Former Dual Australia claims manager Josie Gonzalez dismissed concerns over legal costs of $9 million in one year as a “legacy” issue, the County Court heard today.

Gonzalez assured colleagues the 2012 legal spend related to old claims from before the firm employed her.

“These costs have reached their peak this year as we have inherited a legacy of older files,” she said in a December 10, 2012, email to Dual’s Leo Abbruzzo, who she reported to.

“We have closed many old files this year and that is why there has been an influx this year.

“We are expecting these costs to decrease in the next year or so owing to the tighter control we have now that we manage the files in-house.”

Josie Gonzalez and her husband Alvaro Gonzalez have each pleaded not guilty to 14 charges of obtaining a financial advantage by deception.

It is alleged that Dual was defrauded of $17.4 million as a result of more than 400 false invoices for legal services in a period extending a little over two years from March 2011.

The invoices came from a company called Jaag Lawyers, which had been set up by the couple.

The email, revealed as the trial entered its fifth day, was in response to a query directed at Mr Abbruzzo from capacity provider Arch in London. Arch wrote and requested the costs be investigated and itemised.

“Can it really be the case that over $9 million was spent on counsel? This seems extraordinarily high for a 12-month period,” Arch’s Jiyan Zora wrote in an email to Mr Abbruzzo.

Josie Gonzalez had previously worked at Proclaim, which handled claims for Dual on an outsourced basis.

Dual CEO Damien Coates approached her and she was brought across to Dual to set up a claims management function by replicating the Proclaim offering in-house, Mr Abbruzzo told the court today.

Mr Abbruzzo said he shared a number of emails with Josie Gonzalez discussing the recoding of invoices from law firms. She recommended changing the coding on more than $7 million in legal fees from “indemnity fees” to “legal defence costs”.

On December 4, 2012, Arch’s Mr Zora emailed Mr Abbruzzo to question Dual’s defence cost spend.

“Arch was asking questions about our legal spend and that was why they were recoded,” Mr Abbruzzo said.

The trial continues, and the prosecution expects to rest its case tomorrow or early Monday.