Civil Procedure – Assessment of Standard Costs
The Plaintiff, HGA, had been a subcontractor to Watpac, responsible for certain work in the course of the renovations to the Gabba Cricket Ground. A dispute arose as to the proper calculation of the amount payable under the subcontract and, in the event, HGA commenced proceedings in February 2000 for a little over $175,000.00. The matter was fought bitterly on both sides. Even when an attempt was made to expedite matters by the trial of certain separate questions, that trial itself led to an appeal and an order, in time, that the matter be adjourned back to the District Court. Finally, on 17 March 2003, and when the matter had been set down for trial for a second time, the case settled on the basis that Watpac would pay HGA a sum of just over $112,000.00, together with costs on the standard basis.
The tail then wagged the dog; four years after the apparent “settlement”, the determination of standard costs has been the subject of furious activity and is yet to be finally resolved. The exercise began in earnest in October 2003 when HGA lodged a costs statement which ran for some 219 page, included 1,820 items, and claimed costs and disbursements of $141,054.14, including $46,218.13 for a quantity surveyor’s fees and $21,450.00 for counsel.
When the costs were assessed by the Registrar pursuant to Chapter 17, part 2 of the UCPR, he allowed a figure of $41,708.99 and, when pressed by HGA for a reconsideration pursuant to rule 741, increased that amount to $45,283.99. Pursuant to Rule 742, HGA sought a review of the Registrar’s decision and that is how the matter came before McGill DCJ.
There are a number of areas in which practitioners will derive assistance. His Honour considered the scope of the Registrar’s task, where he is asked by rule 703 to determine the costs “necessary or proper for the attainment of justice or for defending or enforcing the rights of the party whose costs are being assessed”. His Honour held, referring to a long line of authority, that the words would allow the recovery for services that were reasonably obtained rather than only those constituting the bare minimum necessary to carry the case forward. He specifically disagreed with an earlier District Court decision in which it was held that the approach to the assessment of costs on the standard basis should “occur on a parsimonious scale” and he held that the Registrar should not adopt an approach to the assessment of costs which is restricted, rigid, or narrow.
In relation to the quantity surveyor’s fees, the Registrar had been rather critical of the work carried out, and the time taken to do it, and this in turn elicited some criticism from Judge McGill. He noted, in particular, that, whereas the quantity surveyor had deposed in an affidavit to the services he provided, he had not been cross-examined, there was no challenge to his hourly rate, and nor had another quantity surveyor been called to suggest that the work could reasonably have been performed in a shorter time. McGill DCJ noted further that, perhaps because of that process, many of the criticisms made of the quantity surveyor had not been put to him and appeared to be capable of readily being defused. His Honour held, in any case, that it was not appropriate, in the absence of alternative evidence, to discount the quantity surveyor’s fees, and he allowed them in full.
You will be wanting to know what happened in relation to counsel’s fees. It was contended for HGA that it was not appropriate for the reasonableness of those fees to be determined in the abstract and that, rather, one should consider the “market rate” for barristers of the relevant seniority, and accept that amount, without reservation, as the reasonable cost to the client. His Honour noted that he had some sympathy for that approach but that it was not supported by the weight of authority and that the Registrar is entitled to determine what amount the unsuccessful litigant should reasonably pay by reference to considerations other than the market. His Honour found, nevertheless, that the Registrar had been unduly restrictive in the award of costs for counsel. In the judgment, he considers each of the claims and allows a total of $12,905.25 in lieu of the amount of $5,496.75 allowed by the Registrar.
His Honour also tackled the vexed question of GST and its effect on the assessment of costs. The Registrar had assessed the costs by reference to the District Court scale, and then reduced them by one-eleventh on the basis that HGA was a registered GST entity and would have received the benefit of one-eleventh by virtue of the input credits. Judge McGill disagreed with that approach at least as far as it concerned costs rather than disbursements. He had been referred to GSTR 2001/4 where the ATO has ruled that costs should be paid exclusive of GST if the receiving party is a registered entity, but inclusive of GST in all other cases. That ruling gives support, of course, for the view that, where the receiving party is obtaining the benefit of a GST input credit, the payer need not indemnify the receiver to that extent. His Honour noted, however, that the scale was fixed and did not allow that kind of adjustment. He cited similar decisions in other jurisdictions. He noted arguments to the contrary (based on the indemnity principle) but held that they had little force where, as here, the actual costs were well in excess of those assessed.
His Honour concluded that, whilst there was a traditional reluctance to intervene in the decisions of taxing officers, he considered that the circumstances here warranted intervention, and he indicated that he would deal with any consequential matters himself rather than remitting them back to the Registrar.
It seems to me that a reading of the decision will be useful to barristers for a number of reasons. In the first place, it shows that the assessment of costs can take longer than the trial itself and that, if possible, parties should ensure that costs are fixed as part of any settlement. In the second place, it shows that, if a challenge to the fees of an expert is to be made, then whilst the Registrar may take judicial notice of lawyer’s fees and conduct, he cannot do the same in relation to experts, and the rules of evidence must be observed. In the third place, it will assist counsel, when advising clients in relation to an offer which includes costs on the standard basis, to offer some view as to what the clients will receive “in the hand”. Finally, it allows barristers to speak meaningfully with solicitors on a matter that is, at once, difficult and important to their practices!
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