Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic)
[2011] VCC 981
•6 May 2011
| IN THE COUNTY COURT OF VICTORIA | (Not) Revised Not Restricted |
| AT MELBOURNE CIVIL DIVISION COMMERCIAL LIST BUILDING CASES DIVISION |
Case No. CI-08-05309
| BRIREK INDUSTRIES PTY LTD | Plaintiff |
| (ACN 005 807 090) | |
| v | |
| McKENZIE GROUP CONSULTING (VIC) PTY LTD | Defendant |
| (ACN 093 211 977) |
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| JUDGE: | HIS HONOUR JUDGE SHELTON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 22 March 2011 |
| DATE OF RULING: | 6 May 2011 |
| CASE MAY BE CITED AS: | Brirek Industries Pty Ltd v McKenzie Group Consulting (Vic) Pty Ltd (Ruling) |
| MEDIUM NEUTRAL CITATION: | [2011] VCC 981 |
| RULING AS TO COSTS |
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Catchwords: COSTS – plaintiff failed upon trial as to liability – defendant’s offer of compromise – whether a special costs order should be made against plaintiff – treatment of unaccepted offer of compromise as Calderbank offer – whether offer might be taken into account in exercise of discretion as to costs – whether the plaintiff acted unreasonably in not accepting offer – certification of counsel fees – Orders 26 and 62A of County Court Civil Procedure Rules 2008 – Oshlack v Richmond River Council (1998) 193 CLR 72 – Aljade and MKIC v OCBC [2004] VSC 351 – Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 – J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA branch) (No 2) (1993) 46 IR 301 – Regal Life Insurance Ltd v Pacific Financial Resources Pty Ltd (Unreported VSC, 16 November 1994 (BC9401301)) – Towie v Medical Practitioners Board of Victoria [2008] VSCA 157 – Ugly Tribe Co Pty Ltd v Siloa [2001] VSC 189 – Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 – Foster v Galea & Anor [2008] VSC 331 – Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2) [2010] VSC 70 – Stipanov v Mier (No 2) [2006] VSC 424 – Calderbank v Calderbank [1975] 2 All ER 333 – Hazeldene’s Chicken Farm Pty Ltd v Victorian WorkCover Authority (No.2) (2005) 13 VR 435
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr James Gray (Solicitor) | Just Law |
| For the Defendant | Mr G Hellyer | Tress Cox |
| HIS HONOUR: |
1 On 1 March 2011, I handed down judgment in this matter – see [2011] VCC 294 (“the Judgment”). I found that the plaintiff had no cause of action against the defendant, and entered judgment for the defendant. On 22 March 2011, I heard submissions with respect to costs.
2 In paragraph 5 of a written submission provided on this hearing, Mr Hellyer, who appeared for the defendant, stated:
“This has been a ‘supersized litigation’. The hearing occupied 26 days. The transcript is 2,481 pages. The Court Books total some 2,134 pages. The written Submissions and Submissions in Reply delivered on behalf of the parties were substantial.”
I agree with these comments.
The written Submissions and Submissions in Reply ran to 256 pages.
3 Mr Hellyer submitted that the plaintiff should be required to pay the costs of the defendant, the successful party, not merely on a party and party basis but rather that I should make a special costs order in respect of these costs. The normal order is that a successful party is awarded its costs on a party and party basis – see Oshlack v Richmond River Council (1998) 193 CLR 72 at 97-8 per McHugh J. A special costs order, as it has been described – see, for example, Redlich J in Aljade and MKIC v OCBC [2004] VSC 351, at paragraph 13 – refers to the award of costs on a solicitor and client basis or an indemnity basis. Mr Hellyer sought an order that the defendant’s costs be paid for the whole or part of the proceeding on an indemnity basis or alternatively, on a solicitor and client basis.
4 The County Court Civil Procedure Rules 2008 (“the Rules”) provide as follows:
“63A.28 Bases of taxation Subject to this Part, costs in a proceeding which are to be taxed shall be taxed on—
(a) a party and party basis; (b) a solicitor and client basis; (c) an indemnity basis; or (d) such other basis as the Court may direct. 63A.29 Party and party basis On a taxation on a party and party basis all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed.
63A.30 Solicitor and client basis On a taxation on a solicitor and client basis all costs reasonably incurred and of reasonable amount shall be allowed.
63A.30.1 Indemnity basis
(1) Subject to paragraph (2), on a taxation on an indemnity basis all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred. (2) Any doubt which the Costs Court may have as to whether the costs were unreasonably incurred or were unreasonable in amount shall be resolved in favour of the party to whom the costs are payable.”
5 Mr Hellyer based his submission that indemnity costs should be awarded to the defendant on three grounds, namely:
“(a) the plaintiff’s claim against the defendant was misconceived,
fundamentally flawed, untenable and/or very weak;(b) such an order is appropriate having regard to the conduct of the litigation by the plaintiff; (c) the plaintiff imprudently and unreasonably refused to:
(i) accept the settlement proposal put on behalf of the defendant on 13 August 2009 which was rejected by the plaintiff’s solicitors by letter dated 23 October 2009 … .; (ii) [accept] the Offer of Compromise dated 4 May 2010 offering to pay to the plaintiff the sum of $25,000 plus costs … . .”
6 I turn to consider each of these grounds.
(a) The Plaintiff’s claim against the Defendant was misconceived, fundamentally flawed, untenable and/or very weak 7 Mr Hellyer relied upon Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397, where Woodward J stated, at 401:
“… I believe that it is appropriate to consider awarding ‘solicitor and client’ or ‘indemnity’ costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. … .”
8 He also relied upon in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA branch) (No 2) (1993) 46 IR 301, at 303, where French J (as he then was) approved Fountain Selected Meats and stated, with respect to indemnity costs:
“… it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case. … .”
9 Both these cases were cited with approval by Batt J in Regal Life Insurance Ltd v Pacific Financial Resources Pty Ltd (Unreported VSC, 16 November 1994 (BC9401301)), at pages 5 and 6.
10 Mr Hellyer also relied upon Towie v Medical Practitioners Board of Victoria [2008] VSCA 157, where the Court stated, at paragraph 41:
“… The failure or unwillingness of the respondent to address the weakness of its position prior to the appeal, whether born of, ‘intransigence, careless indifference or an extended dismissive refusal’ warrants an order for special costs. … .”
11 As appears from paragraph 5 of the Judgment, the plaintiff based its claim on a breach of contract made between the parties in late 2002; alternatively, on a breach of contract made between the parties in April 2004; or alternatively, in negligence.
12 As appears from paragraphs 66-72 of the Judgment, the claim under the alleged contract made in late 2002, could, in my view, be regarded as very weak or fairly hopeless. Mr Gray, who appeared for the plaintiff, conceded this in his written submission of 1 October 2010 but then resiled from this position.
13 Earlier, on 2 September 2010, at Transcript page 197, on the hearing of an application by Mr Gray for leave to amend the Statement of Claim, he stated, with respect to the alleged contract made in late 2002:
“There is probably a very weak argument to the effect that there is a statutorily constructed contract between the building surveyor and the owner.”
14 Mr Hellyer properly conceded that the claim under the April 2004 contract was “open and arguable”.
15 As to the claim in negligence, the law in this area is developing and complex and, in my view, should have been categorised from the outset as “a difficult case to win” or “weak” rather than “hopeless”.
16 The claim with respect to the alleged late 2002 contract then is the only part of the claim which, in my view, might attract an order for special costs. However, there was considerable overlap with the evidence which needed to be called with respect to this potential cause of action and the cause of action based on negligence. Further, it was necessary to call this evidence to give context to the claim under the April 2004 contract.
17 In all the circumstances, it is, in my view, inappropriate to award indemnity costs, or solicitor-client costs in respect of the alleged late 2002 contract.
(b) Conduct of the Litigation by the Plaintiff 18 Mr Hellyer relied upon comments of Harper J in Ugly Tribe Co Pty Ltd v Siloa [2001] VSC 189, at paragraph 7:
“In seeking costs on an indemnity basis … . Special circumstances must
be present to justify such a departure … . These include:
…
(iii)
Conduct which causes loss of time to the Court and to other parties: Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd. (unreported, Federal Court, French, J., 3 May 1991).
… (vii)
The failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial: National Australia Bank v. Petit-Breuilh (No. 2) (unreported, [1990] VSC 395 …).”
19 He also relied upon a reference by Shepherd J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, at 223 “to the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions” in determining whether a departure should be made from the normal order awarding costs on a party-party basis to a successful party.
20 Reliance was also placed upon the comment of Redlich J in Aljade and MKIC v OCBC (supra) at paragraph 13:
“Relevant delinquency on the part of the unsuccessful party may in particular circumstances justify a special costs order. Oshlack v Richmond River Council … The making of such orders is not confined to parties who are to be regarded as ‘ethically or morally delinquent’. Botany Municipal Council v Department of Arts, Sports & Environment. … The New South Wales Court of Appeal in Rosniak v Government Insurance Office …, in a passage of its judgment which has been referred to with approval, held as sufficient that the party establish ‘unreasonable conduct’ of some sort though ‘it need not rise as high as vexation’.”
21 Mr Hellyer submitted that the plaintiff was “careless and/or delinquent in its approach to the conduct of the proceeding, including in relation to pleadings, discovery and generally”. He relied upon a number of matters in support of this contention. The most convenient way to refer to these matters is to quote verbatim from his written submission in which he indicates that the defendant relies upon the following matters:
“(a)
It was necessary for the defendant to pursue further discovery from the plaintiff. The plaintiff swore four affidavits of documents on 20 May 2009, 2 December 2009, 26 March 2010 and 23 April 2010 respectively;
(b)
It was apparent from the documents obtained from various of the subpoenaed files that notwithstanding the endeavours made to have the plaintiff make full and proper discovery, the plaintiff failed and neglected to do so;
(c)
The plaintiff obtained leave to make significant amendments to its Statement of Claim by adding an alleged cause of action and significantly increasing quantum on the twenty-first day of the hearing after it had closed its case. (The basis for and the formulation of the plaintiff’s amended claim were incomprehensible);
(d)
Upon the resumption of the hearing on 23 August 2010 (following a break of approximately eight weeks), without obtaining leave to do so, the plaintiff purported to file and serve an expert report of Bryan Payne, contrary to the requirements of Order 44 and proceeded to call Mr Payne to give evidence the next day on 24 August 2010;
(e)
The plaintiff somewhat belatedly called John Terlicher and Lisa Wijayanayake to give evidence notwithstanding that their evidence did not support the plaintiff’s contention that Perpetual Investments Pty Ltd had declined to provide finance to the plaintiff because of alleged deficiencies in relation to the building documentation;
(f)
The hearing could not proceed on 23 August 2010 because the plaintiff did not have any witnesses available;
(g) The evidence of Mr Finocchiaro was most unsatisfactory in various respects. The defendant refers to paragraphs 7 — 9 of the defendant’s Submissions dated 1 October 2010 and to Attachment A to those submissions. There were numerous inconsistencies in Mr Finocchiaro’s evidence. i.e. he told lies. During the course of his evidence he was repeatedly non-responsive and volunteered irrelevant material. He engaged in continual exaggeration and irrelevant embellishment. An interpreter was in attendance for each day Mr Finocchiaro gave evidence a save for the last two days. For most of the time the interpreter was not used;
(h) Because a significant amount of “new material” was contained in the subpoenaed files, a considerable amount of preparation was required to be carried out during the course of the hearing and during the course of the break in the hearing of the evidence; (i) The plaintiff’s Submissions and Submissions in Reply included:
(i) a significant amount of exaggeration; (ii) reference to matters which had been ruled to be inadmissible;
(iii) assertions which were factually incorrect and/or unsubstantiated. (j) The plaintiff’s Submissions and Submissions in Reply exceeded the agreed page limit and contained inconsistencies including the position in relation to the October 2002 contract as referred to in paragraphs 23 and 24 above.”
22 Although, in my view, there is substance in some of these allegations, I am not of the view, particularly given the complex nature of this proceeding, that they warrant a special costs order.
(c)
The Plaintiff’s refusal to accept the Settlement Proposal and/or Offer of Compromise
23 The defendant’s solicitor, John Ronald Petts, a partner at Tress Cox, the defendant’s solicitors, deposes in an affidavit sworn 17 March 2011 that following an unsuccessful mediation in this proceeding on 28 July 2009, on 13 August 2009, he telephoned the plaintiff’s then solicitors indicating “that the defendant was prepared to consider an offer to pay to the plaintiff an amount of up to $20,000 inclusive of costs if that would result in the settlement of the proceeding” and that “the matter could settle at $20,000”, in effect an offer to settle for $20,000 “all in”. The plaintiff’s then solicitors rejected this offer in a letter of 23 October 2009 to the defendant’s solicitors. Clearly, the plaintiff did not obtain a judgment more favourable than the offer. It was not indicated to the plaintiff that if the offer was not accepted, the fact that it was made would be used in support of an application for a special costs order.
24 In the circumstances, I am not prepared to make a special costs order on the basis of this offer.
25 On 4 May 2010, the defendant served upon the plaintiff an Offer of Compromise which, on its face, and it is not contended otherwise, complies with Order 26 of the Rules. It offered to compromise the plaintiff’s claim for the sum of $25,000 plus costs and was indicated to be open for fourteen days after service of the Notice. This Offer of Compromise was rejected by the plaintiff by email of 10 May 2010.
26 Somewhat surprisingly, Rule 26.08 of the Rules headed “Costs Consequences of Failure to Accept” does not cover the situation where a defendant, having made an offer of compromise, obtains a judgment in its favour.
27 In Foster v Galea & Anor [2008] VSC 331, Byrne J was faced with a similar situation as here. The defendant had made an offer of compromise pursuant to Order 26 and the plaintiff’s claim was dismissed. Likewise, Croft J faced a similar situation in Tenth Vandy Pty Ltd v Natwest Markets Australia Pty Ltd (No 2) [2010] VSC 70. At paragraphs 13, 14, 15 and 17, his Honour stated:
13. “Order 26 provides a formal procedure for the making and service of an offer of compromise. Although Order 26 makes specific provision for the consequences flowing from the making and non-acceptance of an offer of compromise in certain circumstances, the underlying approach and effect of Order 26 is substantially the same as an offer of settlement contained in an ordinary letter expressed to be “without prejudice” or “without prejudice save as to costs”, known as a Calderbank offer, flowing from the decision in Calderbank v Calderbank. Although there may have been some initial doubt as to whether an offer of settlement contained in a Calderbank offer, rather than as a formal offer of compromise under Order 26, would give the offeror any special advantage in relation to costs, the balance of the authorities now favours the treatment of a Calderbank offer in a similar manner to a formal offer of compromise under Order 26, but subject to the specific provisions as to consequences to the extent that they are provided for in Order 26. Further, the authorities indicate that the device of a Calderbank offer may be called in aid by a party where there is a failure to satisfy the formal requirements of Order 26 or in circumstances where the provisions of Order 26 do not provide for or specify the consequences of the making of a formal offer of compromise under its provisions in particular circumstances. This includes the present case, where the plaintiff fails altogether and judgment is given for the defendant.
14. In relation to the failure to comply with formal requirements,
Byrne J said in Foster v Galea (No 2):‘There is abundant authority for the proposition that when an offer of compromise fails to satisfy the formal requirements of O 26, it may, nevertheless, be brought to account in the exercise of the court’s general discretion as to costs. For this purpose there is no requirement that the offer satisfy the formal requirements of a Calderbank offer that it be expressed to be without prejudice save as to costs. The significance of this expression is not that it confers upon the offer some special effect at the end of the trial but, rather, that the usual privilege attaching to without prejudice offers at trial falls away when questions as to costs are to be determined. If an offer falls outside the O 26 regime, it is available for use by the parties unless it was made in terms or in circumstances which confer upon it the common law privilege, either generally or of the Calderbank type. Moreover, with respect to its effect upon the incidence of costs, it leaves the fairly mechanical regime of Rule 26.08 and enters the more flexible one of discretion as to costs.’
15. In relation to circumstances not provided for in Order 26,
Hollingworth J said in Stipanov v Mier (No 2):
‘Rule 26.08(3) refers only to the situation where the plaintiff recovers a judgment that is not more favourable to the plaintiff than the terms of the offer. The rule is silent on the question of costs where the plaintiff fails altogether and judgment is given for the defendant. However, it is well-established that in such an event the Court may, in the exercise of its general discretion, award costs to the defendant on a more generous basis than party and party from the time the offer was served.
… .’
17. Nonetheless, neither an offer of compromise under Order 26 nor a
Calderbank offer will have any costs consequences unless the rejection of the offer was unreasonable in all the circumstances. … .”
(Emphasis added.)
28 In both Foster and Tenth Vandy, the failure to accept the offer of compromise was treated in the same fashion as a failure to accept a Calderbank offer (Calderbank v Calderbank [1975] 2 All ER 333).
29 The onus is on the defendant to demonstrate the unreasonableness of the plaintiff – see Foster at paragraph 9.
30 In both Foster and Tenth Vandy, the six circumstances which the Court of Appeal stated a trial judge should ordinarily have regard to in determining the unreasonableness of the offeree, were considered. These six matters are set out in Hazeldene’s Chicken Farm v Victorian WorkCover Authority (No.2) (2005) 13 VR 435, at 442, as follows:
“(a) the stage of the proceeding at which the offer was received;
(b) the time allowed to the offeree to consider the offer;
(c) the extent of the compromise offered;
(d) the offeree’s prospects of success, assessed as at the date of the
offer;
(e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for an indemnity
costs in the event of the offeree’s rejecting it.”
31 In Foster, Byrne J, in considering “the fundamental question as to the reasonableness of the plaintiff’s non-acceptance of the offer”, made the following assumptions, at paragraph 18:
“• that the offer was communicated to the plaintiff; • that he had available to him competent legal advice as to matters of procedure in the Court, as to his chances of success and as to his chances of recovering a judgment no less advantageous than the offer;
• that, subject to what appears below, he had available to him sufficient information about the litigation and the risks he was facing in it to make an informed decision whether to accept the offer.”
32 It is appropriate for me, too, to make the same assumptions.
33 I turn to consider the six matters to which I must have regard:
(a)
The Offer of Compromise was served on or about 4 May 2010, approximately twenty-seven days before the hearing was scheduled to commence on 31 May 2010. The commencement of the trial was deferred to 7 June 2010 due to outstanding issues with respect to the plaintiff’s discovery and inspection of the plaintiff’s documents. Proceedings had been on foot since 5 December 2008. By then, the plaintiff and its legal advisors would have been in an advanced stage of preparation of the matter for trial. I particularly note that Finocchiaro swore a very detailed affidavit which stood basically as his evidence-in- chief, on 24 May 2010. The plaintiff’s present solicitors filed a Notice of Change of Solicitor on 26 March 2010. This, in my opinion, is not relevant to the issue of the reasonableness or otherwise of the plaintiff’s non-acceptance of the Offer of Compromise. The defendant should not be prejudiced by the plaintiff’s decision to change its legal representation. The offer of compromise was open for acceptance until approximately 18 May 2010;
(b)
The plaintiff was given fourteen days to consider the offer. Rule 26.03(3) provides that an offer of compromise such as was served here must be open for acceptance for a period of not less than fourteen days. The Rule thus impliedly accepts fourteen days as being a reasonable period;
(c)
When the Offer of Compromise was made, the plaintiff’s claim was based upon an alleged contract in late 2002; or alternatively, a claim in negligence for pure economic loss. As mentioned, Mr Gray indicated in his original written submissions that the plaintiff’s claim based on the late 2002 contract was weak. On the basis of the relevant authorities, the claim in negligence obviously faced real difficulties. The Offer of Compromise, it would seem, was made on a nuisance value basis. If accepted, the plaintiff may have suffered cost consequences pursuant to Rule 63A.24 of the Rules;
(d) See (c). (e)
The offer was expressed in conformity with Order 26. Although there are no forms prescribed for an offer of compromise, the Offer of Compromise here was made in a commonly used form. It is clearly expressed;
(f)
The offer did not foreshadow an application for a special costs order would be pursued should the offer be rejected. A similar situation obtained in Foster and there Byrne J awarded costs to the defendant after the date of the offer of compromise on a solicitor and client basis. His Honour stated, at paragraph 19(f):
“Nothing was said in the offer as to the course the firstnamed defendant might take in the event that the plaintiff should fail on liability. This may be a serious deficiency in the offer in a case such as the present where Mr Foster’s attention might have been focussed upon Rule 26.08 by the reference to O 26 in the document. But, on reflection, I do not consider that, properly advised, he would have been under any misapprehension as to the implications of the offer in that event.”
34 In Tenth Vandy, there was a Calderbank offer in respect to a subsequent appeal in which it was stated that if a more favourable result were obtained, then indemnity costs would be sought from the date of the letter. There, costs were awarded on an indemnity basis from the date of the offer.
35 In Foster, Byrne J stated, of Mr Foster, at paragraph 20:
“… My impression of him at the trial is that Mr Foster was a man driven by anger, fuelled by the suspicious circumstances which attended the events of late 2003 and January 2004, and ready to jump to all manner of conclusions adverse to Mr Galea. ….”
36 Here, Finocchiaro appeared to me to be “driven” in pursuing his claim in this proceeding, particularly after he capitulated in the proceeding in this Court against Bailey Heights. As indicated at paragraph 64 of the Judgment, he was, in my view, intransigent in his attitude to the defendant. He was not prepared to make any concessions as to inconsistencies in his evidence to which I alluded on several occasions during the trial.
37 In all the circumstances, the defendant has satisfied me that the plaintiff was unreasonable in not accepting the offer made in the Offer of Compromise dated 4 May 2010.
38 As a consequence, it is, in my view, appropriate for me to make a special costs order. The plaintiff, given the wording of Rule 26.08 of the Rules, was on notice obviously that the defendant might be seeking such an order in the event that the Offer of Compromise was not accepted and a less favourable outcome achieved by the plaintiff than that offered.
39 Mr Gray submitted that I should make no order as to costs or alternatively that costs should be awarded on a party and party basis to the defendant. In support of this submission he referred to breaches of the Building Act 1993 and the Building Regulations 1994 made under it and the fact that the limitations defence upon which the defendant succeeded so far as the April 2004 contract was concerned, was only introduced at a late stage of the proceedings. The answer to these submissions is that in the end, I found that the breach of the Building Act and the Building Regulations were not relevant since the plaintiff did not have a cause of action against the defendant. Further, the limitation defence was only raised with respect to the April 2004 contract which was only pleaded by the plaintiff in its Amended Statement of Claim on the twenty-first day of the trial. The limitation defence was not pleaded in relation to the late 2002 contract which I found did not exist.
40 In all the circumstances, I think it appropriate that I order that the defendant’s costs, including reserved costs, be paid by the plaintiff, to be taxed on a party and party basis on Scale D up to and including 4 May 2010, and thereafter on a solicitor and client basis. 4 May 2010, the date of the Offer of Compromise, is the date from which, in my view, a more favourable costs order in favour of the defendant should be made since under Rule 26.08(3) of the Rules, this is envisaged should this sub-rule apply.
41 On 23 August 2010, the plaintiff was unable to proceed due to the unavailability of witnesses. I made an order then that the plaintiff was to pay the defendant’s costs of the day to be taxed on Scale D. It is appropriate, now that I am aware of the Offer of Compromise dated 4 May 2010, that I vacate that order and order in lieu:
“The plaintiff to pay the defendant’s costs of 23 August 2010 to be taxed
on a solicitor and client basis.
42 On 2 September 2010, I granted leave to the plaintiff to file and serve an Amended Statement of Claim and for the defendant to file and serve a Further Amended Defence. I further ordered that the plaintiff was to pay the defendant’s costs “thrown away” by reason of the amendment, to be taxed on Scale D. Mr Hellyer indicated that a costs consultant had advised him that “costs thrown away” relates to costs incurred with respect to work done on matters deleted from a pleading. Here, rather, there was an addition to the pleading. Mr Hellyer sought that I make a special costs order for the plaintiff’s amendments on 2 September 2010. In my view, it is appropriate that I make this additional order with respect to the plaintiff’s amendments on 2 September 2010. I order that the plaintiff pay the costs of the plaintiff’s amendments on 2 September 2010 on a solicitor and client basis.
43 I further order that the plaintiff must pay or bear the costs of the preparation of a transcript of the proceedings and for the preparation, service and filing of Court Books.
44 Might I add that in my view it is just and fair that the defendant should obtain some benefit by way of the special costs order to apply after 4 May 2010 given its efforts to resolve the matter by the Offer of Compromise of that date.
Defendant’s Counsel’s Fees
45 As might be appreciated, a substantial component of costs payable by the plaintiff is for the defendant’s counsel’s fees. It is necessary for me to certify for defendant’s counsel’s fees if they are to exceed the scale of fees provided for in Appendix A of the Rules. Appendix A provides that I “may allow an appropriate fee which in the circumstances is considered to be fair and reasonable”. Given that this is “supersized litigation”, it seems appropriate that I should certify for counsel’s fees in excess of scale. In determining an appropriate sum at which to certify the defendant’s counsel’s fees, it is relevant that this case lasted for twenty-six days and given its complexity and the amount involved, may well have warranted two counsel. It was a substantial claim for $1,750,560. Most, if not all, of the counsel fees claimed relate to the period after 4 May 2010 where costs are awarded on a solicitor and client basis. Also relevant is that there was a break in the hearing after day thirteen from 24 June to 23 August 2010 due to my unavailability – the original estimate fixed for this trial was originally two to three days and then, shortly before the trial, five days. This, of necessity, led to some duplication in preparation for trial.
46 Mr Hellyer sought certification of a daily fee of $3,000 and an hourly rate of $300. Mr Gray submitted that counsel’s fees should be at scale, in 2010, $2022. After the initial brief fee, at scale, the defendant would be entitled to two-thirds of this fee by way of refreshers. The sum of $3,000 per day is, in my view, reasonable. Routinely in this Court, daily fees are certified. It is standard practice to allow an hourly rate of one-tenth of the daily fee.
47 I turn to consider other items for which Mr Hellyer sought certification:
(a)
Mr Hellyer sought twenty two days for preparation before trial and during trial at $3,000 per day. Mr Gray submitted that seven days’ preparation would be appropriate. Allowing for some preparation time within the daily fee, in my view, an appropriate sum to allow for additional preparation time is eighteen days. I therefore allow $54,000 for additional preparation before and during trial;
(b)
Mr Hellyer sought twenty-six hours at $300 per hour for special conferences. The transcript contains details of with whom these conferences were held. Mr Gray was prepared to allow twenty hours. The twenty-six hours claimed is, in my view, appropriate – I allow $7,800 for this item;
(c)
Mr Hellyer claimed appearance fees for twenty-seven days at a daily fee of $3,000 which includes 31 May 2010 and 31 August 2010. Mr Gray submitted that twenty days was appropriate given that on some days less than the normal day was spent on the hearing. Inevitably in complex litigation of this nature, there are gaps in the hearing due to the unavailability of witnesses or the need to inspect documents recently provided. I note that on 9 June I did not commence hearing this proceeding until 3.20 pm and on 23 June 2010 until 2.30 pm due to other Court commitments. Mr Hellyer indicated that on days when there was not a full sitting day, he spent time on preparation and conferences which were not being charged separately. I note that some time was spent by the defendant on a ‘no case’ submission which was not pursued when the defendant was put to its election. However, the material placed before me on that submission was used in final submissions and, of course, was relevant to my finding that the plaintiff did not have a cause of action. In all the circumstances, I think it appropriate to allow appearance fees for twenty-four days – I therefore allow $72,000 for this item.
(d)
The defendant claimed forty-one hours at $300 per hour for preparation of an index to the transcript. Mr Gray submitted that this was a luxury and that no sum should be allowed for this item. There was a break in the hearing from 24 June 2010, after thirteen days of hearing, until 23 August 2010. There was then a break from 7 September until 20 October 2010 to allow a substantial time for the preparation of final submissions and submissions in reply, and then a further break until 3 December 2010 when final submissions were concluded. Given the voluminous documentation involved in this matter, the break in proceedings and the fact that Mr Hellyer was running this trial on his own, in my view, it is appropriate to allow for the preparation of an index by Mr Hellyer. I certify for thirty-five hours at $300 per hour, that is $10,500;
(e)
Preparation of Advice dated 24 August 2010 – Mr Hellyer claimed one- and-a-half hours at $300 per hour for this item. Mr Gray did not dispute this item. I allow this sum and certify for $450 for this item;
(f)
Inspection of subpoenaed files at Court – Mr Hellyer claimed thirteen hours at $300 per hour for this item. Mr Gray sensibly conceded that there were voluminous documents to be inspected. I allow $3,900 for this item;
(g)
Preparation of submissions – Mr Hellyer claimed for 6.9 days at $3,000 per day. Mr Gray submitted that four days was a reasonable time for the preparation of the submissions. As indicated, the defendant’s submissions were 256 pages in length. I am prepared to allow six days at $3,000 per day, i.e. $18,000 for this item;
(h)
Preparation of submissions in reply – Mr Hellyer claimed 5.85 days at $3,000 per day. Mr Gray submitted that a reasonable period for the preparation of these submissions was three days. In my view, an appropriate sum to allow is five days at $3,000 per day, i.e., $15,000;
(i) Brief to hear judgment – I allow $300 on this item; (j)
Preparation of submissions for hearing on costs – Mr Hellyer claimed for one day at $3,000 per day and I certify for this sum;
(k)
Appearance at hearing on costs – this hearing lasted over three hours and I am prepared to allow $3,000 for this item;
(l)
Appearance to hear judgment on costs ruling – I am prepared to allow $300 on this item.
48 The total sum certified for counsel’s fees covering the above items (a) to (l) is $188,250.
Summary
49 Subject to any further submissions, I propose making the following orders as to costs:
(i)
The plaintiff pay the defendant’s costs to be taxed on a party and party basis on scale D up to and including 4 May 2010 and thereafter on a solicitor and client basis;
(ii) I vacate the costs order made on 23 August 2010 and order in lieu: “The plaintiff to pay the defendant’s costs of 23 August 2010 to be
taxed on a solicitor and client basis.”
(iii) The plaintiff pay the costs of the plaintiff’s amendments on 2 September 2010 on a solicitor and client basis.
(iv) The plaintiff is to pay or bear the costs of the preparation of a transcript of the proceedings and for preparation, service and filing of the Court Books;
(v) I certify for the defendant’s counsel’s fees at a total sum of $188,250.
(vi) Liberty to apply with respect to costs.
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