Brennand and Naughton v Hartung and Best Practice Education Group Ltd t/as Blue Gum Community School
[2014] ACTSC 326
•5 December 2014
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Brennand and Naughton v Hartung and Best Practice Education Group Ltd t/as Blue Gum Community School |
Citation: | [2014] ACTSC 326 |
Hearing Date(s): | 3 and 18 December 2013 |
DecisionDate: | 5 December 2014 |
Before: | Refshauge J |
Decision: | 1. Leave be granted to the plaintiffs to rely on paragraphs 1 and 5 of the affidavit of Kathryn Brennand deposed on 11 December 2013. 2. The appeal from the judgment of the Master dated 18 July 2013 be dismissed. 3. The review of the decision of the Deputy Registrar in his reconsideration of the assessment of the costs of the order of 28 September 2012 be dismissed. 4. The Certificate of Assessment dated 6 September 2013 be set aside and that a Certificate of Assessment in the sum of $40,796.28 be issued. 5. The parties be heard as to costs. |
Category: | Principal Judgment |
Catchwords: | APPEAL - GENERAL PRINCIPLES – In General and Right of Appeal – Appeal from decision of Master – Legislation regarding appeals from Master needs amending to reflect co-extensive jurisdiction of Master – Whether decision interlocutory order or final order – Question of what is an interlocutory order is notoriously difficult to answer – Decision of Master final order – Decision must be appealed to Court of Appeal – Appeal incompetent APPEAL - GENERAL PRINCIPLES – In General and Right of Appeal – Appeal from decision of Deputy Registrar – Incorrect form used to commence appeal – Court having no jurisdiction is different to prescribed procedure not being followed – Compliance with r 1855 of the Court Procedures Rules 2006 (ACT) dispensed with under r 6 PROCEDURE – Costs – Assessment of Costs – Review of Reconsideration of Assessment by Registrar – Principles on which Review undertaken PROCEDURE – Costs – Assessment of Costs – Bill of Costs – Individual Items – Costs of Attempting to Negotiate Settlement – Costs of Amendments – Instructions be Brief |
Legislation Cited: | Administrative Decisions (Judicial Review) Act 1989 (ACT) Court Procedures Act 2004 (ACT), s 7, Item 1(3) Pt 1.1 Sch 1 Court Procedures Rules 2006 (ACT), rr 6, 21(4), 200, 425, 513, 1452, 1726(2), 1734, 1800, 1807, 1808, 1814, 1833, 1834, 1851, 1852, 1855, 3556, 5012, 6906, 6250, 6256, Item 31 Sch 4, Div 2.17.5, Pt 6.2 |
| Cases Cited: | AB v New South Wales [2014] NSWCA 243 |
| Texts Cited: | Professor Dal Pont, Law of Costs (2009, 2nd ed, LexisNexis Butterworths: Sydney) |
| Parties: | Kathryn Ann Brennand (First Plaintiff) Brian Jonathan Naughton (Second Plaintiff) Maureen Hartung (First Defendant) Best Practice Education Group Ltd t/as Blue Gum Community School (Second Defendant) |
Representation: | Counsel Ms J Keys (Plaintiffs) Mr G Brackenreg (Defendants) |
| Solicitors Kathryn Brennand and Brian Jonathan Naughton Self-represented (Plaintiffs) Meyer Vandenberg (Defendants) | |
File Number(s): | SC 110 of 2012 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: Harper M/Deputy Registrar Kennealy Date of Decision: 18 July 2013/9 August 2013 Case Title: Brennand v Hartung Citation: Brennand v Hartung [2013] ACTSC 132 Brennand v Hartung (Unreported, Australian Capital Territory Supreme Court, Deputy Registrar Kennealy, 9 August 2013) |
Refshauge J:
The plaintiffs are the parents of a young child now nine years old, who was offered a place in a school of which the first defendant is the principal and the second defendant the owner and operator.
The circumstances under which the offer was withdrawn are set out in reasons given by Master Harper in Brennand v Hartung [2012] ACTSC 132 at [12]-[16]. I shall refer to that decision as Brennand (No 1).
The offer of a place was later withdrawn and the first plaintiff, the child’s mother, commenced proceedings in this Court. The plaintiff claimed against the defendants an interim injunction, review (apparently judicial review) of the decision to withdraw the offer of enrolment and also alleged breach of contract, breach of duty of care and defamation. The Originating Application was supported by affidavits. See Brennand (No 1) at [58].
The plaintiff also applied, in the Originating Application, for an extension of time to bring the judicial review proceedings. That application, supported by affidavit material, came on for hearing on 3 August 2012. On 10 August 2012, the Master declined to extend time, dismissing the application for review, joining the second plaintiff, the child’s father, to the proceedings and directing the plaintiffs to file a Statement of Claim: Brennand (No 1) at [59]-[60].
On 28 September 2012, Master Harper ordered that the costs of those proceedings be paid by the plaintiffs. See Brennand v Hartung [2012] ACTSC 150, to which I shall refer as Brennand (No 2).
As an aside, I note that in Brennand (No 2), the Master there set out the Statement of Claim which had been filed and which, in paragraph [6], refers to the year of the birth of the plaintiffs’ daughter as 2006. In an affidavit made by the first plaintiff, however, she states the year as 2005, as is also shown on the enrolment form submitted to the second defendant. This must, I assume, be an error of drafting the Statement of Claim and has, understandably, been repeated from time to time by the Master. I shall, however, proceed on the basis that the child was born in 2005.
As well as ordering the plaintiffs to pay the costs of the orders made in Brennand (No 1), his Honour also ordered in Brennand (No 2), on application by the defendants, that the Statement of Claim be struck out. His Honour, however, gave leave to the plaintiffs to file an amended Statement of Claim. His Honour dismissed applications by the defendant for the costs to be paid as indemnity costs and for summary judgment and that the defendants pay the costs of these applications. See Brennand (No 2).
Further applications were made from time to time. I do not need to detail the precise further course of the proceedings.
On 25 October 2012, however, the plaintiffs sought to join a third defendant. On 13 November 2012, the defendants applied for the proceedings to be dismissed. These applications came on for hearing on 16 November 2012.
On 18 July 2013, Master Harper dismissed the application to join a third defendant and, concluding that none of the present claims, in defamation, breach of contract or negligence, could succeed, dismissed the proceedings and ordered the plaintiffs to pay the costs of the defendants and of the proposed third defendant. See Brennand v Hartung [2013] ACTSC 132. I shall refer to this decision as Brennand (No 3).
On 25 July 2013, the plaintiffs filed a Notice of Appeal against the decision of the Master made on 18 July 2013. The appeal was made to the Supreme Court, not to the Court of Appeal. I shall deal with that application below.
The defendants prepared a Bill of Costs following the orders of the Master of 28 September 2012; the Bill of Costs was filed on 8 March 2013. A notice of objection was filed on 29 April 2013 under r 1807 of the Court Procedures Rules.
The assessment of the costs in the Bill of Costs proceeded and was completed on 12 June 2013 but the plaintiffs filed a notice for reconsideration of that assessment on 26 June 2013. A response to the notice was filed by the defendants on 15 July 2013. On 9 August 2013, the Deputy Registrar published his reasons in which he upheld one claim and reduced one item on review by $69.50 but otherwise confirmed his assessment and indicated that he proposed to issue a Certificate of Assessment for the amount of $42,678.58. See Brennand v Hartung (Unreported, Australian Capital Territory Supreme Court, Deputy Registrar Kennealy, 9 August 2013). I shall refer to this decision as Brennand (No 4). The Certificate of Assessment of Costs was issued on 6 September 2013.
On 23 August 2013, the plaintiffs sought a review of the decision of the Deputy Registrar made in Brennan (No 4). The defendants objected that the plaintiffs also incorrectly commenced that matter. On 3 December 2013, I made orders to regularise the application. The plaintiffs then sought leave to adduce further evidence. I shall deal with that below.
Subject to that latter matter, on which I heard oral submissions, the parties agreed that I should deal with the review of the reconsideration by the Deputy Registrar on the papers. I shall do so below.
Appeal against the decision of the Master in Brennand (No 3)
The provisions relating to appeals from the Master in the Supreme Court Act 1933 (ACT) date from when the jurisdiction of the Master was much more limited than his Honour now exercises. Indeed, in civil matters, the jurisdiction exercised by the Master is now co-extensive with that of a single judge of this Court. The appeal provisions, however, are not the same as for an appeal from decisions of a single judge but should be so. The provisions are in urgent need of reform, as I noted in Australia and New Zealand Banking Group Ltd v Manny (No 4) [2013] ACTSC 236 at [39].
Such reform would not, however, make a relevant difference to the issue I must here decide, though it may have a different consequence.
Appeals from decisions of the Master are regulated by s 9(2) of the Supreme Court Act which provides
(2)A person who is dissatisfied with an order of the master made in the exercise of jurisdiction given under the rules may appeal, as prescribed under the rules –
(a)for an interlocutory order – to the court constituted by a single judge; and
(b)in the case of any other order – to the Court of Appeal.
Were the relevant reform to be made so that appeals from the Master were dealt with in the same way as from a single judge, then, while there would still be a difference between interlocutory and other orders where leave would be required for appeals from interlocutory orders (see s 37E of the Supreme Court Act), the appeals would be heard to the same court. This would mean that, if the Court of Appeal considered that the order the subject of an appeal was interlocutory, though the appeal had been commenced without leave, the Court of Appeal could grant leave at the hearing of the appeal if thought appropriate, as was done in Bailiff v The Queen [2011] ACTCA 7 at [1]. See also McColley v Commonwealth of Australia [2014] ACTCA 21 at [10]-[14].
In the case of an appeal from decisions of the Master, this approach is not available, for the appeals from interlocutory orders are heard by a different court from appeals from other orders.
The defendants challenged the validity of the plaintiffs’ proceedings to this Court. The plaintiffs has appealed to a single judge from the orders of the Master. This is only available were the decision of the Master an interlocutory decision.
The Decision of the Master
The orders made by the Master in Brennand (No 3) were as follows:
1.the plaintiffs’ application to joint [sic] [the proposed third defendant] as a defendant be dismissed.
2.the action be dismissed.
3.the defendants’ costs be paid by the plaintiffs.
4.the plaintiffs pay the costs of the proposed third defendant.
The plaintiffs claim that this order was an interlocutory order and so appellable to a single judge. The defendants submitted otherwise. If the defendants’ submissions are correct, then the appeal is incompetent and cannot proceed.
What is an interlocutory order?
As I pointed out in Arrow International Australia Ltd v Group Konstrukt Pty Ltd (2012) 7 ACTLR 48 at 52; [9], the question of what is an interlocutory order is “a notoriously difficult one”. I referred to the comment of the Privy Council in Tampion v Anderson (1973) 48 ALJR 11 at 12 where their Lordships agreed that “the authorities are not in an altogether satisfactory state” and approved the comment of Lord Denning MR in Salter Rex & Co v Ghosh [1971] 2 QB 597 at 601 that
This question of ‘final’ or ‘interlocutory’ is so uncertain that the only thing for practitioners to do is to look up the practice books and see what has been decided on the point. Most orders have now been the subject of decision. This advice, even if it be distressing to the scientific lawyer, may nevertheless be the most helpful in any actual case.
Nevertheless, the starting point for any consideration of the issue is the often-cited statement of Windeyer J in Hall v Nominal Defendant (1966) 117 CLR 423 at 443, who referred to the test
that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and so ask does it finally determine the rights of the parties in a principal cause pending between them.
This is, as I pointed out in Arrow International Australia Ltd v Group Konstrukt Pty Ltd at 53; [14], the approach followed since.
Subject to one comment below (at [36]), the Master did not clearly identify the rule or rules under which he was acting. This may make a difference. Thus, in Arrow International Australia Ltd v Group Konstrukt Pty Ltd at 56-7; [40]-[51], I held that an order under r 425 of the Court Procedures Rules 2006 (ACT) was interlocutory but an order under r 1452 was final. The Master, however, did identify the source of power he was exercising in making the actual order of dismissal, apparently r 21(4).
The course of the proceedings
The Master had earlier heard an application by the defendants for summary judgment. He dismissed that application but noted that there were difficulties in the drafting of the Statement of Claim which had been filed on 7 September 2012 and which problems counsel for the plaintiffs acknowledged. His Honour directed that an amended Statement of Claim be filed and served on or before 19 October 2012.
That was not done because the plaintiffs wished to join a third defendant, though they did not make that application until 25 October 2012, after the time for filing the amended Statement of Claim had expired. The affidavit in support of the application did, however, annex a draft amended Statement of Claim which included the claim against the proposed third defendant. An affidavit of the second plaintiff set out an explanation as to why the application and amended Statement of Claim had not been filed in time.
On 13 November 2012, the defendants applied to have the proceedings dismissed. They based their application in part on the failure of the plaintiffs to file the amended Statement of Claim within time, the failure to disclose in the draft amended Statement of Claim causes of action against the defendants and failure properly to plead so as to enable the issues in the proceedings to be identified.
It is in that context that the Master considered the proceedings. His Honour, however, did not dismiss the proceedings because of the failure to file the amended Statement of Claim within time or because the draft amended Statement of Claim failed to disclose a cause or causes of actions.
His Honour considered first the application to join the proposed third defendant. He refused the application. The draft amended Statement of Claim pleaded a defamation claim against the proposed third defendant and a claim for repayment of a loan said to have been made to her. His Honour found that the defamation claim would be barred by s 21B of the Limitation Act 1985 (ACT) and that the debt claim could not conveniently be joined in the proceedings as it would unfairly prejudice the proposed third party (r 200 of the Court Procedures Rules). He dismissed the application to join the proposed third defendant.
As to the claims against the defendants, the Master descended into the merits of the claims. His Honour held that the pleaded comments alleged to be defamatory were published on an occasion of qualified privilege where there was no discernible allegation of malice. The claim could not succeed.
As to the claim for breach of contract, his Honour found that the contract, if one there be, was not one which would be specifically enforced by a court and as specific performance was the only remedy sought by the plaintiffs, the action could not succeed.
The final claim was for negligence and his Honour found that there was no duty of care arising from the pleaded circumstances and so the claim could not succeed. His Honour went on to find that, if there were a duty of care owed by the defendants, he could find nothing alleged by the plaintiffs that constituted a breach of that duty. His Honour further found that the losses claimed were not caused by any action of the defendants.
His Honour then proceeded to dismiss the proceedings. His Honour considered that he had power to do so under r 21(4) of the Court Procedures Rules (in error described in his Honour’s reasons as “s 21(4)”). His Honour expressly referred to the example in the sub-rule also. That sub-rule, and the example, are as follows:
(4)The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.
Example for r (4)
The court may dismiss a proceeding or make a costs order if a plaintiff fails to proceed as required by the rules in ch 2 or an order of the court.
Was the order of the Master an interlocutory order?
The reference by the Master to dismissal under r 21(4) of the Court Procedures Rules could encompass a sanction imposed for failure to comply with the order to file the amended Statement of Claim within the time limited within the order his Honour made on 28 September 2012.
That failure, however, could not be considered so egregious that the sanction of dismissal was appropriate for such a breach. It had to be combined with the considered assessment which his Honour gave to the substance of the pleadings that the claims made by the plaintiffs could not succeed. It was not that there was no reasonable cause of action; indeed, his Honour identified a number of recognised causes of action, namely defamation, breach of contract and negligence. What his Honour found was that such actions could not succeed.
The defendants relied on Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd [1972] WAR 148 where it was held that the dismissal of proceedings was a final order.
This was a decision of the Full Court of Western Australia which held that an order striking out a statement of claim was interlocutory, but that where, in addition, the Court dismissed the action, that order of dismissal was a final order.
In coming to that conclusion, the Court applied the decision of the Court of Appeal in England (Lord Alverstone CJ, the Earl of Halsbury CJ and Sir F H Jeune P), in Bozson v Altrincham Urban District Council [1903] 1 KB 547 at 548-9 where Lord Alverstone CJ, identified the test as
Does the judgment or order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as a final order; but if it does not, it is then, in my opinion, an interlocutory order.
This is the test articulated by Windeyer J in Hall v Nominal Defendant referred to above (at [25]).
I note, also, that the Western Australian decision is cited in practice books, such as David Bailey and John K Arthur, Civil Procedure Victoria, vol 1 (at Service 281) 5688.102; [I 64.01.445] and in texts such as M J Beazley, P T Vout and S E Fitzgerald, Appeals and Appellate Courts in Australia and New Zealand (2014, LexisNexis Butterworths: Sydney) at 91; [5.10], for the proposition that an order is final if, as well as striking out a statement of claim for failing to disclose a cause of action, it also dismisses the proceedings.
The approach has some support from the High Court’s decision in Cox Brothers (Australia) Ltd v Cox (1934) 50 CLR 314 where the Court held that granting leave to enter judgment is an interlocutory order even though, it would appear, the judgment, once entered, would be final. See also to similar effect Hall v Johnson (1904) 29 VLR 649.
Nevertheless, the decision in Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd has more recently received a cool reception. In Manny v Sims (2014) 286 FLR 232 at 234; [11], Burns J considered that “it was decided against the weight of authority”. In AB v New South Wales [2014] NSWCA 243 at [13], Leeming JA declined to follow it, preferring to follow the more recent authority of Macatangay v New South Wales (No 2) [2009] NSWCA 272 at [10], where the Court considered an order dismissing proceedings summarily under r 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) relevantly similar to r 425 of the Court Procedures Rules. In Macatangay v New South Wales at [11], the Court of Appeal explained that the order was
not final in legal effect because there was no triable issue, and it did not finally determine the rights of the parties or create res judicata estoppels.
In Western Australia, a number of decisions have suggested that Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd, although applied in a number of subsequent cases, should be reconsidered. See Tobin v Dodd [2004] WASCA 288 at [2], [10] and Glendinning v Cuzens [2009] WASCA 21 at [23]. I am not able to find, however, where the decision has actually been reconsidered.
The Court of Appeal noted in McColley v Commonwealth of Australia at [24]
According to cases such as Hunt v Allied Bakeries Ltd [1956] 1 WLR 1326, and Little v Victoria [1998] 4 VR 596, an order striking out a statement of claim as not disclosing a cause of action is an interlocutory order.
Perhaps the strongest recent statement relevant to this issue is the decision of McHugh ACJ, Gummow and Heydon JJ in Re Luck (2003) 203 ALR 1 at 4; [9] where, although not referring, at least expressly, to Bozson v Altrincham Urban District Council or Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd, the court said
Given the long-established English rule, the decision in Tampion and our decisions in Pye, Hall, Carr and Bienstein, we see no valid reason for departing from the rule laid down in Tampion. An order is an interlocutory order, therefore, when it stays or dismisses an action or refuses leave to commence or proceed with an action because the action is frivolous, vexatious, an abuse of the process of the court or does not disclose a reasonable cause of action.
In the face of these authorities, it seems to me that it is, perhaps, at least unwise to rely on Florida Investments Pty Ltd v Milstern (Holdings) Pty Ltd. Certainly, a single judge should respect the decision of the High Court in Re Luck.
This, however, does not resolve the issue, for the learned Master did not appear to be acting under r 425 of the Court Procedures Rules but was, to use the words of the Court of Appeal in Macatangay v New South Wales, considering the triable issue. The issue decided by the learned Master was not that there was no reasonable cause of action; it was that there were identifiable causes of action but on the allegations made they could not succeed. Thus, the claim was, in reality, a claim for summary judgment.
There seems no dispute that an order for summary judgment is a final order. See Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation [2006] VSCA 191, Hunt v Knabe (No 2) (1992) 8 WAR 96; King Investment Solution Pty Ltd v Hussain (2005) 64 NSWLR 441; Gheorghiu v Perpetual Trustees Victoria Ltd [2007] VSCA 83.
The plaintiffs, however, relied on the decision of the Federal Court in Kowalski v MMAL Staff Superannuation Fund Pty Ltd (2009) 178 FCR 401 (Kowalski).
In Kowalski, the Full Court of the Federal Court of Australia had to consider a purported application for leave to appeal from a decision of a single judge who had summarily dismissed the proceedings under s 31A of the Federal Court Act 1976 (Cth). The question arose as to whether the decision was an interlocutory one for which leave was necessary.
The Court considered the matter in some detail and accepted (at 409; [33]) that the test, as set out in authorities such as Re Luck and Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35 at 38, was that the decision, to be final, must finally determine the rights of the parties in the principal cause pending between them, that the legal effect must be of a final order.
The Court held that summary dismissal under s 31A of the Federal Court Act was interlocutory.
In arriving at this conclusion, the Court examined the history of the section, concluding (at 408; [25]) that it was inserted “to soften the test for a successful application for summary judgment ... and also the test for a successful application for summary dismissal”. It further relied on the fact that the section was permissive, not mandatory, in that it provided that the court “may give judgment” and relied on the use of the words “unmeritorious” and “unsustainable” in describing the proceedings to which the section would apply when describing the sections effects and intention in the Explanatory Memorandum both of the Second Reading speeches.
The Court further quoted with approval the observation of Rares J in Boston Commercial Services Pty Ltd v G E Capital Finance Australasia Pty Ltd (2006) 236 ALR 720 at 731; [44]
In a case to which s 31A applies, where there is a real issue of fact to be decided in the sense identified in the above principle, and, possibly, where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial ...
As a result, I consider that s 31A of the Federal Court Act is quite different to powers in this Court. I do not consider that Kowalski is of assistance in deciding whether the decision of the learned Master was interlocutory or final.
It seems to me that what the learned Master was doing here was deciding that the plaintiffs could not sustain their case on the facts. There was no triable issue of fact between them. It is to be borne in mind that, as his Honour had earlier heard the application for an extension of time within which to bring judicial review proceedings and, indeed, whether judicial review was available, his Honour was aware of the facts on which the plaintiffs relied in their filed affidavits.
For example, his Honour referred in Brennand (No 3) (at [25]) to the letter from the first defendant to the ACT Department of Education beyond the extracts in the pleadings, (at [27]) to another letter also beyond the extracts in the pleadings and (at [34], [38]) to the contents of the waiting list application form and the enrolment form, not reproduced in the pleadings.
I am satisfied that the order of his Honour dismissing the proceedings was a final judgment which decided finally the rights of the parties. Accordingly, any appeal from his Honour’s decision had to be made to the Court of Appeal to this Court and the appeal is incompetent.
Costs
As a result of the order of the learned Master made on 28 September 2012 in Brennand (No 2), when his Honour ordered that the plaintiffs pay the defendants costs of the dismissal of the earlier application relating to the claim for judicial review, prerogative relief and for an extension of time, the defendants filed a bill of costs on 8 March 2013.
That Bill was assessed by the Deputy Registrar on 14 May and 12 June 2013 in accordance with the procedures set out in Div 2.17.5 of the Court Procedures Rules.
The plaintiffs sought a reconsideration of the decision of the Deputy Registrar under r 1851 of the Court Procedures Rules. The Deputy Registrar published his decision, Brennand (No 4), on 9 August 2013 in which he reduced the original assessment by $69.50 but otherwise confirmed the original assessment and, in addition, allowed the defendants’ costs of the reconsideration in the sum of $987.70.
On 23 August 2013, the plaintiffs appealed against the Deputy Registrar’s reconsideration. The plaintiffs also sought leave to present further evidence in support of their appeal.
On 23 October 2013, the defendants sought that the appeal from that decision be set aside.
The parties each filed comprehensive submissions on the issues and were content that I consider the appeal on the basis of those submissions without the need for any further oral hearing. I will do so.
A number of issues were raised.
Was the plaintiffs’ application competent?
The defendants challenged the competency of the application to the Court in respect of the reconsideration decision of the Deputy Registrar.
The plaintiffs contended that the application was well commenced.
The plaintiffs used the form prescribed under r 5012 of the Court Procedures Rules (namely prescribed from AF 2009-284; Form 5.1) to apply to this court for a review of the decision of the Deputy Registrar. They submitted that this was appropriate because the Deputy Registrar was exercising power under r 6250 and, therefore, the challenge to the order of the Registrar was provided for on an appeal under r 6256, thereby using the form prescribed for an appeal, being Form 5.1.
The defendants contended that r 1855 of the Court Procedures Rules made separate and express provision for a review of the decision of the Deputy Registrar on a reconsideration. This, as the note to the rule provided, required the plaintiffs to use an application in proceedings under Pt 6.2 and, accordingly, prescribed form AF 2010-103; Form 6.2 was required.
On 3 December 2013, I ordered that under r 6 of the Court Procedures Rules, the provisions of r 1855 be dispensed with insofar as the Notice of Appeal dated 23 August 2013 did not comply with r 1855 and deemed that Notice to be an application for review under r 1855.
These are my reasons for that order.
Rule 6250 of the Court Procedures Rules provides for the Registrar to exercise certain powers of the Court. These are delegated powers, concurrent with the jurisdiction of the Court, which may be given under the Court Procedures Rules as a result of the grant of such a rule-making power under s 7 of the Court Procedures Act 2004 (ACT). In particular, s 7 and item 1(3) of Pt 1.1 of Sch 1 of that Act provides that the rule-making committee may make rules in relation to
the jurisdiction of the master, registrars and deputy registrars, including review of their decisions.
When the Registrar is exercising the powers of the court under r 6250 of the Court Procedures Rules, any challenge to such a decision is made under r 6256 and, by r 5012, Form 5.1 is to be used as prescribed.
Under Div 2.17.5 of the Court Procedures Rules, however, specific powers are given to the registrar and not to a judge; this is a direct grant of power to the registrar. Thus, for example, when costs are to be assessed, r 1800(2) of the Court Procedures Rules provides that it is the registrar who is to assess these costs. This is not a function given under the rules to the court or a judge, but expressly to the registrar. Under s 47(2) of the Supreme Court Act 1933 (ACT) a deputy registrar may exercise the functions of the registrar subject to certain exceptions not presently relevant.
In contradistinction to the appeal under r 6256 of the Court Procedures Rules, Div 2.17.5 of those rules provides its own procedures for challenge of the decision of the Deputy Registrar in r 1855.
There are a number of reasons why r 1855 of the Court Procedures Rules must apply to this procedure. They include:
(1) that, at the least, insofar as the two rules may be said to cover the same subject matters, r 6256 of the Court Procedures Rules is a general provision and r 1855 is a specific provision to the principle of statutory interpretation applies that, where there is a conflict between such provisions, the specific provision prevails (generalia specialibius non derogant) would require r 1855 to prevail and apply. See Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat and Livestock Corporation (1980) 29 ALR 333 at 347; and
(2) that r 1855 of the Court Procedures Rules refers to a review of the decision of the registrar which is probably a different procedure than an appeal, given the use of both terms in different places: see Boston Clothing Co Pty Ltd v Margaronis (1992) 27 NSWLR 580 at 586-7.
The only basis on which the plaintiffs suggested that the jurisdiction under r 6256 of the Court Procedures Rules was engaged was that r 6250 empowered the registrar to exercise the powers of the Court under the Legal Profession Act 2006 (ACT), Div 3.2.7 (costs assessments). See r 6250(3)(h). That, however, does not assist the plaintiffs for Div 3.2.7 of the Legal Profession Act refers to the assessment of the costs of a solicitor who has submitted a bill of costs to his or her own client.
Section 294A(1) of the Legal Profession Act provides
A client may apply to the Supreme Court for an assessment of all or any part of legal costs.
The Dictionary to that Act defines “legal costs” as
... amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services ...
Costs ordered by a court to be paid by another party such as those ordered by the learned Master in Brennand (No 2), are not costs charged by the law practice to the party in whose favour the costs order is made. They are not charged for, nor is the party who is required to pay the costs ordered by the court liable to pay for, legal services provided to the party. Finally, they are payable not to a law practice but to the party in whose favour the order for costs is made.
Thus, it is clear that the plaintiffs had used the incorrect procedure. That, however, should not defeat the process if the failure will not cause prejudice. The use of an incorrect form, unlike the making of an application to the wrong court, will rarely cause such prejudice.
Further, it seems to me that the use of the incorrect form in this case is an irregularity, not a nullity. Like the distinction between final orders and interlocutory orders, the distinction between a nullity and an irregularity is not an easy line to draw. See Craig v Kanssen [1943] 1 KB 256 at 258.
In Plowman v Palmer (1914) 18 CLR 339 at 348, Isaacs J concluded in relation to determining whether a proceeding was a nullity
... the test is: Is there jurisdiction at the time to do the act impeached, even though prior precautions for the protection of a party, or other formalities, are directed; or is the act complained of, in the circumstances entirely unprovided for or prohibited at the time the act is done?
Similarly, Starke J in Posner v Collector for Inter-State Destitute Persons (1946) 74 CLR 461 at 476 recognised the distinction as one between an order which a court has no jurisdiction to make and an order which, though within jurisdiction, has been made without the prescribed procedure being followed.
In this case, the Court clearly has power to review the decision of the Deputy Registrar. The correct procedure has not been followed. The Notice of Appeal filed generally complied with the requirements as to the content of the application prescribed under r 1855 of the Court Procedures Rules. No prejudice was relied on by the defendants.
The width of the power under r 6 of the Court Procedures Rules is sufficient to dispense with compliance with r 1855. See Lazar v Taito (Aust) Pty Ltd (1985) 5 FCR 395 at 414. I was satisfied that it was open for me to dispense with strict compliance with r 1855 and, in the light of the proper concession by the defendants that this shall be done, I made the order I have set out above (at [14]).
The challenge to the findings of the Deputy Registrar
The orders for costs made by the learned Master in Brennand (No 2) were
1.The defendants’ costs of their application in proceeding dated 18 July 2012 be paid by the plaintiffs.
2.The defendants’ costs of the application by the plaintiffs for extension of time under the Administrative Decisions (Judicial Review) Act 1989 be paid by the plaintiffs.
3.The statement of claim filed by the plaintiffs on 7 September 2012 be struck out.
4.The plaintiffs have leave to file and serve an amended statement of claim by 19 October 2012.
5.The defendants have liberty to apply on three days’ notice in relation to the amended statement of claim.
6.The application in proceedings by the defendants dated 28 August 2012 be dismissed with costs.
7.The defendants’ application in proceedings dated 18 September 2012 be dismissed with costs.
The defendants’ application in proceedings dated 18 July 2012 had sought the following orders:
1.That the plaintiffs’ application for judicial review be dismissed;
2.Any other orders that the court considers appropriate; and
3.The costs of and incidental to the application.
The claims and challenges to the Bill of Costs by the plaintiffs must now be considered seriatim. I shall, however, first make some general remarks about the process.
The approach to be taken to a review of the decision of a registrar or deputy registrar assessing costs or on a reconsideration has been considered a number of times. Although these decisions were made concerning O 65 R 66 of the Supreme Court Rules 1937 (ACT), r 1855 of the Court Procedures Rules has sufficient similarity to consider that the principles already decided apply. Gallop J said in Ongania v Trimboli (Unreported, Australian Capital Territory Supreme Court, Gallop J, 20 May 1983) at p 2
It is now well established that the Court will review a decision of a taxing officer when it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved and the question is whether the taxing officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere (Western Australian Bank v Royal Insurance Co (1908) 7 CLR at p 388; Clark, Tait & Co v Federal Commissioner of Taxation (1931) 47 CLR 142 at pp 145-6; Australian Coal and Shale Employees’ Federation v The Commonwealth (1953) 94 CLR 621 per Kitto J at 629; and Peile v Nobel (Australasia) Pty Ltd (1966) VR 433 per Starke J at p 436. This has been the principle which has guided this Court in the review of taxations of Bills of Costs see, for example, Ronald Keith Ely by his next friend Christopher Finnegan v Ralf Ballschmieter (an unreported decision of Blackburn J, as he then was, delivered 5 September 1975).
In Ely by his next friend Finnegan v Ballschmieter (Unreported, Australian Capital Territory Supreme Court, Blackburn J, 5 September 1975) at p 6, Blackburn J held that the principles of review, set out in House v The King (1936) 55 CLR 499, are the principles to be applied.
This has been the approach for a long time. See, for example, Kores v Franzi (Unreported, Australian Capital Territory Supreme Court, Fox J, 5 February 1971) at p 33 and Tarrant v Lier (Unreported, Australian Capital Territory Supreme Court, Fox J, 5 February 1968) at pp 62-3.
More recently, but also under the previous rules, it appears that the same approach has been taken by Higgins J in Bennett v Seaman (1993) 117 ACTR 1 at 8 and, even more recently, by his Honour in Macphillamy v Vizovitis [2003] ACTSC 60 at [32].
I see no reason why the same approach should not be followed for the exercise of the Court’s jurisdiction under r 1855 of the Court Procedures Rules and, indeed, every reason why it should be followed.
As I have earlier noted, the plaintiffs sought to adduce further evidence on the hearing of the review. Under r 1855(4) of the Court Procedures Rules, a party seeking a review must not present evidence or raise a new ground of objection unless the court otherwise orders.
The affidavit filed by the first plaintiff, Ms Brennand, consisted largely of submissions rather than evidence. I rejected those paragraphs. One paragraph referred to the costs incurred by the plaintiffs in respect of the defendants’ applications for the dismissal of the proceedings and that the costs be assessed as indemnity costs. I permitted this paragraph to be admitted. I also permitted the opening paragraph to be admitted.
Ordinarily, it would be inappropriate to permit evidence to be adduced, though I note that evidence is usually given informally before the registrar on taxation (see Kores v Franzi at p 33) and this desirable practice should continue, though that may mean that there will sometimes be a need for an affidavit to record the proceedings before the registrar to be provided to the Court.
The plaintiffs challenged the allowance by the Deputy Registrar of items 1-3 of the Bill of Costs.
These items were as follows:
Item Number Scale Item Number Date Work Performed Party/Party Charges 2012 1 40 21/5 Receiving and filing e-mail from Defendants advising in relation to proceedings, Directions Hearing listed for 24 May 2012, general background to claim 12.70 2 1 22/5 Instructions to defend application 158.20 3 6 22/5 Instructions to oppose application for an extension of time to bring the action 112.90
The plaintiffs objected to these items on the basis that they were not work done in connection with the defendants’ application dated 18 July 2012 or with the plaintiffs’ application for an extension of time.
The defendants referred to “Regulation 513” and “Rule 1726(b) of the Court Procedures Rules 2006”. There is not, and has never been, r 1726(b) of the Court Procedures Rules. Rule 1726 relates to the costs of amendment, however, and r 1726(2) provides
A party who amends a document must pay the costs of and caused by the amendment, unless the court otherwise orders.
It seems to me that this sub-rule, r 1726(2) is what is intended by the defendants. Regulation 513 appears, in fact, to refer to r 513 of the Court Procedures Rules which is to the same effect as r 1726(2).Thus, the costs of and caused by the amendment to the Statement of Claim are payable by the plaintiffs without any orders, because there was no other order.
The Deputy Registrar, on re-consideration, held
9.Central to the assessment of the bill of costs were items 1 to 54, 97 to 133, and 146 to 244. These items were assessed based on my understanding and interpretation of the orders made by the Master and after considering oral submissions from both parties at the time of the assessment. In respect of the above matters, I made two early rulings: a) that items 1 to 54 were fair and reasonable, save for items 4, 5, 6 & 7, in relation to the plaintiff’s [sic] application for an extension of time; and b) that items 97 to 133 were also fair and reasonable having account of order 3 of the Master’s decision.
10.The Originating Application dated 12 April 2012 seeks, amongst other things, an order for an extension of time. The further Application in Proceedings dated 12 July 2012 seeks to join a further plaintiff to the proceedings and also seeks an order extending time for the filing of the application, relying on the earlier application dated 12 April 2012.
11.Notwithstanding that the Master did not make specific reference at order 2 to the date of the plaintiffs’ application for an extension of time, it was my view that the application traversed both those documents filed on 12 April 2012 and those further documents filed on 12 July 2012. Indeed, the documents filed on 12 July 2012 make reference, and rely on, documents filed as part of the original application which sought, inter alia, an extension of time.
There can be no real complaint about items 2 and 3 of the Bill of Costs as they were clearly necessary for the lawyers for the defendants to deal, as they did, with the proceedings commenced by the plaintiffs in the context of the hearing on 3 August 2012. Item 3 is unarguably encompassed within the orders of the learned Master. It seems to me that the approach of the Deputy Registrar to these items was unimpeachable.
As to Item 1, it was clearly designed to deal with the issues that came to a head in the hearing on 3 August 2012 and I see no error of principle in the decision of the Deputy Registrar.
As to the costs of the amendment and the relevance of r 1726(2) of the Court Procedures Rules, I note that in Brennand (No 2) at [24], Master Harper said
The challenge by the defendants to the statement of claim was justified. The defendants will have an order for the costs of their application dated 12 September 2012.
This makes it clear that, so far as the amendment of the Statement of Claim was concerned, the Court did not “otherwise order” for the purpose of r 1726(2) of the Court Procedures Rules. I deal with that further below at [154].
The plaintiffs next challenged items 9 to 54 in the Bill of Costs
It is not necessary to set out these items in detail. They comprise the following:
(a) costs associated with the preparation for and attendance at the Directions Hearing on 24 May 2012 (Items 9 to 12);
(b) costs associated with preparations for and attendance at the Directions Hearing on 21 June 2012 (Items 13 to 23 and 33 to 36);
(c) costs associated with correspondence between the parties about the issue of the extension of time and the reviewability of the decision to withdraw the offer of enrolment (Items 24 to 32);
(d) costs associated with preparations for and attendance at hearing originally scheduled for 23 July 2012 but re-listed for 3 August 2012 (Items 37 to 54).
Costs in respect of sub-paragraph (c) above can be disposed of quickly. There can be no argument that they are clearly within the costs orders made by the learned Master in Brennand (No 2).
As to the costs referred to in sub-paragraphs (a) and (b) are concerned, a little of the history of the litigation is required.
The proceedings were commenced by originating application. Indeed, it was a Form 3.45 (prescribed form AF 2006-373) headed “Originating Application—judicial review”. The prescribed form refers to r 3556 of the Court Procedures Rules, which rule requires “[a] statutory order of review or prerogative relief” to be sought by such an application. Indeed, the application did seek in paragraphs 1 and 2 a review under the Administrative Decisions (Judicial Review) Act 1989 (ACT) and in paragraph 3 the grant of prerogative relief. It was then only in paragraph 4 that the claim for breach of contract, breach of duty of care and defamation “relying on facts alleged in the supporting affidavit” was referred to briefly but not pleaded in full.
The orders sought were: an extension of time to make the application “if necessary”, an injunction to suspend the operations of the withdrawal of enrolment pending the hearing of the application, a declaration that the withdrawal was invalid, specific performance of the offer of enrolment and damages for defamation and breach of duty of care, that is principally relating to judicial review.
No claim for costs was made by the defendants in their Bill of Costs for the costs of perusing the Originating Application nor for the subsequent application and supporting affidavit to join the second plaintiff as a party.
Thus, the main focus of the proceedings at this time was reasonably to be seen as judicial review, including the need for an extension of time to bring that claim. The application for an interim or interlocutory injunction only supported by judicial review claims and the extension of time only for the judicial review claims were clearly matters that needed to be addressed at an early stage. It is unsurprising, therefore, that, at the Directions Hearing on 10 May 2012, the Deputy Registrar noted on the bench sheet, when adjourning to 24 May 2012,
Foreshadowed placing matter before Judge/Registrar once appearances [sic] filed.
On 24 May 2012, the defendants’ Notice of Intention to Proceed had been filed and the matter was adjourned to 21 June 2012 before the Deputy Registrar “to enable discussions and exchange of documents”.
On 21 June 2012, the matter was set down for hearing of the interlocutory orders and the foreshadowed application by the defendants to strike out the proceedings.
The various applications then came on for hearing on 3 August 2012 and, on 10 August 2012, the learned Master delivered his decision in Brennand (No 1). His Honour indicated (at [61]) that he would hear the parties as to costs and the proceedings were adjourned to 14 September 2012 for further directions. His Honour then made the orders set out earlier in these reasons (at [4]).
Clearly, the work done at and between the Directions Hearing on 24 May 2012 and the hearing on 3 August 2012 were directed towards the application for judicial review and the application for an extension of time which later application was encompassed within the Originating Application and only necessary if the application for judicial review was permitted to proceed. The approach of the Deputy Registrar in Brennand (No 4) at [10], set about above (at [104]), seems to me not only not to show any error of principle, it seems to me to be quite correct.
This then encompasses the word identified in paragraphs (a), (b) and (d). I consider that there is no case to interfere with the decision of the Deputy Registrar in the reconsideration of these items.
Items 66, 83 and 143 in the Bill of Costs
Item 66 in the Bill of Costs was
Attending travelling to and from Court for the purposes of attending Directions Hearing, including time spent waiting at Court for matter to be called (108 minutes)
Item 83 in the Bill of Costs was
Attending travelling to and from Court for purposes of taking reserved judgment including time spent waiting at Court for matter to be called (48 minutes)
Item 143 in the Bill of Costs was an identical item, including as to time.
Each item was charged as an item 31 of Schedule 4 of the Court Procedures Rules (the “Fourth Schedule”). This item is
any other attendance by a solicitor (including travelling and waiting time and including a telephone attendance)
Item 67 in the Bill of Costs was
Attending at Court on Directions Hearing when applications adjourned to 3.8.12 for hearing.
The plaintiffs submitted that, having claimed Item 67 in the Bill of Costs there could be no additional claim for the travelling and waiting time. Item 67 of the Bill of Costs was claimed under item 27(b) of the Fourth Schedule, which is for “in court or chambers or before the registrar ... (b) to mention a matter”.
Items 84 and 144 of the Bill of Costs were “Attending at Court to take reserved judgment” and “Attending at Court to take reserved decision” respectively and charged as Item 27(a) of the Fourth Schedule, which item is “in court or chambers or before the registrar ... (a) to take a reserved judgment”.
It may be accepted that, at common law (Horlock v Smith (1837) 2 My & Cr 494 at 523 40 ER 728 at 739) and under certain scales of costs (eg Supreme Court Rules 1957 (Vic), Appendix N, Item 80), the thrust of the claim for travelling time was to cover the costs of a country solicitor travelling to the city (eg London, Melbourne, etc) to conduct business on behalf of the client. See, for example, United Hand-in-Hand and Bond of Hope Company v National Bank of Australia (1878) 4 VLR 271 at 273.
The item in the Fourth Schedule, however, is quite different from that in such scales. It is an express entitlement to charge travelling time in the ACT jurisdiction where there are no relevant country centres. It seems to me, applying the approach of Beaumont J in Fat-Sel Pty Ltd v Brambles Holdings Pty Ltd (1985) 6 FCR 440, that an allowance for such a claim is required, unless the Deputy Registrar considers the allowance is not fair and reasonable.
Item 31 of the Fourth Schedule makes it clear that it is separate from item 27(b) of the Schedule. It may be that where the lawyer’s offices are only a short distance from the court and that there is no appreciable waiting time, then item 27(b) of the Fourth Schedule would encompass that time. That is a matter of what is fair and reasonable. Here, however, the time was specified and was substantial.
Nevertheless, the Deputy Registrar reduced the allowable costs from $452 to $300, which shows that he assessed the fairness and reasonableness of the charge. He explained that there was, on that day, a long list – thirteen matters of varying length and complexity – and this justified the claim.
Again, Item 31 of the Fourth Schedule is separate from Item 27(a) of that Schedule. I note again that the time was a significant period, nearly an hour. Had it been substantially less, it may not have been fair and reasonable to allow it or allow it in full. Again, the Deputy Registrar reduced the amount claimed for Item 83 of the Bill of Costs from $169 to $100 (though he said in his reasons that the deduction was $69.50 – that would have been a reduction to $99.50). Interestingly, the actual charge for Item 143 in the Bill of Costs was $169.50; it was reduced to $100, a proper reduction of $69.50.
I see no error of principle in the allowances by the Deputy Registrar of these items which, in his discretion, he clearly considered, as required, were fair and reasonable. Nor do I see any error of fact or law.
Item 76 in the Bill of Costs
This item claimed photocopying of both statutes and relevant authorities. It was claimed under Item 16 of the Fourth Schedule, which allows for photocopying.
The plaintiffs challenged the amount on the basis that it was sufficient if just a list of authorities were prepared for submission to the Court and that the making of the copies was unreasonable.
It may be accepted that, in the past, it has been sufficient for the parties to file in good time a list of authorities which the associate of a judicial officer would then assemble. That luxury for the parties is now a distant memory. With the now frequent reliance on unreported decisions, now easily accessible electronically so that they proliferate in numbers, it is no longer possible, especially in a judicial officer’s list of cases, where there may be many parties who will rely on authorities, for the court staff to assemble such authorities. That, of course, is not to say that the Court should be bombarded with “a myriad of single instances” (Hillman v Box (No 4) [2014] ACTSC 107 at [386]) in place of the seminal authorities which set out the relevant principle, nor that the requirement for a preference for authorised reports is to be ignored.
The Deputy Registrar recognised this and allowed the item for this reason, though he reduced the amount from $431 to $300. That seems to me to be proper application of the principle set out in Bennett v Seaman at 3. For example, while it would not ordinarily be expected that the Court would have ready access to the Education Act 2004 (ACT), it is highly likely that the Court would have ready access to the Administrative Decisions (Judicial Review) Act, which it was probably not necessary to copy.
I can see no error of principle in the approach of the Deputy Registrar nor any error of fact or law that impugns his decision.
Items 92 and 93 in the Bill of Costs
These items charge costs for correspondence in which the defendants advised of an assessment of their costs and attempted to settle the issue and on which the plaintiffs responded seeking an itemised account.
The plaintiffs claim that, given that the learned Master had already listed the proceedings for arguments as to costs, the letter was unreasonable. The plaintiffs also refer to the fact that the learned Master dismissed the defendants' application for indemnity costs.
The Deputy Registrar explained in Brennand (No 4) at [24]-[25] his reasons for allowing these items as follows:
24.In relation to items 92 and 93 of the bill, the court places considerable importance on the concept of encouraging negotiation between parties to a litigation and its applicability to negotiation in relation to costs orders.
25.The philosophy underlying the concept of encouraging negotiation does not appear to me to be limited to personal injury litigation or any particular aspect of litigation, be it a claim for damages or a costs issue. Indeed, it is frustrating when parties arrive for an assessment of a bill of costs, arising out of any type of litigation, without any attempts having been made to negotiate a settlement of the costs, either prior to or following the service of the bill of costs. These items are fair and reasonable in my view and I allow them.
The Deputy Registrar was quite correct in his identification of the importance that the courts generally, and this Court in particular, place on mediation and other opportunities to resolve matters between the parties. See Ezekiel-Hart v Law Society of the Australian Capital Territory (No 2) [2012] ACTSC 135 at [26]-[35]. Indeed, as I there pointed out, a failure to engage genuinely in alternative dispute resolution may result in costs consequences.
That the Master also dismissed the defendants’ application is not a relevant consideration here (save that there is a costs set-off consequence) for that was an application for a special costs order, namely that the costs be ordered to be paid on an indemnity basis. This does not undermine the central reason for the decision of the Deputy Registrar.
I can see no error of principle in the approach of the Deputy Registrar nor any error of fact or law which would impugn his decision of the reconsideration.
Items 97 to 133 in the Bill of Costs
These items in the Bill of Costs relate to the defendants and their lawyers dealing with the attempt by the plaintiffs to re-plead their claim with an amended Statement of Claim. They include costs associated with the application made to the learned Master on 21 September 2012 that the Statement of Claim be struck out.
The plaintiffs do not challenge the amount claimed in each item. The plaintiffs’ claim is that these costs were “beyond Orders 1 and 2 made by Master Harper on 28 September 2012”. The plaintiffs pointed out that Order 3 (set out above at [89]) was silent as to costs. They pointed out, relying on Re Roby; Shubrook v Taylor [1916] WN 37, where an interlocutory order is silent as to costs, then the costs of the successful party are costs in the cause.
The defendants rely on two answers. In the first place, they say that these costs fall under r 1726(2) of the Court Procedures Rules as costs of and occasioned by the amendment to the Statement of Claim. Secondly, they say that the transcript records that the learned Master did make an order, not set out in the published order, that the plaintiffs pay the defendants’ costs of their application to strike out the Statement of Claim.
The Deputy Registrar found in Brennand (No 4) at [9], that these costs were encompassed within the learned Master’s orders and were fair and reasonable.
So far as the items were occasioned by the amendment to the Statement of Claim, that is correct. Rule 1726(2) of the Court Procedures Rules is clear and, as I have noted above (at [103]), the Court did not “otherwise order”. The items encompassed within that rule are clearly allowable.
The plaintiffs’ submission, however, was that where an interlocutory order is silent as to costs, the costs of the successful party are costs in the cause. I am not sure that the authority cited by the plaintiffs is the best authority for that proposition. The clearest authority is Memorandum of Leach VC (1823) 1 Sim & St 357; 57 ER 143 which is worth setting out in full:
[357] MEMORANDUM. April 13, 1823.
Costs
On this day, THE VICE-CHANCELLOR said that in Michaelmas term last he had stated to Mr Walker, the registrar, certain questions for the purpose of ascertaining in what cases the costs of a motion, where the Court gave no direction as to the costs, became costs in the cause to a party to whom costs of suit were given upon the hearing. The information he had obtained was:—
1st. That the party making a successful motion is entitled to his costs, as costs in the cause; but the party opposing it is not entitled to his costs as costs in the cause.
2d. That the party making a motion which fails is not entitled to his costs as costs in the cause; but the party opposing it is entitled to his costs as costs in the cause.
3d. That where a motion is made by one party and not opposed by the other, the costs of both parties are costs in the cause.
THE VICE-CHANCELLOR [Sir John Leach] added that it was therefore the duty of the Court, whenever by reason of special circumstances it was not the intention of the Court that these rules should apply, to give particular directions with respect to the costs; but that the Court very rarely gave any special directions with respect to the costs of a motion for the purpose of obtaining, continuing or dissolving an injunction to stay proceedings at law, leaving the costs of such motions to abide the event of the suit.
Professor Dal Pont suggests in his impressive work, Law of Costs (2009, 2nd ed, LexisNexis Butterworths: Sydney) at p 10; [1.18], that the case is called Lyon v Mercer, but, although a decision of that name appears on the same page of the English Reports as the Memorandum, it is a report of a hearing the day before and there is no indication that Leach VC pronounced the rule (or Practice Note as it is called in Ravinder Rehsi (ed), The Digest (2004, 2nd re-issue, LexisNexis UK: London), v 37(4) at 60; [6013]) in that decision.
The decision of Leach VC was followed by the UK Court of Appeal in Friis v Paramount Bagwash Co Ltd [1940] 2 KB 654 at 657, where it is called “a rule”.
I accept, however, that in Re Roby; Shubrook v Taylor, Peterson J did say that
he had always understood that if a plaintiff obtained judgment in an action for administration and nothing was said about costs, that was an admission that he was entitled to his costs down to judgment ...
A more relevant authority, however, may have been the Australian decision of Re Edward and Son; Ex parte Tomlins (1885) 11 VLR 304 at 311 or, indeed, the decision of this Court in Cape v Redarb Pty Ltd (Unreported, Australian Capital Territory Supreme Court, Higgins J, 12 June 1991) at p 3.
What was in issue in Re Roby; Shubrook v Taylor, however, was the costs of taking accounts which was a working out of the judgment, a somewhat different situation than that which pertains here.
Nevertheless, the principle is clear. The question, however, is whether that, in fact, applies here.
It seems to me that it does not. The passage I cited earlier at [107], from Brennand (No 2) shows clearly that the learned Master intended to make an order for costs. In my view, the defendants could (and probably should) apply under the slip rule (r 6906 of the Court Procedures Rules) for an amendment of the order to make it consistent with the clear and obviously correct decision of the learned Master in the reasons for decision. I can see no basis for the order being silent as to costs so as to provide that in such an application, the costs incurred by the defendants successfully applying for the Statement of Claim to be struck out should be the defendants’ costs in the cause.
In those circumstances, it seems to me that, in such a clear case, the Deputy Registrar was right to proceed with the approach that he did and assess the costs on the basis of the obvious intention of the learned Master.
Of course, the plaintiffs must be heard on any application under r 6906 of the Court Procedures Rules and, as the Master has now retired, such application could be heard by any other member of the Court. I shall raise the issue when delivering judgment in this matter.
In my view, there is no discernible error of principle in the decision of the Deputy Registrar on that reconsideration nor any error of fact or law.
Items 146 to 152 of the Bill of Costs
These items relate to negotiations between the parties over the costs of the orders made by the learned Master in Brennand (No 2).
As I have set out above (at [139]), the Court strongly supports efforts by parties to resolve disputes without recourse to the scarce – and expensive – resources of the court. That is probably enough to dispose of this challenge.
The plaintiffs, however, refer to the costs as including “work performed on behalf of the defendants, other than, and in addition to work performed” for the defendants in connection with the two matters on which the defendants were successful, namely the refusal to permit the application for judicial review to proceed and the refusal of the extension of time.
For the reasons set out above (at [102]-[103]), any costs relating to the striking out of the Statement of Claim and the costs occasioned by its amendment would also be allowable.
It seems to me, however, that, so long as the defendants were genuinely seeking to negotiate a settlement of the costs ordered to be paid in the orders made by the learned Master, the costs of such negotiation are allowable. That there were some additional issues sought to be included in the negotiation does not undermine this approach.
Of course, if the costs of such other issues were substantial or there was separate and clearly identifiable work (such as separate letters, separate parts of letters, separate telephone conversations and the like) it may be that the separate costs should not be claimable. No such situation was set out here.
Indeed, it is clear that the Court Procedures Rules contemplate a wide and liberal approach to these costs. In r 1700 costs of a proceeding include “costs incurred before and after the start of proceedings for successful or unsuccessful negotiation for settlement of the dispute”.
As Higgins J said in Bennett v Seaman at 6, though referring to O 65 r 53A of the Supreme Court Rules, which was in somewhat different terms
It should be noted that r 53A refers, not to costs ‘of and incidental to’ the action itself, but, ‘to negotiations for settlement’. It is necessary that such costs be ‘reasonably and properly’ incurred. The fact that negotiations are unsuccessful does not prevent such costs being allowed.
What is incidental to ‘negotiations for settlement’ may be widely different from matters relevant to the issues raised in the litigation. Other possible causes of action may be proposed for release. Other past liabilities may be proposed for discharge. Indeed, some issues not capable of resolution by legal action may be raised for resolution.
I can see no reason why the costs relevant to consideration of an issue, genuinely raised for consideration in settlement negotiations, should not be allowed pursuant to r 53A even if that issue is not otherwise connected with the litigation. Costs of making or considering frivolous proposals can be disallowed as not ‘reasonably and properly’ incurred. However, where a proposal has been raised, discussed and accepted, the costs of that process would, prima facie, be allowable as ‘reasonable’ and ‘proper’.
The plaintiffs referred to r 1814 of the Court Procedures Rules, but that rule relates to Calderbank offers (Calderbank v Calderbank [1976] Fam 93) and, so far as I could see, has no application to this issue.
The Deputy Registrar, who, it appears, saw the relevant correspondence (a copy of which the plaintiffs have not produced to me), found that the correspondence “supports the view that the defendants’ [sic] were genuine in their attempts to resolve the costs issue without incurring the court’s time”.
I cannot discern any error of principle in the decision on the reconsideration by the Deputy Registrar nor any error of facts or law.
Items 155 to 213 in the Bill of Costs
These items are claimed for general care and conduct of the proceedings. This is encompassed in Item 9 in the Fourth Schedule, referred to as Instructions for Brief.
The approach to this item was explained by O’Loughlin J in Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 at 10; [34]-[36] as follows:
34.The subject of care and conduct was considered in Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (unreported, Supreme Court, NSW, Waddell J, 14 April 1986). Clause 41 in Appendix A to Table 1 in Sch G to the Rules of Court of the Supreme Court of New South Wales allowed on taxation an amount for ‘skill, care and responsibility’. The amount is in the discretion of the taxing officer and, because of this, clause 41 was marked ‘discretionary’. Rule 67(3) provided (among other things) that a taxing officer when exercising his or her discretion ‘in respect of any item marked ‘discretionary’ in Sch ‘G’, shall have regard to the several matters that are there set out; they differ from the matters that appear in item 41 but, with one exception, the differences are not very significant; the exception is that the New South Wales Rules do not make an allowance for ‘research and consideration of questions of law and fact’.
35. One critical matter of importance is a determination of what is the base figure upon which a mark-up for ‘care and conduct’ is to be calculated. It seems to be unreal to have a mark-up on such mundane matters as a clerk's attendance to file a document. But the pursuit of this line of thinking would destroy the practicality of a gross sum taxation; it would mean that it would be necessary to have too much regard to individual items of costing before a proper assessment could be made of those items to determine whether a mark-up is appropriate. In my opinion, the preferred approach is to have regard to the fact that there will always be minor items of costing and trivial matters that do not justify a mark-up and to fashion the appropriate mark-up, based on the allowed solicitor's fees, accordingly. Indeed, that approach is also to be advocated on a formal taxation of costs for it affords the advantage of reducing, to a substantial degree, areas of dispute about what items are and are not to be the subject of a mark-up. In Southern Cross Exploration NL v Fire & All Risks Insurance (which was a review of a taxing officer's decision on a Bill of Costs that had been presented in taxable form) Waddell CJ in Eq said:
The words `skill, care and responsibility' seem to me to have an application to everything which is done by a party's solicitors in the conduct of proceedings. I do not think that it is either practicable or correct to attempt to isolate particular items in respect of which profit costs have been allowed as having no relationship to the exercise of care, skill or responsibility. In a proceeding such as this the management and supervision of the work of the [successful party’s] solicitors was of great importance and I think that work done such as photocopying and filing documents was work which had a relationship to the exercise of care and skill in and the acceptance of responsibility for the conduct and management of the case. Clearly enough, the allowance made under Item 41 should have a relationship to the total work done. Once this is accepted there is, I think, justification for assessing the allowance as a percentage or proportion of the other profit costs.
36. I indorse what his Honour has said ...
The allowance for this term has been the subject of consideration in this jurisdiction. In Cape v Redarb Pty Ltd (Receiver and Manager Appointed) at p 6, Higgins J described what was there appropriate, namely to add fifty percent of the costs for the relevant items, which resulted in the allowance for care, skill and attention as being one-third of the sum allowed for the bill. His Honour continued at p 7
An allowance of 1/3, as here, for care, skill and attention reflects a matter of sufficient importance and concern to warrant it being a Supreme Court matter. It is about average on the scale of level of care, skill and attention to be allowed for in such matters. I think a greater allowance could have been considered justifiable in the present case particularly having regard to the basis on which a considerable proportion of the cost was to be assessed.
In Bennett v Seaman at 8-9, his Honour further discussed the issue as follows:
The taxing officer rejected a suggestion that my decision in Cape v Redarb Pty Ltd (SC(ACT), Higgins J, 12 June 1991, unreported) mandated an allowance of 50%. I said in that case (at p 7):
An allowance of one-third, as here, for care skill and attention reflects a matter of sufficient importance and concern to warrant it being a Supreme Court matter. It is about average on the scale of level of care, skill and attention to be allowed for in such matters.
I noted in that case that a greater allowance could have been claimed. That decision supports a view that allowing one third of the total as there indicated is a norm only. The taxing officer rightly rejected the view that it is mandatory in all Supreme Court matters.
However, whilst I do not disagree with the taxing officer’s view that this matter was ‘not unduly complex’, that is not the same as an assertion that the matter was less than usually complex.
Indeed, given the nature of the cause of action pleaded, its admitted difficulties with liability and the amount involved, such a conclusion would be manifestly insupportable: see, for example, Stemm v Feigelsohn [1964] Qd R 416).
In the absence of evidence that the employment of counsel relieved the solicitors of the burden ordinarily to be expected to fall on them, the usual allowance otherwise warranted should not be reduced because counsel was engaged: see Re Federal Deposit Bank Ltd (in vol liq) [1937] QWN 38).
The exercise of specialised knowledge is likely to decrease the quantity of time spent but increase its quality. That is a reason for increasing the allowance otherwise warranted: see Robinson v Malcolm & Co Ltd (1899) 5 ALR 204, Kalamalka Constructions Pty Ltd v Imamovic, supra.
Conversely, the allowance can be reduced to take account of time spent by less experienced practitioners or clerks where the quantity of time spent is unusually high compared with the norm to be expected.
However, the taxing officer does not seem to have given consideration to the fact that, in the approach taken to assessing the item ‘Instructions for Brief’, time spent by junior solicitors or clerks was claimed at a lesser rate than for a senior solicitor. That was done by reference to the scale for such attendances generally but the application of the scale takes some account of the correlation between quantity and quality of time spent. Further, the taxing officer disallowed large periods of the time actually spent by solicitors and clerks to reflect what she considered should have been the time necessary for a solicitor of appropriate skill and experience performing such work as was reasonable or proper in the circumstances.
Then to further reduce the usual level of allowance seems to me to unduly undervalue the amount to be allowed for this item.
See also Cleary v Smith (Unreported, Australian Capital Territory Supreme Court, Higgins J, 26 May 1994) at p 1-2.
This is similar to the position identified in the Federal Court of Australia where Finn J in Titan v Babic [1995] FCA 813 said
At the hearing before me it was submitted that two broad paths were followed in superior courts in relation to the allowance for general care and conduct. The one was to make up only those items which carry a content of legal skill and responsibility, but to mark them up generally by 50 per cent. The other was to mark up the entire bill by an amount of 15 per cent (as was done in this case). The rationale for the latter is that it will produce a like result to the first method I have noted but without the need to dissect items as that method requires.
After receiving expert evidence as to the practice in the Federal Court and in this Court, Finn J accepted “the utility of the practice” of “calculating general care and conduct as a percentage of the bill”, though his Honour was insistent the range must not be seen as inflexible and the taxing officer must exercise a genuine discretion in the selection of the percentage.
To summarise the position, I find as follows:
1. Item 9 of the Fourth Schedule is to provide a component of skill, care and responsibility in the awarding of costs which may not otherwise be properly reflected in the application of the Fourth Schedule to the work actually undertaken.
2. The provision for such a component is limited to work that requires a special degree of skill, care and responsibility and not to be included in work that is properly described as “mundane” or, perhaps, mechanical and which do not require special expertise or particular thought.
3. Thus, the following work would not ordinarily, if ever, attract such a component: instructions under Div 4.2.1 of the Fourth Schedule, engrossing a document, making copies of a document, attending to serve a document, formal telephone attendances and formal, circular and ordinary letters, travelling and waiting time (to be excised from those attendances which would otherwise attract it) and receiving and filing correspondence. This list is not intended to be exhaustive or indicate that items not mentioned would automatically attract such a component.
4. To approach the assessment in this way can lead to too great a concentration on individual items for which the assessment that they attract the skill, care and responsibility component may be arbitrary and impractical.
5. Where the component is only applied to items requiring the special degree of skill, care and responsibility, a larger component will be appropriate than adding it to the whole bill. In this jurisdiction, the norm is to add one-half to the amounts allowed for items specifically attracting the component of skill, care and responsibility, the amount depending on the particular complexity and care required in the matter. A greater or lesser percentage may be appropriate depending on the particular case.
6. Alternatively, a percentage can be applied to the whole bill of costs which will be much less, perhaps of the order of fifteen percent, but with the intention that the actual amount of the component will ultimately be the same, whichever method is adopted.
7. When assessing this component, the officer assessing the costs must exercise a genuine discretion in deciding the amount or percentage to apply in order to allow this component.
8. Unlike other jurisdictions, the Fourth Schedule does not require the officer in this Court who assesses the costs to have regard to a particular list of factors but the discretion is not at large and is to be exercised in accordance with the general approach to this item seen in the authorities so as to address issues such as the complexity of the case, any particular need for special attention to be paid to it, any additional responsibilities which the lawyers may have taken or had to have taken towards their clients, and any special difficulties that the conduct of the case, especially by the other party or parties has caused. See, for example, Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169 at 184-5. In addition, it is appropriate to take into account specialised knowledge of the lawyer, the degree of skill available and used, the responsibility for the case and any special research or consideration necessary for the case. See, for example, Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 at [21].
I will apply this approach.
In this case, the Bill of Costs took the more usual approach in this jurisdiction of identifying the relevant items that attract this component and charging for them in accordance with the scale and then adding the component for skill, care and responsibility. In this case, the component was fifty percent of the specified items.
This is within the range regularly allowed in this Court. The Deputy Registrar’s allowance is, of course, a discretionary one, not to be lightly disturbed unless clearly wrong.
The plaintiffs’ challenge was rather vague. It merely submitted that the amounts claimed “are not reasonable and are not justified by the difficulty, complexity or public interest importance of the proceedings”.
It seems to me that the proceedings were complex because of the lack of clarity in relation to the claims not encompassed in the judicial review. The judicial review component was not straightforward as the question of whether the defendants were exercising a power under the Education Act was an interesting and novel question which required skill to determine the appropriate approach that the defendants should adopt.
I see no error of principle in the decision of the Deputy Registrar, nor any error of law or fact.
Items 153, 154 and 214 to 244 in the Bill of Costs
These items relate to the preparation of the Bill of Costs and attendance on taxation. I did not understand the plaintiffs’ challenge to them. Such costs are ordinarily recoverable: see r 1734 of the Courts Procedures Rules. This seems to me to accord with the common law: In re National Bank of Wales [1902] 2 Ch 412 at 414.
In certain circumstances, the costs of assessment are not to be allowed where the bill, on assessment, is reduced by fifteen percent or more, but this only applies where the costs are payable out of a fund or estate or out of the assets of a company in liquidation. See r 1834 of the Court Procedures Rules. This does not apply here.
I consider there is no substance in the challenge to these items and there was no error of principle, fact or law in the decision of the Deputy Registrar.
Other matters
The plaintiffs challenged the defendants’ failure to provide a copy of the costs agreement. I reject that challenge. A costs agreement between the defendants and their solicitors is irrelevant to the assessment of party and party costs.
The plaintiffs also complain that there was no written record of the proceedings before the Deputy Registrar on 12 June 2013. There is no such requirement. The parties were both represented. So far as I can tell, neither party sought to have the proceedings recorded. No specific prejudice to the plaintiffs is alleged. I reject the complaint.
Further, the plaintiffs complain that they were not provided with an opportunity to make submissions in respect of the reconsideration. Rule 1852(4) of the Court Procedures Rules requires the applicant for reconsideration to set out the reasons for the objection in or with the statement or objection. This provides the applicant with natural justice. There is no requirement in the rules to give a further opportunity for submissions, though, if there is any uncertainty, the Registrar may do so. Given that the Registrar will have heard full argument during the course of the assessment, the opportunity under r 1852(4) should ordinarily be sufficient. I reject the complaint.
The plaintiffs also complain that the Deputy Registrar did not make rulings on the amount of individual items when they appeared grouped together, as in Items 1 to 3, 9 to 54, 97 to 133, 146 to 152 and 155 to 213. This is clearly because the objection was to the inclusion of these items at all and no complaint was made, either in the Notice of Objection nor in the Appeal to this Court, about any individual item. Given the limit on the role of the Registrar as assessing officer under r 1808 of the Court Procedures Rules, the Deputy Registrar would have been acting contrary to the Court Procedures Rules had he considered the quantum of individual items where no objection to quantum had been raised. I reject the complaint.
Set off
Under r 1833 of the Court Procedures Rules, if a party is entitled to be paid costs as well as being liable to pay costs, the Registrar may assess those costs and set off those costs one against the other.
It was agreed before me that the costs payable to the plaintiffs under the orders made by the learned Master in Brennand (No 2) were in the sum of $2,870.
Although the Court Procedures Rules are silent on the matter, it seems to me that these costs should be deducted from the costs for which the Certificate is otherwise issued and the final amount should be the amount for which the Certificate issues.
In this case, the Deputy Registrar assessed the costs, after reconsideration at $42,678.58. He also awarded the costs of the reconsideration in the sum of $987.70. This totals $43,666.28.
The amount of $2,870 should be set off against that sum, reducing it to $40,796.28.
Conclusion on the Challenge to Brennand (No 4)
None of the challenges the plaintiffs made to the decision of the Deputy Registrar as to the recommendation of the assessment of costs made in Brennand (No 4) have been upheld. The application for review must therefore be dismissed.
I will, however, take into account the costs of the reconsideration of the set-off rather than confirm the Certificate of Taxation.
Thus, I will order that the Certificate of Assessment be set aside and that a Certificate of Assessment issue for the sum of $40,796.28.
Costs
Since the plaintiffs have been unsuccessful in these proceedings they should ordinarily be required to pay the costs of the defendants. I shall, however, hear the parties as to costs.
| I certify that the preceding one-hundred and ninety-eight [198] numbered paragraphs are a true copy of the Judgment of his Honour Justice Refshauge. Associate: Date: 5 December 2014 |
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