James Minchinton - Corrs Chambers Westgrath - What are Reasonable Legal Costs?

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LAND ACCESS FORUM

Reasonable Legal Costs

28 August 2014

Presenter:

James Minchinton Partner

11473765/1

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OVERVIEW – REASONABLE LEGAL COSTS AND RESOURCE COMPANIES

• Perspectives on reasonable legal costs

• Obligations on tenement holders to pay the

reasonable legal costs of landowners

• Relevant factors when assessing reasonable legal

costs

• Options for dealing with and managing the

reasonable legal costs of landowners

28 August 2014 LAND ACCESS FORUM: WHAT ARE REASONABLE LEGAL COSTS

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PERSPECTIVES ON REASONABLE LEGAL COSTS

LAND ACCESS FORUM: WHAT ARE REASONABLE LEGAL COSTS 28 August 2014

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THE LAWYER’S PERSPECTIVE

All legal costs are reasonable

And mine are more

reasonable than others!


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THE CLIENT’S PERSPECTIVE

No legal costs are reasonable

And if I’m paying someone

else’s they are even less

reasonable than others!


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TENSIONS AROUND PAYMENT OF REASONABLE LEGAL COSTS

• Landholders:

– Feel they only need to incur legal fees because of a

resources company

– Feel they should not be out of pocket

• Tenement Holders:

– Feel they have a right to be on the land too

– Are concerned that the landholder’s legal costs may be

inflated because someone else is paying

– Feel that there is no incentive on a landholder to settle or to

act commercially and can fight to the death because someone

else is paying

– Concerned that landholders are happy to cause additional

cost to the tenement holder


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OBLIGATIONS TO PAY REASONABLE LEGAL COSTS


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OBLIGATION TO PAY REASONABLE LEGAL COSTS

• For all resource authorities in Queensland (other

than mining leases) a resource authority holder

has an obligation to pay the “compensation

liability” to each eligible claimant for the

compensable effect the eligible claimant suffers

because of the activities.

• The compensable effect includes:

“accounting, legal or valuation costs the claimant

necessarily and reasonably incurs to negotiate or

prepare a conduct and compensation agreement

(other than the costs of a person facilitating an

ADR)”


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REASONABLE LEGAL COSTS

• Legal costs

• Necessarily or reasonably

• Incurred

• By the claimant

• To negotiate or prepare a conduct and

compensation agreement


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RELEVANT FACTORS FOR ASSESSING REASONABLE LEGAL COSTS


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REASONABLE LEGAL COSTS

• No judicial decisions about “reasonable legal

costs” in a resources context

• Some guidance from:

– Acquisition of Land Act cases

– Proceeds of crime cases


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INITIAL OBSERVATIONS

• Not an open cheque book

• Not necessarily all legal costs incurred

• General expectation that the quantum of the legal

costs will be proportional to the quantum of the

compensation

• But there may be circumstances in which this isn’t

the case


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ACQUISITION OF LAND CASES

• Lowry v Coordinator General [2012] QLC 0026

• The reasonableness must relate to both:

– The issue of whether it was reasonable to incur the cost; and

– Whether the quantum of the cost was reasonable

• Not enough for a claimant to assert that they relied

on the expertise of the lawyers (that their fees

were reasonable) and paid the bill accordingly.

That approach does not contain any analysis as to

whether it is reasonable


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PROCEEDS OF CRIME CASES

• New South Wales Crime Commission v Fleming;

New South Wales Crime Commission v Heal

(NSW Court of Appeal, 40300 of 1990 and 40301

of 1991)

• What is reasonable is determined by a judge, not

the person affected or their lawyers

• If the parties agree on costs, a judge would

normally be entitled to accept that agreement

• Where no agreement exists, the parties will need

to call evidence of reasonableness

• Court scales and average fee amounts are not

sufficient evidence to confirm reasonableness

• Will be assessed on a case by case basis

• Public interest is also relevant


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ELEMENTS OF REASONABLENESS

• Rates must be reasonable

– Hourly rates

– Expenses and disbursements

– Other components e.g. care and consideration

• Time taken for tasks must be reasonable

• Nature of the work and relevance to the matter

• The merits of the case or argument


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OPTIONS FOR DEALING WITH REASONABLE LEGAL COSTS


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SEARCH FOR CERTAINTY

• Judicial decision

• Most likely a petroleum lease case

• But potentially a smaller claim where one (or both)

parties are legally represented

• Until then....


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IS THERE A BETTER WAY?

• No payment of legal fees (reasonable or

otherwise)?

• Setting hourly rates?

• Capping reasonable legal fees?

• 10% added to the amount of compensation

otherwise determined?

• Something else?


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CONCERNS OF RESOURCES COMPANIES

• No visibility on costs

• Only see bill at the end and are expected to simply

pay it

• Timing of payments:

– ongoing regular payments during negotiations; or

– lump sum payment at the end


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PROFESSIONAL OBLIGATIONS AROUND LEGAL COSTS • Legal Profession Act 2007 (Qld) provides for third

party payers of fees

• Two categories:

– Associated third party payer

– Non-associated third party payer

• Resources companies would be non-associated

third party payers


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RIGHTS OF NON-ASSOCIATED THIRD PARTY PAYERS

• No rights to costs disclosure

• No costs agreement and no right to see the costs

agreement

• May request (and receive) a copy of the itemised

bill

• May apply for costs assessment


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PROTOCOLS FOR COST DISCLOSURE

• Protocols for landholders disclosing certain

information at the beginning of negotiations:

– Rates

– Other costs

– Estimates

– Scope of work

– Engagement letter

– Costs disclosure

– Confirmation that the rates and other costs are in the same or

comparable to those usually billed by the solicitor


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SUMMARY

• There is no simple formula and there is no single number

• What is reasonable will depend on all the facts and

circumstances

• The need for the costs must be reasonable

• The quantum of the costs must be reasonable

• The work undertaken must relate to the negotiation of the

conduct and compensation agreement

• The arguments pursued and the negotiating position

adopted must have been reasonable

• Certainty around reasonable legal costs would be

advantageous to both landholders and tenement holders

• Protocols to disclose costs (or the basis for costs) to

resources companies may be useful


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LAND ACCESS FORUM

Reasonable Legal Costs

28 August 2014

Presenter:

James Minchinton Partner

11473765/1

James Minchinton - Corrs Chambers Westgrath - What are Reasonable Legal Costs?

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