| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : BARR and OLD PERTH PORT PTY LTD [2009] WASAT 251 MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 18 DECEMBER 2009 FILE NO/S : CC 318 of 2009 BETWEEN : NIGEL MORRISON BARR REMONNA ANN BARR
Applicants
AND
OLD PERTH PORT PTY LTD
Respondent
Catchwords: State Administrative Tribunal Act 2004 (WA) - Indemnity costs awarded in respect of part of the proceedings - Costs to be paid in part by representative and in part by applicants - Approach to fixing of costs Legislation: Commercial Tenancy (Retail Shops) Act 1985 (WA), s 15F(1)
Legal Profession Act 2008 (WA), s 282
Rules of the Supreme Court 1971 (WA), O 66, r 11(2)
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State Administrative Tribunal Act 2004 (WA), s 48, s 89
State Administrative Tribunal Rules 2004 (WA), r 43 Result: Costs fixed Category: B
Representation: Counsel:
Applicants : Mr L Robinson (Representative)
Respondent : Mr J Garas with Ms S Schmidt
Solicitors:
Applicants : Self-represented
Respondent : Karp Steedman Ross-Adjie
Case(s) referred to in decision(s):
Hanson v English [1999] WADC 141
J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282(S)
Kinder v Gross [2008] WADC 69
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190
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REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision 1 During the course of the final hearing of an unconscionable conduct application brought under s 15F(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA), the Tribunal made indemnity costs orders against the applicants and the applicants' agent. The Tribunal further ordered that if the parties were unable to agree costs that the Tribunal would fix the costs. 2 As the parties were unable to agree costs, the respondent applied for the Tribunal to fix the costs as against the agent in the sum of $3,148.75 and as against the applicants in the sum of $13,437.65 and, further, that the applicants pay the costs of the application to fix costs in the sum of $250. 3 The Tribunal determined that in order to provide an effective indemnity against costs, the respondent should be allowed all costs incurred, except insofar as they were of an unreasonable amount or had been unreasonably incurred. Further, that the costs recoverable on a solicitor and client scale were limited by the Legal Practitioners (State Administrative Tribunal) Determination 2008 unless a written costs agreement had been entered into in compliance with s 282 of the Legal Profession Act 2008 (WA). 4 The Tribunal found that a costs agreement entered into between the respondent and its solicitors met the prescribed statutory requirements in that the agreement was written and was expressed as an offer to provide legal services capable of being accepted by signature, dating and return to the solicitors. The solicitors were therefore entitled to charge at rates in excess of the Legal Practitioners (State Administrative Tribunal) Determination 2008. 5 In reviewing the costs claimed, the Tribunal expressed the view that the State Administrative Tribunal Act 2004 (WA) envisaged different procedures for finalising costs, either by the Tribunal fixing costs, or by the costs being assessed in accordance with the Tribunal rules. Further, that the process of fixing costs should not entail an item by item assessment of a bill of costs, although it was necessary to consider the services provided and charges therefor in a sufficient manner to enable a view to be formed of the amount at which the costs should be fixed. In considering whether any charges constitute an unreasonable amount or were unnecessarily incurred, the Tribunal expected that representatives of (Page 4)
the parties would approach matters in the Tribunal in a way that minimises costs to their clients. 6 In reviewing the costs claimed, the Tribunal, without objection from the respondent, applied a discount in respect of the charges for services which had been calculated in six minute units of time. The Tribunal considered that basis of charging to be inherently inaccurate and therefore to be unreasonable in assessing indemnity costs payable by the other party, although permitted under the costs agreement. The Tribunal also disallowed some charges outside the ambit of the Tribunal's orders which were restricted to the costs of an adjournment, and the costs incurred for a specified short period prior to the hearing. Costs were awarded against the applicants' agent in the sum of $1,408 and against the applicants in the sum of $12,232. The Tribunal found that there was insufficient reason to move away from the usual position that each party bear its own costs in respect of the application to fix costs.
The cost orders 7 This matter involves proceedings which were brought under s 15F(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA). The matter was programmed to a final hearing which was set down for two days, being Friday, 1 May 2009 and Monday, 4 May 2009. In these reasons, the applicants are referred to as the tenants and the respondent as the landlord. 8 On 1 May 2009, the applicants' agent, Mr Lee Robinson, applied for the hearing to be adjourned to 4 May 2009. The circumstances leading up to and making that adjournment necessary were such that the Tribunal, in granting the adjournment, ordered that Mr Robinson pay the respondent's costs in respect of the adjournment forthwith, on an indemnity basis, in any event, either as agreed, or as fixed by the Tribunal. 9 When the hearing resumed on 4 May 2009, it became evident that Mr Robinson was concerned about his ability to advance the case. The deficiencies in the applicants' case had been highlighted during a directions hearing on 23 April 2008, but Mr Robinson was then confident that they could be addressed. After hearing submissions from the parties, the Tribunal ordered on 4 May 2009 (although the order which was issued is incorrectly dated 1 May 2009) that leave be granted for the proceedings to be withdrawn without prejudice to the tenants' right to commence fresh proceedings, if so advised, and that the tenants pay the landlord's costs of preparation for the hearing subsequent to 23 April 2009 and all costs of the day, forthwith on an indemnity basis, in such sum as might be agreed, (Page 5)
or as fixed by the Tribunal; and, further, that the parties were to bear their own costs in respect of the proceedings prior to 23 April 2009. The Tribunal also ordered that the costs be determined on the documents, unless otherwise directed. 10 The parties have been unable to agree costs and consequently the task for the Tribunal is to fix those costs.
The costs sought 11 By application lodged on 15 May 2009, the landlord seeks the following orders: 1. The indemnity costs payable by the applicant's [sic] personal representative Mr Lee Robinson, pursuant to the Tribunal's order dated 1 May 2009, be fixed at $3148.75. 2. The indemnity costs payable by the applicants, pursuant to the Tribunal's order dated 4 May 2009, be fixed at $13,437.65. 3. The applicants pay the costs of this interim application fixed at $250, payable forthwith. 12 The application was supported with copies of the relevant accounts relied upon and the grounds for the application set out an explanation of the initials used in the accounts to identify the relevant fee earners and to explain the role of some of the persons on whom attendances were made. 13 By facsimile letter dated 20 May 2009, Mr Robinson sought a hearing in respect of the costs application. A directions hearing was ultimately heard on 3 July 2009. During that directions hearing, the Tribunal endeavoured to deal with various concerns raised by Mr Robinson. Mr Robinson had prior thereto filed submissions opposing the costs application. Consequently, on 3 July 2009, the Tribunal provided an opportunity for the tenants to file and serve any further written submissions in opposition to the respondent's costs application on or before 24 July 2009, failing which the application for costs would be determined on the documents filed to that date. Leave was also granted to the landlord to file and serve any replying submissions on or before 31 July 2009. The Tribunal expressly directed that the costs application be determined on the documents. Thereafter, there were additional delays. Mr Robinson was unable to file submissions within the time directed because he was unable to obtain a transcript of the directions hearing on 3 July 2009. The Tribunal's support officer had inadvertently failed to record the hearing. (Page 6)
14 Ultimately, the landlord's solicitors provided typed notes of their record of the directions hearing. In due course, they also filed further replying submissions. Thereafter, in the course of considering the application, the Tribunal deemed it necessary to issue an order on 30 October 2009, providing the landlord an opportunity to file, and serve on the tenants' representative, a copy of any costs agreement on which it relies and an outline of written submissions addressing the effect of the Legal Practitioners (State Administrative Tribunal) Determination 2008 (Determination). The tenants were also provided an opportunity to file an outline of submissions addressing the effect of the costs determination. 15 The landlord's solicitors have filed a costs agreement dated 30 March 2009. It is submitted for the landlord that by virtue of s 5(c) of the Determination, the recommendations of the Legal Costs Committee contained therein are not intended to override the entitlement of a practitioner to make a written agreement as to costs with a client under the Legal Profession Act 2008 (WA) (LP Act). The further submission filed on behalf of the tenants submits, relevantly, that the respondent should be entitled to costs only strictly in accordance with the Determination. Additional submissions go to the general principles guiding the exercise of a discretion whether or not to award costs, or repeat the submissions made by Mr Robinson that the costs should be awarded only against him and not against the tenants, neither of which have any continued relevance because the costs orders have been made and all that is now required is to fix those costs. A submission relating to the inclusion of costs relating to settlement negotiations will be addressed later. 16 As submitted for the landlord, s 5(c) of the Determination specifically provides that the recommendations of the Legal Costs Committee (as contained in the Determination) are not intended to override the entitlement of a practitioner to make a written agreement as to costs with a client. 17 In this case, the cost agreement relevantly provides that for each time period of up to six minutes, partners will charge at a rate of $430 per hour, associates at $355 per hour, senior practitioners (admitted for more than five years) at $285 per hour, intermediate practitioners (admitted between three years and five years) at $260 per hour and junior practitioners (less than three years' legal experience, including period of articled clerkship) at $235 per hour. Clause 42 of the agreement expressly records that GST is payable in respect of each taxable supply under the agreement and that the above rates do not include GST. (Page 7)
18 Clause 12 and cl 13 of the agreement deal with the incurment of disbursements, including barristers' fees. It is agreed that the disbursements will be charged to the landlord at cost. 19 The written agreement referred to in s 5(c) of the Determination is a written agreement made under the LP Act. Clause 6 of the schedule to the Determination provides that unless a practitioner has made a written agreement as to costs with a client under the provisions of s 282 of the LP Act, the costs of or in relation to a party to an action or other proceeding (inclusive of GST and counsel's fees but exclusive of other disbursements) in the Tribunal are payable by a party to that party's own legal practitioner, shall not exceed an amount calculated at the stipulated relevant hourly rates. 20 Under s 282 of the LP Act, a costs agreement, relevantly, as in this case between a client and a law practice retained by the client, must be written or evidenced in writing. A costs agreement may consist of a written offer which is clearly expressed as an offer to enter into a costs agreement, and that it may be accepted, relevantly, in writing. I find that the costs agreement meets those requirements and is therefore made in accordance with s 282 of the LP Act. The agreement is in writing and is signed for and on behalf of both the landlord and its solicitors. Clause 1 expressly states that the document comprises an offer to enter into a costs agreement capable of being accepted by signature, dating and return to the solicitors, all of which has been done.
The applicable legal principles 21 Within the court system in Western Australia, by virtue of the operation of O 66, r 11(2) of the Rules of the Supreme Court 1971 (WA), an order for indemnity costs has less significance than in those jurisdictions where the amounts allowed for party and party costs are materially lower than those allowed for solicitor and client costs: see Unioil International Pty Ltd v Deloitte Touche Tohmatsu(No 2) (1997) 18 WAR 190 at 191 (Unioil). As there discussed, unless there is an agreement in writing between the solicitor and his client, the fees allowed under the relevant scale apply both as between party and party and solicitor and client. Consequently, the only difference is that there may be items which, by their nature, are not matters referred to in the relevant scale, which will accordingly be allowed in respect of a solicitor and client bill of costs. 22 However, as evidenced by the order for indemnity costs made in the Unioil matter, in assessing the amounts to be allowed under the relevant (Page 8)
scale, the taxing master, in order to provide a reasonable indemnity against costs, should allow all the costs incurred except insofar as they are of an unreasonable amount or have been unreasonably incurred. That formulation accords with the general law definition of indemnity costs which allows all costs incurred by the person in whose favour the cost order is made, except to the extent that they are of an unreasonable amount or have been unreasonably incurred: see GEDal Pont, Law of Costs,LexisNexis Butterworths, Australia, 2003 at [16.21]. 23 There is no party and party scale of costs applicable to the Tribunal. Regard has been had previously to the scales applying to the Supreme Court, District Court and Magistrates Court, depending upon the nature of the matter. However, the Determination came into effect on 1 March 2009, which prescribes maximum hourly and daily rates, inclusive of GST, which may be charged as between solicitor and client. Clause 6 of the schedule to the Determination records that unless a practitioner has made a written agreement as to costs with a client under the provisions of s 282 of the LP Act, the costs payable by a party to that party's own legal practitioner, shall not exceed an amount calculated at the hourly rates specified. The rates specified inclusive of GST are for a senior practitioner (admitted for five years or more) an hourly rate of $330, for a junior practitioner (admitted for less than five years) $231, and for junior counsel an hourly rate of $253.
The process of fixing costs 24 By s 89 of the SAT Act, the Tribunal may either fix the amount of the costs or order that the costs be assessed in accordance with the rules. Rule 43 of the State Administrative Tribunal Rules 2004 (WA) provides for assessment of costs by the executive officer or a member, if the Tribunal does not fix the costs. It is evident that different procedures for finalising costs are contemplated and that the process of fixing costs should not entail an item by item assessment of a bill of costs. It is, however, necessary to consider the services provided and the charges therefor in a sufficient manner to enable a view to be formed of the amount at which the costs should be fixed. 25 In considering whether any charges constitute an unreasonable amount or have been unreasonably incurred, regard must be had to the cost principles outlined by Judge Chaney, as he then was as Deputy President of the Tribunal, in J & P Metals Pty Ltd and Shire of Dardanup [2006] WASAT 282(S). His Honour stated at [38]: (Page 9)
The procedures of the Tribunal are designed to achieve the objectives prescribed by s 9 of the SAT Act. The Tribunal strives to ensure that its procedures are proportionate to the nature of the matters in issue. … In the unusual event that an order for costs is made by the Tribunal, the Tribunal's obligation to minimise the costs to parties will be reflected in the costs assessed by the Tribunal as recoverable. That approach reflects an expectation that representatives of parties before the Tribunal will approach a proceedings in a way that minimises costs to their clients. … 26 The amounts charged relate to services provided by three legal representatives (including counsel from the independent bar). The bulk of the work carried out was by a solicitor of two years' postadmission experience, identified in the accounts by the initials SRS. Her time was charged at a rate of $235 plus GST. A few attendances were charged in respect of a partner of the landlord's firm of solicitors, identified by the initials ERA. His time was charged at a rate of $430 plus GST. Although the grounds to the costs application refer to a senior associate, RJC, whose time was charged out at a rate of $350 per hour plus GST, the accounts relied on reflect only one conference between SRS and RJC, which was charged for at SRS's rate. No charge was made by RJC. 27 These chargeout rates are justified in terms of the cost agreements provided to the Tribunal. 28 Counsel's fees have been charged at the rate of $250 per hour plus GST. This is a disbursement payable by the landlord's solicitors and which cl 12 of the costs agreement permits to be charged, at cost, to the landlord. Clause 6 of the schedule to the Determination restricts the costs and disbursements relating to counsel fees, the rates specified in the Determination, unless a written agreement has been entered into with the client under s 282 of the LP Act. 29 However, with some exceptions, and as contemplated by the costs agreement, the common practice has been followed, of charging for attendances in six minute units of time. Thus, for example, on 28 April 2009, charges have been raised for three units of time of six minutes each for SRS to review a Tribunal order, to email the order to the client and to counsel, that is, a total time charged of 18 minutes, amounting to $70.50 (plus GST) for work which could not possibly have taken that length of time. That inherent inaccuracy was recognised in Kinder v Gross [2008] WADC 69 and was described as 'at best an "ambit" claim' in Hanson v English [1999] WADC 141. I consider that charging on this basis, although permitted under the parties' costs agreement is (Page 10)
nevertheless unreasonable in assessing indemnity costs payable by the other party. 30 At the directions hearing held on 3 July 2009, I raised this matter with the landlord's legal representatives and suggested that a way to deal with it, although arbitrary, would be to reduce the rates to be allowed for services provided by SRS and ERA to hourly rates of $200 and $360, plus GST, respectively, except in respect of any attendances where the actual time spent was shown to have been charged. After conferral, no objection was raised to that course being adopted and I accordingly intend to do so. 31 To the extent that the accounts include charges for attendances on 23 April 2009 prior to and including the directions hearing held on that date, those costs are disallowed in their entirety because they are not included within the ambit of the Tribunal's orders. 32 Mr Robinson submitted that no costs should be allowed in respect of attendances by ERA or Mr Garas, the landlord's counsel. In respect of ERA, the submission is that ERA had attended 'on a pro bono basis as an observer'. With respect, that entirely misconstrued ERA's role in the proceedings. It was made plain in oral submission that ERA was the partner responsible for the matter. In written replying submissions, it was also confirmed that, apart from incidental attendances, the only time charged by ERA was for attendance at the second day of the final hearing on 4 May 2009, when the solicitor, who had the primary conduct of the matter (SRS) was absent on leave. 33 Legal practices contain cost by minimising the involvement of partners and by making greater use, under appropriate supervision, of less experienced practitioners. The time charged for general attendances in the matter, excluding the appearance on 4 May 2009, for ERA totalled only 2.7 hours. No charge was made in respect of ERA attending the hearing on 1 May 2009 (2.8 hours). On 4 May 2009, charges based on four hours of time for ERA attending the hearing, including preparation for hearing and travelling time, were raised. There are numerous other examples where charges have been raised in respect of SRS conferring with ERA, without any time being recorded for ERA. I consider it entirely appropriate that costs should be allowed in respect of the attendances by ERA for which charges have been raised. The approach taken is consistent with the Tribunal's expectation that the representatives of the parties will minimise costs to their clients. (Page 11)
34 Mr Robinson's submission in relation to Mr Garas' costs, is that: The employment of a barrister in the jurisdiction of the State Administrative Tribunal was, in all the circumstances, and considering the applicant was represented by a layperson, an abuse of process. 35 It is evident that the issues raised by this application were far more complex than was appreciated by Mr Robinson. Given that there were then no decided cases of the Tribunal giving any guidance to practitioners, I consider that it was entirely appropriate for the landlord to retain counsel. This was a case in which the tenants would have been well advised to have had competent legal representation. The attendances by Mr Garas and the amounts charged by him were both necessary and reasonable and are considerably less than would have been charged by a solicitor with comparable experience. 36 Criticism is also raised about the charges made by the landlord's solicitors in relation to a period during which the parties were engaged in settlement negotiations. It is submitted that the landlord evidenced a lack of good faith in those negotiations. In an attempt to support this submission, reference is made to a term of what appears most likely to have been a without prejudice offer. The landlord's solicitors had no opportunity to respond to this because it was contained in the tenants' submissions which were filed last and which were intended to deal only with the effect of any costs agreement and the Determination. If the term was part of a without prejudice offer of settlement, it should not have been disclosed, and in any event, it was outside the ambit of the submissions which the Tribunal directed be made. On either of those bases, I would be justified in ignoring the submission, but in any event, it is to be noted from the accounts filed by the landlord's solicitors that the total account rendered to the client for legal costs was $40,919.62, which related to services beyond those which the landlord is entitled to recover costs under the Tribunal's orders. The submission is presumably intended to establish that the costs were unreasonably or unnecessarily incurred because the negotiations were not entered into in good faith, but that cannot possibly be found to be the case because it is irrelevant that the contribution towards costs that were then sought, exceeded the costs claimed pursuant to the Tribunal's orders. The Tribunal's orders were limited to the costs incurred between 23 April 2009 and 4 May 2009. 37 Finally, Mr Robinson submitted that the landlord's solicitors should provide him with an amended account reflecting the comments made at the directions hearing on 3 July 2009. Mr Robinson obviously understood (Page 12)
that the landlord's representatives had conveyed their concurrence with the proposal put forward by the Tribunal as a basis to deal with the manner in which time charges had been raised. Perhaps there was concurrence, although the Tribunal understood simply that there was no objection to the matter being dealt with on that basis. In any event, Mr Robinson has misunderstood the process being followed. The landlord has submitted its claim for costs and it is for the Tribunal to fix the costs which it considers should be recoverable, either from Mr Robinson, or the tenants, pursuant to the abovementioned orders. There is no need for any invoice to issue. As pointed out by the landlord's solicitors, the invoices issued were to their client and have been paid. Those invoices simply form part of the material to be considered by the Tribunal in fixing costs. 38 I have applied the above to the landlord's accounts covering the charges claimed and I do not consider that any of such costs have been unreasonably or unnecessarily incurred, except to the extent of those costs charged on 23 April 2009, prior to and including the directions hearing on that date, and to the extent of the discount applied as a result of the charges being made in six minute units of time. 39 The costs which Mr Robinson will be ordered to pay in respect of the adjournment on 1 May 2009 will be fixed as follows: 40 Costs which the tenants will be ordered to pay in respect of the proceedings subsequent to 23 April 2009 will be fixed as follows: (Page 13)
41 Finally, it is necessary to address the claim for costs for this application to fix costs. The amount sought is $250. While none of the arguments put forward by Mr Robinson have succeeded, it is perhaps not surprising that when faced with the total costs claimed, the tenants chose not to agree costs but to have the Tribunal fix the appropriate amount. Not being a lawyer, it could not have been expected that Mr Robinson would be able to provide any reasoned advice to his clients in order to provide them with any basis upon which to attempt to compromise the costs claimed. Those costs have been reduced by the Tribunal. In all the circumstances, I do not consider that there is any sufficient basis for moving from the usual position in the Tribunal that each party bear their own costs in respect of this application.
Orders 42 For the above reasons, the Tribunal will issue orders as follows: 1. Within 28 days of the date of this order, Mr Lee Robinson is ordered to pay to the respondent the costs of the adjournment of the hearing on 1 May 2009, fixed in the total sum, inclusive of GST, of $1,408. 2. Within 28 days of the date of this order, the applicants must pay to the respondent the costs of the proceedings subsequent to 23 April 2009, inclusive of GST, fixed in the sum of $12,232. 3. Each party is to bear their own costs in respect of the application to fix costs. |