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Blackstone Brief Volume 13

In this month’s Blackstone Brief one of our stellar Sydney paralegals, Fiona Trime, takes a close look at the recent case of Wiltshire v Amos & Anor, a recent authority in the Supreme Court of Queensland dealing with multiple legal costs issues.

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Wiltshire v Amos & Anor

As well as being a novel matter (the application for appeal was brought a staggering 7 years after the costs order!), the case demonstrates fundamental and universal considerations of Courts when determining the reasonableness of legal costs and disbursements.
Although the matter was heard in Queensland, principles considered within the judgment can be applied to all states and territories. In this case, his Honour Justice Crow shed light on issues often contemplated by our clients in every state, such as the recoverability of fees for multiple Counsel and the entitlement to recover unpaid disbursements. The judgment demonstrates the difficulty faced by legal practitioners in determining what is and what is not recoverable.

In a nutshell:

During a lengthy litigation against Monsour Legal Costs, the Applicant, Mr Edward Amos, briefed Mr Christopher Wiltshire of Counsel to advise and appear on his behalf in District Court proceedings.
On or about 2nd June 2009, a one-day trial took place at the District Court and judgment was made in favour of Monsour Legal Costs.
Mr. Amos subsequently brought an action in negligence against his now former barrister, Mr. Wiltshire. Mr. Amos made serious allegations asserting that Mr. Wilshire was both incompetent and dishonest.
Judgment was delivered in the first instance in favour of Mr. Amos, with the District Court ordering Mr. Wiltshire to pay Mr. Amos damages in the sum of $114,302.17. On appeal to the Court of Appeal, this decision was set aside and a new trial was ordered. Speaking to the credibility of Mr. Wiltshire, combined with an acknowledgment of his experience spanning some 10 years, Muir JA opined in Wiltshire v Amos [2010] QCA 294 at [42] that Mr. Wiltshire’s evidence regarding the drafting and briefing of critical Affidavits was to be preferred over that of Mr. Amos. The Court also directed Mr. Amos to pay Mr. Wiltshire’s costs of the appeal.

Seven years and 8 months later, Mr. Amos applied for a review of costs as assessed by the second respondent in this matter, the Court appointed cost assessor Mr. Edward Skuse.

Mr. Amos’ application was dismissed for reasons set out below in the decision of Wiltshire v Amos & Anor [2018] QSC 224.

Do Costs Respondents have a right to seek a review of a Cost Assessor’s decision?

Crow J discussed the ambit of Regulation 742, the right of a dissatisfied party to seek a review of a cost assessor’s decision.
His Honour noted that the Court will review a decision of a Taxing Officer where it has been alleged that the Officer has proceeded on a wrong principle and, as such, an error has occurred in determining whether an item should be allowed. However, where no principle is involved, the question for the Court’s determination is whether the Taxing Officer has correctly used their discretion.
Referring to the judgment of Jordan CJ in Schweppes Ltd v Archer(1934) 34 SR (NSW) 178, his Honour remarked upon the Court’s reluctance to review the decisions of Taxing Officers unless it appears that the Officer has either failed to exercise their discretion or has done so in a manner which is manifestly erroneous. The onus of proving such conduct rests on the party seeking the review.
Crow J held that Mr. Amos had not successfully established that the cost assessor had failed to apply, or had incorrectly applied, his discretion.

Are unpaid disbursements recoverable?

Mr. Amos mounted an argument that disbursements totalling $123,085.90 were not assessable, as proof that the disbursements had been paid had not been provided to the costs assessor.
Despite strong and meritorious arguments raised by Mr. Harrison QC on behalf of Mr. Amos, His Honour Crow J held at [26] that the clear and unambiguous language of r723 of the Uniform Civil Procedure Rules 1999 provides authority on whether unpaid disbursements are assessable. This rule states:
* If a party’s costs statement includes an account that has not been paid, the party may claim the amount as a disbursement.
* A costs assessor may allow the amount as a disbursement only if it is paid before the cost’s assessor signs the certificate of assessment.
* Subrule (2) does not apply to an amount for lawyers’ or experts’ fees.
His Honour further provided that, as r723 states that the necessity that a disbursement be paid is not applicable to lawyers’ and experts’ fees, this is essentially a matter of discretion for the cost’s assessor.
His Honour stated, obiter dicta, that the purpose of rule 723 is to prevent the disadvantage of impecunious parties.
The test for the Court’s involvement in the review of a costs assessor’s decision was again reiterated by his Honour with reference to disbursements. His Honour held at [28] that ‘the Court will interfere only where it appears the discretion has not been exercised at all or has been exercised in a manner which is manifestly wrong’. In so doing, the second ground of appeal raised by Mr. Amos was dismissed.

Are the costs of more than one Counsel recoverable?

In responding to the submission made by the Applicant that two counsel ought not to be allowed on assessment, his Honour stated that the relevant test is ‘whether the nature and circumstances of the case are such that services of two counsel are required if the case is to be presented to the Court in such a manner that justice can be done between the parties’.
Noting reliance upon the judgments in Stanley v Phillips [1966] 15 CLR and Kroehn v Kroehn (1912) 15 CLR 137 by the Applicant, his Honour held that the costs assessor was correct in establishing and applying the principles of these cases. Notably, his Honour held that the relevant considerations when evaluating the reasonableness of the engagement of two counsel should rest upon the complexity of the matter, the nature of the conflict, the probable duration of the trial and the general practice of briefing two counsel.

What if costs claimed exceed damages awarded?

The Applicant argued that as the costs assessed exceeded the award of damages ordered by almost $16,000, such costs were disproportionate to the amount in issue.

The Court held that the quantum of the subject matter in issue is not the sole factor relevant in determining the reasonableness of costs and, in any event, “the matter was of the utmost importance to Mr. Wiltshire and of general importance. Left uncorrected and because of Mr. Amos failure to meet his disclosure obligations, Mr. Wiltshire, as a barrister, faced the unattractive prospect of having a published judgment questioning his credibility and his competence as a barrister”. As such, the costs claimed were held to be justly and reasonably incurred despite the proportionality question raised.

Should GST be claimed?

The Applicant also raised the issue of GST, asserting that, as the Respondent had not yet paid the costs claimed he could theoretically claim input tax credits once the costs were paid. The effect of this being that, if allowed on assessment, the Respondent might be enabled to recover greater costs than those paid. The Applicant invoked the costs indemnity principle – that a party cannot profit from the recovery of costs from another party.
As Mr. Wiltshire had provided the Court with an undertaking that he would not claim input tax credits on disbursements paid on behalf of the Applicant, the Court held that the Applicant could not demonstrate that the cost assessor had wrongly exercised his discretion. Given Mr. Wiltshire’s professional obligations of candour to the Court as outlined by the Legal Profession Act 2007(QLD) and the Bar Association of Queensland Barrister’s Conduct Rules, the Court was satisfied that such an undertaking was sufficient.

Judging fees by reference to current levels

The Applicant argued that the cost assessor was mistaken in evaluating the reasonableness of professional fees by considering the current market rate of fees as opposed those of 2010.
With reference to the professional qualifications necessary of costs assessors, including their in-depth knowledge of appropriate rates of solicitors and Barristers, the Court held that there was no material evidence to suggest that the cost assessor had erroneously applied irrelevant market rates in making his assessment.
Crow J reiterated the fundamental principle of costs recovery as was stated by the Court of Appeal in Chong Herr Investments Ltd v Titan Sandstone Pty Ltd [2007] QCA278:
‘The successful party should not have been put to the expense of litigation, and it should be indemnified in respect of the costs which it has reasonably incurred in order to establish rights contested by the unsuccessful party’

On obligations to disclose costs to sophisticated clients

The final point of contention dealt with in this appeal was the reliance of the costs assessor on costs disclosure material not provided to the Applicant.
The Applicant submitted that Mr. Wiltshire’s failure to comply with the requirements of costs disclosure pursuant to s308 and s310 of the Legal Profession Act 2007 (QLD) meant that, as per s316, costs claimed were not payable.
His Honour held, at [69], that s311 of the Legal Profession Act creates an exemption to disclose to sophisticated clients, including legal practitioners. Therefore, the duty to disclose was not applicable in this case.
Furthermore, his Honour noted at [65] that the effect of s316 ‘is not to render Counsel’s fees unobtainable on assessment but merely that they must be a different type of assessment, namely a Division 7 assessment’.
Finally, his Honour highlighted the enforceability of costs agreements afforded to Barristers by virtue of s326 of the Legal Profession Act 2007 (QLD) . Observing that, under s326, a Barrister may enforce a cost agreement in the same way as a contract.
The discretion given to the cost assessor by regulation 723 of the Uniform Civil Procedure Rules 1999 (QLD) allows for the recovery of disbursements such as counsel’s fees that have not yet been paid.
Take a look at Volume 11 of the Blackstone Brief for more information on the importance of costs disclosures and the effects of Conditional Costs Agreements:
http://www.bstone.com.au/conditional-costs-agreement/

What does this mean for you?

The judgment of this case raises several important considerations regarding cost law. It is clear by his Honour’s comments throughout the judgment that the Court is committed to the indemnity of successful parties. As such, they are reluctant to interfere with the decisions made by cost assessors provided that those decisions are made on reasonable grounds. The overarching principles enunciated by this case suggest that the Court’s considerations are predominantly whether cost assessors have in fact utilised their discretion and, in doing so, have applied this discretion correctly.
His Honour’s comments on the recovery of costs yet to be paid suggests a real ‘substance over form approach’ has been applied. Again, the main consideration being that successful parties are indemnified appropriately.
The same can be said about the Court’s judgment on the use of two Counsel. Despite the Court’s commitment to the facilitation of quick, cheap and just litigation, it is evident that appropriate representation and the prevalence of justice are imperative. From a legal costs perspective, it is reassuring to note that litigants involved in highly complex matters which merit or indeed require the use of more than one Counsel will not be penalised.
It is also clear from the decision of Crow J that the Court is inclined to allow recovery of full legal costs charged when all requirements are met. However, drafting a Bill of Costs to meet this threshold can be taxing without an in-depth knowledge of cost law. Inadequately drawn Bills of Costs or Costs Statements can lead to, both, substantial losses of costs claimed and a delay in recovery of those costs.
At Blackstone Legal Costing we guide you through the labyrinth that is cost law to achieve optimum recovery for both you and your clients. For more information on how costs are assessed in your state click the link below for a helpful explanation:

http://www.bstone.com.au/blackstone-brief-volume-8/

Fiona Trime

Fiona graduated from the London School of Economics and Political Science in 2013 with a Bachelors Degree in Social Policy and Government. She has since moved to Sydney to pursue a career in law and has recently completed the Juris Doctor Degree at Macquarie University.
Fiona joined Blackstone’s Sydney team as a paralegal in 2018 with previous experience in civil litigation and immigration law. She has since developed costing skills, having worked on a range of matters from personal injury to planning law.
Find Out More (http://www.bstone.com.au)