Potential Construction Defect Claim Site: 100 Eton Road, Lindfield "Dunstan Grove"

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1 3 April 2017 Partner: David Andrews Direct Line: Direct Facsimile: Our Ref: DA: BEL: BY The Secretary The Owners - Strata Plan No Strata Plus PO Box H181 AUSTRALIA SQUARE NSW 1215 Dear Secretary The Owners - Strata Plan No Potential Construction Defect Claim Site: 100 Eton Road, Lindfield "Dunstan Grove" Thank you for asking us to provide a costs estimate for provision of legal services in relation to the above matter. We are required under the Legal Profession Uniform Law (NSW) (the Uniform Law) to disclose information about the costs of our legal services and your rights under the Uniform Law. Our engagement to undertake the legal services below is required to be approved by a resolution at a general meeting of the Owners Corporation (per section 103 of the Strata Schemes Management Act, 2015). Nature of, and Estimate of Costs for, Work We Have Been Asked to Do We anticipate that work foreshadowed by our instructions will involve the commencement and prosecution of a building claim against the builder and developer and maybe other parties involved in the construction of the building. We set out in the attached schedule a more detailed outline of the work and an estimate of costs for each stage of work. More than one stage of work may be undertaken at a time.

2 The Owners - Strata Plan No Page 2 We have included in the estimate a budget allowance for the cost of experts. More than one expert may be required depending on the issues which emerge during the inspection of the building. Until the building is inspected and issued identified, it is difficult to provide an estimate of costs. The Owners Corporation will be required to engage the experts directly, and will be directly responsible for payment of the experts' costs. Our estimate is based upon proceedings being commenced in the Supreme Court of NSW and being defended. We do not, at this time, have enough information to determine the appropriate jurisdiction for the commencement of legal proceedings. In the event that proceedings are commenced in another jurisdiction, we may be required to revise our estimate of costs. These estimates are made on the information available to us at this time. The estimates may change: when more information is available to us; as a result of events which occur as the matter progresses. Further examples of other factors that could affect our estimates are set out in the attached Terms and Conditions. Persons Responsible for the Work David Andrews, a Partner in the firm, with the assistance of employed solicitors and paralegals as appropriate, will be the responsible principal for your work in this matter. You may contact the responsible principal for your matter at any time regarding your matter and/or your legal costs. Offer to Enter into Costs Agreement This letter, including the Terms & Conditions attached, is an offer to enter into a costs agreement with you which upon acceptance by you will become a binding costs agreement. Yours faithfully Makinson d'apice Encl I/We accept the offer set out in this letter and I/we confirm that I/we have read this letter including the attached Terms & Conditions. Signed Date Liability limited by a scheme approved under Professional Standards Legislation.

3 1. Your Rights You have the right to: (c) (d) (e) (f) (g) (h) COSTS AGREEMENT TERMS AND CONDITIONS negotiate a costs agreement with us; receive a bill of costs from us; request an itemised bill of costs within 30 days after you receive a lump sum bill from us; request written reports about the progress of your matter and the costs incurred in your matter; apply for costs to be assessed within 12 months if you are unhappy with our costs; apply for the costs agreement to be set aside; accept or reject any offer we make for an interstate costs law to apply to your matter; notify us that you require an interstate costs law to apply to your matter. If you request an itemised bill and the total amount of the legal costs specified in it exceeds the amount previously specified in the lump sum bill for the same matter, the additional costs may be recovered by us only if: when the lump sum bill is given, we inform you in writing that the total amount of the legal costs specified in any itemised bill may be higher than the amount specified in the lump sum bill, and the costs are determined to be payable after a costs assessment or after a binding determination under section 292 of the Uniform Law. Nothing in these terms affects your rights under the Australian Consumer Law. 2. Professional Fees Our professional legal fees are charged on the basis of the time we are engaged in providing legal services. Our hourly rates are currently: an hourly rate of: $ (plus 10% GST) for a partner; an hourly rate of up to: $ (plus 10% GST) for a special counsel; (c) an hourly rate of up to: $ (plus 10% GST) for a senior associate; (d) an hourly rate of up to: $ (plus 10% GST) for an associate; (e) an hourly rate of up to: $ (plus 10% GST) for a solicitor; (f) an hourly rate of up to: $ (plus 10% GST) for a paralegal. Our hourly rates are generally reviewed on 1 July each year and may change during the course of a matter. Details of current rates are available at any time upon enquiry. Otherwise you will be informed as soon as reasonably practicable of any significant changes to anything contained in this cost agreement. These rates will be proportionately charged for work involving shorter periods less than an hour. Our charges are structured in 5 minute units. For example, the time charged for an attendance of up to 5 minutes will be 5 minutes and the time charged for an attendance between 5 and 10 minutes will be 10 minutes. From 1 October 2016 or later we will commence structuring our charges in 6 minute units rather than 5 minute units. For example, the time charged for an attendance of up to 6 minutes will be 1 unit (6 minutes) and the time charged for an attendance between 6 and 12 minutes will be 2 units (12 minutes). Once the change in structure occurs, all time billed from the date of the change will be in 6 minute units regardless of whether the work was done prior to the change in structure or afterwards. Work done prior to the change in structure will be shown on our bills as approximately 0.83 of a 6 minute unit. 3. Charges for Services and Disbursements You will also be responsible for the cost of all services and disbursements incurred on your behalf. Disbursements include items such as barristers and other professional fees, stamp duty, search fees and document lodgement and registration fees. Our basis for charging for services and disbursements

4 The Owners - Strata Plan No Page 4 is as follows: We will charge you for services we use or supply. For example, document lodgement, searches at courts, document delivery etc. $ $50.00 plus GST. All other disbursements will be as charged by the third party. For example, agent s fees, legal searches, court filing fees, process servers, expert reports, external photocopying and or collating, couriers, bank fees, dishonoured cheque fees etc. 4. Examples of Factors which may Affect Costs Estimate: (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) 5. Billing Arrangements Your prompt and efficient response to requests for information or instructions. The number and duration of telephone calls or other communications. Whether your instructions are varied. Whether documents have to be revised in light of varied instructions. The lawyer or other persons with whom we deal and the level of co-operation of the lawyer s clients and other persons involved. The nature of documentation provided, filed, served or relied upon by other parties. The complexity or uncertainty concerning legal issues affecting your matter. In the case of court proceedings, whether other parties are joined and the existence of any cross-claims. In the case of court or tribunal proceedings, any interlocutory applications which may be required or which may be made by other parties. Requirements to comply with the directions of any court or tribunal. Whether we are involved in negotiations in relation to any particular matter and those negotiations are, or the matter generally is, protracted. Any changes to the law (including any decisions of any court or tribunal). We will send you a bill of costs containing information of our professional fees and charges, disbursements and expenses, including GST, either after completion of the work or monthly or at other times as we deem appropriate when the work is in progress. Our bill of costs is payable within 30 days of it being rendered. You will be liable to pay our costs whether or not the other party to any court proceedings has to pay your costs of the proceedings. You consent to us sending our tax invoices to you electronically at your usual address as provided by you. 6. Payment Methods We may ask you to pay money into our trust account or for your credit card details or we may determine only to incur fees up to a certain limit without payment into trust in advance. If we do this we will advise you. In some circumstances, we may determine not to incur fees or expenses in excess of the amount that we hold in trust on your behalf or beyond a specified limit. 7. Application of Trust Funds After we have sent you our bill of costs, we will consider ourselves authorised to apply any money held by us on your behalf in our trust account towards payment of that bill of costs at the expiration of 7 days after that bill of costs is sent to you unless you specifically advise us to the contrary. If funds have been requested in trust please note that we will not be required to carry out work for you unless and until we receive those funds in our trust account. You authorise us to receive directly into our trust account any judgment or settlement amount, or money received from any source in furtherance of your work, and to pay our professional fees, internal expenses and disbursements in accordance with the provisions of Rule 42 of the Uniform General Rules. A trust statement will be forwarded to you upon completion of the matter. 8. Interest on Unpaid Costs Interest at the maximum rate prescribed in Rule 75 of the Legal Profession Uniform General Rules 2015 (Uniform General Rules) (being the Cash Rate Target set by the Reserve Bank of Australia plus 2%) will be charged on any amounts unpaid after the expiry of 30 days after a tax invoice is given to you. Our tax invoices will specify the interest rate to be charged.

5 The Owners - Strata Plan No Page 5 9. Costs in Court Proceedings If court proceedings are taken on your behalf, if you are successful, the court may order the other party to pay your costs. This does not affect your liability to pay our costs and charges. All courts have discretion in respect of awarding costs. The unsuccessful party will generally be required to pay your costs as agreed or assessed. If our bill of costs is assessed, you are likely to recover between 60% and 85% of your actual costs. If you are unsuccessful, the court may order you to pay the other party s costs. These costs will be additional to the costs payable under this agreement. If the successful party s bill of costs is assessed, you are likely to be liable to pay between 60% and 85% of the successful party s actual costs. The amount of costs that a court may award a successful party or order an unsuccessful party to pay will also be influenced by whether or not an offer is made to settle prior to hearing and is refused. If at the hearing the party that made the offer achieves an outcome as favourable as or more favourable than that set out in the offer, the court may award costs on an indemnity basis against the party who refused the offer from the date the offer was made. If you win at first instance, you may still face the prospect of meeting the costs of defending your verdict, if the other side appeals. If you lose at first instance, you may be advised to appeal. Any cost estimates provided with respect to an appeal are very uncertain as the costs associated with an appeal will depend upon many factors including initial trial length, findings by the court of first instance, nature of appeal to be run and which party is appealing. The possible costs associated with winning or losing on appeal are not dealt with in this document but will be advised to you should an appeal follow the result at first instance. Even if you are successful in proceedings and have a costs order in your favour it may still be necessary to seek to enforce such costs order through the court system. This can be time consuming and costly. The possible costs associated with such potential enforcement proceedings will be provided to you separately at that time. Courts and costs assessors take into account whether a successful party is entitled to an input tax credit in respect of legal costs already paid, when assessing costs recoverable by the successful party. 10. Your Rights in Relation to a Dispute Concerning Costs If you have a dispute in relation to any aspect of our legal costs you have the following avenues of redress: in the first instance we encourage you to discuss your concerns with us so that any issue can be identified and we can have the opportunity of resolving the matter promptly and without it adversely impacting on our business relationship; you may apply to the Manager, Costs Assessment located at the Supreme Court of NSW for an assessment of our costs. This application must be made within 12 months after the bill was provided or request for payment made or after the costs were paid. 11. Recovery of Costs 12. GST The Uniform Law provides that we cannot take action for recovery of legal costs until 30 days after a tax invoice (which complies with the Uniform Law) has been given to you. Where applicable, GST is payable on our professional fees and expenses and will be clearly shown on our tax invoices. By accepting these terms you agree to pay us an amount equivalent to the GST imposed on these charges. 13. Multiple Clients 14. Travel If you comprise two or more people or organisations, we may act on the instructions from any one or more of you and you will be jointly and severally liable for payment of our costs and disbursements. If we are required to travel in the course of carrying out our instructions, we will be entitled to charge you for the time taken to travel from our office to where we are instructed to attend and return to our office at our hourly rate. 15. Progress Reports You are entitled to request, at reasonable intervals, written progress reports on your matter. Our normal charge out rates will apply for providing this service. You are entitled to request a written report on the legal costs incurred to date since the last bill of costs was given to you, free of charge.

6 The Owners - Strata Plan No Page Engagement of Another Law Practice It may be necessary for us to engage, on your behalf, the services of another law practice to provide specialist advice or services, including advocacy services (ie barrister), or to act as our agent. We will consult you as to the terms of that law practice's engagement, but you may be asked to enter into a costs agreement directly with that law practice. The law practice engaged by us will disclose costs in a similar manner to the disclosure in this letter and we will, in turn, disclose those costs to you. 17. Governing Law The law of New South Wales governs these terms and legal costs in relation to any matter upon which we are instructed to act. 18. Termination We may cease to act for you or refuse to perform further work, including: (c) (d) (e) (f) (g) (h) while any of our tax invoices remain unpaid; if you do not within 7 days comply with any request to pay an amount in respect of disbursements or future costs; if you fail to provide us with clear and timely instructions to enable us to advance your matter, for example, compromising our ability to comply with Court directions, orders or practice notes; if you refuse to accept our advice; if you indicate to us or we form the view that you have lost confidence in us; if there are any ethical grounds which we consider require us to cease acting for you, for example a conflict of interest; for any other reason outside our control which has the effect of compromising our ability to perform the work required within the required timeframe; or if in our sole discretion we consider it is no longer appropriate to act for you; or for just cause. We will give you reasonable written notice of termination of our services. You will be required to pay our costs incurred up to the date of termination. 19. Termination by You You may terminate our services by written notice at any time. However, if you do so you will be required to pay our costs incurred up to the date of termination (including if the matter is litigious, any cancellation fees or other fees such as hearing allocation fees for which we remain responsible). 20. Retention of your Documents 21. Lien On completion of your work, or following termination (by either party) of our services, we will retain your documents for 7 years. Your agreement to these terms constitutes your authority for us to destroy the file after those 7 years. The authority does not relate to any documents which are deposited in safe custody which will, subject to agreement, be retained on your behalf indefinitely. We are entitled to retain your documents while there is money owing to us for our costs. You will be liable for the cost of storing and retrieving documents in storage and our professional fees in connection with this. Without affecting any lien to which we are otherwise entitled at law over funds, papers and other property of yours: we shall be entitled to retain by way of lien any funds, property or papers of yours, which are from time to time in our possession or control, until all costs, disbursements, interest and other moneys due to the firm have been paid; and our lien will continue notwithstanding that we cease to act for you. 22. Authority to Instruct Us If you comprise two or more people or organisations, we may act on instructions from any one or more of you. 23. Privacy Your privacy is important to us. The details of the way we collect and store information about you can be found in our Privacy Policy which is located on our website or follow this link, Confidentiality At all times we will seek to maintain the confidentiality of your information. However, we may be permitted or required by law to disclose confidential information. We may also, on a confidential basis,

7 The Owners - Strata Plan No Page 7 provide your information to third parties where we consider it is appropriate for the proper conduct of your matter. 25. Sending Material by We are able to send and receive documents electronically. However, as such transmission is not secure it may be copied, recorded, read or interfered with by third parties while in transit. If you ask us to transmit any document electronically, you release us from any claim you may have as a result of any unauthorised copying, recording, reading or interference with that document, for any delay or nondelivery of any document and for any damage caused to your system or any files. 26. Acceptance of Offer You may accept this Costs Disclosure and Costs Agreement by: (c) signing and returning this document to us; or continuing to instruct us after receipt of this document; or advising us orally or in writing (including by ) of your acceptance. Upon acceptance you agree to pay for our services on these terms. Please note that, if we have required you to deposit funds in our trust account in this matter, we will not commence work until those trust funds are received. LD/SCA_LTR_2015 Mar 2017

8 The Owners - Strata Plan No Estimate of Costs (estimates are exclusve GST) Stage Tasks Estimate date of completion Assumptions Makdap costs estimate Counsel costs Draft Supreme Court Summons and Technology and Instruction Date (ID) + 2 weeks Proceedings commenced for breach of statutory Construction List Statement; Arrange for filing and warranties 1 service. Attending to requests for particulars and inter-party ID + 8 weeks The proceedings are defended matters; attending directions hearing (allow 1 attendance); review, consider and provide advice with 2 respect to defence. A Sub-Total (Pleadings complete) 3 Preparation of Evidence in Chief, up to service of evidence; brief experts, obtain evidence in respect of liability and quantum; liasing with experts; review draft reports and settle; prepare lay evidence; attend to service; Preparation for and attendance at directions hearing (allow 1 attendance). 4 Reviewing evidence from Defendants; advising you in relation to matters arising; preparation for and attendance at directions hearing (allow 1 attendance) 5 Preparation of evidence in reply; liaise with experts; review draft reports and settle; liaise with defendants regarding mediation proposal; preparation for and attendance at directions hearing (allow 1 attendance) B C Sub-Total (Evidence complete) Total: Pleadings (A) and Evidence (B) 6 Preparation for and attendance at Mediation; including preparation of mediation paper; preliminary conference with mediator; attending one day mediation; preparation of terms C Total (C) + 6 (Mediation completed) 7 Preparation for and attendance hearing before a Judge; includng preparation of Court Book; conferences with Counsel and Witnesses; preparation of submissions and chronology; Completion report D 7A D (Alt) Total (C) + 7 (Court Hearing) Preparation for and attendance at Referree Hearing (allow 3 days) Preparation for and attendance at adoption hearing Completion report Total (C) + 7A (Referree Hearing) ID + 5 months ID + 9 month ID + 11 months ID + (11-12) months ID + (12-18) months ID + (12-18) months Deliverables by experts received on time Defendants will seek 4 months to prepare evidence Evidence in reply will be required. Assessment required upon review of Defendants' evidence as to nature and extent of evidence in reply required. 1 mediation 1 day; external room hire not required; cost of mediator shared 50/50 $6,000 per day; experts (x3) required to attend 1 est. $ per hour ex GST other disb (including experts, filing fees) Stage Totals $5, $3, $3, $12, $8, $2, $5, $15, $13, $6, $8, $27, $40, $14, $80, $134, $15, $9, $ $24, $20, $7, $30, $57, $75, $30, $110, $215, $88, $36, $119, $243, $8, $10, $11, $29, $96, $46, $130, $272, Matter does not settle at mediation; 3 day hearing in Supreme Court (Note: if matter exceeds 3 day estimate, likely allocated hearing date will be significantly later); allowed 3 days preparation for Counsel $29, $30, $35, $94, Matter does not settle at mediation; 3 day hearing Reference hearing; adoption of referee report not opposed $125, $76, $165, $367, $32, $30, $42, $104, $128, $76, $172, $377,100.00

9 7 Disbursement (other than expert) Estimate Hearing allocation fee $8, Transcript costs (3 $1,800 per day) $5, External Copy costs $ Total $14, A Disbursements (other than expert) Estimate Plaintiff share (assume 50%) Referree cost - pre-trial (1 per day. 50% share) $4, $2, Referree cost - hearing/report (6 per day. 50% share) $24, $12, Monitoring and Transcript costs (3 $2,100 per day $6,300 $6, External copy costs $ $ Room Hire (3 days plus 1 day preliminary (4 $400 per day)) $1, $ Total $36, $21, Note: Have budgeted $20, for expert attendance at hearing