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[2024] QSC 28
This case concerned the review of a costs assessment made after a long and complex trial. The costs assessor reviewed more than 19,000 claimed items totalling more than $11 million. Both parties contested aspects of the costs assessor’s decision including the assessor’s decision to reduce counsel’s fees, reduce the amount recoverable for pre-commencement costs and reduce the amount recoverable for care and conduct. In finding that the costs assessor had made several errors, the Court considered the principles applicable to review of a costs assessment.
Muir J
8 March 2024
The parties were engaged in a long and complex dispute related to civil works conducted near the Port of Gladstone. [10]. The parties enjoyed similar levels of success at trial, with the net result being slightly positive for the plaintiff. [17]. The plaintiff was awarded costs of its claim on the standard basis and the defendant, the costs of the counterclaim on the standard basis. [1]. Much like the trial, the costs assessment was hard fought. The plaintiff, CMC, claimed around 19,000 separate items of costs, totalling nearly $11 million. [3]. The defendant, WICET, raised various objections. The costs assessor ultimately awarded costs of $6,605,189.25 to CMC. [5]. WICET sought a review of the final costs certificate raising various objections. Six objections are of particular note.
First, the dispute involved an adjudication under the Building Industry Security of Payment Act 2004, prior to the commencement of litigation. [11]. CMC claimed various costs related to this adjudication as pre-proceeding costs. Many of these costs were rejected by the assessor and CMC challenged this rejection. The Court rejected CMC’s submissions on these costs on various grounds. Most notably, under r 679 Uniform Civil Procedure Rules 1999, costs of the proceedings are defined to mean “costs of all the issues in the proceeding and includes … costs of complying with the necessary steps before starting the proceeding; and costs incurred before or after the start of the proceeding for successful or unsuccessful negotiations for settlement of the dispute …”. [25]. The Court noted that costs of the adjudication process were not costs of complying with pre-commencement steps, nor were they costs incurred in relation to settlement negotiations. [78(b)(iii]].
Second, senior counsel for CMC charged a rate of $10,000 per day. [101]. The costs assessor reduced the amount recoverable for these fees to $9,000 per day, in part on the basis that senior counsel for WICET, charged a rate of $9,000 per day. [106]. The Court noted that this was an irrelevant consideration which led the assessor into error. [106]. The amount charged by senior counsel for CMC was not excessive or unreasonable. [108]. As such, the Court set aside this aspect of the costs certificate. [109].
Third, the trial in this dispute lasted for 36 days. The costs assessor capped the costs recoverable for trial preparation to 36 days, in reliance on the general “rule of thumb” that one day of preparation is necessary for one day of trial. [111]–[112]. The Court rejected that “rule of thumb”. [113]. That general approach is too simplistic, and has a tendency to overlook relevant factors including how many counsel are briefed, the timing of the listing of the trial and the urgency of the trial. [113]. Reliance on the “rule of thumb” led the costs assessor into error, such that this aspect of the assessor’s certificate was set aside.
Fourth, in relation to the care and conduct of the matter, CMC sought various uplifts on their solicitor’s fees. In particular, the plaintiff claimed that the matter was one of substantial complexity, and therefore warranted an uplift of 30 per cent, under r 691(5). [175]. In addition, CMC sought an uplift on general care and conduct of 35 per cent in accordance with Item 1 of the Scale of Costs. [175]. The costs assessor granted the latter, but not the former. [178]–[180]. The Court was not satisfied that this aspect of the costs certificate should be set aside. In particular, the mere fact that the matter was complex or that the work was done effectively, did not mean that an uplift under r 691(5) was necessarily warranted. [193]. In addition, it would be appropriate, when determining whether to grant an uplift under r 691(5), to take account of an uplift already given under the schedule to the scale of costs. [215].
Fifth, in relation to particular findings of the costs assessor, the parties were in dispute about the effect of the scale of costs. In particular, the scale refers to four types of costs claimable in relation to documents: drafting, producing, perusing, and examining. [256]. The Court noted “drafting” is the composition of a new document; “producing” is the composition of a document into the final form; “perusing” entails a careful reading of a document, giving detailed consideration to its contents; and “examining” involves a higher level review than perusing. [258]. Notably, costs may be recoverable in various categories for the production of a single document. [259]. For example, in the production of a statement of claim, a solicitor might examine documents, draft the statement of claim, and produce the statement of claim into its final form. [259].
Finally, CMC sought costs of $322,421.59 for “preparing and collating”. [287]. The assessor disallowed $149,663.35. [287]. Various objections were raised by WICET in relation to the claim for these costs, including that there is no item in the scale which provides for the costs of preparing and collating material. [287]. WICET submitted that, at best, preparing and collating costs could be considered as part of general care and conduct. [287]. The Court rejected this submission. It may be necessary for a solicitor to, for example, collate material for inclusion in a list or a brief. [288]. In such a case, the solicitor would need to examine the documents to determine their relevance, and an examining charge under the scale would be appropriate. [288].
L Inglis