Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers

[2021] QDC 182

DISTRICT COURT OF QUEENSLAND

CITATION:

Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers [2021] QDC 182

PARTIES:

VAL ECO HOMES PTY LTD (IN LIQ)
ACN 104 030 462

(applicant)

v
JASON HALL T/A JHL LAWYERS
ABN 26 312 281 326

(respondent)

FILE NO/S:

BD.  2625/20

DIVISION:

Civil

PROCEEDING:

Application

DELIVERED ON:

13 August 2021

DELIVERED AT:

Brisbane

HEARING DATE:

In Chambers

JUDGES:

Jarro DCJ

ORDERS:

1.   The applicant pays 93% of the respondent’s costs of the Application on a standard basis on the District Court scale prior to 29 September 2020, to be agreed or assessed. 

2.   The applicant pays 93% of the respondent’s costs of the Application on an indemnity basis from 29 September 2020, to be agreed or assessed.

3. There be an assessment pursuant to s 335(2) of the Legal Profession Act 2007 (Qld) of the whole of the fees and disbursements charged by the respondent to for the services provided and charged for by the respondent and described in Clause 10 of the Loan Facility Deed dated 19 February 2019, namely the legal costs charged in:

a.   Tax Invoice Bill Ref: 12337 dated 17 September 2019, in the sum of $21,168.96 (Including GST); and

b.   Tax Invoice Bill Ref 12381 dated 29 September 2019, in the sum of $16,883.90 (Including GST). 

4.   An independent costs assessor be appointed by the registrar of the court. 

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL RULE: COSTS FOLLOW EVENT – EVENT: WHAT CONSTITUTES – where the applicant sought assessment of twenty-seven invoices for legal services – where only two invoices were ordered to be assessed – where costs should follow the event – whether the term ‘event’ is to be construed narrowly or broadly.

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – REGULATED COSTS: GROSS OR FIXED COSTS, LUMP SUM ORDERS OR CAPPING ORDERS AND LIKE MATTERS – POWER TO ORDER – where the respondents seek an order fixing costs – whether the circumstances of the matter are appropriate to necessitate an order fixing costs. 

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – RELEVANT CONSIDERATIONS GENERALLY – where the respondents made a Calderbank offer – where the applicants did not receive a more favourable outcome than the offer – where both parties accept indemnity costs are appropriate – whether indemnity costs should be imposed.

STATUTE 

Uniform Civil Procedure Rules 1999 (Qld)

COUNSEL:

SOLICITORS:

Dowd & Co for the applicant

JHL Lawyers for the respondent

Background

1. The applicant in the proceeding sought to have twenty-seven of the respondent’s invoices for legal services assessed.[1]  I largely found in favour of the respondent and ordered assessment of only two of the invoices and that I would hear from the parties as to costs.[2]

   [1]Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers [2020] QDC 301.

   [2]Val Eco Homes Pty Ltd (in liq) v Jason Hall t/a JHL Lawyers [2020] QDC 301 [32].

2. The parties have subsequently been unable to agree on an appropriate costs order.  The main issues in dispute are the extent of costs recoverable by the successful party and whether they should be fixed by the court or assessed by a costs assessor.

Apportionment of Costs

1. The court has discretion to award costs but they generally follow the event unless the court orders otherwise.[3]  The term ‘event’ does not have to be construed narrowly such as to confine the allocation of costs to the overall outcome of the application.[4]  A single proceeding may have multiple events[5] when the term ‘event’ is interpreted broadly to mean an issue of law or fact.[6]  Costs can be interpreted as following the event when they follow the verdicts on each issue of fact or law.[7]  Although the Uniform Civil Procedure Rules 1999 (Qld) (‘UCPR’) do not contain an express provision to deal with ordering costs in accordance with the outcomes of issues, the rules’ silence does not oust the court’s jurisdiction to interpret the term ‘event’ broadly.[8]  Therefore, it is within the court’s discretion to order costs proportionately to the relative success of the parties in the proceeding.  As the application was partially allowed but largely disallowed, I find it appropriate that the costs order reflect this mixed outcome. 

   [3]Uniform Civil Procedure Rules 1999 (Qld) r 681.

   [4]Fuller v Municipal Tramways Trust [1921] SASR 109, 111.

   [5]Thiess v TCN Channel Nine Pty Ltd (No 5) [1994] 1 Qd R 156, 208.

   [6]Cretazzo v Lombardi (1975) 13 SASR 4, 12.

   [7]Keith Bray Pty Ltd v Hamburg-Amerikanische [1970] 3 NSWR 226, 227.

   [8]Sequel Drill & Blast Pty Ltd v Whitsunday Crushers Pty Ltd (No 2) [2009] QCA 239 [4].

2. Costs may be apportioned on an issue-by-issue basis[9] or on a percentage basis.[10]  The overarching objective in discerning an appropriate method is to achieve the fairest outcome.[11]  In Sanders v Snell (No 2)[12], Kirby J opined that there is an inutility and expense to the courts to divide legal fees based on the amount of time spent on various issues. The most pragmatic approach would be to apportion costs based on the overall impression of the case’s success.[13]  Therefore, I find that costs should be divided on a percentage basis, in accordance with the relative success of the total amount of invoices sought to be assessed.  As I refused assessment for twenty-five of twenty-seven invoices, I find that the respondent should receive 93% of their costs. 

   [9]BHP Billiton Iron Ore Pty Ltd v National Competition Council (No 2) [2007] FCA 557 [23].

   [10]Spotless Group Ltd v Premier Building and Consulting Pty Ltd [2008] VSCA 115 [15]; UCPR r 684(2).

   [11]Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 [3]–[5]; Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 [52].

   [12](2000) 174 ALR 53, 57.

   [13]Ibid.

Apportionment of Costs – The Assessable Invoices

1. After finding the applicant was eligible to have two invoices assessed, I must determine whether it is eligible to receive 7% of its costs from the respondents.  In the broader interest of court efficiency and decongestion, parties should not be encouraged to advance more expansive submissions for the purposes of re-cooperating part of their costs.[14]  Traditional circumstances where the successful party pays a proportion of the unsuccessful party’s costs include where issues are improperly or unreasonably raised[15] or where the opponent’s costs are otherwise needlessly increased.[16]  The applicant has not suggested that any of these factors are applicable.   

   [14]        Pharmos Nominees Pty Ltd v Commissioner of State Taxation (No 2) [2012] SASC 34 [9].

   [15]Mok v Minister for Immigration, Local Government and Ethnic Affairs (No 2) (1993) 47 FCR 81, 89.

   [16]AMP Services Ltd v Manning (No 3) [2007] FCA 510 [4]–[5].

2. As the respondent has submitted,[17] the “position and behaviour of the person brought to court unwillingly may need to be judged in that light.”[18]  Although a plaintiff may be penalised through their costs for unnecessarily raising unsuccessful issues, the court should exercise a more lenient approach to a substantially successful defendant.[19]  It logically flows that a substantially successful defendant should not be penalised on their failed issues to the same extent as the plaintiff.[20]  As the plaintiff has initiated proceedings and failed to substantially achieve the sought relief, only in compelling circumstances will a successful defendant have to pay some of the plaintiff’s costs.[21]

   [17]Respondent’s submissions at [5].

   [18]Evans Deakin Pty Ltd v Sebel Furniture Ltd [2003] FCA 282 [7].

   [19]        BHP Billiton Olympic Dam Corp Pty Ltd v Steuler Industriewerke GmbH (No 3) [2012] VSC 414 [42].

   [20]Byrns v Davie [1991] 2 VR 568.

   [21]Verna Trading Pty Ltd v New India Assurance Co Ltd [1991] 1 VR 129, 154.

3. I have already reduced the costs payable to the respondent by 7% in favour of the applicant to reflect its partial success in the matter.  Having regard to the lack of unreasonableness or needless submissions, the dichotomy of will between the parties in bringing the application to court, the substantial success of the respondent and the past reluctance of the courts to penalise a successful respondent, I find it just to not order that the defendant pay 7% of the applicant’s costs.   

Whether Costs Should be Fixed

1. The respondent has submitted that costs should be fixed by the court.[22] The default position in making a costs order is that they are to be taxed or assessed unless appropriate circumstances indicate that they should be fixed.[23] Costs can be fixed pursuant to r 687(2) of the UCPR.  District Court Practice Direction 3 of 2007, s 3(a) provides that the court will fix costs where it “will avoid undue delay and expense.”

   [22]Respondent’s submission on costs [8].

   [23]Aquilina Holdings Pty Ltd v Lynndell Pty Ltd (No 2) [2008] QSC 98 [6].

Quantum of costs and delay

1. Costs are particularly appropriate for assessment when the case is lengthy and complex such that the processes of assessment will be time consuming and expensive and lead to excessive costs.[24]  Cases that have necessitated fixed costs to avoid undue delay and expense include where the quantum of charges are such that the costs were fixed at $8,000,000,[25] $650,000,[26] $50,000,000[27] and $1,100,000.[28]  The respondent seeks the amount of $28,454.50. 

   [24]Harrison v Schipp (2002) 54 NSWLR 738, 742, 744.

   [25]Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119, 123.

   [26]Nine Films & Television Pty Ltd v Ninox Television Ltd [2006] FCA 1046.

   [27]Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23.

   [28]Olivaylle Pty Ltd v Flottweg GMBH & Co KGAA (No 6) [2011] FCA 688.

Material to support fixation

1. Before costs can be fixed, the court must “be confident that the material before it enables it to make a sufficiently reliable calculation or estimate of an appropriate costs sum.”[29]  A reasonable evidentiary foundation is necessary to enable costs to be fixed.[30]

   [29]Tim Barr Pty Ltd v Narui Gold Coast Pty Ltd [2011] NSWSC 11 [21].

   [30]Baychek v Baychek [2010] NSWSC 987.

2. The respondent has provided a tax invoice from Queen’s Counsel, a tax invoice from junior counsel, a pre billing guide dated 10/02/2021 for practitioners the responsibility of Jason Hall and a payslip of Lisa Francoeur to support their submissions.  Although it is not necessarily a requirement, evidence from an independent costs consultant may be useful.[31]  No such evidence is provided in the instant case by either party.  Additionally, the court’s findings may be guided by evidence about the likely costs of the assessment process.[32]  The respondents have not provided any evidence to support the conclusion that taxation will be expensive. 

   [31]H Lever & Co Pty Ltd v Maniotis [2006] FCA 1668 [11].

   [32]Butler v JSL Racing Pty Ltd [2016] VSC 110; ACN 074 971 109 (as trustee for the Argo Unit Trust) v National Mutual Life Association of Australasia Limited [2013] VSC 137.

3. The courts have elected against fixing costs where the material is insufficiently detailed and fails to identify the components of the costs incurred or how the costs were calculated.[33]  The information provided by the parties would make it difficult for the courts to calculate costs.  For example, in the invoice of Queen’s Counsel, costs are generalised between date ranges and include two fees for a general list of tasks.  Without more specific information, I am unable to critically assess the amount charged against the work provided by Queen’s Council to determine whether the amounts are reasonable. 

   [33]Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878 [26].

Dispute

1. In previous cases where costs have been fixed, judges have considered a lack of objection to fixation from the opposing side to be a salient consideration.[34]  In the instant case, the application to fix costs is opposed[35] and an element of the costing, namely the use of two counsel, is challenged.[36]  Although such a dispute does not necessarily disqualify fixation, the absence of agreement between the parties about fixation weighs against exercising my discretion to fix costs.   

   [34]Beach Retreat Pty Ltd v Mooloolaba Marina Ltd [2009] QSC 84 [8].

   [35]Applicant’s submissions at [10].

   [36]Applicant’s submissions at [12(c) – (d)].

Conclusion

1. The quantum sought, the insufficient material supporting the application and the absence of agreement all weigh against the fixation of costs.  Additionally, the respondent has submitted that costs should be fixed to avoid “undue delay as the recoverable costs are simple, realistic and appropriate for an order in a fixed amount.”[37]  As a corollary of the respondent’s argument, an inference may be drawn that the assessment process will not be lengthy nor expensive.   Therefore, I find that there are not appropriate circumstances in this case to deviate from the default position of the courts to requirement assessment of costs. 

   [37]Respondent’s submissions at [11].

Indemnity Costs

1. On 29 September 2020, the respondent made a Calderbank offer to settle.  The applicant did not accept the offer and subsequently obtained an outcome at the hearing which was not more favourable than the offer.  Statute does not grant the defendant an express right to claim indemnity costs in these circumstances, but that does not preclude such a claim.[38]  The court’s discretion to award indemnity costs is enlivened under r 361(2) where a “party shows that another order for costs is appropriate in the circumstances.”[39]  In the instant case, both parties accept that the applicant is liable to pay indemnity costs.[40]

   [38]Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1 [6].

   [39]McChesney v Singh [2004] QCA 217 [12].

   [40]Respondent’s submissions at [21]; Applicant’s submissions at [4].

2. Such acceptance is supported by precedent that where a defendant makes an offer which is rejected by the plaintiff, and the plaintiff receives an outcome that is not more favourable than the offer, a prima facie entitlement arises to indemnity costs from the date of the service of the offer.[41]  Consequently, I find it appropriate to follow the orders indicated by the parties and supported by common law, to impose indemnity costs from 29 September 2020.

   [41]Maronich v Top Oak Pty Ltd (No 2) [2015] SASC 167 [41]; Dukemaster Pty Ltd v Bluehive Pty Ltd [2003] FCAFC 1.

Orders

1. In accordance with my findings above, I make the following orders:

   1.   The applicant pays 93% of the respondent’s costs of the Application on a standard basis on the District Court scale prior to 29 September 2020, to be agreed or assessed. 

   2.   The applicant pays 93% of the respondent’s costs of the Application on an indemnity basis from 29 September 2020, to be agreed or assessed.

   3. There be an assessment pursuant to s 335(2) of the Legal Profession Act 2007 (Qld) of the whole of the fees and disbursements charged by the respondent for the services provided and charged for by the respondent and described in Clause 10 of the Loan Facility Deed dated 19 February 2019, namely the legal costs charged in:

   a.   Tax Invoice Bill Ref: 12337 dated 17 September 2019, in the sum of $21,168.96 (Including GST); and

   b.   Tax Invoice Bill Ref 12381 dated 29 September 2019, in the sum of $16,883.90 (Including GST). 

   4.   An independent costs assessor be appointed by the registrar of the court.