Baronglow Pty Ltd v Thomas (No 7) - [2008] SASC 33

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
BARONGLOW PTY LTD v THOMAS (NO 7)
[2008] SASC 33
Reasons of Judge Lunn a Master of the Supreme Court
20 February 2008
PROCEDURE - COSTS
Adjudication under Chapter 12 of Supreme Court Civil Rules 2006 - held there can be no waiver by the parties of the filing of a short form Claim for costs under 6R 271 - held the drawing fee for an itemised Schedule of costs under 6R 273 is to be assessed on the number of pages formatted in accordance with Form 28 and not solely in accordance with Note D to Schedule 1 to the Rules - held 6R 262(3) requiring a solicitor to maintain costing records did not preclude the solicitor from charging a drawing fee for the Schedule of costs.

BARONGLOW PTY LTD v THOMAS (NO 7)
[2008] SASC 33
BARONGLOW PTY LTD –v- THOMAS (No 7)
Reasons on reserved items.

JUDGE LUNN: I am adjudicating on a schedule of costs filed by Mr Thomas (FDN 87) pursuant to an order for costs in his favour made on 9 August 2007 against both Baronglow Pty Ltd and Mr Jordan. The adjudication is proceeding under Chapter 12 of the Supreme Court Civil Rules 2006. These reasons deal with 4 items, or groups of items, where I reserved my ruling so that I could consider the issues involved, and in one instance for Mr Jordan to provide further information.
Item 18.
This item is a claim for $7.30 on 19 July 2007 for “sending e-mail to Jordan advising review apparently now listed for 27 July”. Mr Jordan denied he had ever received this e-mail. He asserted that the print-out of it produced to me by Mr Thomas had been falsified. Even though the amount in issue was only $7.30, Mr Jordan insisted upon an adjudication on the item as he said he may wish to use it in a complaint against Mr Thomas to the Legal Practitioners Conduct Board. Because his professional standing had been put in question Mr Thomas refused to waive the item. I indicated I did not intend to do other than merely summarily determine an item where only $7.30 was at stake. Initially I adjourned further consideration of the item for Mr Jordan to seek expert evidence to support his assertion that the print-out of the e-mail produced by Mr Thomas could not have been of an e-mail sent on 19 July 2007, but he was unable to produce any such evidence.
The issue for determination on this adjudication is only whether Mr Thomas sent the e-mail. While evidence that it was not received is some indication that it may not have been sent there is also the equal possibility that through some malfunction in the e-mail system it was sent but it was not delivered to Mr Jordan. Mr Thomas filed an affidavit, FDN 91, deposing that such an e-mail was sent by him. I do not accept Mr Jordan’s convoluted circumstantial argument that it is unlikely that the e-mail would have been sent. I find that the e-mail was sent and allow Item 18 as claimed.
Costs of short form Claim for costs.
Items 48-53 and 55 and 56 claim costs relating to the preparation, service and processing of Mr Thomas’ short form Claim for costs under 6R 271 based on the order of 9 August 2007. Mr Jordan’s principal objection was that he had waived any requirement for service of such a short form Claim. He relied on a letter of April 2007 which he had written to Mr Thomas in which he stated, inter alia:
…..
Now you have proceeded to get the sealed order without further communication. You also threaten to proceed as you see fit. As you see fit usually means the method that produces the highest level of cost claimable by you acting as your own solicitor. This should have been done in the existing bill, and although the order is for joint and several liability, you seem to be lining this up for multiple bills. If you are, we waive any requirement for a short form bill, and will resist costs on any long form bill.
I find this letter related to an earlier order for costs and was not a waiver in relation to the subsequent order for costs of 9 August 2007. Mr Jordan also relied upon an e-mail of 23 August 2007 to Mr Thomas which he stated, inter alia:
Your application and the copy sealed order have not yet arrived.
The requirements for a short form bill is waived. The drafting of the document is most premature. Further, you have been repeatedly put on notice of the objection to the short form bill process and the opinion held that it serves no purpose and is only done by you to escalate charges. Do not serve it.
…..
Any taxation scheduling will be resisted on the ground that the order referring to the Full Court and the Full Court determination is required before any assessment of your costs can occur. If you wish to provide a lump some (sic) amount proposed as your costs claim as you did twice last year, that might be productive.
This was sent after the short form Claim had been drawn and copied and probably filed and served. Hence it cannot be a waiver for most of the work claimed in these items.
In any event I accept the argument of Mr Thomas that it is not open under the terms of 6R 271 for the party liable to pay costs to waive compliance with that Rule. 6R 271 provides:
271 – Initiation of proceedings for adjudication upon costs.
(1)A person (the claimant) who claims to be entitled to costs from another person (the respondent) that are liable to adjudication under an order of the Court or these rules, must file in the Court a claim for the costs prepared in an approved form.
(2)The claim must include –
(a)a notice in the approved form; and
(b)a general description of how the claim is made up including a statement of all counsel fees and other disbursements.
(3)The claimant must, at the request of the respondent, produce for inspection by the respondent all documents on which the claimant proposes to rely if the claim proceeds to adjudication.
(4)Within 28 days after service of the claim on the respondent, the respondent must respond to the claim by filing a notice in the Court –
(a)admitting the claim in full; or
(b)admitting the claim to an extent stated in the response; or
(c)rejecting the claim in its entirety,
(and if the respondent fails to respond as required by this subrule, the respondent will be taken to have admitted the claim in full).
(5)The Court will, on administrative request, make an order for payment of costs to the extent they are admitted or presumed to be admitted under subrule (4).
(6)If the claim is not admitted in full, either party may apply to the Court for a preliminary assessment of the issues in dispute and, on such an application, the Court may exercise any one or more of the following powers –
(a)determine the basis on which costs are to be awarded and give any directions that may be necessary or desirable to arrive at a proper award of costs on the relevant basis;
(b)resolve issues in dispute between the parties or give directions for resolving such issues by mediation, arbitration or reference to an expert for report;
(c)make such orders for costs as may appropriately be made without proceeding to detailed adjudication of the costs;
(d)order that the claim for costs proceed in whole or part to detailed adjudication.
Subr (1) is in mandatory terms of “must file” and is not in permissive terms of “may file”. The whole scheme of Part 3 of Chapter 12 of the Rules is predicated upon a short form Claim being filed as the first step in the quantification of costs ordered by the Court. It is meant to give parties liable to pay the costs sufficient information to assess for themselves what is the proper amount of costs payable and to respond accordingly under subr (4), and possibly 6R 187, with an admission of the amount which they say they are liable to pay under the order. In effect the short form Claim procedure in subrr (1)-(4) is intended to draw the broad battle-lines for any disputes which need to be resolved by the Court. The adequacy of the admission, or any offer, made by the parties liable to pay the costs is likely to be a primary determinant on who will ultimately be ordered to pay the costs of resolving the disputes about the quantum of the costs.
Once the general nature of the disputes about the quantum of costs have been identified under subr (4) the Court then considers under subr (6) what is the appropriate means to resolve the dispute. Subr (6) gives the Court four alternatives, only one of which is a formal adjudication on a long form Schedule of costs. Whether that is to be the procedure to be adopted in a particular matter is in the discretion of the Court in the light of the response to the short form Claim for costs.
The repealed 1987 R 101A.02(1a) expressly allowed all parties (but not the party liable to pay the costs unilaterally) to waive the requirement for service of a short form bill under the 1987 Rules. The procedure by which an adjudication on a long form Schedule is procured under the 2006 Rules differs markedly from the procedures under the repealed 1987 Rules. On the proper construction of Part 3 of Chapter 12 of the 2006 Rules I am satisfied that neither the party liable to pay the costs, nor even all parties, can waive compliance with subrr 271(1)-(4). The only way in which it could be circumvented is by a dispensation from 6R 271(1)-(4) under 6R 117(2)(a). That was not sought in this matter.
Mr Jordan complains that the short form Claim procedure on this order for costs was pointless as on the history of what had occurred on the earlier bills and Schedules taxed and adjudicated upon between the parties in this matter it was always known that there would be a major dispute on whether Mr Thomas was entitled to recover profit costs for acting for himself. That issue has been referred to the Full Court but has not been resolved because conditions precedent imposed on the references of payments into Court have not been met by Baronglow. However, the Court must also look at the position of Mr Thomas. Several previous allocaturs for costs in his favour remain unpaid. He has the benefit of the order of 9 August 2007 and can only enforce payment of it by complying with the Rules about the procedures necessary to obtain an allocatur for those costs. Unless the Court dispenses with compliance with R271 he has to comply with it if he is to obtain an allocatur for the costs. The onus is not on him to obtain any dispensation from 6R 271. The necessary costs of him obtaining his allocatur for the proper amount payable under the order of 9 August 2007 are allowable costs on the adjudication. Baronglow and Mr Jordan could protect themselves against such costs by making an offer under 6R 187 or by their response to the short form Claim under 6R 271(4). I have been told, without objection, that an offer of $10 was made which is clearly inadequate in the light of the other items which I have already taxed and allowed. If Baronglow and Mr Jordan ultimately succeed before higher Courts in establishing that Mr Thomas is not entitled to profit costs when acting for himself, it may be that that offer will then become relevant on what costs orders will then be made, but in view of my previous rulings about that question Mr Thomas is entitled at this stage to his proper costs of complying with 6R 271. Accordingly, Items 48-53 and 55 and 56 are allowed.
Items 58-72.
These items all relate to an application taken out by Mr Thomas on 19 November 2007, FDN 82, seeking directions under R 271(6). I made a direction on that application that the long form Schedule of costs, which is now before me, be filed. The objection is that the matter could have been dealt with without an application being taken out for the purpose. Mr Thomas had requested the Registry to list a 6R 271(6) hearing in conjunction with another hearing before me in this matter, but he received no response to his e-mail. (On an earlier adjudication such a request had resulted in my giving a direction under 6R 271(6) without an application being issued for the purpose). When Mr Thomas followed the matter up with the Registry he was informed that 6R 271(6) required an application to be issued. I consider this is the correct interpretation of 6R 271(6). “Application” there refers to an application under 6R 131. It is to be contrasted to the reference to “administrative request” in 6R 271(5). The amounts claimed in these items are allowable as proper costs for steps required to obtain the allocatur. Baronglow and Mr Jordan could have protected themselves by seeking an order for dispensation from the Rule, but in any event the costs of some hearing before the Court would have been allowed. They could have also protected themselves by an adequate offer for costs, but, as stated above, at least for the proceedings before me, their offer is clearly inadequate.
Items 73 and 74.
These items relate to the drawing of the long form Schedule of costs. Mr Jordan disputes the proper number of pages to be allowed.
By 6R 273(1) the itemised Schedule is to be in Form 28 to Part 2 of the Practice Directions. It has been presented in that form. That Form requires that the Schedule should have six vertical columns of varying widths into which details for each item are to be inserted in accordance with the prescribed subject matter for each column. The major column, which here is 3/8s of the total widths of all six columns, is the only column in which any narrative is to be placed. The other columns are for dates, item numbers and amounts of disbursements and costs.
Note D to the First Schedule of the 2006 Rules provides:
Where, in the Schedule, fees …… are set by reference to an A4 page, such fees are fixed …… on the basis that the typed or printed content of each page consists of 30 lines of 12 size print with a left-hand margin no wider than 4cm and right-hand margin no wider than 2cm …. The fee allowable may be adjusted by the Adjudicating Officer depending on whether the document …… in question exceeds or falls short of those standards. Where the content of the document (or page of a document) are less than one A4 page in length, the fee allowed is, therefore, to be at the discretion of the Adjudicating Officer.
Mr Jordan asserts, and for the purpose of the argument I accept, that if all of the entries in the various columns on a page of the Schedule were typed continuously on an A4 page without reference to requirements for columns they would occupy only about half an A4 page. Therefore he submits that the number of pages to be allowed in the drawing of the Schedule for costs under Item 1 of Schedule 1 to the 2006 Rules should be halved.
I do not accept this argument. Note D is intended to deal with cases where the spaces between the lines, the size of the type-face and the width of the margins are excessive resulting in less material being contained on the page than is proper. Here the width of the lines to be used is governed by the requirements of Form 28 which has the consequence of reducing substantially the total number of words and figures that might otherwise properly appear on the A4 page. Item 1 of Schedule 1, under which the drawing fee is assessed, provides a rate per A4 page. In the case of Schedules of costs under 6R 273 this must mean A4 pages formatted in accordance with Form 28. Mr Thomas has done this and so the drawing fee for the Schedule is to be adjudicated as the number of pages properly required to comply with Form 28. Furthermore, there are several more than 30 lines the in major columns and the left-hand margins are only 3cm.
I reject Mr Jordan’s further submission that the drawing fee for Item 73 should be in accordance with Item 2 of Schedule 1 for documents which are partly printed and partly drawn. Apart from the column headings, which are insignificant, none of the material in the Schedule comes from Form 28. It is all material drawn by Mr Thomas. Item 2 in Schedule 1 is intended for documents where contents are largely pro forma and where it is only necessary for the party completing the document to fill in some blanks. That is not the case with a Schedule of costs. It has never been taxing or adjudicating practice in this Court to allow the drawing of bills, or Schedules, of costs only under Item 2 of Schedule 1 or its predecessors.
I reject Mr Jordan’s submission that the description of the items in the Schedule was no more than a replication of contemporaneous file notes made by Mr Thomas of his work and no drawing fee was to be allowed for them under 6R 262(3). The relevant part of 6R 262 is as follows:
262 – Record of costs to be kept
(1)A party to proceedings must maintain an adequate record of the party’s costs.
(2)An adequate record is one that enables the party, within 28 days of the date of judgment, to formulate a claim for costs –
(a)stating –
(i)the total amount claimed; and
(ii)the component of that amount referable to disbursements, and
(b)showing in general terms how the amount of the claim is arrived at.
(3)A solicitor acting for a party must maintain a record under this rule on the party’s behalf and is not entitled to charge a fee for doing so.
(4)If a party fails to comply with obligations under this rule, the Court may refuse to award costs or reduce the amount of the costs that might otherwise have been awarded in the party’s favour.
6R 262(2) only requires a record to be kept sufficient to allow the expeditious production of a Claim for costs under 6R 271(1) and (2). This is considerably less detailed than what is required for properly preparing an itemised Schedule under 6R 273. The prohibition on charging under 6R 262(3) does not extend beyond the keeping of the records necessary to prepare a 6R 271 short form Claim for costs. (Even then the records kept under 6R 262(2) would not in themselves without a good deal more work enable the preparation of the 6R 271(1) Claim for costs).
Mr Thomas conceded that his office practice was to make a contemporaneous computer record of each item of work which he did. His computer was able to collate all of these entries into a single document which became the starting point for his drawing the itemised Schedule. I accept it still required considerable work to convert that computer-generated first draft into what became the itemised Schedule of costs. Insofar as his contemporaneous cost entries constituted the drawing of the items which appeared in the ultimate itemised Schedule he was entitled to claim such drawing fees for that work. It is not barred by 6R 262(3) which merely prevents a solicitor from making a claim for keeping the basic cost entries which become the raw material from which any short form Claim under 6R 271 can be prepared.
Note G to Schedule 1 authorises an Adjudicating Officer to allow an additional 50% on drawing fees for Schedules of costs. Mr Thomas’ claimed such a loading on his drawing fees. Taxing Masters have traditionally allowed that loading where bills and itemised Schedules of Costs have been well prepared and in sufficient detail to facilitate their ready taxation and adjudication. I consider the itemised Schedule here to have been well prepared and to have been in a form which facilitated its ready taxation. Accordingly, I allow the loading of 50% for this item.
I disallow the first page of the itemised Schedule on the basis that most of the items there were disallowed. Item 73 is to be allowed at 7 pages at $97.50 per page. It is allowed at $682 which means that $97.50 is taxed off. $1 is taxed off Item 74.

I allow Item 82 (the attendance on the adjudication) at $723 (2 ¾ hours).
I have today made the following orders:
1On the adjudication of the Schedule FDN 87 I make a provisional costs order under R 276 for payment of costs by Baronglow Pty Ltd and Neville Jordan of $4,799.08 including the adjudication fee (but subject to the payment of that fee by Mr Thomas).
2Any reconsideration of that provisional costs order by a Master under R 278 is dispensed with as I have published my reasons previously for my rulings.
3Under R 278(4)(b) I direct that the provisional costs order be entered in the Court’s record as a judgment of the Court.