Northtronics Pty Ltd v Coutts-Smith

[2011] QSC 302

SUPREME COURT OF QUEENSLAND

CITATION:	Northtronics Pty Ltd v Coutts-Smith [2011] QSC 302
PARTIES:	NORTHTRONICS PTY LIMITED ACN 102 205 096 (applicant) v GEOFFREY COUTTS-SMITH (respondent)
FILE NO:	BS9881 of 2010
DIVISION:	Trial Division
PROCEEDING:	Application for review of costs assessor’s certificate
DELIVERED ON:	7 October 2011
DELIVERED AT:	Brisbane
HEARING DATE:	12 July 2011, respondent’s written submissions received 26 September 2011, applicant’s written submissions received 30 September 2011
JUDGE:	Mullins J
ORDER:	The application is adjourned to a date to be fixed to enable the parties to submit an order that incorporates the outcome of the review
CATCHWORDS:	PROCEDURE – COSTS – COSTS ASSESSMENT – REVIEW – where respondent had been ordered to pay the applicant’s costs of the proceeding to be assessed – where costs assessed by costs assessor appointed by the court – where respondent applied for review of the costs assessment pursuant to rule 742 Uniform Civil Procedure Rules 1999 (Qld) Uniform Civil Procedure Rules 1999, r 738, r 742
COUNSEL:	G J Robertson for the applicant T L Laing for the respondent
SOLICITORS:	McCullough Robertson for the applicant Morgan Conley Solicitors for the respondent

1. This proceeding was commenced by originating application on 14 September 2010.  The respondent had been a director of the applicant until 21 July 2010.  Steps had been taken by the respondent on behalf of the applicant to establish a company in the UK of which the respondent was the sole shareholder, but the applicant claimed to be entitled to the share.  After the respondent had failed to respond to a demand by the applicant to execute a share transfer in favour of the applicant and take certain related steps, this proceeding was commenced.  It was continued, as if started by claim, and an early hearing date of 5 November 2010 was set.  There was an accelerated timetable for the preparation for trial.  On 26 October 2010 the relevant share transfer signed by the respondent was delivered to the applicant’s solicitors and the respondent agreed to undertake the other related steps which meant the only outstanding issue in the proceeding when it came on for hearing was the question of costs.       

1. On 5 November 2010, Peter Lyons J ordered the respondent to pay the applicant’s costs of and incidental to this proceeding, including reserved costs, to be assessed on the standard basis and certified that it was an appropriate case for the applicant to retain senior and junior counsel.  After the filing and service of the applicant’s costs statement claiming the amount of $205,714.61 for costs including outlays and the respondent’s objections to the costs statement, a registrar appointed Ms Davis as the costs assessor.  The costs assessor’s certificate was filed on 4 February 2011.

1. The costs assessor assessed the costs of the applicant pursuant to the order of the court dated 5 November 2010 in the amount of $152,519.84 comprising professional fees of $102,598.65 and disbursements of $49,921.19.  The costs assessor’s fee of $3,818.18 (excluding GST) payable by the respondent was included in the disbursements.  The costs assessor certified that the party entitled to be paid the costs of the assessment was the applicant and those costs were incorporated in the items claimed in the costs statement.    

1. On 18 February 2011 the respondent filed the application for review of the costs certificate pursuant to r 742 of the UCPR.  The respondent did not request reasons from the costs assessor, as permitted by r 738 of the UCPR.

1. As a result of directions given for the conduct of the review, on 29 March 2011 the respondent provided a schedule to the applicant identifying item numbers subject to review or objection and on 11 April 2011 the applicant filed its response to the respondent’s application for review.  Most item numbers were included in the schedule of objections, including 78 items which had already been disallowed by the costs assessor.     

1. The matter came before me for hearing on 12 July 2011.  During the course of that hearing a number of items in the costs statement were removed or reduced, as a result of the objections pursued by the respondent, and a number of the objections were rejected.  In light of the pattern that emerged in relation to how I was dealing with the objections, the hearing was adjourned part heard to give the parties an opportunity to address the objections in a less costly way than a full hearing before the court. 

1. Subsequent to the hearing the solicitors for both parties conferred and, as a result, further reductions were made.

1. The parties then agreed on a timetable for written submissions dealing with the items that remained the subject of objections that had not been able to be resolved.   The respondent conceded items 1818, 1819, 2034 and 2060, 2538 and 2540 to 2569. I will decide the remainder of the outstanding objections by reference to the written submissions. 

Item 692

1. This item was for the disbursement of $800 paid to the process server for serving the respondent personally with the originating application and three supporting affidavits.  The costs assessor reduced the claim by $624, allowing for two attempts at service and disallowing urgency loading and waiting time.  The quantum allowed was calculated by reference to the actual service fee claimed by the process server for the successful service.  The invoice of the process server sets out in great detail the circumstances of achieving service.  The only point of contact the applicant’s solicitors had for the respondent (apart from his solicitors who did not respond to the request to accept service) was a post office box at the Toowong post office at which the process server waited for the respondent to clear his post office box.  In light of the detail on the invoice, the approach of the costs assessor in allowing fees for two attempts at service is unexceptional.  The respondent submitted that service should have been allowed as item 10(a) of schedule 1 which is for personal service by a solicitor or solicitor’s employee.  That item does not apply to fees paid to a process server.  The objection is rejected.       

Items 1881 and 1889

1. The respondent maintains the objections to both items of email correspondence at $33.50 each.  The applicant does not press these claims.  These objections are therefore allowed.

Item 2537

1. This is the claim for care and consideration which was made initially at the level of 30% of the professional fees, but the quantum was reduced by the costs assessor to reflect the reduction in professional fees made in the course of the assessment.  The costs assessor maintained the rate of 30% of the fees allowed.  On the basis of the further reduction made to the professional fees on this review, the respondent seeks a further reductions in the amount for care and consideration at the rate of 30% of the amount by which the professional fees have been further reduced.  That is appropriate, but merely requires a mathematical calculation after taking into account all reductions in the professional fees made as a result of this application for review.

Item 2539

1. This item for professional fees of perusing the objections to the costs statement was claimed and allowed at $2,171.20 on the basis of an estimated 472 folios at $4.60 per folio.  The respondent asserts that the actual objections to the costs statement contained 118 folios.  That is mistaken.  The objections comprised 118 pages which equates to the estimated 472 folios.  The objection should not be allowed.

Item 2570

1. The objection made to this item sought a re-calculation of care and consideration for the costs assessment, if the objection were allowed to item 2539.  As the objection to item 2539 has not been allowed, there is nothing to consider in relation to this objection.

Costs of the application to review

1. To put the submissions made by the parties in context in relation to the costs of the application to review, there were 2,570 items in the costs statement that was the subject of the assessment.  The claimed amount of $205,714.61 was reduced to $148,701.66, before taking into account the costs assessor’s fee.  The reduction was mainly in respect of the disbursements, as professional fees were reduced only by $3,932.70. 

1. As a result of review by the court approximately 167 further items out of the remaining 2,417 items were reduced or disallowed that resulted in a very small reduction of the assessed fees and disbursements of about 2% or $3,500, before taking into account the further reduction in care and consideration of about $1,000.  There are slight discrepancies in the figures used in the respective written submissions of the parties and the additional reduction of $67 as a result of the allowance of the objection to items 1881 and 1889 reasons also needs to be taken into account. 

1. The respondent submits that the reduction of approximately 167 items “clearly identifies a large quantum of systemic errors on the part of the cost assessor”.  Most of these items were in relation to small reductions, however, such as the difference between a short letter and an ordinary letter ($20 per item).  That explains why the number of successful objections on the review has resulted in very little reduction of the costs assessment and a reduction that bears no relationship whatsoever to the costs of the application for review.  I am satisfied that the relatively small reduction of the costs assessment does not warrant any different decision than that made by the costs assessor that the applicant was entitled to be paid the costs of that assessment.   

1. I accept the applicant’s submission that the applicant has been substantially successful in resisting the application for review of the costs assessor’s certificate and that the applicant should have an order for costs on the standard basis.  The applicant has made a request in its written submissions for the court to fix the amount of these costs.  That cannot be done without hearing or receiving submissions from the respondent.  On the publication of these reasons, I will allow time for the parties to confer on whether they can reach agreement on the amount for which costs of the application for review should be fixed.  Failing that, I will receive any submissions that the respondent wishes to make on the quantum of the costs sought by the applicant for the application or whether it is more appropriate in the circumstances to order that the respondent pay the applicant’s costs of the application for review to be assessed.  The formal order that I will make is that the application is adjourned to a date to be fixed to enable the parties to submit an order that incorporates the outcome of the review.