FEDERAL COURT OF AUSTRALIA
Modtech Engineering Pty Limited v GPT Management Holdings Limited (No 2) [2013] FCA 1163
Citation: Modtech Engineering Pty Limited v GPT Management Holdings Limited (No 2) [2013] FCA 1163 Parties: MODTECH ENGINEERING PTY LIMITED (ACN 006 993 022) v GPT MANAGEMENT HOLDINGS LIMITED (ACN 113 510 188) and GPT RE LIMITED (ACN 107 426 504) File number: VID 1408 of 2011 Judge: GORDON J Date of judgment: 7 November 2013 Catchwords: REPRESENTATIVE PROCEEDING – representative proceeding under Federal Court of Australia Act 1976 (Cth) – Court approval of settlement – fairness and reasonableness of terms of settlement – assessment of reasonableness of legal fees and disbursements – assessment of reasonableness of “applicant’s expense claim” Legislation: Federal Court of Australia Act 1976 (Cth)
Federal Court Rules 2011 (Cth)Cases cited: Courtney v Medtel Pty Limited (No 5) [2004] FCA 1406
Guglielmin v Trescowthick (No 5) [2006] FCA 1385
King v AG Australia Holdings Ltd (formerly GIO Australia Holdings Ltd) [2003] FCA 980
Jarra Creek Central Packing Shed Pty Ltd v Amcor Limited [2011] FCA 671
Mainteck Services Pty Limited v Stein Heurtey SA and Stein Heurtey Australia Pty Ltd [2013] NSWSC 266 Modtech Engineering Pty Limited v GPT Management Holdings Limited [2013] FCA 626
Re Blyth and Fanshawe (1882) 10 QBD 207 Roadshow Films v iiNet Ltd (2011) 86 ALJR 205
Sanders Lead Co Inc v Entores Metal Brokers Ltd [1984] 1 WLR 452
Taylor v Telstra Corporation Ltd [2007] FCA 2008
Williams v FAI Home Security Pty Ltd (No 5) [2001] FCA 399Dal Pont GE, Law of Costs (3rd ed, LexisNexis Butterworths, 2013
Date of hearing: 19 September 2013 Date of last submissions: 24 October 2013 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 143 Counsel for the Applicant: Mr P Gray SC with Ms L Nichols Solicitor for the Applicant: Slater & Gordon Counsel for Comprehensive Legal Funding LLC: Mr PD Crutchfield SC with Mr D Synder Solicitor for Comprehensive Legal Funding LLC: Arnold Bloch Leibler
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 1408 of 2011
BETWEEN: MODTECH ENGINEERING PTY LIMITED (ACN 006 993 022)
ApplicantAND: GPT MANAGEMENT HOLDINGS LIMITED (ACN 113 510 188)
First RespondentGPT RE LIMITED (ACN 107 426 504)
Second Respondent
JUDGE:
GORDON J
DATE OF ORDER:
7 NOVEMBER 2013
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Subject to further order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), and on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following documents are to remain confidential on the Court file and be sealed on the Court file in envelopes marked “NOT TO BE OPENED EXCEPT BY DIRECTION OF THE COURT OR A JUDGE” and they and any of their contents are not to be disclosed to any persons other than the authorised legal representatives of the Applicant in this proceeding and are not to be…
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- Case
- [2013] FCA 1163
- Decision Date
CaseChat Overview and Summary
The court examined the Registrar's Report, which concluded that certain fees were excessive. The Registrar disallowed $285,575.00 (excluding GST) of the $2,213,197.30 in counsel fees, categorising the disallowances into three groups: trial preparation costs, counsel rates, and other counsel fees. The court reviewed the Registrar's approach, noting that the disallowance of trial preparation costs was based on the complexity of the case, the number of counsel involved, and the division of work between counsel and their instructing solicitors. The court found no error in the Registrar's methodology, affirming that the assessment of reasonable preparation time should be flexible but guided by relevant factors.
The court concluded that the applicant would need to bring in orders to give effect to the judgment by a specified deadline. The court also ordered that certain documents remain confidential and sealed on the court file to protect sensitive information. The decision underscored the importance of addressing issues of cost and fairness at the outset of a representative proceeding to avoid complications later in the litigation process.
Orders
Orders of the court
1. Subject to further order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (the Act), and on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following documents are to remain confidential on the Court file and be sealed on the Court file in envelopes marked “NOT TO BE OPENED EXCEPT BY DIRECTION OF THE COURT OR A JUDGE” and they and any of their contents are not to be disclosed to any persons other than the authorised legal representatives of the Applicant in this proceeding and are not to be published:
1.1 The Confidential Report of the Assessment of the Applicant’s Costs and Expenses dated 30 August 2013 prepared by Registrar Allaway and its annexures;
1.2 Paragraphs 7 to 10 (inclusive), paragraphs 60 to 70 (inclusive), and annexure “JMH1” to the Affidavit of James Michael Higgins affirmed on 16 September 2013;
1.3 Paragraph 3 and annexure “JMH1” to the Affidavit of James Michael Higgins affirmed on 18 September 2013;
1.4 Paragraphs 23 to 26 (inclusive), the heading preceding paragraph 79 and paragraphs 79 to 94 (inclusive), and Annexure 5 of the Applicant’s submissions as to its application for approval of the Applicant’s Costs, dated 16 September 2013 and the Applicant’s corrected submissions dated 19 September 2013;
1.5 Paragraphs 5 to 9 (inclusive) of the Affidavit of Peter Gordon affirmed on 19 September 2013.
2. The Applicant is directed to bring in orders to give effect to these Reasons for Judgment by 4:00pm on 14 November 2013.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Counsel fees accounted for $2,213,197.30 or 52.5% of the total disbursements incurred in the matter. The Registrar disallowed $285,575.00 (excluding GST) of that amount: see [106] above. The reasons for the disallowances fell into three categories:1.“Trial Preparation Costs”;2.“Counsel Rate”; and3.“Counsel Fees – Other”.Each category will be considered in turn. (i) Trial Preparation Costs The Registrar disallowed $227,625.00 (excluding GST) relating to fees charged by counsel for preparing for trial from 1 December 2012. Several counsel were retained on behalf of the Applicant in the matter. For trial, Slater & Gordon retained two senior counsel and two junior counsel. The Registrar concluded in the Registrar’s Report that, assessed overall, the amount charged by counsel for preparation was excessive and therefore unreasonable. In making that assessment, the Registrar took into account the fact that this was a representative proceeding with all the complexities that typically involves, including a significant number of documents and sources of data, a large member group, a wide array of witnesses including numerous experts, and a trial occupying 16 sitting days. The Registrar placed particular emphasis on the number of counsel and solicitors involved in the matter and the fact that several of the more senior solicitors were also involved in pre-trial preparation. In the Registrar’s Report, the Registrar acknowledged that “there are no hard and fast rules for the amount of preparation allowed to counsel for costs assessed on a solicitor/own client basis”. However, as a “general guide”, the Registrar considered that two days’ preparation for each day of trial represented a “reasonable upper limit for the allowance”. The Registrar went on to note (at page 32) that:A further allowance might be justified on account of the added size and complexity of a representative matter. For counsel with no advocacy role … the allowance in each case would be less.Where multiple counsel are retained, generally speaking one would expect that the time spent by the lead counsel in preparation for trial would be less and that of other counsel more, particularly where there is a second senior counsel involved, such as here. Having regard to each of those matters, the Registrar considered that counsel fees for preparation should be reduced as follows: At a general level, Slater & Gordon submitted that taking an a priori approach to how much preparation is reasonable, particularly to a complex matter, is not an appropriate approach. It was submitted that to impose a pre-determined “upper limit” on trial preparation would be inappropriate because the amount of work reasonably required for any case will depend upon the particular circumstances pertaining to that case. While I do not disagree with that submission at a general level, it is based on an incorrect premise. The Registrar did not apply a pre-determined “upper limit”. The Registrar merely indicated that two days’ preparation for each day of trial may represent a reasonable starting point for an assessment. That figure was subject to adjustments based on relevant factors. Here, those factors included the size and complexity of the proceedings, the number of counsel retained, the role undertaken by each counsel, and the division of work between counsel and their instructing solicitors. There is no error in that approach.