Key Points:
When a claimant amends a claim for compensation, what are the cost implications for the constructing authority? Recent Queensland Land Court decisions have taken different approaches.
A claimant is entitled to reasonable legal, valuation and other professional fees for preparing a claim for compensation.
When a claimant amends a claim for compensation, what are the cost implications for the constructing authority? Recent Queensland Land Court decisions have taken different approaches.
The approach taken by the Land Court in Inglis v State of Queensland makes it difficult for a constructing authority to prove that professional fees incurred were not reasonable. However, the decision in Cupo v Chief Executive, Department of Transport and Main Roads took a different approach and set a higher burden for the claimants.
Lomin Holdings Pty Ltd as TTE v Brisbane City Council gives some comfort to a constructing authority that if a claimant amends a claim during court proceedings then the constructing authority may be able to recover costs thrown away prior to the amendment.
Inglis v State of Queensland (No 2) [2014] QLC 7
The applicants' previous solicitors submitted a claim for compensation in October 2010. On 26 November 2012, the applicants' new solicitors filed another claim for compensation that was not expressed as an amendment of the first claim.
The second claim for compensation included a claim for professional fees in the amount of $189,645.09, which included solicitors' fees ($73,062.10), counsel fees ($42,724.00), valuation fees ($42,572.24), town planner fees ($20,509.50), agricultural scientist, soil and water fees ($10,227.25) and traffic engineering fees ($550). The State of Queensland accepted that the traffic engineering costs were reasonable but disputed the remainder of the disturbance costs.
The applicants' solicitor gave evidence about the legal fees. The solicitor's costs included 10 or 11 conferences with counsel, two site visits with counsel and experts, drafting and settling letters of instructions to three new experts and reading the file of the previous solicitor that amounted to $7,899.76.
The solicitor stated in evidence that all the costs were necessarily and properly incurred and that the costs were conservative, given the issues involved.
The State had made an open offer of $60,000 for disturbance items and had prepared a table of rates and hours to demonstrate why $60,000 was a reasonable amount. However, the Land Court stated that the $60,000 was not supported by any evidence "such as might have been given by a cost assessor" and that there was no reason not to accept the solicitor's uncontracted sworn evidence.
The claim for disturbance in the amount of $189,645.09 was allowed by the Land Court.
With respect, a cost assessor has no expertise in assessing whether or not work undertaken to prepare a claim for compensation was necessary or reasonable. The pitfalls of attempting to use a cost assessor are discussed in the case below. Further, constructing authorities are in a good position to assess the reasonableness of professional claims because they deal with them on a regular basis.
Cupo v Chief Executive, Department of Transport and Main Roads [2014] QLC 19
The original claim for compensation dated 1 September 2008 included a disturbance claim for legal, town planning and valuation costs in the amount of $22,408.48. In September 2011 the applicants'' solicitor served an amended claim for compensation in the amount of $367,350.34 which included solicitor's fees ($159,354.83), Counsel's fees ($129,970.50), town planning fees ($45,498.01), KPMG tax lawyers' fees ($7,227) and valuer fees ($25,300).
When the claim was referred to the Land Court, the claimants' solicitor, in an affidavit, claimed a revised figure for disturbance in the amount of $373,394.14.
The claimants sought to provide evidence of the reasonableness of the costs incurred by way of an affidavit from a costs assessor (the claimants had the same legal team that was in Inglis). The Department objected and sought disclosure of six documents listed in the costs assessor's affidavit, including an advice from the claimants' counsel. The Land Court held that the costs assessor's affidavit could not be admitted into evidence until disclosure of the requested items was made. The claimants subsequently withdrew the affidavit and the solicitor gave evidence.
The Land Court held that the claimants had to establish the reasonableness of the actions taken and the reasonableness of the charges incurred in the context of making a claim for compensation as distinct from preparing for trial. The claimants had already made a claim for compensation so it needed to be considered whether the action taken was the result of "improved advice" as described in the State of Queensland v Pajares. The Land Court stated that, as the claimants did not produce counsel's advice and other advices referred to in the costs assessor's affidavit, it was impossible for the Department to exercise the right to test the reasonableness of obtaining the advice and the costs incurred.
The respondent had given the Land Court a list of decided cases with a summary of disturbance items, however this information was rejected by the Court.
The Land Court held that "asserted claims for disturbance do not amount to uncontracted evidence but are simply not adequate evidence where the need for improved advice is in issue and the advice was not produced". This appears to be a different test than was required for the amended claim in Inglis.
The Land Court held that the claimants did not discharge their onus of proof in relation to the disturbance items and awarded an amount of $22,408.48 for professional fees based on the original claim for compensation.
Lomin Holdings Pty Ltd as TTE v Brisbane City Council [2014] QLC 11
The claimant filed an originating application in June 2012 which included a claim of $1,240,000 for land.
On 5 September 2012, the claimant filed an amended originating application. The claim for land increased to $1,340,000. On 9 October 2012, the claimant filed a response to Council's request for further and better particulars of the claimant's statement of facts, issues and contentions. Council filed its response to the claimant's statement of facts, issues and contentions on 9 November 2012.
On 9 August 2013, the claimant filed a further amended originating application. The claim for land was reduced to $681,000.
Council brought an application for costs thrown away as a result of the claimant's significant amendment to its compensation claim.
The claimant resisted the application on two grounds. The first ground was the failure of Council to engage in without prejudice discussions. The second ground was that the claimant had relied on the advice of a "respected valuer". Both grounds were rejected.
The Land Court stated that the claimant is obliged to file a properly formulated claim and that there was no reason why Council should be expected to bear the costs thrown away by the amendment. However, the Land Court found that not all the costs had been thrown away and that much of the work done remained relevant to the current claim.
The claimant was ordered to pay 50% of Council's costs of preparing a request for particulars, a response to the claimant's statement of facts, issues and contentions, all Court reviews prior to 13 August 2013 and the application for costs, such costs to be assessed on a standard basis.
Future implications
The Inglis decision is currently the subject of an appeal by the State of Queensland to the Land Appeal Court. If the professional fee claim is upheld, then to prove a claim for reasonable fees each claimant which simply get its solicitor to give evidence that the fees were reasonable. The onus will then be on the constructing authority to prove that the fees were not reasonable or not reasonably incurred. This will lead to all sorts of issues for constructing authorities, particularly when the Land Court has rejected an assessment (based on many cases and years of experience) by the constructing authority of reasonable fees.
We don't think appointing a cost assessor is the answer for either a claimant or a constructing authority.
The Cupo decision is a step in the right direction for constructing authorities who are regularly facing exorbitant claims for professional fees.
We look forward to some direction from the Land Appeal Court.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
