Throughout any litigious matter, a focus is always placed on keeping the costs low. However, as a matter grows in complexity, costs will be raised where experts are engaged to comment on aspects of a matter, such as liability or the extent of damage sustained by an applicant. Costs will again be raised if the complexity of a matter merits the retention of legal counsel to assist in investigations and/or strategise how best to present a case.
This article was originally published in the Lexis Nexis Health Law Bulletin Volume 33 No 3.
Accordingly, it is considered important to scrutinise costs when they are questionably incurred, as was done in the matter of Schwarze v South Australia (No 2)1 (Schwarze (No 2)). The scrutinisation of costs was explored within Schwarze (No 2) with particular focus on the retention of multiple counsel, multiple experts and the allowance of claims for increased rates for interstate counsel. They were further explored within Schwarze v South Australia (No 4)2 (Schwarze (No 4)) with focus on the retention of an investigators.
This article will provide the relevant background of Schwarze (No 2). It will then detail the findings of the Supreme Court of South Australia, (the court), in relation to the costs claimed by Mr Deakon Schwarze (the applicant) regarding multiple counsel and experts. Next, it will detail the subsequent findings of the court in relation to the applicant’s retention of an investigator. Finally, the article will discuss the key takeaways of the decision.
The background
On 19 September 2006, the applicant was delivered by emergency caesarean section. At the time of the applicant’s delivery, he was 11 weeks pre-mature and had been diagnosed with growth retardation.3
As soon as the applicant was delivered, he was observed to have difficulty breathing, his heart rate was then recorded as dropping to under 60 beats per minute. A resuscitation team was called and a Neopuff and Leardal bag was administered to resuscitate the applicant. The Leardal bag was later discovered to be incorrectly configured, meaning the applicant was deprived of oxygen for a total of 27 minutes following his delivery.4
As a result of the applicant’s deprivation of oxygen, he was diagnosed with catastrophic injuries. The applicant’s injuries included asthma, autism spectrum disorder, cerebral palsy, gastroesophageal reflux disease, inability to swallow and severe intellectual disabilities.5
The applicant, through his litigation guardians, made a claim for damages against the hospital where he was born, alleging negligence in failing to effectively resuscitate him.6 The matter later settled between the parties. However, the applicant and respondent disagreed over costs incurred throughout the matter causing proceedings to be initiated in the Supreme Court of South Australia.
Schwarze v South Australia (No 2)
From the outset, the court accepted that the nature of the applicant’s matter was incredibly complex and that arguments regarding causation resulted in significant investigation.7 The main issues in respect of costs were, inter alia, limited to the applicant’s use of multiple counsel throughout the matter and experts both nationally and internationally.8
The use of multiple counsel
Within the proceedings, the applicant retained four separate counsel throughout the matter. The counsel retained by the applicant consisted of two junior counsel, a senior counsel and later, a King’s Counsel.9 It was understood that the first junior counsel was retained to assist in, inter alia, investigations, speaking with witnesses and preparing the matter for eventual presentation. The second junior counsel was later retained to perform similar if not identical tasks to the first. The roles of both junior counsel were subsequently superseded by the retention of senior counsel and later King’s Counsel.10
The respondent took the position that it was neither necessary not appropriate to brief multiple counsel from 2017 onwards once King’s Counsel had been retained. Particularly, it was argued that the retention of two counsel was not required and certain tasks, such as the proofing of witnesses, could have been performed by the applicant’s solicitor.11
In determining if the retention of multiple counsel is necessary, the court deferred to the test set out in Stanley v Phillips.12 The test has been phrased as 'whether the services of more than one counsel [was] reasonably necessary for the adequate presentation of the case'.13 In applying this test, the court referred to the retention of the first junior counsel, noting that the investigations carried out developed in an organic way.14 Particularly, that one aspect of evidence would be considered before following the evidence to further investigation.
The court expressed its view that it saw no reason why an experienced solicitor and single junior counsel could not carry out and manage initial investigations without the assistance of additional (junior) counsel.15 The court indicated there could be no objection to counsel carrying out work if it is more cost effective. However, if a task could be performed by an experienced solicitor at a cheaper rate, that rate would be adopted for the purposes of taxation.16
Accordingly, the court determined that the engagement of two junior counsel was inappropriate and only allowed for the costs of one junior counsel.17
Use of multiple experts
The court acknowledged that through the length of the matter, causation was significantly contested by both the applicant and the respondent.18 The applicant, to advance their case, sought the opinions of nine experts both nationally and internationally. The applicant explained that the retention of the experts was on the basis that each offered a sub-specialty and that each of the experts could be adduced from each other. Further, it would not be unreasonable to have two experts provide evidence regarding the same point.19 The applicant had also indicated that the use of overseas experts was appropriate given that many of the experts retained by the respondent were at some point, or another engaged in the applicant’s care.20
Further, the respondent’s lead expert witness was a world-renowned expert on causes of cerebral palsy and had chaired an international task force on cerebral palsy. The applicant contended it was necessary to put together a team of well qualified and regarded experts and relied on the case of Burford v Allan citing the test Calcagno v State Government.21 Particularly, the applicant indicated that a party seeking costs for retention of experts either interstate or internationally must demonstrate:22
- Proper enquiries had been made within the State as to experts holding the necessary qualifications in the particular field. If there were none that would either be acceptable to the court in terms of knowledge, qualifications or expertise (or if they lack considerable reputation among peers), then an allowance may be made for an expert who does not suffer those disabilities.
- They would have been prejudiced by being restricted to South Australian resident experts and thus forced to employ outside the State.
In response, the respondent submitted that a party is only allowed, on taxation, to claim one expert in each speciality; the basis for the rule being that a party is only allowed that which is necessary to prove their case.23 The respondent identified that, throughout the proceedings, there was clear duplication of the applicant’s experts and that the applicant had failed to establish that one expert was not enough to prove his case.24 The respondent cited Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (No 2) (Aristocrat) to advance an argument that there would be no justification for calling multiple experts in separate fields to attempt to establish a similar if not the same argument.25
The court, sharing the view in Aristocrat, indicated that within straightforward cases, it would be unusual to allow a party to claim the costs of more than one expert from a particular specialty.26 However, Schwarze (No 2) was not a straightforward case, as causation was hotly contested and no element of the initial opinion provided by the applicant was accepted by the respondent. Further, the court expressed the view that the retention of experts needed to be considered against the background of the settlement reached between the parties. Particularly, the court noted that the matter settled for the sum of $9,500,000.00, and that settlement followed the respondent rejecting the applicant’s expert evidence at the outset of litigation.27
The court determined the applicant’s retention of experts was proportionate to addressing the nuanced aspects of the applicant’s case and contributed to the outcome eventually neogitated.28 The court accordingly allowed the cost of national and international experts.29
Schwarze v South Australia (No 4)
Within the subsequent decision of Schwatze v South Australia (No 4), the court’s attention was primarily confined to the applicant’s retention of an investigator.30 In essence, the applicant’s solicitor retained an investigator to ascertain facts relevant to the potential pursuit of a claim for damages.
The investigator’s activities involved: preparations of a chronology, drafting correspondence to expects, attending conferences with the solicitor, counsel and expert witnesses, carrying out research, purchasing medical equipment alleged to have caused the applicant’s injuries, attending conferences with the applicant’s parent’s, analysing discovery documents, settling pleadings, preparing responses to expert reports, preparing advice on evidence and on the future conduct of the action, conferring as to the choice of senior counsel, and attending meetings with expert witnesses in New Zealand, Sydney and Melbourne.31
The court acknowledged that throughout the course of the investigator’s investigation, he spent in excess of 350 hours on research, collating and cross reference, preparing summaries, and red-inking; he charged $250–$300 per hour.32 The court explained that when determining the appropriateness of costs raised by an investigator, it will have reference to the test in Blight v Tickle Industries. In Blight v Tickle, the court indicated that costs should only be allowed where they were reasonably incurred if they were incurred necessarily or properly for the attainment of justice.
The court also referred to W & A Glibey Ltd v Continental Liquers Pty Ltd33 (W & A) where the court further explored appropriateness of costs. The court citing W & A indicated:
In applying this test to the investigator, the court found that the amount of time the investigator claimed for many of the tasks was excessive and would be considered as performed with extravagance.35 The court expressed that the investigator’s invoices demonstrated he spent several hours on a single task.36 Further, these tasks were duplicated by the investigator and later performed again by both Solicitor and Counsel.37 The court also expressed that some of the work completed by the investigator would ordinarily be completed by law clerks or paralegals who charge at a reduced rate.
Last, the court indicated that the expert evidence and medical records obtained within the proceedings largely satisfied the need for most investigations and next steps could have been taken without the assistance of an investigator.38
The court made allowances for the investigator’s reading of medical records and preparations of a chronology, drafting correspondence and other documents, and copying and collating documents. It made no allowances for any other items invoiced.39
Discussion
Schwarze (No 2) demonstrates that where a claim for costs has been made, a court will have regard to several factors in scrutinising costs claimed by the applicant. Particularly, a court will consider the circumstances of a matter and if there is a need for extensive investigation. If the matter is settled, the court will also consider the settlement amount to determine if actions are reasonable. The court will then consider the complexity of the claim and what is required for the adequate presentation of the case brought before it. Finally, the court will consider if the costs incurred by third parties, such as investigators, were appropriately costed.
First, the circumstances in which multiple counsel are retained in the early stages of a matter will be relatively confined. As noted above in the context of the decision of Schwarze (No 2), the court, when confronted with claims for the use of multiple counsel, will consider the test set out in Stanley v Phillips. A court will acknowledge that most matters evolve organically over time and that investigations will be carried out in a similar vein. However, the court acknowledged that, where time is an issue, such as in asbestosis claims or other time sensitive matters, multiple investigations are likely to occur contemporaneously, requiring the assistance of multiple counsel.
Accordingly, circumstances in which multiple counsel are required in the early stages of a claim will be relatively confined.
Schwarze (No 2) also demonstrate that departures from the general rule of obtaining expert reports are rare. As noted within Aristocrat, the general rule of obtaining expert opinion is that only one report may be obtained per specialty.40 Reports which are simply duplicates obtained from different experts will not be allowed unless the expert is providing their opinion from the perspective of a subspecialty. It also appears that allowance of duplicate reports (provided they are from sub-specialties) will be contingent on the settlement sum of a claim. As indicated above, the court had considered whether the nature of alleged duplicate reports ultimately assisted in and contributed to the outcome eventually negotiated between parties.
Accordingly, it is reasonable to assume that departures from the general rule will be confined to circumstances where duplicate expert reports are provided from the perspective of a sub-specialty and also that they are capable of assisting in an outcome to be negotiated between the parties.
The court has also provided a caution with respect to the use of investigators. The decision in Schwarze (No 2) emphasises that investigators should only be used within the early stages of a liability investigation. Particularly, an investigator should, inter alia, assist in the obtaining of facts and circumstances outside the reach of the instructing solicitor, creating documents to assist the instructing solicitor’s investigation and highlight key matters for the instructing solicitor’s attention. Where an investigator acts outside of these limits, there is risk that a court will determine that those costs are inappropriate.
As a minor issue, the court had also indicated that the use of interstate counsel would be appropriate. However, in circumstances where costs cannot be agreed, a court will refuse a claim for an increase in counsel fees to match interstate rates. Instead, the court will, at its discretion, adopt a new rate.
Conclusion
It is in the interest of all parties to settle a matter on the best possible terms. However, as a matter progresses, a focus should remain on keeping the costs of proceedings low. Accordingly, Schwarze (No 2) serves as a timely reminder to ensure that costs incurred over the course of a matter are appropriately and reasonably incurred. Further, that the incursion of costs are reasonably necessary for the presentation of a party’s case.
1 Schwarze v South Australia (No 2) [2023] SASC 167; BC202317391.
2 Schwarze v South Australia (No 4) [2025] SASC 5; BC202500643.
3 D Schwarze 'The Battle For Justice and Damages' Duncan Basheer Hannon Lawyers 9 January 2024 https://dbh.com.au/blog/injury... .
4 Above.
5 Above n 3.
6 Above.
7 Above n 1, at [10].
8 Above n 1, at [2].
9 Above n 1, at [3].
10 Above.
11 Above n 1, at [5]–[7].
12 Stanley v Phillips (1996) 115 CLR 470; ALR 197; 40 ALJR 34; BC6600570 (Stanley); above n 3, at [8].
13 Stanley, above, at [22], referred to in above n 1, at [8]
14 Above n 3, at [11].
15 Above.
16 Above n 3, at [13].
17 Above n 1, at [10]–[13].
18 Above n 3, at [10]
19 Above n 1, at [32].
20 Above n 1, at [33].
21 Burford v Allan (1997) 68 SASR 217; BC9700157 at [7], referred to in above n 1, at [33], citing Calcagno v State Government Insurance Commission, SADC, Kelly J, 13 July 1992, unreported.
22 Above.
23 Above n 1, at [34].
24 Above.
25 Aristocrat Technologies Australia Pty Ltd v Commissioner of Patents (No 2)
(2020) 155 IPR 454; [2020] FCA 974; BC202006365 at [12], referred to in above n 1, at [35].
26 Above n 3, at [36].
27 Above n 3, at [37].
28 Above.
29 Above n 3, at [36].
30 Above n 2, at [1].
31 Above n 2, at [3].
32 Above n 2, at [4].
33 W & A Gilbey Ltd v Continental Liqueurs Pty Ltd [1964] NSWR 572.
34 Above, at 534, referred to in above n 29, at [28].
35 Above n 2, at [39]–[44].
36 Above n 2, at [4].
37 Above.
38 Above n 2, at [42].
39 Above n 2, at [45].
40 Above n 1, at [35].
