiff claimed $131,192.04 in lost rent together with interest pursuant to s 57 of the Insurance Contracts Act 1984 (Cth).  The second plaintiff claimed the following:
  1. (a)
      clean-up costs, $52,953.53
  1. (b)
     new fitout costs, $457,530.86
  1. (c)
     overdraft interest, $1,887.14
  1. (d)
     facility interest, $140,296.73; and
  1. (e)
     loss of practice income, $198,787.
  1. [22]
    Davis J identified the primary issues and sub-issues in dispute as follows:

[17] The issues defined in the list of issues as ‘Primary Issues’ are:

  1. Whether the insurance policy ‘flood exclusion’, pleaded at paragraph 4 of the amended defence, applies to exclude the plaintiffs’ claims.
  1. Whether the first plaintiff had an entitlement to and lost rent as a result of the inundated basement, and if so, in what amount.
  1. What was the amount of the loss which was suffered by the second plaintiff by way of business interruption resulting from the inundation of the basement in January 2011.’

[18] The list of issues identifies various ‘Sub Issues’.  It is not necessary to set all these out.  Of some importance, though, are the following:

  1. (i)
     whether the second plaintiff is entitled to claim overdraft interest;
  1. (ii)
     whether the second plaintiff is entitled to claim facility interest;
  1. (iii)
     the quantum of the loss of rent; and
  1. (iv)
     the quantum of the claim for business interruption.”
  1. [23]
    Prior to construing the terms of the insurance policy, it was necessary for Davis J to consider the mechanism through which the water entered the basement of the premises.  His Honour noted that there were four experts relevant to this issue:

“… Dr Newton and Dr Connor were both called by the defendant and Mr Martin Giles was called by the plaintiff.  Mr Winders, who provided reports for the plaintiff, joined in a joint report with Dr Newton, but Mr Winders did not give evidence before me.”[21]

  1. [24]
    His Honour considered this expert evidence,[22] concluding that most of the water that entered the basement was river water.  Senior counsel for the defendant examined Dr Newton and Dr Connor in chief and cross-examined the plaintiffs’ expert, Mr Giles.
  2. [25]
    Davis J then considered the terms of the policy[23] and, in particular, its flood exclusion clause.  His Honour was required to consider the meaning of the term “physical loss, destruction or damage occasioned by or happening through” in the flood exclusion clause.[24]  His Honour also identified that there was a dispute on the facts as to what constituted “normally dry land” for the purposes of the flood exclusion clause.[25]  His Honour had to further consider submissions as to the meaning of the term “Escaping or released from the normal confines of any natural water course whether or not altered by any reservoir, canal or dam.”[26] 
  3. [26]
    Having considered the expert evidence and the parties’ submissions on the construction of the policy, his Honour concluded that the relevant damage was caused by water from various sources including river water in the pipes, local runoff in the pipes and groundwater in the subterranean soils between the pipes and the basement.[27]  This conclusion led his Honour to find that the plaintiffs’ claims were excluded by the flood exclusion in the insurance policy.[28]  His Honour then proceeded to provisionally consider quantum.  The quantum issues included the amount of the loss suffered by the second plaintiff by way of business interruption,[29] whether, and in what amount, the first plaintiff had an entitlement to claim lost rent,[30] and whether the second plaintiff was entitled to recover overdraft and facility interest.[31]
  4. [27]
    His Honour assessed quantum as follows:

“1.The first plaintiff:

 Loss of rent  $131,192.04

  2. The second plaintiff:

 Clean up costs  $52,953.53

 New fitout costs  $457,530.86

 Overdraft interest  $1887.14

 Facility interest  $140,296.73.”[32]

  1. [28]
    His Honour’s provisional assessment of quantum was therefore approximately $784,000.  Junior counsel, who dealt with the quantum issues at trial, cross-examined the plaintiffs’ accounting expert and conducted the examinationinchief and reexamination of the defendant’s accounting expert.[33] 

The approach of the costs assessor

  1. [29]
    In their Form 61, the plaintiffs outlined their objection to the cost of junior counsel:

“… [i]t is the Plaintiffs’ Objection that only a Senior Counsel ought to be allowed on the Trial in any event.  The matter did not involve such complexity or volume of material necessitating the division of labor between two Counsel.  There was little contentious issues between the various Experts on Liability and as his Honor found there was much more in common between Experts than in contention.  The Plaintiffs had only one Counsel at the Trial and while this is not a binding factor for the Costs Assessor, it is a factor to be taken into account in considering whether two Counsel ought to be allowed …”[34]

  1. [30]
    In its response to the objection, the defendant referred to G E Dal Pont, Law of Costs (LexisNexis, 3rd ed, 2013) at [17.82]:

“The importance of a case, either to the general community or the parties, alone or in combination with other relevant factors, may lead a taxing officer (or court) to allow to the successful party costs of two counsel.  A case may, for instance, raise a novel question of law with far-ranging implications, in which case fees of both senior and junior counsel may be allowed.  The importance of a case can also be measured by its significance to the financial position or reputation of one or more of the parties; the greater that significance the more appropriate it is that a prudent person may go in with two counsel.”

  1. [31]
    Relying on this passage, the defendant submitted in its response to the objection:

“This was a case, the outcome of which was important to the Plaintiffs and the Defendant and the amount at stake at the trial was approximately one million dollars plus costs.  However for a stronger reason the matter was not one merely of importance to the immediate parties, but was a matter of general importance (British Metal Corp Ltd v Ludlow Brothers (1913) [1938] Ch 787). 

The general importance to the insurance industry, insurers and insured is relevant on a world wide basis and in the Defendant’s submission justifies the propriety of engaging Junior Counsel in addition to Senior Counsel (to whom the Plaintiffs’ do not object).”[35]

  1. [32]
    The defendant identified that liability continued to be a triable issue and that, in all the circumstances, the engagement of both junior and senior counsel was a proper cost.[36]
  2. [33]
    On 1 September 2020, the costs assessor sent an email to the parties seeking their advice as to “the actual date that the issues of quantum (apart from the rent issue) was settled between the parties”.[37]  The defendant replied on the same day that, by reference to paragraphs 15, 17 and 18 of the judgment of Davis J, while there were admissions of quantum of clean-up costs, new fitout costs, the overdraft interest and the facility interest, these were only admissions as to the quantum of those items and not to the entitlement of the plaintiffs to recover those items under the insurance policy.[38]  A further quantum item in dispute was the amount of loss suffered by the second plaintiff by way of business interruption.[39]
  3. [34]
    On 25 September 2020, the costs assessor wrote to the parties in relation to the fees of two counsel as follows:

“… I would allow the costs of two counsel up to the date when the quantum of some of the claims was in issue.  After that I date I have decided to allow only the costs of Queens Counsel and any work done by junior Counsel after that time, which I considered was of a standard nature, I allowed as if it was done by Queens Counsel.  I have reduced the quantum of Queen’s Counsel’s to an hourly rate of $1000.00 per hour.”[40]

  1. [35]
    By email dated 26 September 2020, the defendant raised with the costs assessor its concern that he was labouring under a fundamental misconception as to the role of junior counsel at trial and the triable issues.[41]  The costs assessor was referred to paragraphs 17 and 18 of the judgment of Davis J, which I have set out in [22] above.  The email referred to the fact that:
    1. (a)
      it was junior counsel who focussed on the plaintiffs’ entitlement to, and the quantum of, damages;
    2. (b)
      it was junior counsel who was responsible at trial for the cross-examination of the plaintiffs’ quantum expert and the formulation of the defendant’s submission in relation to quantum; and
    3. (c)
      a significant portion of the trial was occupied with issues relevant to quantum.[42] 
  2. [36]
    On 30 September 2020, the defendant made further submissions to the costs assessor to the effect that:
    1. (a)
      significant issues of quantum remained in contest at the trial which was set down for three days and ran well into its third day;
    2. (b)
      this warranted two counsel;
    3. (c)
      the plaintiffs sought in excess of $1 million plus interest and costs and more than half of this amount (plus interest and costs) remained in contest at the trial;
    4. (d)
      the defendant’s closing submissions in relation to quantum drafted by junior counsel addressed, among other things, heads of loss, the issues of rent and business interruption and spent some five pages out of a total of 22 pages of the defendant’s overall submission extensively critiquing the evidence given by the plaintiffs’ expert quantum witness Mr McDonald;
    5. (e)
      junior counsel’s cross-examination of Mr McDonald was both critical and evidently effective, as the plaintiff was contending at trial for an amount in excess of $200,000 for business interruption based on the expert evidence of Mr McDonald and the court ultimately determined that it was entitled to nothing by way of business interruption loss;
    6. (f)
      the case as to liability which was the focus of senior counsel’s attention was concerned with a complex of area of law involving the consideration of a multitude of case authorities as well as extensive and complex hydrological evidence, requiring a reconsideration of an earlier case of LMT Surgical v Allianz Australia in relation to the operation of a similarly worded flood exclusion arising out of the same flood event.  In that earlier decision Jackson J found against the insurer, holding that the plaintiff’s loss was not excluded by the flood exclusion; and
    7. (g)
      the judgment of Davis J was of sufficient legal interest and importance to feature in the Australian Insurance Law Bulletin as a stand-alone case note within two months of the decision being handed down and also as a key element (comparing and contrasting the decision with, amongst other cases, LMT Surgical v Allianz Australia) of a feature academic article in the Insurance Law Journal.[43]
  3. [37]
    By correspondence dated 2 October 2020, the costs assessor informed the parties that, having reconsidered his assessment of costs on the basis that he may have had an incorrect view as to the issues that were alive at trial, and having considered the submissions and examined the transcript, he did not consider that his view as to the quantum issues “was totally misconceived”.[44]  The costs assessor noted that in the opening submissions, senior counsel for the plaintiffs had stated that there had been discussions between the parties as to the issues and that there were “smallish matters” to do with quantum to be decided.  The costs assessor therefore stated that he did not intend to change his decision.[45]
  4. [38]
    On 8 October 2020, the defendant made further submissions to the costs assessor to the effect that:
    1. (a)
      of the 313 minutes of evidence at trial, the evidence in relation to quantum occupied 160 minutes compared to 153 minutes in relation to liability;[46]
    2. (b)
      greater time at the trial was occupied with contested evidence in relation to quantum than with evidence in relation to liability; and
    3. (c)
      it was junior counsel who was involved in leading evidence-in-chief, crossexamining and re-examining forensic accountants who authored extensive reports and were the parties’ expert quantum witnesses at trial for 64 of those minutes.
  5. [39]
    On 13 October 2020, the costs assessor noted that his final decision was made after a consideration of all the submissions, further submissions and documents provided by the defendant, including transcripts.[47]  The costs assessor stated that he had read the submissions and taken them into consideration.  The costs assessor stated:

“… I considered the issue of briefing two counsel and made my decision afresh with a full appreciation of the additional materials and advices provided by Mr. Mead  As a result I did not have any misapprehension of the quantum issues when I confirmed my decision on the 2 October, 2020 and consider I have exercised my discretion correctly in coming to the decision that Queens Counsel could have adequately presented the case at the hearing without having a junior counsel.”[48]

  1. [40]
    The costs assessor then referred to a statement of Barwick CJ in Stanley v Phillips:[49]

“… 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 … at his opponent’s expense.

… The question is not whether a man in seeking his own maximum advantage would be imprudent not to engage counsel of a particular level of experience or skill.  The question is whether the services of more than one counsel are reasonably necessary for the adequate presentation of the case.”[50]

  1. [41]
    In that same correspondence, the costs assessor informed the defendant that it had a procedure under the UCPR for seeking reasons for any decision contained in the certificate of assessment.  The defendant replied to this suggestion on 2 December 2020, stating that it considered that the costs assessor had set out clearly his reasons in his detailed correspondence of 13 October 2020 and prior correspondence in relation to the issue (for example, his letter of 2 October 2020).[51]

The first ground of review

  1. [42]
    The first ground of review is that “the Costs Assessor erred in considering that the relevant decision was whether ‘Queens Counsel could have adequately presented the case at the hearing without having a junior counsel’”.[52]  This is a reference to the costs assessor’s statement in his letter of 13 October 2020.[53] 
  2. [43]
    The plaintiffs submit that neither the costs assessor’s correspondence of 13 October 2020 nor the earlier correspondence of 2 October 2020 constitute reasons sufficient for the purposes of a review pursuant to r 738.  In support of this submission, the plaintiffs refer to the decision of Dowsett J in Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Jovanovski).[54]  His Honour was dealing with an appeal from a taxing officer’s taxation of a bill in a personal injuries action.  His Honour observed that the taxing officer had not given reasons for his decision to disallow junior counsel, nor had such reasons been requested.[55]  His Honour stated:

“… The only significance that I attach to the absence of reasons is that it encourages me to be rather more adventurous than I might otherwise be in interfering in the exercise of a discretion.”[56]

  1. [44]
    His Honour did not grant leave for the applicant to read an affidavit deposing to the reasons of the taxing officer given an initial hearing.  His Honour observed:

“… Had the reasons been given at the later stage or had the Taxing Officer’s reasons at the earlier stage been then adopted or relied upon, I would have allowed that affidavit to be read, but in the absence of any apparent adoption by the Taxing Officer of his prior reasons, it seemed better to assume that reasons given at the taxation were of a provisional nature only and that they should not be taken as necessarily being the reasons for which the Taxing Officer acted in disallowing the objections at a later time.”[57]

  1. [45]
    His Honour’s observation is relevant to the reliability of the taxing officer’s reasoning being sufficiently exposed in circumstances where detailed reasons are not provided.  The taxing officer’s reasoning at the initial hearing did not constitute reliable evidence of his ultimate reasoning supporting the decision to disallow the cost of junior counsel.  Jovanovski is not authority for the proposition that, without detailed reasons, a court cannot proceed to determine a review based on the reasoning revealed by the costs assessor in correspondence. 
  2. [46]
    In the present review, the letter of 13 October 2020 refers to the costs assessor having considered all the submissions and the transcript of the trial and having reconsidered his initial decision as to the briefing of two counsel.  The letter also refers to the decision being “my final decision” as to the cost of two counsel.[58]  While the letter of 13 October 2020 reveals some of the costs assessor’s reasoning in disallowing the cost of junior counsel, it cannot be treated in the same way as written reasons provided pursuant to r 738. 
  3. [47]
    The test for costs assessment on the standard basis is that stated in r 702(2) outlined above and requires a determination of whether costs are “necessary or proper”.[59] The costs assessor’s letter of 13 October 2020 does not explicitly indicate whether he considered that the cost of junior counsel was “necessary or proper”.  The defendant therefore submits that the costs assessor has not applied the correct test.  This submission, however, treats the letter of 13 October 2020 as constituting detailed reasons of the kind referred to in r 738.  While the costs assessor did not set out the test under r 702 in his letter of 13 October 2020, he did refer to Barwick CJ’s judgment in Stanley v Phillips which stated the correct test.  I accept the plaintiffs’ submission that the costs assessor’s informal wording, being that Queen’s Counsel could have ‘adequately presented the case’ without junior counsel, does not necessarily constitute the application of the incorrect test and that, in the absence of detailed reasons, there is no identifiable error of principle to justify concluding that the costs assessor’s discretion miscarried.[60]

Second ground of review

  1. [48]
    The second ground of review is that the costs assessor’s exercise of discretion in disallowing the cost of junior counsel was manifestly wrong.  The authorities referred to by Martin J in Pinehurst Nominees Pty Ltd v Coeur De Lion Investments Pty Ltd in the passage I have quoted above do not define with any precision what is meant by the term ‘manifestly wrong’.  The parties have not identified any authority that assists with such an enquiry.  I suspect that this is because the term ‘manifestly wrong’ is not particularly amenable to precise definition.  It seems clear, however, that where a particular decision was not open to the costs assessor on the facts before them, or was not within the costs assessor’s lawful discretion, the decision will be manifestly wrong.
  2. [49]
    In determining whether the costs assessor’s decision was manifestly wrong, the Court does not substitute its own opinion.  Rather, having regard to the decision itself, the material before the costs assessor as well as those matters identified by Barwick CJ in Stanley v Phillips outlined in [17] above, the Court determines whether the decision reveals an exercise of discretion that is manifestly wrong.  Such a consideration in the present case leads to a conclusion that the costs assessor’s decision to disallow the cost of junior counsel constitutes an exercise of discretion that was, in my view, manifestly wrong.
  3. [50]
    Before I outline the matters that lead to this conclusion, it is first necessary to deal with the plaintiffs’ characterisation of the second ground of review as an allegation that the costs assessor erred by failing to take into account or give sufficient weight to a number of matters.  These include that the matter was factually and legally complex, the judgment was 54 pages long, demonstrating factual and legal complexity, there was a conflict of evidence, the material was voluminous and it was appropriate to engage two counsel on matters of significant importance to the insurance industry.[61]  The plaintiffs submit that, having not requested the costs assessor’s written reasons pursuant to r 738, the defendant cannot now assert that the costs assessor failed to take something into account, nor could it prove such an allegation to the requisite standard.  What weight the costs assessor placed on matters will, according to the plaintiffs, “remain unknown given the absence of such reasons”.[62]  This submission mischaracterises the second ground of review which is expressed as an exercise of discretion which was manifestly wrong.  While such a ground of review will require the Court to consider the decision made and the circumstances of the case in the context of the test propounded by r 702(2), it does not necessarily invite an enquiry as to what weight the costs assessor placed on various matters nor whether the costs assessor failed to take into account a relevant matter.
  4. [51]
    The issues in relation to liability and quantum identified by Davis J in paragraphs 17 and 18 of the judgment show that the matter was factually and legally complex.  The case involved expert evidence relevant to both liability and quantum.  His Honour was required to resolve a conflict of evidence in relation to quantum concerning losses claimed for business interruption.  This required a detailed consideration of the evidence of the plaintiffs’ accounting expert, Mr McDonald.  After identifying the task required in calculating the indemnity sum under the insurance policy,[63] his Honour dealt with Mr McDonald’s evidence.[64]  The plaintiffs submit that junior counsel’s cross-examination of Mr McDonald “could not be said to be so detailed or complex so as to require the division of resources between two counsel”.[65]  The crossexamination of an accounting expert in relation to business interruption loss in the context of an insurance policy is, in my view, an exercise of some complexity.
  5. [52]
    The plaintiffs, in their written submissions, concede that different views may be held as to whether or not a matter is factually and legally complex.[66]  Having considered the transcript and the judgment of Davis J, it is my opinion that the matter may fairly be described as somewhat complex litigation.  Consistent with the reasoning in Stanley v Phillips, this is a conclusion that strongly favours a finding that the cost of junior counsel’s appearance at trial was, at the very least, a cost properly incurred by the defendant.
  6. [53]
    The plaintiffs also submit that the defendant’s assertion that the matter was of importance to the insurance industry is entirely subjective and that the matter was not complex:

“Ultimately it was the application of a very specific set of facts, regarding water ingress through a crack in a pipe into a basement, to an exclusion clause only slightly different to those already decided by this Court.”[67]

  1. [54]
    This description oversimplifies the issues at trial.  As noted in the defendant’s letter of 30 September 2020, the judgment of Davis J was of sufficient legal interest and importance to feature in the Australian Insurance Law Bulletin and was considered in an academic article in the Insurance Law Journal.  It was also selected for publication in the authorised reports of decisions of this Court.
  2. [55]
    In applying the test under r 702(2), and having regard to each of the matters above, most particularly the nature and complexity of the proceedings, the cost of junior counsel for appearance at the trial was a proper cost in all the circumstances.  The decision of the costs assessor to disallow the cost of junior counsel in the circumstances of the present litigation constitutes an exercise of discretion which was manifestly wrong.

Disposition

  1. [56]
    The Court makes the following orders:
  1. The certificate of Mr Lawrence Clarence Ronald Hallam dated 10 December 2020 (Assessor’s Certificate) is varied to allow the following additional amounts for disbursements:
  1. (a)
     $3,800 of the amount claimed at Item 2016 of the defendant’s amended costs statement dated 2 March 2020 (Costs Statement);
  1. (b)
     $3,800 of the amount claimed at Item 2052 of the Costs Statement;
  1. (c)
     $3,800 of the amount claimed at Item 2087 of the Costs Statement;
  1. (d)
     $3,800 of the amount claimed at Item 2149 of the Costs Statement.
  1. The decision at Item 3 of the Assessor’s Certificate is set aside and referred to Mr Lawrence Clarence Ronald Hallam for reconsideration consequential upon the variation in paragraph 1 above.
  1. The decision at Item 6 of the Assessor’s Certificate is set aside and referred to Mr Lawrence Clarence Ronald Hallam for reconsideration consequential upon the variations in paragraphs 1 and 2 above.
  1. The plaintiffs pay the defendant’s costs of the application on the standard basis.

Footnotes

[1]Wiesac Pty Ltd v Insurance Australia Limited [2019] 1 Qd R 198 (Trial Judgment).

[2] Wiesac Pty Ltd v Insurance Australia Limited (No 2) [2018] QSC 171.

[3] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, paragraph 6.

[4] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, paragraph 7.

[5] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, paragraph 9.

[6]Order of Registrar dated 28 February 2020, CD45.

[7] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, paragraphs 13 and 15.

[8]Applicant’s Written Submissions filed by leave on 19 February 2021, paragraph 7.

[9] W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWR 527, 533 (Asprey J).

[10] The Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2009] 2 Qd R 356, [18]-[19] (Martin J), citing, inter alia, W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWR 527, 535 (Asprey J).

[11] W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWR 527, 535 (Asprey J).

[12] Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 5.

[13][2015] QSC 122 at [8]-[10].

[14] (1966) 115 CLR 470.

[15] Stanley v Phillips Stanley v Phillips (1966) 115 CLR 470, 478.

[16] (1912) 15 CLR 137 gvg.

[17]Stanley v Phillips (1966) 115 CLR 470, 479.

[18]Stanley v Phillips (1966) 115 CLR 470, 479-80.

[19] Trial Judgment (n 1).

[20] Trial Judgment (n 1), [1], [2] and [9].

[21]Trial Judgment (n 1), [23].

[22] Trial Judgment (n 1), [24]-[49]

[23] Trial Judgment (n 1), [50]-[80].

[24] Trial Judgment (n 1), [66]-[80].

[25] Trial Judgment (n 1), [81]-[93].

[26] Trial Judgment (n 1), [94]-[106].

[27] Trial Judgment (n 1), [108].

[28]Trial Judgment (n 1), [112].

[29] Trial Judgment (n 1), [114]-[136].

[30] Trial Judgment (n 1), [137]-[152].

[31]Trial Judgment (n 1), [153]-[170].

[32]Trial Judgment (n 1), [171].

[33] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 219-234.

[34] Affidavit of Andrew Davidson O’Halloran filed 29 January 2020, CD36, exhibit ADO1, page 249.

[35]Affidavit of Andrew Davidson O’Halloran filed 29 January 2020, CD36, exhibit ADO1, page 363.

[36] Affidavit of Andrew Davidson O’Halloran filed 29 January 2020, CD36, exhibit ADO1, page 363.

[37] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 1.

[38] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 2.

[39] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 2.

[40] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 16.

[41] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 18-20

[42]Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 18-20.

[43] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 328-331; Applicant’s Written Submissions filed by leave on 19 February 2021, paragraph 25.

[44] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 373.

[45] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 373.

[46] In oral submissions it was clarified by reference to the transcript that the evidence in relation to quantum occupied 100 minutes, not 160 minutes.

[47] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 444-445.

[48]Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 445.

[49] (1966) 115 CLR 470, 478-9.

[50] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, pages 443-445.

[51] Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 447.

[52]Defendant’s Amended Application filed by leave on 19 February 2021.

[53] See [39].

[54] Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Supreme Court of Queensland, Dowsett J, 19 March 1993).

[55] Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Supreme Court of Queensland, Dowsett J, 19 March 1993) 4.

[56]Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Supreme Court of Queensland, Dowsett J, 19 March 1993) 4.

[57] Jovanovski v Tafcom Contractors Pty Ltd (in liq) (Supreme Court of Queensland, Dowsett J, 19 March 1993) 6.

[58]Affidavit of Patrick Gerald Mead filed 18 December 2020, CD48, exhibit PGM-2, page 444.

[59] See [6].

[60]Respondents’ Written Submissions filed by leave on 19 February 2021, paragraphs 32-33.

[61]Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 28.

[62] Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 29.

[63] Trial Judgment (n 1), [115]-[117].

[64] Trial Judgment (n 1), [118]-[136].

[65]Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 35.

[66] Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 34.

[67] Respondents’ Written Submissions filed by leave on 19 February 2021, paragraph 44.

Close

Editorial Notes

  • Published Case Name:

    Wiesac Pty Ltd v Insurance Australia Ltd (No 3)

  • Shortened Case Name:

    Wiesac Pty Ltd v Insurance Australia Ltd (No 3)

  • MNC:

    [2021] QSC 69

  • Court:

    QSC

  • Judge(s):

    Flanagan J

  • Date:

    16 Apr 2021

  • Selected for Reporting:

    Editor's Note

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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