THE OWNERS OF STRATA PLAN 41133 and LENDLEASE PROJECT MANAGEMENT AND CONSTRUCTION (AUSTRALIA) PTY LTD
[2014] WASAT 6 (S)
•10 APRIL 2014
| JURISDICTION | : | STATE ADMINISTRATIVE TRIBUNAL |
| STREAM | : | COMMERCIAL & CIVIL |
| ACT | : BUILDING SERVICES (COMPLAINT |
RESOLUTION and ADMINISTRATION) ACT 2011
(WA)
| CITATION | : | THE OWNERS OF STRATA PLAN 41133 and LENDLEASE PROJECT MANAGEMENT AND CONSTRUCTION (AUSTRALIA) PTY LTD [2014] WASAT 6 (S) |
| MEMBER | : | MR C RAYMOND (SENIOR MEMBER) |
| HEARD | : | 18 MARCH 2014 |
| DELIVERED | : | 10 APRIL 2014 |
| FILE NO/S | : | CC 307 of 2013 |
| BETWEEN | : | THE OWNERS OF STRATA PLAN 41133 Applicant |
| AND | ||
| LENDLEASE PROJECT MANAGEMENT AND CONSTRUCTION (AUSTRALIA) PTY LTD First Respondent | ||
| BUILDING COMMISSION Second Respondent | ||
| Catchwords: |
Building Services (Complaint Resolution and Administration) Act 2011 (WA) -
Assessment for the purposes of fixing costs - Principles to be applied
[2014] WASAT 6 (S)
Legislation:
Builders Registration Act 1939 (WA)
Building Services (Complaint Resolution and Administration) Act 2011 (WA),
s 5
Legal Profession Act 2008 (WA)
Result:
Costs fixed in the sum of $23,348
Summary of Tribunal's decision:
The Tribunal made orders that the first respondent pay the applicant's costs of an adjournment of a hearing, the costs thrown away as a result of the adjournment and the costs of review proceedings under the Building Services (Complaint Resolution and Administration) Act 2010 (WA). As the parties were unable to agree the quantum of costs, the matter was listed for a hearing to enable the Tribunal to determine costs.
The first respondent submitted a bill of costs claiming $59,734.40, including GST. The Tribunal found that due to clerical or arithmetical errors, this total was wrong and that the claim, correctly computed, amounted to $56,662.10, including GST.
The Tribunal set out the applicable principles to be applied in fixing costs and then applied those principles to the costs claimed. The Tribunal observed that the applicant had chosen to litigate the matter to a very high professional standard by applying resources and conducting the matter in a way in keeping with Supreme Court proceedings, but which was not reflective of the Tribunal's expectation that proceedings be conducted in a way that minimises costs. The Tribunal noted that: costs had been charged by four fee earners involved in the conduct of the case, two of whom were senior practitioners; that there were indications of overlap in the services provided by the differing practitioners; and that the amount of time spent on various attendances, and therefore the costs charged demonstrated the high degree of care and attention given to the matter by the applicant's legal representatives.
| The Tribunal acknowledged that the importance of the matter to the client and the value of the dispute warranted the involvement of more than one legal practitioner in the matter, but noted that the time spent by senior practitioners was considerably in excess of that of the junior practitioners concerned. Taking a robust view of the matter, the Tribunal reduced the costs claimed by the second senior practitioner to that which would have been chargeable by a junior practitioner and then discounted the time charged in respect of each practitioner by 30%. The Tribunal fixed costs in respect of the adjournment, wasted costs and the costs of review in the sum of $23,348 which it observed accorded with its appreciation of the complexity of the matter, the importance of the matter to the applicant, the nature of the proceedings, and the work necessary to conduct the proceedings efficiently in a manner which minimised the costs to the parties. | [2014] WASAT 6 (S) |
| Category: B | |
| Representation: | |
| Counsel: |
| Applicant | : | Mr JF Park |
| First Respondent | : | Mr JM Healy |
| Second Respondent | : | N/A |
Solicitors:
| Applicant | : | Park Linfoot Legal Solutions |
| First Respondent | : | Jackson McDonald |
| Second Respondent | : | N/A |
Case(s) referred to in decision(s):
Hoskins v Daniel Vinci trading as D'Vinci Contracting [2011] WASAT 188
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 292 (S)
| Marvelle | Investments | Pty Ltd | and | Argyle | Holdings | Pty Ltd |
[2010] WASAT 125 (S)
Medical Board of Australia and Costley [2013] WASAT 2
Teo and Gojko Maricic trading as G and MS Maricic Building Co
[2013] WASAT 166
The Owner's Strata Plan 41133 and Lendlease Project Management and
Construction (Australia) Pty Ltd [2014] WASAT 6
[2014] WASAT 6 (S)
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
1 On 13 January 2014, the Tribunal delivered its written decision in
review proceedings reported in The Owner's Strata Plan 41133 and Lendlease Project Management and Construction (Australia) Pty Ltd [2014] WASAT 6, setting aside a decision of the Building Commissioner refusing to accept two complaints lodged under s 5 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act). On 20 February 2014, the Tribunal heard and determined an application by the first respondent for costs. The Tribunal ordered that the first respondent pay the applicant's costs of the application for review, either as agreed, or as fixed by the Tribunal, but refused costs in respect of the application for leave. Prior to that on 1 November 2013, the Tribunal ordered, when granting the first respondent's application for an adjournment of the review hearing, that the first respondent pay the applicant's costs of the application to adjourn and the wasted costs of the adjournment. The parties have been unable to agree the costs to be paid. The Tribunal, by this decision, will fix the costs payable.
2 The complaints related to building work carried out by the first
respondent in relation to an apartment building known as Upper East Side Apartments No 29 Trafalgar Road, East Perth. The construction of the apartment was completed in 2002 but, as the above reported decision reflects, the first respondent carried out repair works over a considerable period of time. The Tribunal concluded that the repair work had been carried out within the six year time limit applying to complaints made under the BSCRA Act.
3 The material before the Tribunal discloses that the applicant
estimates that the cost of necessary repairs to be undertaken, if its complaints are upheld, will be in the region of $920,000 to $1,500,000, including GST. The criteria to be applied in determining whether or not the complaints were made out of time is complicated by complaints having been previously made under the Builders Registration Act 1939 (WA) (now repealed), which were withdrawn following a settlement agreement being entered into between the parties, the making thereafter of a further complaint to the Building Disputes Tribunal, which appeared not to have been prosecuted any further, the making of the current complaints and the interaction of the previous and current legislative regimes.
| 4 | Pursuant to directions made by the Tribunal on 20 February 2014, the applicant filed a statement of the costs claimed and its submissions |
[2014] WASAT 6 (S)
in support. The submissions comprise nine pages and the statement of costs claimed, in the form of a bill of costs, comprise a further 23 pages. In accordance with the directions given, the first respondent filed submissions in opposition comprising two and a half pages. The total costs claimed amount to $59,734.40, including GST. The first respondent contends, on a number of bases discussed more fully below, that the costs should be fixed in an amount of $6,702.
Applicable principles
The following principles apply to the fixing of costs awarded to a party in proceedings before the Tribunal.
1) In determining costs in proceedings under the BSCRA Act, the Tribunal should apply its discretion in a manner which is consistent with and reinforces the objectives and procedures of the Tribunal: Hoskins v Daniel Vinci trading as D'Vinci Contracting [2011] WASAT 188 at [19].
2) The Tribunal's preferred approach is not to look at what has actually been charged to the client, but rather, what reasonable allowance should be made, taking a robust and broad brush approach, in respect of the work necessary to be done to bring the proceedings to a conclusion: Medical Board of Australia and Costley [2013] WASAT 2.
3) In assessing a party's reasonable costs, the Tribunal will consider the nature of the matter, its complexity, its importance, possibly its urgency, and the amount of time and effort required to properly prepare and present the case: J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 292 (S) at [9] (J & P Metals).
4) In cases in which an order for costs has been made, the Tribunal's obligations to minimise costs to the parties will be reflected in the costs assessed by the Tribunal as recoverable. That approach reflects an expectation that representatives of parties before the Tribunal will approach a proceeding in a way that minimises costs to their clients. If clients choose to approach proceedings before the Tribunal in a way which substantially increases costs for them, it will be a rare case where that increase in
[2014] WASAT 6 (S)
costs will be recoverable through a favourable costs
order: J & P Metals at [38].5) The Tribunal will always strive to maintain proportionality between the subject matter of a proceedings and the costs associated with the proceedings: J & P Metals at [9].
6) In determining the appropriate costs, the Tribunal will be guided by statutory scales and Cost Determinations made under the Legal Profession Act 2008 (WA). In that regard, the most current Determination being The Legal Practitioners (State Administrative Tribunal) Determination 2012, is a guide to the Tribunal of the maximum which might be allowed on a party and party basis for an hour or daily rate, as the case may be: see the discussion in Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) at [46] and following in relation to the Determination then in force.
The costs claimed
6 At the relevant times, there were four fee owners who were engaged
on the matter, being a law graduate (EH - who has been treated as a clerk), a junior practitioner (JBP), and two senior practitioners (KW and JP). The hourly rates charged, inclusive of GST, were: EH - $264; JBP - $385; and KW and JP - $495 respectively.
7 The bill of costs comprises three schedules. Schedule 1 deals with
the costs of the application to adjourn and is Annexure 'B1'. Schedule 2 is the claim for wasted costs and is identified as Annexure 'B2'. Schedule 3 is the costs of the application for review (excluding the costs claimed in Annexures 'B1' and 'B2') and is described as Annexure 'B3'. An index to the three schedules shows that the amount claimed in respect of Annexure 'B1' is $5,188, plus GST, in respect of Schedule 2 $11,925, plus GST, and in respect of Schedule B3 (referred to incorrectly as 'B2') $37,191, plus GST. That is a total of $54,304, excluding GST, or $59,734, including GST. It appears that some arithmetical or clerical errors have occurred in the preparation of the above schedules. In the course of its consideration, the Tribunal has totalled the time claimed in respect of each item reflected in the schedules. This reveals the total time charged in respect of EH is 15.9 hours which, at the rate charged, computes to $4,197.60. In respect to JBP the total time charged is 13.1 hours which, at the applicable rate, computes to $5,043.50.
[2014] WASAT 6 (S)
In respect to KW the total time charged is 46.4 hours, which computes to $22,968. For JP the total time charged is 49.4 hours, which equates to $24,453. These charges total $56,662.10, including GST, or $51,511, excluding GST.
Application of the applicable criteria
Complexity and the nature of the proceedings
8 The Tribunal accepts that the matter is to be regarded as a complex
proceeding in the circumstances already referred to in the introduction above. It is also a matter of obvious importance to the client, because it involves a claim that the first respondent is liable for the cost of significant repairs to a value of possibly up to $1,500,000. These factors are counterbalanced, to some extent, by the nature of the proceedings, which involved a review of a decision to refuse to accept the complaints. Under the legislative regime, the Tribunal's review, as sought by the applicant, did not involve in any way a consideration of the merits of the complaints. The review was limited to a consideration of whether, on the material before the Tribunal, the correct and preferable decision was to accept the complaint or not, depending upon whether building work had been carried out within a six year period prior to the making of the complaints. However, as submitted by counsel for the applicant, the outcome was a final one for the applicant, if the decision under review was affirmed.
9 When the Tribunal granted leave to review the decision, it adjourned
the matter to a later date so that the parties could give consideration to the appropriate directions to be made in order to program the review to final hearing. It was open to the parties to prepare the matter on the basis that detailed factual evidence would be given of each repair carried out, to establish the date of the particular repair and the causative link between each alleged current defect and the building work said to have been carried out by the first respondent. The witness statements provided by both parties addressed only generally the type of repairs carried out during approximate periods. This led to the Tribunal observing in the review decision at [24] that the parties had not availed themselves of the opportunity to carry out a detailed forensic examination to establish precisely when particular work was carried out and whether any particular current complaint was incapable of being linked to the actual work carried out. The review hearing was therefore essentially limited to an argument on the evidence filed by the parties. Although the matter had been listed for a full day, the hearing was concluded within a few hours.
[2014] WASAT 6 (S)
10 Having regard to these factors, the Tribunal considers that the
appropriate hourly rate which should be applied is 90% of the maximum permitted under the Legal Practitioners (State Administrative Tribunal) Determination 2012, subject to rounding up or down to arrive at a convenient figure. On this basis, the hourly rates to be applied will be: for a clerk $120 per hour; for a junior practitioner $250 per hour; and for a senior practitioner $335 per hour, all inclusive of GST.
Proportionality and cost minimisation
11 The first respondent submits that costs should be allowed based on a
half-day hearing and a day's preparation for that hearing. Further, that while costs thrown away should be awarded for preparing for the hearing on 1 November 2013, this should be based on no more than an allowance of three hours' time. The first respondent also submits that costs were awarded against the first respondent on the basis that it was reasoned that, subsequent to the decision in Teo and Gojko Maricic trading as G and MS Maricic Building Co [2013] WASAT 166, the first respondent should have realised its continued opposition was unreasonable. Consequently, it is submitted that the applicant should have realised that, as a result of this decision in its favour, the applicant should have streamlined its preparation for the hearing.
12 This submission is, with respect, an oversimplification of the issues
facing the applicant. The concession that most of the claims (but not all) should have been accepted by the Building Commission would have been apparent only after close analysis of the statutory declaration of the first respondent's witness, Mr Frank Smith, filed approximately two weeks prior to the hearing. It remains part of the first respondent's case that the settlement agreement precluded various claims being advanced. Most of the costs incurred in preparing witness statements and documentation was well prior to this date.
13 As will appear below, the Tribunal is of the view that the preparation
of the matter did involve a considerable amount of work, well in excess of the allowance for which the first respondent contends. Notwithstanding this, the Tribunal is of the view that the applicant has chosen to litigate this matter to a very high professional standard by applying resources and conducting the matter in a way which might be entirely in keeping with Supreme Court proceedings, but which is not reflective of the Tribunal's expectations that proceedings before it should be approached in a way that minimises costs. Some specific examples to illustrate the basis for this conclusion are set out below.
[2014] WASAT 6 (S)
14 Firstly, the applicant has chosen to be represented by two senior
practitioners, both of whom were heavily involved in the conduct of the proceedings. On the Tribunal's calculation, the total time charged out for KW was 46.4 hours and, for JP, 49.4 hours. The Tribunal raised this with counsel for the applicant, indicating that it accepted that a case such as this might require the involvement of more than one legal practitioner to ensure its efficient handling, but that was usually on the basis that a more junior practitioner was used to carry out the bulk of the work so that costs were minimised overall by reducing the involvement of the more senior practitioner. By contrast, the more junior practitioners involved in this matter, on the Tribunal's calculations, were charged out only for 15.9 hours and 13.1 hours respectively. Counsel for the applicant (JP) endeavoured to meet this point by agreeing that it might be appropriate to reduce the charges for the senior practitioner (KW) who had supported him (as the other senior practitioner) by reducing the amount charged by her to the rate of a junior practitioner.
15 Secondly, there are, in any event, indications, notwithstanding the
applicant's submission to the contrary, that there has been an overlap in the services provided by the differing practitioners. By way of example, item 7 of Annexure 'B1' shows that KW prepared a letter to the applicant on 21 October 2013 enclosing a letter from the respondent. The letter is stated to have been two pages long; three units of time, or 18 minutes, have been charged out for this service. On the same day, JP has charged for drafting a letter to Mr Casper Hoogstrate (the owner giving instructions on behalf of the applicant) regarding the respondent's letters; the letter is stated to be two pages long and four units of time, or 24 minutes, have been charged out for the service. Even if the letters dealt with a different subject matter or emphasised different issues, this was not an efficient way to deal with the matter. A single letter could have been written addressing all relevant matters.
16 On 16 October 2013, KW charged 1.8 hours of time for reviewing
and considering a transcript (understood to be the transcript of the leave application hearing which was 60 pages long). The leave application was argued by JP and it would have been far more efficient for him to review the transcript.
17 There are many examples of KW and JP meeting with
representatives of the applicant, and of both KW and JP preparing for hearings, when JP was the person who appeared for the applicant at the hearing. For instance, on 31 October 2013, both JW and KP spent time on various activities in preparation for a hearing on 1 November 2013,
[2014] WASAT 6 (S)
which was adjourned. The total time charged for KW's time relating to the hearing on 1 November 2013, reflected in items 3 and 4 (Annexure 'B2'), totalled 10.7 hours. Part of the time in respect of KW included meeting with the client. On 1 November 2013, the day of the adjourned hearing, KW charged four hours of time for preparing and attendance at the hearing. The charge for JP, essentially for preparation for the same hearing, totalled 14 hours (items 5, 6 and 8 of Annexure 'B2'). The attendance of two senior practitioners, or even a senior practitioner and a junior practitioner, at the hearing on 1 November 2013 and at the later final review hearing, might well be justifiable because of the manner in which the applicant chooses to litigate the matter, but it is not conducive with minimising costs as the Tribunal requires.
18 This duplication in preparation is also evident when KW and JP were
both heavily involved in preparing for the final hearing which occurred on 27 November 2013. Items 49 and 50 of Annexure 'B3' show that KW charged 4.6 hours and JP charged 4.6 hours for services which are described in an identical manner.
19 Thirdly, apart from increased charges due to overlap in services by
the abovementioned practitioners, the amount of time spent on various attendances, and therefore the costs charged, demonstrates the high degree of care and attention given to the matter by the applicant's legal representatives. Counsel for the applicant submitted that all the services provided were necessary in order that the applicant's legal representatives properly discharge their professional responsibilities and no less would be expected from its professional indemnity insurers. Ultimately, it is a matter for a litigant to agree with its legal representatives about the resources to be brought to bear, and it may well be that a legal practitioner considers that an extremely high degree of care and attention is required in order to avoid the risk of breaching his or her professional obligations. But, in the end, the Tribunal must assess the work undertaken and whether the charges are reasonable, having regard to the need to comply with the Tribunal's objectives to minimise costs. For example, in this matter, on the Tribunal's calculation, 20.7 hours have been charged out for the preparation of the witness statement for the applicant's proposed expert witness, Mr P Faigen. Mr Faigen's statement is only six and a half pages in length, comprising 45 paragraphs. It had numerous documents attached to it in the form of expert reports, Scott Schedules, correspondence and the like, but it was essentially no more than a chronological statement of the dealings between the parties and the steps taken by Mr Faigen in providing reports and assisting with the claim, largely recorded
[2014] WASAT 6 (S)
in the attached documents. The time charged in this respect did not include time for collating these documents, which was charged separately and, in any event, many of these documents had been collated and provided for the leave application. Four hours of this time was charged by EH after the senior practitioner, JP, had spent 5.8 hours settling Mr Faigen's statement. This example is reflective, in the Tribunal's view, of the manner in which the entire matter has been conducted. At every stage, the submissions filed by the applicant have been of an extremely high standard but have been lengthy and not consistent with the Tribunal's expectation that the costs be minimised. The submissions and bill of costs totalling together 33 pages are the final example of this. The time charged by JPB for these services totalled 13.1 hours ($5,043.50, inclusive of GST) and for JP one hour ($495, inclusive of GST).
The bill of costs
20 Annexure 'B1' reflects attendances in respect of the costs of the
application to adjourn in a total sum of $5,188, excluding GST. There appears to be some error in the calculation of this claim as, on the Tribunal's calculation, the total time charged for services provided by EH is 9.2 hours, for KW one hour, and for JP four hours which, at the rates charged, computes to an amount of $4,458, excluding GST. There is some overlap between the costs claimed in respect of the costs of the adjournment (Annexure 'B1') and the costs thrown away as a result of the adjournment (Annexure 'B2'). See, for instance, the time spent by EH on 30 October 2013 of four hours for drafting submissions in relation to the respondent's application for an extension of time (Annexure 'B1') and the charges on the same date by JP (item 5 of Annexure 'B2') of 9.5 hours for drafting submissions regarding extension of time, considering and reviewing the law and preparing for the hearing on 1 November 2013.
21 It is not apparent that the costs set out in Annexure 'B2' were
necessarily wasted, but if the costs were not wasted to any extent, they would, in the Tribunal's view, form part of the costs of the review (Annexure 'B3').
22 In the circumstances, in taking the robust view which the Tribunal is
required to take in relation to its assessment for the purposes of fixing costs, all three annexures have been addressed in the same way without an attempt at close analysis of each particular item claimed. Based on the views expressed above, the Tribunal has firstly reduced the costs claimed by KW to those which would have been chargeable by a junior practitioner, and has then discounted the time charged in respect of each
[2014] WASAT 6 (S)
practitioner by 30%. The rate at which that time is allowed is, as stated above, 90% of the maximum rate allowable under the Legal Practitioners (State Administration Tribunal) Determination 2012. This is set out in the following table.
| Legal | Total | Time | Less 30% | Rate | per | Hour | Total |
| Practitioner | Recorded/hours | (inclusive of GST) |
| EH | 15.9 | 11.1 | $120 | $1,332 |
| JBP | 13.1 | 9.2 | $250 | $2,300 |
| KW | 46.4 | 32.5 | $250 | 8,125 |
| JP | 49.4 | 34.6 | $335 | $11,591 |
| $23,348 | ||||
| Conclusion |
23 For the above reasons, the Tribunal fixes the total costs payable by
the first respondent to the second respondent, in respect of the costs of the adjournment on 1 November 2011, the wasted costs occasioned thereby, and the costs of the review, in the sum of $23,348. While this amount has been fixed in a robust manner and necessarily has an element of arbitrariness in the manner in which it is applied, it results in a total costs award which, in the Tribunal's view, accords with its appreciation of the complexity of the matter, the importance of the matter to the applicant, the nature of the proceedings and the work necessary to conduct the proceedings efficiently in a manner which minimises the costs to the parties.
| Orders |
The Tribunal will accordingly cause orders to issue as follows.
1.
On or before 8 May 2014, the first respondent must pay to the applicant the sum of $23,348, being the costs fixed by the Tribunal in respect of the adjournment on 1 November 2013, the costs thrown away by the adjournment and the costs of the review.
[2014] WASAT 6 (S)
I certify that this and the preceding [24] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
0
3
4