CGA Law Pty Ltd & Anor v Diane Lawyers Pty Ltd & Anor [2022] QSC 92

SUPREME COURT OF QUEENSLAND CITATION: CGA Law Pty Ltd & Anor v Diane Lawyers Pty Ltd & Anor [2022] QSC 92 PARTIES: CGA LAW PTY LTD ACN 623 155 180 (first applicant) and CGA CONSULTING PTY LTD ACN 164 583 484 ATF CGA CONSULTING TRUST (second applicant) v DIANE LAWYERS PTY LTD ACN 650 581 196 (first respondent) and DIANE AMANDA MASSELOS (second respondent) FILE NO: 7076/2021 DIVISION: Trial PROCEEDING: Application ORIGINATING COURT: Supreme Court of Queensland DELIVERED ON: 13 June 2022 DELIVERED AT: Brisbane HEARING DATES: 9 and 18 March 2022 Further written submissions received 27 May 2022. JUDGE: Dalton J ORDER: 1. Set aside the costs assessor’s decision insofar as it allows for recovery of the fees of Mr Trewavas of counsel. 2. Vary the costs assessor’s decision so that it allows the respondents to recover from the applicants the fee on brief of Mr Morris QC in the amount of $9,800. 3. Vary that part of the costs assessor’s decision which deals with liability for (a) the respondents’ assessed costs of the costs assessment and (b) the costs of the assessor so that it allows the respondents to recover from the applicants 90% of both those costs. 4. Direct that the parties bring in a draft judgment in the amount of the costs to be paid pursuant to the order of Applegarth J on 25 June 2021 at the further hearing scheduled by order 6 below. -- 1 of 17 -- 2 5. Order that the applicants pay the respondents costs of and incidental to the application filed 3 February 2022 (Court Document 51) to be agreed or to be fixed by the Court, on evidence, at the further hearing scheduled by order 6 below. 6. Order a further hearing before Dalton J on 24 June 2022 at 10.00 am. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – PROCEDURE AND EVIDENCE – TIME AND EXTENSION THEREOF – where r 737 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”) requires the costs assessor to give a copy of the certificate of assessment to each party – where the costs assessor sent an unsigned copy of the certificate to the respondents – where r 742(2)(b) UCPR requires an application for review to be filed within 14 days after a party receives the certificate – whether time under r 742(2)(b) UCPR begins to run where the respondents did not receive a signed certificate – whether the respondents filed the application for review in time PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – APPEAL REVIEW OR REFERENCE – RELEVANT PRINCIPLES – GENERALLY – when a court will interfere with a costs assessor’s decision – distinction between an error of principle and an error in the exercise of a costs assessor’s discretion – when the court will review the costs assessor’s decision PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – APPEAL REVIEW OR REFERENCE – RELEVANT PRINCIPLES – MISTAKE OF TAXING OFFICER – whether “costs of the hearing” and “costs of and incidental to the hearing” differ in meaning – where the respondents were awarded the “costs of the hearing” – where the costs assessor misunderstood the law PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – PARTICULAR ITEMS – COUNSEL FEES – NUMBER OF COUNSEL – TWO COUNSEL – where there was an application to wind up the first respondent and appoint a provisional liquidator – where the application was dismissed – where the applicants were ordered to pay the respondents’ costs – where the respondents engaged senior and junior counsel – where the costs assessor disallowed senior counsel’s fees and reduced junior counsel’s fees – where the respondents sought a review of the costs -- 2 of 17 -- 3 assessor’s decision pursuant to r 742 UCPR – whether the nature and importance of the proceeding warranted two counsel – whether the costs assessor exercised his discretion on a mistaken factual and legal basis PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – APPEAL REVIEW OR REFERENCE – RELEVANT PRINCIPLES – MISTAKE OF TAXING OFFICER – where the costs assessor made enquiries and garnered facts from sources external to the material provided by the parties – where r 720(2)(b) UCPR requires the procedure on assessment be consistent with the rules of natural justice – where the costs assessor did not notify the parties of his enquiries – whether the costs assessor did not act consistently with natural justice PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – APPEAL REVIEW OR REFERENCE – RELEVANT PRINCIPLES – MISTAKE OF THE TAXING OFFICER – where the party entitled to costs was awarded costs on the assessment – where there were no offers – where the costs assessor determined that the respondents should bear 75% of the costs of the assessment – where the costs assessor proceeded on a mistaken factual and legal basis – whether the cost assessor’s decision on the costs of the assessment should be adjusted PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY – COSTS – TAXATION AND OTHER FORMS OF ASSESSMENT – APPEAL REVIEW OR REFERENCE – RELEVANT PRINCIPLES – MISTAKE OF TAXING OFFICER – where the costs assessor did not allow the parties the opportunity to make submissions on the costs of the assessment – whether the costs assessor denied the parties natural justice Uniform Civil Procedure Rules 1999 (Qld), rr 7, 371, 705, 706, 720, 721, 737, 738, 740, 742 Australian Coal and Shale Employees’ Federation & Anor v The Commonwealth & Ors (1953) 94 CLR 621 Schweppes’ Ltd v Archer (1934) 34 SR (NSW) 178 Re Hudson; Ex parte Citicorp Australia Ltd (1986) 11 FCR 141 Mio Art Pty Ltd v Macequest Pty Ltd (No 2) [2013] QSC 271 Hunter v Hunter [2015] QSC 181 SOLICITORS: Morgan Conley Solicitors for the applicants Australian Law Partners for the respondents -- 3 of 17 -- [1] The respondents sought to review a decision of a costs assessor, r 742, UCPR. The costs assessed were costs ordered in favour of the respondents on an application brought by the applicants for the appointment of a provisional liquidator. Applegarth J dismissed that application on 25 June 2021. [2] Rule 742 of the UCPR provides as follows: “(1) A party dissatisfied with a decision included in a costs assessor’s certificate of assessment may apply to the court to review the decision. (2) An application for review must be filed within— (a) if reasons are requested under rule 738(1)—14 days after the party receives those reasons; or (b) otherwise—14 days after the party receives the certificate. (3) The application must— (a) state specific and concise grounds for objecting to the certificate; and (b) have attached to it a copy of any written reasons for the decision given by the costs assessor; and (c) state any other matter required by a practice direction made in relation to this rule. … (5) On a review, unless the court directs otherwise— (a) the court may not receive further evidence; and (b) a party may not raise any ground of objection not stated in the application for assessment or a notice of objection or raised before the costs assessor. (6) Subject to subrule (5), on the review, the court may do any of the following— (a) exercise all the powers of the costs assessor in relation to the assessment; (b) set aside or vary the decision of the costs assessor; (c) set aside or vary an order made under rule 740(1); (d) refer any item to the costs assessor for reconsideration, with or without directions; (e) make any other order or give any other direction the court considers appropriate. (7) Unless the court orders otherwise, the application for review does not operate as a stay of the registrar’s order.” -- 4 of 17 -- 5 Time in which to apply for a Review [3] The applicants took the point that the application before me was filed 52 days after the original costs certificate was given, and at least 17 days after the corrected costs certificate was purportedly given. I am not sure that there was any power in the costs assessor to give a corrected costs certificate. There is no express power in the rules, and the general law is that once a costs assessor has signed a certificate they are functus officio.1 I did not hear argument on this point, so I refrain from expressing a concluded view. [4] The respondents made an oral application to extend time for compliance with r 742(2) pursuant to r 7 of the UCPR if necessary. On their behalf it was contended that it was not necessary because time under r 742(2)(b) had never begun to run. Under r 742(2)(b) time runs from the day the parties receive “the certificate”, which must mean a copy of the certificate the costs assessor is obliged to file within 14 days of the end of a costs assessment. [5] Rule 737 provides: “(1) At the end of a costs assessment, a costs assessor must certify the amount or amounts payable by whom and to whom in relation to the application, having regard to— (a) the amount at which costs were assessed; and (b) the costs of the assessment. (2) The certificate must be filed by the costs assessor in the court within 14 days after the end of the assessment and a copy must be given to each of the parties.” [6] The costs assessor sent an unsigned copy of the certificate to the respondents pursuant to r 737(2). Therefore the respondents said, the time limit in r 742(2) did not apply. [7] In my opinion, r 737(2) does require a costs assessor to send a copy of the signed certificate to the parties. Unless the original certificate is signed, I cannot see that it is a certification by the costs assessor, and it is a copy of the certificate which must be given to the parties. Nonetheless, this does seem a fairly technical point and where a party receives an unsigned certificate and thus knows of the assessment, they would be foolish to delay filing an application for review because: (a) r 740 allows only 14 days before a judgment in the amount certified is effective, and (b) on an application under r 742, an applications judge might well regard a failure to give a signed copy to the parties as an irregularity – r 371. [8] In case I am wrong about my view that the copy of the certificate given to the respondents had to be signed to be effective, I will indicate that I would grant an extension of time in which to file the review application so that it can be heard – r 7(1). The Registrar has not given judgment in the amount of the certificate. There 1 Australian Coal and Shale Employees’ Federation & Anor v The Commonwealth & Ors (1953) 94 CLR 621. -- 5 of 17 -- 6 was no specific prejudice to the applicants. They have paid their share of Mr Laws’ fee but that is no reason not to hear the review. As discussed below, there is at least one important point of law raised in the review sought, and some clear errors on the part of the costs assessor. When the Court will hear a Review [9] In Australian Coal and Shale Employees’ Federation & Anor v The Commonwealth & Ors2 Kitto J discussed when a court will interfere with the decision of a taxing officer. A distinction was made between interfering where a taxing officer has erred on a question of principle, and where a party was only seeking to have the Court interfere with a taxing officer’s decision on “a mere question of quantum”. Further, it was established that a court would rarely interfere with a costs assessor’s exercise of discretion. [10] Kitto J adopted a summary made by Jordan CJ in Schweppes Ltd v Archer:3 “In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. … it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.” [11] As discussed below, the costs assessor has made an error of law as to the meaning of Applegarth J’s costs order, and has misunderstood it in another important respect. In two further respects he had denied the respondents natural justice. These errors resulted in him exercising his discretion about: (1) allowing senior counsel; (2) the quantum of counsel’s fees, and (3) the costs of the assessment on wrong legal and factual bases. The respondents only seek to review the assessment in relation to two discrete points. In my view, the respondents have demonstrated errors of principle and errors of sufficient magnitude that the assessment should be reviewed. [12] As well, there are odd features of the assessment. The costs assessor produced reasons which no-one requested on what should have been a small, relatively simple assessment. Those reasons show that he spent time considering various matters which were irrelevant to the assessment which was before him. Other matters, if not strictly irrelevant, were considered at such length as to become irrelevant. Further, there seems to be animosity towards Mr Cameron (a costs assessor engaged by the respondents) expressed in the reasons, and in the correspondence during the course of the assessment.4 2 (1953) 94 CLR 621, pp 626-628. 3 (1934) 34 SR (NSW) 178, p 73. 4 Undesirably, and unbidden by either party, the costs assessor filed an affidavit (document 53) on this application. This adds to the impression that Mr Laws had motivations beyond simply assessing the -- 6 of 17 -- 7 The Application before Applegarth J [13] On 22 June 2021 the applicants filed an originating application seeking that the first respondent be wound up on the just and equitable ground; an account from the first respondent, and a declaration that the second respondent has contravened the directors’ duties imposed by the Corporations Act 2001 (Cth). That was Court Document 1. The factual background is unusual. The first applicant carries on business as a lawyer and to do so relies upon the second respondent’s being admitted to practice as a legal practitioner. The second respondent owns 30% of the shares in the first applicant and was, or is, an employee of the first applicant. The director of the first applicant, Alistair Bell, alleges that the second respondent has registered her own law firm, the first respondent, and has caused the Queensland Law Society (QLS) to remove the first applicant as a law firm registered with the QLS. He alleges that the second respondent has transferred the clients of the first applicant to the first respondent and closed the first applicant’s trust account. [14] At the same time as the originating application was filed, an interlocutory application seeking the appointment of a provisional liquidator to the first respondent was also filed. That was Court Document 2. The interlocutory application came before Applegarth J on 25 June 2021. Mr Coulsen of counsel appeared for the applicants and Mr Morris QC leading Mr Trewavas of counsel appeared for the respondents. Applegarth J made an order dismissing the interlocutory application on undertakings given by the second respondent not to adversely deal with the assets of the first respondent, and to keep proper books of accounts and records of the first respondent. [15] When this matter first came on before me in the applications list I raised concerns about understanding what had gone on before Applegarth J. In response to this, solicitors for the applicant obtained a copy of the transcript and it is now exhibited to Court Document 57. The transcript shows that although Applegarth J did not give separate ex tempore reasons for his decision, the reasons for his decision appear in his discussions with counsel during the course of his hearing the application. Unfortunately that transcription did not include the order made. After I reserved my decision on this matter I ordered the transcript of the order; circulated it to the parties and invited any further submissions they had. I have made that transcript exhibit 2 on this application.5 [16] No transcript of the hearing before Applegarth J was available to the costs assessor. Some of what went wrong on this assessment is attributable to the assessor’s lack of understanding of the hearing before Applegarth J. [17] At the hearing before Applegarth J, Mr Morris QC raised s 462(4) of the Corporations Act to say that the applicants had no standing to bring a winding up application unless security for costs had been given, and a prima facie case for winding up the company had been established. This was because, it was submitted, the applicants’ material did not show that they were anything more than contingent or prospective creditors of the company. Applegarth J did not express a concluded opinion on this point, but costs he was appointed to assess. The applicants’ solicitor originally read it and objection was taken to it. During the course of the hearing the solicitor acting for the applicants disclaimed reliance upon it. 5 I have made the applicants’ email declining the opportunity to make further submissions exhibit 1. The respondents further submissions were marked leave to read and file. -- 7 of 17 -- 8 made it clear that even if he were free to determine the application for a provisional liquidator, he would not make such an appointment because: the contentious issues between the applicants and the respondents had not been raised in correspondence; no undertakings had been sought by the applicants; the matter had been short-served, and undertakings were proffered by the respondents at the beginning of the hearing. Further, to appoint a provisional liquidator to such a small company as the first respondent would financially ruin it, which would not be to the advantage of either the applicants or the respondents in circumstances where one of the things which the applicants sought was an account of profits from the respondents. Costs Order made by Applegarth J [18] Having made his thoughts on those matters clear, Applegarth J enquired why he ought not make a costs order. He said to counsel for the applicants, “Well, why shouldn’t you pay the costs of today?” He later said, “I think I’m in a position to decide the question of costs for today.” Counsel for the applicants raised with him that the applicants might be successful on the final hearing for the winding-up and Applegarth J said: “Plenty of people are successful in getting final injunctions, but they don’t have a case for interlocutory injunctions. It depends. … there’s no settled order as to what happens when a court doesn’t grant an interlocutory injunction. Can be costs in the proceedings. Can be reserved and the like, but I don’t think a judge on [the return date] or a judge at the trial’s going to have a particularly different view as to the merits of seeking a provisional liquidator today.” [19] Later his Honour said, “… I’m not saying that you were disentitled to bring an application to wind up. You’ve got to get over several hoops and get leave to prosecute it. … I’m really dealing with the prospects of getting a provisional liquidator appointed today, which is what you came to court to do.” [20] At a later point in the transcript his Honour’s decision about costs is recorded: “… Well, it seems to me, in circumstances in which there wasn’t a request for the respondents to give the kind of undertakings which have been given and were given at the start of this hearing, that the applicants should pay the respondents’ costs of and incidental to the hearing today. That’s my provisional view. … And I would add to that. That is because whatever view one takes about arguable cases, prima facie cases or the like, the court was never likely to do more than order the respondents to not transfer assets away and to order them to keep records. … And that the court would have not granted a provisional liquidator because to do so would have – if I use a colloquialism – sunk the business.” (my underlining). [21] Orally His Honour indicated his view of what the orders would be: 1. Upon the respondents, by their counsel, giving certain undertakings the application is adjourned to 3 August 2021. 2. The application filed 22 June 2021, Court Document number 2, is dismissed. -- 8 of 17 -- 9 3. The applicants have liberty to apply on two days’ notice in writing. 4. The applicants are to pay the respondents’ costs of and incidental to the hearing on 25 June 2021. 5. Otherwise, the costs be reserved. [22] Applegarth J invited the parties to send a draft order to him. The applicants’ solicitors apparently did. Applegarth J initialled it. Unfortunately, that draft was not quite in terms of the order which Applegarth J made: “1. The Interlocutory Application filed 22 June 2021 (Court Document 2) is dismissed. … 3. The Applicants pay the Respondents’ costs of the hearing of 25 June 2021. 4. The costs of the Application are otherwise reserved.” (my underlining). [23] I think it is clear from the order which dismisses the interlocutory application, and from the remarks of Applegarth J (above), that order 4 dealt with the originating application to wind up. Costs Assessor is Appointed [24] Following these orders, the respondents’ solicitors engaged a costs assessor, Mr Paul Cameron, to cause a costs statement to be prepared (see r 705 UCPR). It is dated 7 July 2021 and is exhibit PC2 to Court Document 52. It was in the amount of $22,160. The first item was receiving instructions on 22 June 2021, which is the date upon which both the originating application and the interlocutory application were filed. Item number 93 on the costs statement was the sending of an email to brief Mr Morris QC and Mr Trewavas on 24 June 2021. On the same day is an item to attend on the respondents and the barristers. Item 95 relates to attendance on the respondents prior to the hearing. Items then run through to perusing invoices sent by counsel – items 120 and 121. After that, the costs statement itemises the fees of senior and junior counsel as outlays, along with various other items. [25] Solicitors for the applicants then delivered a notice of objection (see r 706 UCPR). In respect of each of items 1 to 93 the same objection was made, namely: “● The order of Applegarth J dated 25 June 2021 … pursuant to which the costs statement dated 7 July 2021 is made … provides that the applicants pay the respondents costs of the hearing of 25 June 2021 and that costs of the application are otherwise reserved. ● This item is not a cost of the hearing of 25 June 2021 and is outside the scope of the costs order. ● The applicants are not liable to the respondents for this item pursuant to the terms of the order.” -- 9 of 17 -- 10 [26] On 15 September 2021 a Mr David Laws was appointed as a costs assessor for this matter by Court order. The Respondents make a Concession [27] On 18 October 2021 solicitors for the respondents caused a response to the notice of objection to be served. This is not a document contemplated by the UCPR. Nonetheless, I can see that such a document will generally be useful to define the issues. In response to the objections taken by the applicants to items 1 to 93 this document said, “[The respondents] concede that items 1 to 93 are reserved costs. However maintain that items 93 to 126 are costs of the hearing.” [28] This concession was wrongly made, see [23] above and [41] below. Procedure on the Assessment [29] Rule 720(1) provides that a costs assessor is to decide the procedure to be followed on the costs assessment. Rule 720(2) provides that the procedure must be fair and consistent with the rules of natural justice (inter alia). Rule 720(4)(b) makes it clear that the costs assessor may carry out the costs assessment on the papers without an oral hearing. This is what Mr Laws decided was appropriate in this case, and I do not see a difficulty with that. [30] Rule 720(4)(d) is to the effect that the costs assessor may “be informed of the facts in any way the costs assessor considers appropriate”. That power to be informed of the facts must be subject to the overriding requirement of fairness and natural justice, so that if a costs assessor hearing a matter on the papers goes beyond what is contained in the material given to them by the parties, the parties ought to be informed of the additional information and have a chance to answer it. [31] Rule 738 provides as follows: “(1) Within 21 days after receiving a copy of a cost assessor’s certificate of assessment, a party may make a written request to the costs assessor for reasons for any decision included in the certificate. (2) If a costs assessor receives a request under subrule (1), the costs assessor must— (a) within 21 days give written reasons for the decision to each of the parties who participated in the costs assessment; and (b) give a copy of the written reasons to the registry of the court in which the certificate was filed. (3) A party requesting reasons must pay the costs assessor’s reasonable costs of preparing the reasons and those costs form part of the party’s costs in any subsequent review. …” [32] In this matter the costs assessor published reasons for his assessment even though there was no request from the parties. He said on the first page of those reasons, “In -- 10 of 17 -- 11 accordance with my usual practice and notwithstanding the provisions of UCPR r [sic] under which an assessor may charge separately for Reasons, I give Reasons without charge where I believe that explanation will assist in ensuring finality”.6 The rules do not allow a costs assessor to charge for reasons unless they have been requested. The rules do not contemplate reasons without request. Here, rather than promoting finality, the provision of reasons revealed errors made by the costs assessor and prompted, or at least supported the respondents in bringing, this application for review. [33] The respondents complain about two matters. I will deal with each in turn. 1. Allowance made for Counsel’s Fees (a) Allowance for Senior Counsel [34] The costs assessor only allowed fees for junior counsel. He allowed $1,080 for junior counsel to prepare, and $1,080 for junior counsel to appear before Applegarth J. Disproportionately he allowed $270 for junior counsel to prepare the draft order. [35] The solicitor for the respondents before me argued that Mr Morris QC’s fee should be allowed because of the complexity and importance of the matter before Applegarth J. He did not ask to recover both counsels’ fees – t 1-13. [36] As to this topic the costs assessor’s reasons say: “I have a particularly wide discretion where the fees of both senior and junior counsel are claimed. That discretion must be exercised judicially. Having read the Judgment of Justice Jackson in Re Diane Lawyers P/L [2021] QSC 229 and Mr Morris’s very economical and succinct written Submission placed before Justice Applegarth, (which adopts the draft prepared by Mr Trewavas). I cannot be satisfied this matter was at all complex, nor was it one apt to challenge senior counsel of Mr Morris’s undoubted and very extensive experience, or that of his very senior his junior – Indeed, where the material is not voluminous, I genuinely struggle to see why it was thought desirable, necessary or reasonable to engage 2 counsel. But having briefed a very senior junior counsel, the Party Entitled confronts me with a further difficulty, because I also struggle, (I hope without appearing to contradict myself), to see why briefing a very senior QC was necessary or reasonable Not where Mr Trewavas is himself a highly experienced junior counsel of some 20 years’ experience. – His Chambers biography states: ‘Simon has been practicing law since 2002 and specialising in commercial litigation since 2007. In that time he has acted for companies, directors of companies, insolvency practitioners and individuals in a wide variety of corporate, commercial, construction, estate and partnership disputes.’ 6 Court Document 52, p 89 of the exhibit bundle. -- 11 of 17 -- 12 Having regard to the matters I have just discussed, I consider that while it was reasonable and necessary to brief Mr Trewavas, this was not a case where the briefing of a very senior silk in addition to a relevantly and highly experienced, very senior, junior was necessary, reasonable or (for that matter) justified, either to ensure the adequate presentation of the case, or for the attainment of justice. In my view, briefing of a very senior silk was plainly a luxury for which the Party Liable ought not to be called upon to pay. I therefore disallow Mr Morris’ fees for the Hearing and allow the half day claimed for Mr Trewavas under Item 124 (as adjusted for discounting under Item 126 – [see below]).”7 (reproduced without footnotes, but otherwise as the original). [37] First, the respondents complain that Mr Trewavas is not “a very senior junior” and does not have 20 years’ experience at the Bar. Nor in fact does his Chambers biography say this, it speaks to the period of time he has been “practising law”. In fact Mr Trewavas was admitted to the Bar in 2016. Insofar as this is new evidence before me, I allow it – r 742(5). It is short in compass and it is the evidence which would have been before the assessor if he had informed the parties of his enquiries, and given them a chance to answer the factual material he thought he had found. The costs assessor ought not to have made enquiries, even as to Mr Trewavas’s seniority, and garnered facts from sources external to the material the parties provided him without notifying the parties he intended to act on the basis of the facts he thought he had found and giving them an opportunity to make submissions about them, see [30] above. [38] Secondly, r 721 provides that in assessing costs a costs assessor must consider, inter alia, “the nature and importance of the proceeding”. The application for the appointment of a provisional liquidator was a significant application. It was made aggressively in that it was short-served and there had been no correspondence as to the respondents’ complaints, or as to undertakings, before the application was served. As Applegarth J pointed out, had the order sought been made, its financial effects on all parties to this proceeding would have likely been ruinous. Further, the second respondent is a lawyer, and the application was one which might, either immediately, or consequently, have impacted upon her right to practice, having regard to the allegations which were made against her. In those circumstances, it was not luxurious for the respondents to brief senior counsel, it was reasonable. (b) Costs of the Hearing [39] The costs assessor was confused about what application was before Applegarth J and disposed of by him. Associated with this, he wrongly assumed that the word “application” in order 4 made by Applegarth J meant the interlocutory application, rather than the originating application: “On 25 June 2021 an interlocutory Application seeking the Winding up of Diane Lawyers Pty Ltd on the ‘just and equitable’ ground, the appointment of a provisional liquidator and other relief was part-heard before Justice Applegarth. The Application for appointment of a 7 Court Document 52, exhibit bundle pp 93-94. -- 12 of 17 -- 13 liquidator was dismissed and the Application was otherwise adjourned. The Applicant was Ordered to pay the Respondent’s Costs of the Hearing before his Honour on 25 June, 2021 Importantly, his Honour also ordered the costs the Application were otherwise reserved.” (transcribed as in the original, including underlining). [40] Secondly, the assessor failed to understand a fundamental point of law as to the meaning of paragraph 3 of the order which Applegarth J initialled, “the costs of the hearing”. [41] As discussed above, because I have a transcript of the hearing, I know this is different from what Justice Applegarth ordered orally. Orally, Justice Applegarth used the common formula, “the costs of and incidental to the hearing”. Ultimately though, the difference in phrasing does not matter, the better view is that there is no difference in meaning between the two phrases.8 [42] The costs assessor referred to Mio Art, but he misunderstood it and interpreted it to mean that there is a difference between an order which includes the words “of and incidental to” and an order which does not: “It appears to me that the form of order pronounced by Justice Applegarth was deliberately confined. That exercise of discretion is not unique. In Orders 3 and 4 (respectively), his Honour has drawn a clear dichotomy by expressly distinguishing between the costs of the Hearing itself and the costs of the Application … I therefore approach this Assessment on the basis that the costs order in favour of the Party Entitled is strictly confined to the actual costs of the Hearing held on 25 June, 2021, with all other costs of the Application, being otherwise reserved. I should say that I have found the question of how I might draw a clear between the costs reasonably and necessarily incurred in the Application and those reasonably and necessarily incurred by the Party Entitled in the preparation of and for the Hearing difficult. Item 122 and particularly Item 123 each present a mix of claims, some of which are allowable preparation for the Hearing, some of which are simply not allowable as double dipping (see below) and the remainder appear to be more properly allowed as the costs of the substantive Application. Doing the best I can to give effect to what I conceive to be the clear dichotomy and intention expressed in his Honour’s Orders 3 and 4, I propose being pragmatic allowing what is a traditional (but discounted – see below) fee equivalent to Mr Trewavas’ half day fee to Appear as compensation for his preparatory work for the Hearing. I consider this 8 Re Hudson; Ex parte Citicorp Australia Ltd (1986) 11 FCR 141, pp 143-144; Mio Art Pty Ltd v Macequest Pty Ltd & Ors (No 2) [2013] QSC 271, [19]. The case of Re Hudson discusses an order in terms of “costs of today”. Even that was held not to be confined to work actually done on the day of the hearing but to include costs associated with the hearing. -- 13 of 17 -- 14 approach recognises and gives full effect to Justice Jackson’s views expressed in Mio Art …” (transcribed as in the original). [43] In this context the assessor remarks that the objection taken by the applicants to items 1 to 93 of the statement of costs was “proper”. In my view the objection was incorrect in law for the most part.9 Most of those costs are in fact costs of the hearing because they were costs of preparing for the hearing in circumstances where the first notice the respondents had of any litigation was the service of the originating application and interlocutory application on 22 June 2021. Consistently with the (wrongly made) concession before the costs assessor, the costs at items 1-93 were not re-agitated before me. [44] The applicants argued that the decision about counsels’ fees was one within the costs assessor’s discretion. I reject this because the costs assessor made the two errors discussed above and then exercised his discretion on a clearly wrong factual and legal basis. [45] The applicants argued that because Mr Morris QC delivered an invoice in which he charged a fee on brief, not all of his fee was within the costs order made by Applegarth J because it included “work done before the actual date of the hearing”. This is based on a misconception as to the meaning of the order, “costs of the hearing”, see [41] above. The fee on brief was part of the costs of the interlocutory application assessable by Mr Laws. [46] Charging a fee on brief and refreshers was the practice before charging on a time basis became popular. However, I note that r 731 speaks in terms of refreshers. The nature of a fee on brief is discussed by Dal Pont: “[17.48] The traditional basis of charging counsel’s fees in respect of a court hearing has been via a brief fee and refreshers, and counsel’s fees have been taxed as between party and party on this basis. As preparation for trial is incidental to the central task for which counsel’s fee is paid, the brief fee is ‘taken to include a good deal of time spent on reading facts or law in preparation for trial’. It covers preparation up to at least a substantial part of the day and night before the hearing, and for time spent before the first refresher, which usually commences after the first day of the trial. The extent of the allowance for preparation in the brief fee is usually reflected in the difference between the fee on brief and a refresher. A party who seeks a departure from that traditional basis, it has been said, carries the onus of satisfying the taxing officer that the traditional method of fee marking could not reasonably have been followed in all the circumstances of the case.”10 (footnotes omitted). [47] I allow the entirety of senior counsel’s fee on brief in circumstances where: (1) there was work – preparing, conferring and dealing with the draft order – not charged for separately by Morris QC; (2) no fee is claimed for junior counsel in circumstances where the fee notes show junior counsel prepared drafts for and otherwise assisted 9 There may be some items in this group that were not referable to the interlocutory application, but they would be in the minority. 10 GE Dal Pont, The Law of Costs, 3 rd ed, LexisNexis Butterworths 2013. -- 14 of 17 -- 15 senior counsel; (3) the costs assessor allowed only 10% of a fairly modest claim for care and consideration in part because of the solicitors’ reliance on counsel, and (4) the fee is reasonable having regard to the nature of the application. 2. Costs of the Assessment [48] The second complaint the respondents make about the assessment is in relation to the costs assessor’s decision about the costs of the assessment, by which I mean the respondents’ costs of the assessment, as assessed by Mr Laws, and the fee charged by Mr Laws. [49] On the view the costs assessor took, costs were assessed in an amount of about 25% of what was claimed in the original costs statement.11 The costs assessor said this: “I am now left with an assessment where the Party Entitled’s concessions and my disallowances have resulted in a quantum reduction amounting to approximately 75% of the Costs Statement as delivered. In the exercise of the discretion reposed in me I have decided the Party Entitled should pay the 75% of the Costs of the Assessment, to reflect the very substantial reductions to the Party Entitled’s professional costs and its outlays/disbursements and the inflation of the costs of the assessment by reason of its advancing unmaintainable claims and arguments.” By this he meant that the respondents were to pay 75% of his fee and that the applicants were to pay only 25% of his assessed costs of the respondents on the cost assessment process.12 [50] The effect of this decision is succinctly stated in the respondents’ outline on this application: “5. The costs of Counsel claimed by the Defendants were $12,300 however the cost assessor refused the costs of Mr Morris QC to appear and reduced the fee of Mr Trewavas to only $2,430. 6. The professional fees allowed totalled $2,822.50 making the total costs allowed of $5,252.50, however the cost assessor then decided that the costs of the assessment of $4,620 should be paid mostly by the Defendants leaving the nett costs payable of $1,787.50 to the Defendants by the Plaintiffs.”13 [51] In Hunter v Hunter,14 McMurdo J said: “[34] The assessor reasoned that ordinarily the costs of an assessment should be paid by the party liable for the costs in the absence of an offer to settle by that party. Absent such an offer, the party entitled to 11 The respondents’ costs statement totalled around $22,000. Items 1 to 93 (which were wrongly conceded by the applicants) totalled just over $3,000, and nearly $11,000 of counsel’s fees was disallowed by the costs assessor. 12 See the maths in the certificate. 13 I am not sure how this maths reconciles with the maths in the certificate, but the general idea is correct. 14 [2015] QSC 181. -- 15 of 17 -- 16 the costs has no choice but to have the costs assessed. In my view, that reasoning was sound. [35] The assessor then considered whether some of the burden of the costs of the assessment should be borne by the present respondents. He correctly took into account the outcome of the costs assessment. That was a relevant consideration because where claims in a costs statement are substantially reduced by the assessor, it can be said that the costs of the assessment have been increased through the fault of the party which presented the costs statement. …” [52] Bound up in the calculation of the 75/25 proportion are the costs assessor’s wrong notions about what application was before Justice Applegarth, and what the phrase “costs of the hearing” meant. Separately to that, the application of the rule expressed in [35] of Hunter v Hunter was extreme: the party who succeeded on the costs assessment was to pay 75% of that assessment. These things would be enough to cause this Court to review the assessment. Unfortunately there is one more thing: the costs assessor denied the parties natural justice in not allowing them to make submissions as to the costs of the assessment. In his reasons the costs assessor said this as to his process of determining the costs of the assessment: “… I considered inviting Submissions from the parties upon by whom the costs of this assessment ought to be paid. However, the obligation to afford both parties natural justice, does not demand observance of a process or step where, on the facts before me, neither party could conceivably place anything for me, either in fact or Law, which is reasonably likely to be influential, much less decisive. For that reason and where I consider the costs of this assessment are already disproportionate I decline to extend that invitation.” [53] I am persuaded to re-exercise the power to make a decision as to these costs. [54] In their costs statement, the respondents claimed costs of $22,000. The applicants’ notice of objection objected to all but $2,700 of that. There were no offers from either side. Mr Laws assessed costs at about $6,600. Disregarding the costs of items 1 to 93, the respondents claimed about $4,600 in solicitor’s fees and Mr Laws allowed $2,800 of that. Making adjustments for what I think ought to be allowed for counsels’ fees, the respondents claimed just over $12,300 in outlays and recovered about $10,000.15 [55] The solicitor appearing for the respondents before me submitted that the assessor’s costs should be paid by the applicants, or failing that, “shared” – t 1-18. He acknowledged that there should be some adjustment for the fact that items 1 to 93 were claimed and then abandoned. In my view, that adjustment should be relatively small given that, (1) the applicant made the same formulaic and wrong objection to each of these items; (2) the items were not of great value, and (3) that they were abandoned by the respondents so that the assessor did not have to decide them. [56] In a case where the applicants’ notice of objections proved too low, and the respondents’ statements of costs proved too high, I would not make any other 15 See Court Document 52, pages 100-101. -- 16 of 17 -- 17 adjustment. The order as to these costs should otherwise recognise that the respondents were compelled to have their costs assessed in order to obtain payment of them. My view is that the applicants should pay the respondents 90% of both the costs of the assessment and the costs assessor’s fee. Costs of this Application [57] The applicants submitted that they should have the costs of this application. I disagree. Costs should follow the event. The applicants are to pay the respondents’ costs of and incidental to the application filed on 3 February 2022 (Court Document 51). Consequential Orders and Directions [58] Because I am varying the costs assessor’s decision in ways which will affect the amount of the costs certificate, I have decided the best way forward is to issue a judgment for the amount of costs ordered by Applegarth J on 25 June 2021. That amount will be the amount assessed by Mr Laws with the changes necessitated by my views as to counsels’ fees and the costs of the costs assessment process. I will set a return date and ask the parties to bring in a draft judgment in the new amount. When they do I will give judgment and set aside any remaining parts of Mr Laws’ certificates. [59] Further, to prevent any repetition of the process before this assessor, or further prolongation (and costs) of this costs issue, I will direct that the parties attempt to agree the costs of the application before me (Court Document 51). If they cannot I will fix those costs, on evidence, at the return date. [60] I set 24 June 2022 at 10.00 am as the return date. On that date I will give a judgment in the amount of the costs due to the respondents under the order of Applegarth J and set aside the remainder of Mr Laws’ certificates. If they have not been agreed, I will fix the costs of and incidental to the hearing of the application brought by Court Document 51. -- 17 of 17 --