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Alexander, Phillipa --- "Costs column: Costs loadings under the Victorian Supreme Court scale" [2017] PrecedentAULA 78; (2017) 143 Precedent 60


COSTS LOADINGS UNDER THE VICTORIAN SUPREME COURT SCALE

By Phillipa Alexander

As part of an application for approval of a settlement of a group proceeding arising from the Mickleham bushfire, the Supreme Court of Victoria has recently examined whether the amount of $7.3 million claimed for legal fees and disbursements was reasonable in Williams v AusNet Electricity Services Pty Ltd.[1] From the settlement amount of $16 million (inclusive of costs), approval was sought for payment of legal costs in the sum of $7,300,000 being 95.1 per cent of the incurred costs of $7,675,732.41.

In accordance with a costs agreement, the costs were calculated in accordance with Appendix A – Supreme Court Scale to the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (SCR) – and increased by 30 per cent (being the maximum allowance) pursuant to r63.34(3) SCR to reflect the nature, importance and difficulty of the proceedings. The costs agreement also provided for an uplift fee of 25 per cent payable upon a successful outcome. An expert costs report obtained by the plaintiff’s solicitors was filed in support of the claim for $7.3 million.

Insurance Group Australia also obtained an expert costs report which disputed the allowance of the 30 per cent premium pursuant to r63.34(3) SCR in addition to a 25 per cent loading on scale items assumed to be pursuant to r63.48 SCR.

Rule 63.34(3) provides:

‘The Court may, on special grounds arising out of the nature and importance or the difficulty or urgency of the case, allow an increase not exceeding 30 per cent of the legal practitioner's charges allowed on the taxation of costs with respect to—

(a) the proceeding generally; or

(b) to any application, step or other matter in the proceeding.’

Rule 63.48 provides:

‘Discretionary costs

(1) Except where these Rules or any order of the Court otherwise provides, the fees and allowances which are discretionary that are referred to in Appendix A shall be allowed at the discretion of the Costs Court.

(2) In exercising the discretion under paragraph (1), the Costs Court shall have regard to—

(a) the complexity of the matter;

(b) the difficulty or novelty of the questions involved in the matter;

(c) the skill, specialised knowledge and responsibility involved and the time and labour expended by the legal practitioner;

(d) the number and importance of the documents prepared and perused, regardless of length;

(e) the amount or value of money or property involved;

(f) research and consideration of questions of law and fact;

(g) the general care and conduct of the legal practitioner, having regard to the instructions and all relevant circumstances;

(h) the time within which the work was required to be done;

(i) allowances otherwise made in accordance with the scale in Appendix A;

(j) any other relevant matter.’

Emerton J was concerned that the two percentage increases under the SCR may have been included ‘for much the same reasons’ and referred the following question to an Associate Judge in the Costs Court:

‘Should the legal costs allowed by the Court include both the increase allowed under r63.34 and an increase for discretionary costs under r 63.48 and, if so, what should the percentages be?’[2]

Wood AsJ delivered her ruling on 4 September 2017[3] after carefully examining the relationship between rr63.34(3) and 63.48 SCR. Her Honour held that there is considerable overlap between the language utilised in r63.34(3) to justify the exercise of the discretion contained in that rule – (that is, nature, importance, difficulty, urgency, specialised knowledge in the case) when compared with the language utilised in r63.48(2)(a),(b),(c),(e),(f),(h) – (that is, complexity, difficulty, specialised knowledge, value of property, consideration of questions of fact and law, and time within which work was required to be done).[4]

Her Honour also noted that r 63.34(1) SCR provides that ‘Subject to paragraph (3)’ a legal practitioner shall be ‘allowed costs in accordance with the Scale in Appendix A unless the Court or Costs Court otherwise orders’. Her Honour considered that this suggests that the allowance under r63.34 is relevant for the purposes of r63.48.[5] Rule 63.48 is also subject to an exception under the Rules or an order of the court which otherwise provides.

The key question considered by her Honour was whether the exercise of a discretion under r63.34(3) to allow a loading of up to 30 per cent could be viewed as ‘otherwise providing’ for the purpose of r63.48 given that most of the same factors exist to justify a loading under r63.34(3)? Wood AsJ considered that an order for a loading under r63.34(3) must be taken into account when assessing whether a loading under r63.48 is appropriate.

In considering the loading to be allowed, her Honour noted that the combined effect of the scale hourly rate plus 25 per cent plus 30 per cent as contended for would result in an hourly rate in 2016 (when most work was done) of $693.55 inclusive of GST (exclusive of any uplift fee). Wood AsJ considered that the maximum 30 per cent loading under r63.34(3) had covered most of the factors in r63.48 and the latter rule is applied ‘subject to’ r63.34. However, taking into account a consideration of ‘the number and importance of the documents...perused, regardless of length’ is contained in r63.48(2)(d) and is absent from r63.34, her Honour was prepared to allow an additional 5 per cent loading under r63.48.

Accordingly, loadings under both rr63.34 and 63.48 may be allowed where warranted by the circumstances of the case, although it appears unlikely that maximum loadings would ever be allowed under both rules. In addition to considering the hourly rate that would result from the application of both claimed loadings, Wood AsJ did note that while it was clear on the face of the costs agreement that a 30 per cent loading under r63.34 was the basis of the plaintiff’s solicitors taking on the matter and this was accepted by the client at the outset, it was not immediately apparent to the client from the costs agreement that a further loading under r63.48 was to be applied as this was ‘buried in Appendix A’

[6]. This suggests that where it is intended to claim both loadings, this should be made clear to the client.

Phillipa Alexander is a specialist in legal costs with Costs Partners. PHONE (02) 9006 1033 EMAIL Phillipa@costspartners.com.au.

This article has been prepared for Precedent by Costs Partners. For more information on Costs Partners, please go to www.costspartners.com.au.


[1] [2017] VSC 474.

[2] Ibid, [106].

[3] Williams v AusNet Electricity Services Pty Ltd (Ruling No. 3) [2017] VSC 528.

[4] Ibid, [26].

[5] Ibid, [10].

[6] Ibid, [35].


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