Brott v Abeles
[2007] FamCA 28
•31 January 2007
FAMILY COURT OF AUSTRALIA
| BROTT & ABELES | [2007] FamCA 28 |
| APPEAL – COSTS – REVIEW OF ASSESSMENT OF COSTS BY REGISTRAR – Where solicitor appealed against trial Judge’s review of assessment of costs by Registrar – Where taxation conducted under Family Law Rules 1984 and review conducted after introduction of Family Law Rules 2004 – Whether proceedings for assessment of costs are judicial or administrative – Process of assessment by Registrar primarily matter of practice and procedure as an incident of administrative, as distinct from a judicial function and not an appeal in the strict sense - Whether necessary for Registrar conducting an assessment to give reasons – No legal or statutory requirement for Registrar acting as an assessing officer to give reasons, although a Judge conducting review of Registrar’s assessment would be assisted by brief reasons - Whether trial Judge gave adequate reasons for upholding Certificate of Taxation on basis of no error of principle by Registrar – In absence of provision in rules for Registrar to give reasons in respect of disputed items, trial Judge may have been constrained in review of two disputed items - Appeal allowed in part. COSTS – COSTS OF APPEAL – Although appeal allowed in part, overall solicitor substantially unsuccessful – Appropriate there should be no order for costs – Not an appropriate case for grant of certificates under Federal Proceedings (Costs) Act 1981 (Cth). |
| Family Law Act 1975 (Cth) Family Law Amendment Rules 2004 (No. 2) 2004 No. 53, reg 4 |
Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621
Bennett v Bennett (1991) FLC 92-191
Blyth and Fanshawe (1882) 10 QBD 207
Boys v Australian Securities Commission [2001] FCA 1440
Cachia v Westpac Financial Services Ltd [2003] FCA 817
Gyopar v Cohens Frenkel Berkovitch Kefford & New (1987) FLC 91-839
Harris v Caladine (1991) 172 CLR 84; (1991) FLC 92-217
Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
In re Brockman (1909) 2 Ch 170
Locke and Locke (1993) FLC 92-352
Minister for Immigration and Multicultural and Indigenous Affairs and B and B (2004) 219 CLR 365; (2004) FLC 93-174
Pacific Dunlop Limited v Australian Rubber Gloves (unreported, judgment delivered 17 August 1993: Olney J, Federal Court of Australia)
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656
Re Price, Deceased (No 2) (1941) QSR 205
Sanders v Snell (No 2) (2000) 174 ALR 53
Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (unreported, judgment delivered 14 April 1986: Waddell CJ in Eq, Supreme Court of New South Wales)
Stanistreet v Ridgeway Clements (1987) FLC 91-848
Titan v Babic [1995] FCA 813
Enright C, Federal Administrative Law (Sydney: The Federation Press, 2001)
Osborn PG and Woodley M, Osborn’s Concise Law Dictionary (London: Sweet & Maxwell, 9th ed, 2001)
Quick R and Garnsworthy D, Quick on Costs (Sydney: Law Book Co, 2001)
| APPELLANT: | Issac Alexander Brott (t/a Issac Brott & Co) |
| RESPONDENT: | Estate of the late Lady Katelin Abeles (Yvonne Muller as executrix) |
| FILE NUMBER: | SYF | 8204 | of | 1999 |
| APPEAL NUMBER: | EA | 42 | of | 2005 |
| DATE DELIVERED: | 31 January 2007 |
| PLACE DELIVERED: | Melbourne |
| JUDGMENT OF: | Faulks DCJ, Kay & Boland JJ |
| HEARING DATE: | 23 August 2005 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 18 March 2005 |
| LOWER COURT MNC: | [2005] FamCA 196 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Levine |
| SOLICITORS FOR THE APPELLANT: | Issac Brott & Co |
| ADVOCATE FOR THE RESPONDENT: | Mr Twigg |
| SOLICITORS FOR THE RESPONDENT: | Adrian Twigg & Co |
Orders
That the appeal be allowed in part.
That the Certificate of Taxation issued 24 April 2003 be amended by the deletion of the sum of $35,276.13 and the insertion in lieu of $42,486.71.
That each party pay their own costs of and incidental to the appeal.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 42 of 2005
File Number: SYF 8204 of 1999
| Issac Alexander Brott (t/a Issac Brott & Co) |
Appellant
And
| Estate of the late Lady Katelin Abeles (Yvonne Muller as executrix) |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed on 14 April 2005, a Victorian solicitor, Mr Issac Alexander Brott (“the solicitor”) appeals against orders made by Moore J on 18 March 2005. Central to the appeal is a dispute about legal costs and expenses charged by the solicitor to his now deceased former client, Lady Katelin Abeles (“the client”) and how a review of the assessment of those costs by a Registrar should be conducted by a trial Judge.
The solicitor acted for the client for just over one month. The solicitor sent the client a bill for costs and disbursements. As we will detail later in our reasons, the circumstances of the solicitor’s retainer were unusual. The client had instructed solicitors in Sydney to file an application for property settlement in the Sydney Registry of the Court in June 1999 shortly prior to the death of her wealthy husband, Sir Peter Abeles, and she subsequently instructed those solicitors to advise her about her late husband’s will and estate. However in August 1999 the client decided to terminate her instructions to her Sydney solicitors and to instruct the solicitor who carried on practice under the name Issac Brott & Co in Melbourne.
The solicitor ultimately sent the client a bill of costs, which became the subject of review before the trial Judge, in which he claimed costs and disbursements of $100,885.66, being fees of $55,317.88 and disbursements of $45,567.78, were payable to him. Those costs and disbursements were calculated at the then applicable scale under the Family Law Rules 1984 (“the former rules”). An earlier much larger bill of $240,385.00, calculated in accordance with a costs agreement, had been rendered by the solicitor but was ultimately not pursued on taxation (as it was then referred to in the former rules). The parties on 31 October 2000 entered into consent orders setting aside the costs agreement.
The hearing before the trial Judge was a review of a Certificate of Taxation dated 24 April 2003 which was issued by Registrar Cain in the sum of $35,276.13 following a taxation. However, by the time of the hearing before the trial Judge the Family Law Rules 2004 (“the rules”) were in operation and governed the review procedure.
It was conceded before us that counsel who appeared for the solicitor before the trial Judge submitted to her Honour that she was required to determine the review of the taxation applying appellate principles relevant to a discretionary judgment, rather than conducting a rehearing de novo of the Registrar’s decision.
The central thrust of the solicitor’s argument on this appeal was that the trial Judge was in error in reaching her conclusion that there was no error of principle by the Registrar. It was asserted that conclusion was not open to the trial Judge because her Honour was unable to discern whether or not the Registrar had made any error of principle because of a failure by the Registrar to give adequate reasons for disallowing various amounts claimed by the solicitor in his bill of costs. In summary, it was submitted the trial Judge had not followed appropriate appellate principles.
It was also initially submitted on behalf of the solicitor that although the trial Judge, as counsel before her had urged she should do, had regard to certain specific items in the bill of costs, that there was no abandonment by the solicitor of all other items claimed in his bill of costs, but disallowed by the Registrar conducting the taxation, and that the trial Judge was in error in limiting her consideration to a small number of identified items in the bill of costs. However, counsel for the solicitor conceded before us that, having regard to the manner in which the case was conducted before the trial Judge, he did not press this aspect of the appeal.
Before us, on behalf of the solicitor, his counsel urged that we should uphold the appeal, and remit the bill of costs for review before a single Judge notwithstanding the time and expense involved in so doing. As recorded by the trial Judge, we note that the amount in issue in this appeal is the sum of $36,944.59 plus an amount of $7,218.25 for skill, care and responsibility, being sums claimed in addition to the amount allowed on taxation.
Grounds of appeal
The Notice of Appeal sets out five grounds of appeal. Before us, counsel for the solicitor abandoned grounds 2 and 4 so that the grounds relied on were:
1.The Appellent [sic] was denied natural justice by the failure of the Registrar to provide reasons for their [sic] decision in disallowing certain costs upon the taxation of the matter.
…
3.The Honourable Judge erred in law by misinterpreting the decision in Re Blyth.
…
5.The Honourable Judge erred in law as the decision was against the weight of the evidence.
We record that both the solicitor’s counsel and the client’s solicitor conducted this appeal on the basis that the traditional exercise of power by way of supervision by a superior court of taxation of costs was an appropriate exercise of inherent, or more correctly, implied power of the Court to control its procedures. However, we note the much more limited role exercised by state superior courts such as the Supreme Court of New South Wales in respect of solicitor/client costs since the introduction of assessment processes (see Legal Profession Act 2004 (NSW), Division 11) which provide for a review process by a panel of costs assessors and an appeal only with leave of the Court, changes adopted by this Court by reason of the introduction of the assessment process in Chapter 19 of the rules, and the abandonment of taxation of solicitor and client bills of costs in the Federal Magistrates Court, see Chapter 1, Part 21 of the Federal Magistrates Court Rules 2001 (see also Quick R and Garnsworthy D, Quick on Costs (Sydney: Law Book Co, 2001) at [1.120],
1-1551).
We have already noted that the solicitor’s counsel does not put in issue the trial Judge’s manner of dealing with the review as requiring the application of appellate principles, rather than as a rehearing de novo. We will refer however to this “concession” later in the course of our discussion. As a result of the concession, we discern the issues raised by the grounds of appeal require consideration of the following questions:
· Is it necessary to determine whether proceedings for the taxation (or now assessment) of costs are judicial or administrative proceedings and any consequences which may flow from such determination?
· Is it necessary for a Registrar acting as a taxing officer, or conducting an assessment, to give reasons?
· Did the Registrar in this case give sufficient reasons to enable the trial Judge to determine that the Registrar had not erred in the exercise of her discretion, or was the trial Judge able on her own assessment on review to determine no error of principle in respect of the Certificate of Taxation including determination of unusual expenses? and/or
· Was the trial Judge’s assessment of no error of principle in respect of the disputed items in the bill of costs correct?
Trial Judge’s reasons for judgment
Having set out the nature of the application, and brief background, the trial Judge referred to the evidence relied on by each of the parties. Her Honour then, inter alia, summarised relevant parts of the affidavit material of the client and the solicitor, as well as the evidence of Mr Pritchard, a solicitor who provided advice to the client about the solicitor’s costs agreement, and the evidence of two of the counsel retained by the solicitor.
Her Honour then referred, under the heading “Approach to taxation review”, to the principles regarding a review of taxation by the Court quoting from Halsbury’s Laws of Australia. The trial Judge also quoted from the judgment of Baker J in Locke and Locke (1993) FLC 92-352 at 79,720 where his Honour said:
…a review is not in the nature of a re-hearing of the taxation procedure. It is not my primary function to concern myself with individual items, but rather to determine matters of principle and significant factual error.
Having identified the items in dispute fell into two categories (expenses of an unusual nature, and asserted anomalies) the trial Judge dealt in some detail with the expenses of an unusual nature in respect of which the client’s solicitor argued the principles enunciated in Blyth and Fanshawe (1882) 10 QBD 207 (“Re Blyth”) applied and found:
These cases demonstrate the rule in Re Blyth has been approved and applied by this Court and the argument that the assessment of party/party costs in this Court is different to the approach taken elsewhere by the exclusion of the Re Blyth rule is of no merit. In any event, the rule found expression in the former Rules of Court and finds expression in the current Rules at 19.12 which strengthens the obligation of a lawyer by requiring instructions to be in writing [paragraph 69].
Her Honour then dealt in some detail with various items subject of dispute on the basis of the Re Blyth principle, and on the basis of “anomalies” and concluded “it is my assessment that no error of principle has been demonstrated and nor has the Registrar exercised her discretion in a manner that is manifestly wrong”.
Relevant rules
Before commencing our discussion of the questions we posed above, we note that the taxation which is the basis of this appeal was conducted over six days between 27 April 2001 and concluded on 27 March 2003. The taxation was therefore conducted under the provisions of the former rules. The review before the trial Judge was conducted essentially on 15 and 18 June 2004, that is, after the introduction of the rules on 29 March 2004.
The former rules relevantly provided:
ORDER 38 RULE 8
Proper costs
(1) Unless the court otherwise orders, a lawyer may charge for work done for a proceeding:
(a) fees for performing the work of a solicitor that are not more than the amount calculated using the scale of fees in Part 1 of Schedule 2; and
(b) disbursements (including the fees of a lawyer engaged as counsel) properly incurred for the proceeding.
(2) Unless the court otherwise orders, a lawyer performing the work of a solicitor for a proceeding heard by a court of summary jurisdiction must not charge for the work a fee that is more than 80% of the amount that may be charged for the work in accordance with the scale of fees in Part 1 of Schedule 2.
ORDER 38 RULE 9
Additional charge for skill etc
In addition to the fees that may be charged under rule 8 for work done for a proceeding, a lawyer performing the work of a solicitor may charge a fee calculated on the basis of:
(a) the complexity of the proceeding; or
(b) the difficulty or novelty of the matters raised in the proceeding; or
(c) the special skill, knowledge or responsibility required of, or the demands placed on, the lawyer by the client or the proceeding; or
(d) the amount or value of the property or financial resource involved in the proceeding; or
(e) the importance of the proceeding to the client; or
(f) any other relevant matter.
ORDER 38 RULE 10
Work not reasonably required for proceeding
(1) A lawyer must not charge costs for:
(a) a kind, or amount, of work not reasonably required to be done for a proceeding; or
(b) work done for the administration of the lawyer's office; or
(c) preparing documents not reasonably required for the conduct of the proceeding.
(2) However, a lawyer may charge for work, or recover the cost of a disbursement, if:
(a) a client instructs the lawyer to:
(i) do work for a proceeding; or
(ii) incur a disbursement of a particular kind or amount; and
(b) the lawyer advises the client that:
(i) the work is not reasonably required to be done; or
(ii) the disbursement is not reasonably required to be incurred; and
(c) in accordance with the client's instruction, the lawyer does the work, or incurs the disbursement.
ORDER 38 RULE 21
Costs improperly or negligently incurred
A lawyer must not charge, for work done for a proceeding, an amount for costs if the costs were improperly or negligently incurred by the lawyer.
The present rules which were applicable and relevant at the time of the hearing before the trial Judge are:
19.12 Costs not to be charged
(1) A lawyer must not charge:
(a)an amount for costs improperly, unreasonably or negligently incurred by the lawyer; or
(b)for work done for the administration of the lawyer’s office.
(2)A lawyer must not make an agreement with a client to avoid the requirement under paragraph (1) (a).
(3) Despite any rule in this Chapter, if:
(a)the client instructs the lawyer, in writing, to do work for a case, or incur an expense of a particular kind or amount, that the lawyer advises the client would be unreasonable and unlikely to be recovered on a party and party basis; and
(b)the lawyer does the work, or incurs the expense, in accordance with the client’s instructions;
the lawyer may, as between the lawyer and the client, charge an amount for the costs incurred.
19.18 Maximum amount chargeable
(1)This rule sets out the maximum amount of costs a lawyer may charge and recover for work done for a case:
(a) for a client;
(b)if the court orders that costs are to be paid and does not fix the amount; and
(c)if a person is entitled to costs under these Rules.
(2)The maximum amount of costs that a lawyer may charge and recover is as follows:
(a)for fees — an amount calculated in accordance with Schedules 3 and 4;
(b)for an expense mentioned in Schedule 4 (other than item 101) — the amount specified in Schedule 4 for that expense;
(c)for any other expenses — a reasonable amount.
(3)However, for lawyer and client costs only, if there is a valid costs agreement between a lawyer and a client:
(a) subrule (2) does not apply; and
(b)the maximum amount of costs that the lawyer may charge and recover is the amount calculated in accordance with the costs agreement.
19.34 Assessment principles
(1)A Registrar must not allow costs that, in the opinion of the Registrar:
(a)are not reasonably necessary for the attainment of justice; and
(b)are not proportionate to the issues in the case.
NoteA lawyer may charge an amount for costs unreasonably incurred if the client gives the lawyer written instructions to do work for a case, or incur an expense of a particular kind or amount, that the lawyer has advised the client would be unreasonable and unlikely to be recovered on a party and party basis (see subrule 19.12 (3)).
…
19.35 Allowance for matters not specified
(1) A Registrar may allow a reasonable sum for work properly performed that is not specifically provided for in Schedule 3.
(2) When considering whether to allow an amount for costs or an expense, the Registrar may consider:
(a) any other fees paid or payable to the lawyer and counsel for work to which a fee or allowance applies;
(b) the complexity of the case;
(c) the amount or value of the property or financial resource involved;
(d) the nature and importance of the case to the party concerned;
(e) the difficulty or novelty of the matters raised in the case;
(f) the special skill, knowledge or responsibility required, or the demands made, of the lawyer by the case;
(g) the conduct of all the parties and the time spent on the case;
(h) the place where, and the circumstances in which, work or any part of it was done;
(i) the quality of work done and whether the level of expertise was appropriate to the nature of the work; and
(j) the time in which the work was required to be done.
The procedure under the former rules for review of a taxation was contained in Order 38 rules 59 to 64. Those provisions were as follows:
ORDER 38 RULE 59
Interpretation
In this Division:
application for review means an application for review of:
(a)the taxation of a bill; or
(b)a decision by a taxing officer in relation to the taxation of a bill.
ORDER 38 RULE 60
Review of taxation
The taxation of a bill, or a decision by a taxing officer in relation to the taxation of a bill, is reviewable:
(a)if the taxation was conducted by a Registrar of a Family Court — by a Judge; or
(b)in any other case — by a Magistrate.
ORDER 38 RULE 61
Time for filing application for review
An application for review must be filed:
(a)within 14 days after the certificate of taxation in relation to the bill is issued; or
(b)on or before a later date fixed by the court or the taxing officer.
ORDER 38 RULE 62
Further evidence
Unless the court otherwise orders, a party must not give further evidence at the hearing of an application for review.
ORDER 38 RULE 63
Issues that may be raised at hearing of review
A party must not raise an issue at the hearing of an application for review, unless the issue:
(a)was identified in a valid notice disputing the bill; or
(b)concerns the costs of taxing the bill; or
(c)concerns an alleged error of calculation in, or omission from, the taxation of the bill; or
(d)concerns an alleged error of law or fact by the taxing officer.
ORDER 38 RULE 64
Powers of court
(1)Subject to rule 62, at the hearing of an application for review, the court may exercise all the powers and discretions of the taxing officer in relation to the subject matter of the review.
(2)In particular, the court may do any of the following:
(a)confirm the certificate of taxation;
(b)set the certificate aside and order a revised certificate to be issued;
(c)order that any question be referred to:
(i)the taxing officer whose decision is the subject of the review; or
(ii)another taxing officer;
(d)make any other order that the court thinks fit.
The current provisions for review of an assessment are contained in Part 19.8 of the rules and provide as follows:
19.54 Application for review
(1)A party may apply to the court to review the decision of a Registrar under rule 19.32 by filing an Application in a Case (Form 2).
(2) A party must include in the affidavit filed with the application:
(a)the number of each item in the itemised costs account to which the party objects to the Registrar’s decision;
(b) the reasons for objecting to the decision; and
(c) the decision sought from the court for each objection.
19.55 Time for filing an application for review
An application for review must be filed within 14 days after the costs assessment order is made.
19.56 Hearing of application
(1) An application for review must be heard by a Judge.
(2) At the hearing of the application:
(a) the court must not receive any new evidence;
(b) the court may:
(i) exercise all the powers of the Registrar;
(ii) set aside or vary the Registrar’s decision; and
(iii)return any item to the Registrar for reconsideration; and
(c) a party may raise an issue only if it:
(i)was identified in an itemised costs account or Notice Disputing Itemised Costs Account (Form 15);
(ii)concerns the costs of assessing the itemised costs account;
(iii)concerns an alleged error of calculation in, or omission from, the assessment of the itemised costs account; or
(iv)concerns an alleged error of law or fact by the Registrar.
(3)A hearing of an application for review does not operate as a stay of the decision reviewed.
Note This rule applies unless the court orders otherwise (see rule 1.12).
The transitional provisions in the Family Law Amendment Rules 2004 (No. 2) 2004 No. 53 provide:
REG 4Transitional
(1)If:
(a)a case was commenced in accordance with the 1984 Rules; and
(b)the case not finally determined before the repeal of those Rules;
the case must be continued in accordance with the 2004 Rules.
(2)If:
(a)an act or thing was done under the 1984 Rules before the repeal of those Rules; and
(b)the act or thing is of a kind that could be done under the 2004 Rules;
the act or thing is taken to have been done under the 2004 Rules.
…
(7)In this rule:
1984 Rules means the Family Law Rules 1984, as in force immediately before the commencement of these Rules.
2004 Rules means the Family Law Rules 2004.
“case” has the meaning given by the dictionary to the Family Law Rules 2004.
The transitional provisions, which require the review to be conducted in accordance with the rules, prima facie pose some difficulties in this case as the assessment process now provided in the rules is a much more limited review of only disputed items following a preliminary assessment by a Registrar with a view to reducing expense and delays in costs matters. It is clear that the trial Judge was cognisant of the potential difficulties (see transcript 15 June 2004,
p 5, line 16).
As we propose to refer to a number of decisions of the Federal Court of Australia, we think it is useful at this stage to also set out the relevant Federal Court Rules which provide for a review of a taxation:
ORDER 62 RULE 44
Review
(1)The Court may review the decision of a taxing officer on reconsideration if the taxing officer has given:
(a)a certificate in accordance with that decision; and
(b)reasons for the decision in response to a request under paragraph 43 (1)(b).
(2)Where, during the time within which a request may be made under rule 43, it becomes impracticable to make the request by reason of the death or incapacity of, or other matter personal to, the taxing officer, subrule (1) shall apply notwithstanding that a request under rule 43 has not been made.
(3)A notice of motion applying for a review under subrule (1) must be filed within:
(a)28 days after the certificate is given; or
(b)any extension of that time granted by the Court or the taxing officer at the time the certificate is given.
(4)On the review, unless the Court by order otherwise directs:
(a)further evidence shall not be received; and
(b)a party shall not raise any ground of objection not either stated in a statement of objection or raised before the taxing officer.
(5)Subject to subrule (4), on the review, the Court may:
(a)exercise all the powers and discretions of the taxing officer in relation to the subject matter of the review;
(b)make orders for the alteration of the certificate;
(c)make orders for the remission of any item to the same or any other taxing officer for taxation; and
(d)make such other orders as the nature of the case requires.
Relevant law in respect of review of a decision of taxing officer
An examination of cases in this Court dealing with reviews of decisions of a Registrar must be considered in the light of prevailing regulations or rules at the time of the decision, and with regard to the decision of the High Court in Harris v Caladine (1991) 172 CLR 84; (1991) FLC 92-217 and the limits to the Court’s jurisdiction discussed by the High Court in cases such as Minister for Immigration and Multicultural and Indigenous Affairs and B and B (2004) 219 CLR 365; (2004) FLC 93-174. Accordingly, we note as important preliminary matters to our discussion that a hearing “de novo” is a hearing “[a]new” (Osborn PG and Woodley M, Osborn’s Concise Law Dictionary (London: Sweet & Maxwell, 10th ed, 2005) at 124), that the Court may delegate some part of its jurisdiction in the exercise of its rule making power, or in the exercise of its implied jurisdiction, subject to the limitation that such “legislative power and the power of delegation cannot be exercised in a manner that is inconsistent with the continued existence of the Family Court as a federal court constituted under Ch III [of the Constitution]” (see Harris v Caladine (supra) per Mason CJ and Deane J at 94). The procedure to review a Registrar’s decision in respect of a power delegated under the rules is now contained in Part 18.2 of the rules. As will become apparent from our discussion below, this review is not identical with the review process in Chapter 19.8 of the rules.
The principles on review of a taxation include the seminal passage of Kitto J quoting Jordan CJ in Australian Coal & Shale Employees Federation v The Commonwealth (1953) 94 CLR 621 at 628 – 629. This passage has been referred to and applied in many decisions in both federal and state jurisdictions dealing with reviews of taxing officers.
I respectfully adopt the summary of the law on this matter which was made by Jordan C.J., with the concurrence of Harvey C.J. in Eq. and Street J., in Schweppes' Ltd. v. Archer. His Honour said: — “In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where 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. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances: Western Australian Bank v. Royal Insurance Co.; Clark, Tait & Co. v. Federal Commissioner of Taxation at pp. 145–146, but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case” [His Honour then proceeded to consider the specific items objected to and having stated his opinion upon them made an order standing over the application generally.] [footnotes omitted]
In Gyopar v Cohens Frenkel Berkovitch Kefford & New (1987) FLC 91-839 Barblett J (as he then was) discussed proceedings which involved the review by his Honour of a decision of a Registrar acting as a taxing officer which was conducted under the former Family Law Regulations 1984 (Cth), but which by the time of the review was determined under the then Family Law Rules. In discussing the guidelines for a court hearing a review his Honour referred to the well known common law authorities which included references to the judgment of Kitto J in Australian Coal & Shale Employees Federation v The Commonwealth (supra), but concluded:
This traditional approach to a review of a taxing master's discretion needs to be questioned in this case. It does appear that O. 38 r. 21(3) by its very wording contemplates a hearing de novo. The court is not limited to any evidence that may have been before the Registrar and the assessment itself appears to be only one of the factors to be taken into account. To this extent a cost review differs substantially from the type of review in Marinko and Stredwick (see O. 32 r. 5(5)).
It is clear from the passage quoted, that Barblett J (as he then was) was influenced in his reasoning by the fact the rules then in existence provided for the receipt of further evidence on the review process.
The nature of the process to be adopted under the rules in existence prior to 1987 was discussed by Treyvaud J in Stanistreet v Ridgeway Clements (1987) FLC 91-848. His Honour noted those rules were not a review of a taxation as applied in common law jurisdictions, but a rehearing de novo, because of the provision which permitted the adducing of further evidence on the review itself. He noted the then amended rules, which came into effect after February 1987, prohibited the receipt of further evidence unless the court so directed, and were identical to the Victorian Supreme Court rules. His Honour concluded the relevant principles to be applied by a court reviewing the decision of a “Taxing Master” to be those enunciated by Kitto J in Australian Coal & Shale Employees Federation v The Commonwealth (supra).
In Locke and Locke (supra) Baker J was dealing with a review of a taxing officer’s decision of 13 March 1990. The relevant rules then applicable provided:
ORDER 38 - RULE 43
Review
(1)Every taxation of costs and every decision of a taxing officer shall be subject to review by a Judge or Magistrate as the case may be provided that the party seeking such review has first sought a reconsideration under rule 40.
(2)Where a taxing officer issues a certificate in accordance with a decision on reconsideration under rule 41 and pursuant to that rule a party requests the taxing officer to state the reasons for the decision the Court shall, on application by any party interested, review the decision of the taxing officer on reconsideration.
(3)Where, during the time within which an application may be made under rule 40, it becomes impracticable to make an application by reason of the death or incapacity of, or other matter personal to, the taxing officer, subrule (1) shall apply notwithstanding that an application under rule 40 has not been made.
(4)An application for a review under subrule (1) shall be filed within 14 days after the certificate is issued, but the court, or the taxing officer when issuing the certificate, may extend the time.
(5) On the review, unless the court by order otherwise directs:
(a) further evidence shall not be received; and
(b)a party shall not raise any ground of objection not stated in a statement of objection or raised before the taxing officer.
(6) Subject to subrule (5), on the review the court may:
(a) exercise all the powers and discretions of the taxing officer in relation to the subject matter of the review;
(b) make orders for the alteration of the certificate;
(c) make orders for the remission of any item to the same or any other taxing officer for taxation; and
(d) make such other orders as the nature of the case requires.
It is also relevant to note at the time of conducting the review, the rules (Order 38 rule 43(2)) then provided that a dissatisfied litigant could seek the taxing officer review his or her decision about a particular item, and request the taxing officer to state reasons. In the case before Baker J the reasons were not the reasons of the actual taxing officer, but reasons for the decision had been published by another taxing officer. Baker J set out the then relevant rule and said:
The gravamen of the dispute before me therefore is the meaning of “review” as used in Order 38 Rule 43. It must first be said that Registrars who tax bills of cost are usually possessed of considerable expertise in their role by dint of their experience and because of the knowledge gained in the course of their work they are able to assess accurately what charges are reasonable and what charges are not. I therefore respectfully agree with what Fogarty J held in Molan and Messrs Stedman Cameron Meares and Hall (1979) FLC ¶90-646 at page 78,402:
“In my view the Court ordinarily ought to give real regard to the assessment of the Registrar. He is the person primarily charged with this onerous and unattractive task, and of necessity acquires, from the many taxations in which he is involved, an expertise and a practical appreciation of the issues which the Court, on an occasional review, is not seized of. (As to which see the judgment of Joske J. in Higgins v. Nicol (1972) 21 F.L.R. 34 and the cases therein referred to; and the judgment of the Court of Appeal in Slingsby v. Attorney-General (1918) P. 236).”
Thereafter his Honour set out a concise summary of the principles established in the common law authorities. Dealing with the manner in which he should conduct the review Baker J said:
I must now determine the manner in which the court of review undertakes the exercise. For example, should I undertake a laborious consideration item by item of every entry in the bill of costs in respect of which there was an unsuccessful objection? I think not. The husband has already had the benefit of a reconsideration which, although unsuccessful, nevertheless enabled him to restate his objection to the wife's bill of costs. I am satisfied that the proper approach is that adopted by Allen J in Hannan v Hannan (supra) in grouping the various items in dispute under headings and dealing with each heading, as it were, in globo.
In 1993 Olney J in the Federal Court considered the appropriate principles to be applied to a review of a decision of a taxing officer in Pacific Dunlop Limited v Australian Rubber Gloves (unreported, judgment delivered 17 August 1993: Olney J, Federal Court of Australia). The relevant Federal Court Rules at the time of this decision were in similar terms to the former rules in this Court and did not permit the adducing of further evidence unless the Court otherwise ordered. His Honour referred to the classic statements of the role of a Judge on the review of a taxation and determined such a review was not an appeal, but rather a rehearing de novo conducted “as if the judge were the original decision-maker”.
His Honour noted:
The rules of court entitle a dissatisfied party to have a taxation of costs and every decision of a taxing officer reviewed by a judge. A review is not an appeal and in the absence of any guidance from the rules it is appropriate that the review be conducted as if the judge were the original decision-maker. This is particularly so in the case of the exercise of power pursuant to Federal legislation in view of the constitutional limitations on the exercise of Federal judicial power. The numerous judicial determinations made in respect of reviews conducted under similar rules are of course helpful but ultimately, it is for the reviewing judge to come to a conclusion as to what is necessary and proper in a particular case.
In Boys v Australian Securities Commission [2001] FCA 1440 Carr J first considered whether a taxation of costs was an exercise of judicial power and noted, having referred to Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245, he was inclined to the view that the function was a judicial one, and said the significance of that fact was that the review must be a review de novo. Whilst not determining the issue he said:
I do not think that the intention of the Rules is that the taxing officer’s decision is to be treated as an administrative decision subject to judicial review in accordance with the normal principles of judicial review of administrative action. Nor do I think that the intention is that the review should be by way of an appeal in a strict sense.
His Honour thereafter referred with approval to the reasoning of Olney J in Pacific Dunlop Limited v Australian Rubber Gloves (supra) (see also the unreported decision of Finn J who found it was unnecessary to determine whether the review was a rehearing de novo in Titan v Babic [1995] FCA 813.)
In 2003 in Cachia v Westpac Financial Services Ltd [2003] FCA 817 Hely J noted the divergence of opinion amongst the Judges of the Federal Court as to whether “that formulation” (Jordan CJ’s remarks in Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178 adopted by Kitto J in Australian Coal & Shale Employees Federation v The Commonwealth (supra)) was applicable in the Federal Court, or whether the hearing was a rehearing de novo. His Honour disagreed with and did not follow the reasoning of Carr J and Olney J. His Honour referred to the decision of Kirby J in Sanders v Snell (No 2) (2000) 174 ALR 53 and to Baker J in Locke and Locke (supra) and concluded:
The nature of a “review” of a taxing officer’s decision in the Federal Court is no different from the nature of that “review” in the High Court, even though the High Court Rules, and the Federal Court Rules in relation to the “review”, are not identical. It follows that I also do not agree with the proposition that the review of a taxing officer decision must be a review de novo. What is involved in a “review” of a decision will depend upon the nature of the decision and the ground on which it is sought to be impeached.
In Sanders v Snell (No 2) (supra) Kirby J was dealing with two summonses for a review of a Registrar’s decision in taxing a bill in the High Court. Under the heading “Principles for review of orders in taxation of costs” Kirby J said at 56:
My powers in conducting this review are confined to those proper to judicial review of an administrative decision. The review contemplated by O 71 r 89(1) of the High Court Rules is not a hearing de novo of the decisions of the court's taxing officer. The ordinary principles governing the review of administrative decisions and, in particular, those in the nature of decisions concerning practice or procedure, apply. [our emphasis]
The nature of the proceedings (administrative or judicial)
We turn then to the first question we posed for determination in this appeal.
History of taxation
The role of Masters and prothonotaries, and later taxing officers, in taxation of costs has been an evolutionary one developed over the centuries. That history is well defined in the relevant texts (see for example Quick on Costs at [2.2930]. It had long been recognised that when a taxing officer taxed a bill he or she did so “under power delegated to her or him by the court and the court has jurisdiction to control that delegated authority”. That situation is to be contrasted to the power exercised by a person exercising an authority delegated by statute which is regarded as an administrative function (see Quick on Costs at [2.3000]).
The taxation of costs devolved in the 19th century to taxing masters in King’s Bench and prothonotaries in the Court of Common Pleas and thence to clerks. From these times the principles applied on review of decisions of these officers by Judges was a limited one. Ultimately statutory provisions were enacted both in the United Kingdom and Australia in various Acts concerning the regulation of the legal profession (see for example Legal Profession Act 2004 (Qld)) and rules of court established practice and procedure for a review of a taxation. State courts have, it appears for sound policy reasons, continued to deal with reviews or appeals of taxing officer’s decisions in a restricted way consistent both with early practice under the common law, and appropriate to a review of a person designated by statute the task of taxation. We respectfully adopt the discussion by Baker J, set out above, which reflects the sensible rationale for this policy.
Judicial proceedings
This leads us to the question of whether principles applicable in state courts or other courts of unlimited jurisdiction are apposite in federal courts and in particular the Family Court of Australia. Although there is presently no specific delegation of power to a Registrar to act as an assessing officer (cf taxing officer under Order 38 rule 43 of the former rules), the Registrar has specified power under the rules to conduct an assessment and to make a costs assessment order.
Our examination of the history of the process of taxation, which involved the delegation of power subject to the supervision of the court, tends to support the conclusion of Carr J in Boys v Australian Securities Commission (supra) that the process is not an administrative one, but rather the function is an exercise of judicial power.
The reasoning of Carr J, including his acceptance of the reasoning of Olney J in Pacific Dunlop Limited v Australian Rubber Gloves (supra) which we quoted above appears to be supported by the learned authors of Quick on Costs in their discussion of judicial review as distinct from a power exercised persona designata (at [2.3010]), but must be considered in the light of the decision of Kirby J in Sanders v Snell(No 2) (supra) where his Honour unequivocally refers to the process being a review of an administrative decision, not a hearing de novo, and adopts the review principles followed by superior courts over many years.
Conclusions
Having reviewed the authorities, it appears to us that the process in Chapter 19 of the rules for a review of an assessment is a distinct procedure enabling a review of a decision of practice and procedure by a Registrar acting as an assessing officer, and is not analogous to a Registrar exercising delegated judicial power of the Commonwealth, which delegated power is exercised subject to a review de novo by a Judge. Such a determination is in conformity with well established authority applied over many years in both English and Australian courts in respect of costs.
As discussed above we consider the process of assessment by a Registrar is primarily a matter of practice and procedure as an incident of an administrative, as distinct from a judicial function, and not an “appeal” in the strict sense.
Are reasons necessary?
Reasons for judicial decision
The function of reasons in the judicial process is subject of well established authority.
In Bennett v Bennett (1991) FLC 92-191 the Full Court considered that the test as to the adequacy of reasons propounded by Gray J in the passage appearing hereunder was a useful one and one which applies to discretionary judgments. The Court observed at 78,266:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.”
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
The decision of the New South Wales Court of Appeal in Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386 is also relevant. There Mahoney JA considered the function to be served by the giving of reasons. His Honour said the function included the fact that reasons may be necessary to enable a party to exercise his or her right of appeal, and that the requirement should be seen as an incident of the judicial process. Further, his Honour noted limits to the function:
Nor is it necessary for a judge who is exercising a discretionary judgment to detail each factor which he has found to be relevant or irrelevant, or to itemize, for example, in the assessment of damages for tort, each of the factual matters to which he has had regard … Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient, if the inference as to what is found is appropriately clear.
He concluded:
But, subject to matters such as these, the basis of the decision of a trial judge or of an intermediate court of appeal should be made apparent. This does not mean that the reasons given need be elaborate: an elaborate argument may not require an elaborate answer. Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.
Reasons for administrative decision
The necessity for reasons in respect of a judicial decision is to be contrasted with the position in respect of an administrative decision. As noted by the learned author of Federal Administrative Law (Enright C, Federal Administrative Law (Sydney: The Federation Press, 2001)), whilst the necessity to give reasons is recognised by the common law “[i]n the executive sphere, however, there is no such obligation” (at 125). In Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 662, Gibbs CJ noted:
[t]here is no general rule of the common law, or principle of natural justice, that requires reasons to be given for administrative decisions, even decisions which have been made in the exercise of a statutory discretion and which may adversely affect the interests, or defeat the legitimate or reasonable expectations, of other persons
whilst noting at 670 some qualification as follows:
[i]t remains to consider whether, notwithstanding that there is no general obligation to give reasons for an administrative decision, the circumstances make this a special case in which natural justice required reasons to be given. The rules of natural justice are designed to ensure fairness in the making of a decision and it is difficult to see how the fairness of an administrative decision can be affected by what is done after the decision has been made.
We also note the provision for giving reasons enacted in statutes dealing with administrative decisions such as the Administrative Decisions (Judicial Review) Act 1977 (Cth), and the comments of Kirby J in Sanders v Snell (No 2) (supra) at 56, although made in the context of a review of a costs order of an appellate court, as follows:
It is not for me to rely on any knowledge that I may have concerning the deliberations of the Full Court in coming to its conclusions expressed in the reasons published by it. I must simply take those reasons, as the deputy registrar was bound to do, according to their terms, consider, as she was bound to do, the orders which followed from those reasons and ensure that such orders were given effect, as their terms required, in the certificates of taxation ultimately issued. [paragraph 42]
Discussion
We have already averted to the fact that the historical procedure for taxation of costs, and particularly regulation of solicitor/client costs, has in recent years been subject of substantial change in some state jurisdictions with the appointment of costs assessors and very limited rights of appeal against such assessments. These reforms seek to achieve quicker and cheaper processes to resolve costs disputes, and have much merit.
The former rules provided a dissatisfied party could request the Registrar conducting the taxation to provide reasons in respect of disputed items, and this procedure has been maintained in the Federal Court Rules and the High Court Rules 2004.
The present rules provide for a preliminary assessment by a Registrar “on the papers”, and an opportunity for a party dissatisfied with a Registrar’s assessment on a particular item, subject to written notification to the other party and provision of security, for the conduct of an assessment hearing in respect of the disputed items.
The rules set out the assessment principles to be applied by a Registrar, but do not now make provision for a party to request reasons. Prima facie this omission from the procedure in the rules, which was modelled on the procedure in the Federal Court Rules, does not appear to afford an opportunity for a litigant to discern why a Registrar came to a particular decision. Whilst the purpose of the present procedure appears to have been to minimise delay and expense, the omission from the rules, absent the introduction of a costs assessment process by an independent assessor with a further review process, appears to be an unfortunate omission, notwithstanding we note, prima facie, the right to reasons is not required in respect of an administrative decision.
An examination of the case law demonstrates that English and state court Judges reviewing decisions of taxing officers have either requested the Taxing Master to furnish the court with a memorandum as to the Taxing Master’s practice (see In re Brockman (1909) 2 Ch 170 at 177) or to have perused notes on the taxation made by the Taxing Master (see Re Price, Deceased (No 2) (1941) QSR 205 at 208). Given the multiplicity of items dealt with in a large taxation, the course of not providing written reasons for each item, but limiting the right to reasons to disputed items identified by a party in a bill of costs, has a sound practical basis.
It appears to us the rationale for the provisions in the rules for a preliminary assessment with a right to challenge items in a bill of costs genuinely in dispute is in accordance with the main purpose of the rules and designed to minimise costs and delay. It also appears to us that aim would be enhanced by a right of a dissatisfied party to the assessment process to seek reasons in respect of genuinely disputed items to determine whether or not to proceed to a review by a Judge.
Conclusion
The rules do provide for a review by a Judge, who must give reasons for his or her decision, thus satisfying the general principles relevant to the giving of reasons for a judicial determination. It is apparent from our adoption of the remarks of Baker J about practice and procedure on review, our examination of reviews conducted in other jurisdictions, and/or acceptance that the review is a review of an administrative decision, that lengthy and detailed reasons by a Judge are not generally necessary for a review of taxation or an assessment.
It appears to us on this appeal, what is relevant is not so much whether Registrar Cain’s notes relating to disputed items are adequate, but whether the trial Judge’s reasons for judgment are sufficient to identify whether there was an error of principle by the Registrar.
In examining the trial Judge’s reasons we are cognisant of the difficulty her Honour faced in having to deal with this matter where the taxation was conducted under the former rules, and the review was required to be conducted under the rules. There had been no preliminary assessment, and items in contention were not readily apparent from the application. The trial Judge did not have the benefit of any written reasons prepared by the Registrar from which she may more easily have determined any error of principle.
We conclude that there is no legal or statutory requirement for a Registrar acting as an assessing officer to give reasons. However, from a practical point of view, a Judge conducting a review of a Registrar’s administrative decision, would be assisted by brief reasons sufficient to identify the basis of the Registrar’s decision about disputed items which are contested in an assessment hearing, and an amendment to the rules to so provide appears necessary.
The trial Judge’s approach
General approach
We have already set out the manner in which the trial Judge approached the task of the review. We are satisfied that approach was well open to her Honour in the following circumstances:
·it was a course adopted by the trial Judge after discussion with the parties’ legal representatives;
·the solicitor’s counsel submitted the taxation was an administrative procedure (see transcript, 29 August 2003, p 19, line 34);
·it was in accordance with an earlier decision of this Court (see Locke and Locke (supra));
·it accorded with the long history of review practice in English and state courts; and
·her Honour’s practice closely followed the practice adopted in the High Court by Kirby J in Sanders v Snell (No 2) (supra).
Consideration of adequacy of trial Judge’s reasons
It appears to us the gravamen of this appeal is whether the trial Judge’s judgment adequately discloses the process of reasoning which led her Honour to uphold the Certificate of Taxation on the basis there was no error of principle by the Registrar.
Material before the trial Judge
Her Honour’s reasons disclose the material on which the solicitor sought to rely on the review, as well as the material relied on by the client. At the commencement of the hearing the trial Judge raised with counsel for the solicitor the absence of the solicitor’s file, for example, in relation to briefing of counsel, but counsel then appearing for the solicitor said:
MR TODD: (indistinct) it’s probably a bit more simplistic than that, that the Abeles estate, as contended in the affidavit material, was exceptionally large. That there were various discrete elements of it, in not only the Family Law jurisdiction but tax, equity, probate, all of which, as your Honour outlined, was a no holds barred approach. There was reasons why Lady Abeles went down to Melbourne and was said to be dissatisfied with her position in Sydney and I don’t think I should say much more than that until the affidavit goes in. But Mr Brott tries to justify his position in the affidavit and if that were accepted, we say there are then these discrete elements as well as the whole context that are thrown up in light of the determinations made by the Registrar on the taxation which are challenged, which in their own sense may not require your Honour to go back to the file itself.
After further discussions with counsel for the solicitor her Honour said:
HER HONOUR: Well again – not addressed to you, Mr Twigg, but Mr Todd, just having difficulty at this stage but I’ll consider it when I’m reading the material of course, how do you determine if it’s conceded that one senior, one junior is not disputed and then there’s other seniors and perhaps other juniors, I don’t know, who were engaged in that period. How do you come to the view that in not allowing them, which I gather she did not, is manifestly wrong unless you have a look at least at the brief to counsel? Dr Gavin Griffith for example, if he wasn’t the one who was allowed by concession, wouldn’t I have to get a better idea of whether the Registrar was manifestly wrong in disallowing those fees by at least having a look at the brief?
MR TODD: Well - - -
HER HONOUR: Otherwise, what am I going to go on? You’re going to say; well, it was a lot of money in a big complex case and therefore a lot of barristers were needed but I don’t even know what they were briefed for and any rate – I’m thinking out loud.
MR TODD: I think, your Honour, that the point taken before the Registrar was more fundamental. It was simply that nothing other than a senior and junior counsel should be allowed and that became policy effectively adopted by the Registrar. Now, I haven’t analysed every one of the 700 odd items on the taxation but as best I can I cannot find any senior counsel or junior counsel other than one senior and junior who has been allowed.
HER HONOUR: I see them on the front of this page. There’s Ms Bryant, QC, Udorovic, QC, Dr Gavin Griffith, QC.
MR TODD: There’s no issue - - -
HER HONOUR: Hardingham or something I saw?
MR TODD: Ian Hardingham.
HER HONOUR: Is he Senior Counsel?
MR TODD: Yes.
HER HONOUR: Well, there’s what, four?
MR TODD: There was no issue that these people were briefed. There’s no issue that they rendered those fees and as I understand it there was no issue taken as to whether the work was actually undertaken by them. Indeed, it was submitted by concession in the sense that the only objection that was taken on the basis of re Blythe [sic], namely, that it was inappropriate to either brief these people at this stage or alternatively that the client’s express instructions had not been received at that stage of the case. So it didn’t descend into going into the file at that stage. Maybe it should have. But the Registrar, we would say from simply looking at the costs and the Bill of Costs and what has been taxed has clearly simply adopted the policy of accepting the re Blythe [sic] argument and taxing off everyone [sic] of those additional senior counsel.
Later in her Honour’s discussion with the parties’ legal representatives on the issue of disputed items of an unusual nature, the following exchange occurred:
MR TWIGG: I’ve provided submissions during the course of the taxation which I’ve referred to. The Registrar allowed a couple of weeks I think, one or two weeks, after the hearing part of the taxation part had concluded in March I think of this year, for the respondent to provide any submissions he wanted to about the Re Blythe [sic] point, the Registrar having left that decision about all of those to await the final submissions of each of the parties. And Mr Brott put in no submissions on the re Blythe [sic] point and, to my knowledge, has still not. And this of course is a matter that was flagged from – well really it was flagged from 1999 when the original bill was done. But certainly from 2000, three years ago, when my objections to this – essentially what became this bill were put in.
HER HONOUR: Did he put any submissions in in respect to the re Blythe [sic] point, Mr Todd? Is that an accurate - - -
MR TODD: In my understanding he did not.
HER HONOUR: And does he want to raise that point now? That is to say, to argue the re Blythe [sic] point?
MR TODD: Save in the context which I have indicated. I do not have those instructions.
At the resumed hearing on 15 June 2004, counsel for the solicitor confirmed to the trial Judge that the items the solicitor sought should be allowed were those set out in paragraphs 3.1 to 3.5 of counsel’s outline of submissions. To more readily understand her Honour’s decision we set out 3.1 to 3.5:
3.1The items taxed off on the Re Blyth principle are set out in the schedule attached hereto which incorporates a number of amounts which the Court need not necessarily deal with. The Applicant is concerned to attempt recovery of approximately $63,340.00 taxed off in accord with the following items set out in the annexed schedule, namely:-
(a)
Item 134, paid fees of Gavan Griffiths QC
$4,687.50
(b)
Item 321, perusing of 11,073 folios $4 p/folio
2,733.00
(c)
Item 390, copying 791 pages, brief to K Lucas, forensic accountant
1,067.85
(d)
Item 456, special attendance on Lucas, 2 hrs 20 mins
304.30
(e)
Item 468, solicitor scanning NSW legislation 298 pages
1,847.00
(f)
Item 472, copying 298 pages legislation for enclosure
402.30
(g)
Item 475, perusing memorandum and articles, Abakus Aircraft – 92 folios
411.10
(h)
Item 604, preparation conference with Lady Abeles
3,000.00
(i)
Item 630, special attendance on Lady Abeles in Sydney, 12 hours
1,567.20
(j)
Item 641, copy company search files for Counsel (4) 903 pages x 4
1,219.05
(k)
Item 663, 17 – 27.9.99 telephone conferences with Sandbach and Harding QC
3,000.00
$20,239.30
3.2The Applicant relies upon the various anomalies in the taxing officer allowing additional Counsel’s fees as set out in schedule 3 including the fees of Udorovic QC and Sandbach being items 52, 88, 654 and 652 respectively.
3.3The Applicant seeks to recover the fees of Diana Bryant QC in Item 86 being:-
· Reading brief $350.00
· 3 hours preparation 1,050.00
· Dr. Richard Ingleby (Item 266) fees 2,000.00
3.4The Applicant claims entitlement for the controlled legal services fees for searches conducted as a disbursement being item 668 of $7,621.15 taxed off on the basis that such preparation was reasonably necessary in a large and complex commercial context of the property adjustment proceedings.
3.5The paid fees of Pritchard Udovenya as solicitors acting in Sydney for Lady Abeles $5,684.14 should be recoverable (Item 670), those solicitors having provided advice to Lady Abeles.
Trial Judge’s consideration of disputed items
At paragraph 48 of her reasons, the trial Judge set out the eleven items which it was asserted had been incorrectly “taxed off” on the basis of the application of the principles in Re Blyth. Her Honour then set out the well known passage from Re Blyth and subsequent judicial discussion of the decision as follows:
50.This argument relates to the application in this Court of Re Blyth and Fanshawe (1882) 10 QBD 207. At 210 Baggallay LJ said:
“I take it to be the general rule of law, and an important rule which is to be observed in almost all cases, that if an unusual expense is about to be incurred in the course of an action it is the duty of the solicitor to inform his client fully of it, and not to be satisfied simply by taking his authority to incur the additional expense, but to point out to him that such expense will or may not be allowed on taxation between party and party whatever may be the result of the trial.”
51.The principle in Re Blyth was stated in Victoria by Cussen J in Re Lamrock, Brown and Hall (1908) VLR 239 at p 255 as follows:
“The principle generally applicable is that before doing unusual work or incurring an unusual amount of expense on behalf of a client, the solicitor should get the client's express authority. This rule applies whether or not the work is done or the expense is incurred in the course of an action. But in the latter case the Courts have said that express sanction or authority is not enough, as it may have been given under the impression that success in the action would result in an order for payment by the opposite party. Therefore it is laid down that in such a case the solicitor must show that the client knew that such a result would or might not follow, and usually the only way of showing such knowledge is by giving of an express warning.”
Having recorded each of the parties’ submissions as to whether or not the principles in Re Blyth applied to an assessment under the Act, the trial Judge reviewed the cases in which the principles had been applied and concluded:
These cases demonstrate the rule in Re Blyth has been approved and applied by this Court and the argument that the assessment of party/party costs in this Court is different to the approach taken elsewhere by the exclusion of the Re Blyth rule is of no merit. In any event, the rule found expression in the former Rules of Court and finds expression in the current Rules at 19.12 which strengthens the obligation of a lawyer by requiring instructions to be in writing [paragraph 69].
We note there is no challenge in this appeal to her Honour’s determination that the principles enunciated in Re Blyth, and now incorporated into the rules themselves, were applicable both on the taxation and the review of the taxation, however the solicitor asserted in his grounds of appeal that the trial Judge “misapplied” the principles.
Her Honour noted the client’s solicitor’s contention that item 134 (Dr Griffith QC’s fees) was not one in respect of which the challenge was an unusual expense which the client had not authorised, but rather it was an example of excessive work claimed. Her Honour also recorded the client’s solicitor’s submissions in respect of item 390 which he asserted was incurred by unnecessarily obtaining and copying searches at that stage of the proceedings. She also noted his submission that the challenges to items 456, 472, 475 and 630 were not on the basis that such expenses were unusual, but rather were either unnecessary at that stage of the litigation or excessive.
In dealing with the Re Blyth argument advanced on behalf of the client the trial Judge noted:
In a little over a month of acting for Lady Abeles Mr Brott engaged multiple counsel, all supposedly related to her family law property claim. In that time, as Mr Twigg rightly points out, the only document filed by Mr Brott in the proceedings was his Notice of Address for Service. The costs of this is an ‘unusual’ expense by any reckoning and Mr Brott did not advise her at any stage what fees were to be charged by counsel he engaged or advert to the consequences of that on a party/party taxation in due course if it came to that and therefore, absent any warning, it does not assist him to fall back on anything she might have said about her ‘team’. He did not at any point explain to her the amount of costs thus being incurred. [paragraph 73]
In dealing with the “anomalies” the trial Judge noted an error by the solicitor, and that the Registrar had in fact allowed two items for counsel’s fees. Her Honour referred to the disallowed search fees, and then discussed fees incurred by Mr Pritchard of $5,684.14 before concluding in respect of all disputed items there was no error of principle nor “has the Registrar exercised her discretion in a manner that is manifestly wrong”.
Her Honour also noted she accepted the solicitor for the client’s arguments about items other than counsel’s fees:
namely, they are either wrongly claimed by Mr Brott, unnecessary, or excessive and give every appearance of being undertaken without direction or purpose during the particular short period he was acting. Added to that, there is not demonstrated any foundation for the skill loading. [paragraph 73]
The submission in support of asserted misapplication of Re Blyth
The solicitor’s counsel in his written submissions asserted the trial Judge:
·failed to consider whether costs were reasonably and necessarily incurred;
·erred in holding that fees should be disallowed in total and failing to consider whether some other sum should have been allowed; and
·erred in failing to allow for conferences attended by the client and counsel and which were not unnecessary or improper.
We have already noted the parties’ differing positions on the nature of the objections. Whilst the solicitor’s counsel grouped eleven items (134, 321, 390, 456, 468, 472, 475, 604, 630, 641 and 663) as being items to be dealt with under Re Blyth principles, the client’s solicitor asserted his objection to items 390, 630 and 641 were disputed on the basis that the work incurred was unnecessary or was repetitive in that it was charged elsewhere in the bill.
Discussion
Without conducting an exhaustive reconsideration of all disputed items in the Re Blyth category we note the solicitor was afforded the opportunity to provide written submissions to the Registrar in respect of items said to fall under the Re Blyth category and failed to do so. In those circumstances we discern both the Registrar and the trial Judge were entitled to accept, without detailed analysis, the position asserted by the client’s solicitor.
Item 134 dealt with counsel’s fees for Dr Gavan Griffith QC. The itemised bill claimed “½ claimed which relate to Family Law Issues”. Before us counsel for the solicitor was requested to indicate to us where we would find material which supported the claim that one half of Dr Griffith’s fees were in respect of the family law proceedings. Counsel was only able to refer us to a brief reference in the solicitor’s oral evidence that there had been discussion about Supreme Court proceedings, as distinct from the family law proceedings, where he said:
Next thing was she wanted commercial, we’re looking at Supreme Court obtaining the Will, or obtaining – getting rid of the executor, clawing back shareholding, question of whether the husband was (indistinct), various Anton Pillar applications that we talked about, hence Griffith.
We are unable to discern any error by the trial Judge, applying appellate principles to the Registrar’s decision, disallowing Dr Griffith’s fees in these proceedings.
We find it convenient to consider items 321 and 390 together. Item 321 sought costs for “[c]opy search files for the briefs of Dr Ian Hardingham QC, James Isles, Ms Diana Bryant QC & Dr Richard Ingleby – 4 x 791 pages claim ¾ which realtes [sic] to Family Law Issues” and item 390 was a claim for “[c]opy documents to accompany brief to Mr. Kevin Lucas, Accountant – searches 791 pages.” The Registrar’s notation on the amended bill showed she disallowed this item in its entirety. We are unable to read the notation on the bill other than the first word appears to refer to “Blyth”. There is no notation in respect of item 321.
In her reasons the trial Judge noted the submissions made on behalf of the client, namely, that the copying of legislation, given the stage of the proceedings was unnecessary, and it was appropriate that it be taxed off. The trial Judge recorded “[a]s for the items other than counsel’s fees, the merit lies with Mr Twigg’s arguments about them; namely, they are either wrongly claimed by Mr Brott, unnecessary, or excessive and give every appearance of being undertaken without direction or purpose during the particular short period he was acting”. We are satisfied that her Honour was entitled to accept as correct in respect of these items the submissions of the client’s solicitor.
Item 456 in the bill is noted as “[s]pecial attendance on K. Lucas discussion preliminary view and discussing Cannonvale, Abakus and Lady K O Abeles’s entitlements – engaged 2 hours 20 mins”.
The client’s solicitor submitted that this item did not come within the Re Blyth objection but rather was an excessive charge not supported by a diary note. We are satisfied that the trial Judge was entitled to accept the submissions of the client’s solicitor in respect of this item.
The submissions in relation to item 468 were noted by the trial Judge as “not a Re Blyth objection but it should remain taxed off as it is not a proper claim and no relevance is shown to the family law dispute”. We accept the trial Judge did not err in accepting this submission. It follows that the objection in relation to items 472, the photocopying of this legislation, can also not be maintained.
In respect of item 475, namely, “[p]erusing memorandum & articles of association of Abakus Aircraft – 92 folios” it is clear from the Registrar’s notes, and as recorded by the trial Judge, that this item was not rejected, but rather reduced with the Registrar allowing half an hour for scanning. We consider no error by the Registrar, or the trial Judge in her review in respect of this reduction in fees claimed.
Item 604 in the amended bill of costs was shown as “[p]reparation (4.75 hours), conference with Lady Abeles, Mr Brott and Tien (3.25 hours) ($2,000.00)” . The trial Judge referred to item 604 and said “[i]tem 604 does attract that objection, Mr Einstein is the 8th counsel engaged”. Neither party directly dealt with this item in their submissions. The solicitor in his affidavit and outline of submissions on the review makes no submission in respect of this item, nor is there any specific submission in respect of the item in his outline of submissions before us other than the assertion that the amount was taxed off on the Re Blyth principle. In circumstances where the solicitor provided no details in his submissions as to the necessity and type of work conducted by him in preparation for the conference we are satisfied that her Honour’s finding that “charges must be for work that is necessary and reasonable and these disputed items fall outside that description” is a sufficient reason for the purposes of a review of the Registrar’s decision.
Item 630 was “[s]pecial attendance on Lady K O Abeles in Sydney obtaining further instructions – engaged 12 hours” but as the trial Judge correctly noted the objection to the item was that it was identical with item 623, which was not the subject of objection.
The trial Judge dealt with item 641 in the following terms: “Mr Twigg points out the amount noted by Mr Brott is incorrect as $914.29 was taxed off and ¼ was allowed by consent”. We are satisfied the trial Judge clearly examined the assertions in relation to this item and it was open to her to accept the client’s solicitor’s submissions.
Item 663 referred to telephone conferences with Mr Sandbach and Mr Hardingham QC and were noted by the trial Judge to be a Re Blyth exception. We agree with her finding
The solicitor asserted anomalies in the approach by the Registrar in allowing some of counsel’s fees including fees of Mr Udorovic QC and Mr Sandbach and in her rejection of item 663.
In his written submissions the client’s solicitor noted:
It is quite apparent from the bill filed by Mr. Brott (appeal book page 243 and following) and the notice disputing costs (appeal book page 234-241) that it was not every attendance by Counsel or indeed Senior Counsel to which objection was taken and therefore in effect allowed (see for example Mr. James Isles, item 48 where $2,500 was allowed it not being objected to, and at item 52 where $4,400 was allowed for Mr. Udorovic…
The client’s solicitor further noted “[i]t must also be remembered that the solicitor was afforded the opportunity to make any submissions about the Re Blyth & Fanshawe argument but as the Registrar noted and Her Honour records in her judgment … the solicitor did not make any submission in relation to those arguments”.
Again, having regard to the nature of the review, we see no error of principle by the trial Judge in her conclusions about the retention of multiple counsel “all supposedly related to her family law property claim” and that there was no error by the trial Judge in finding this to be an “unusual” expense particularly where the trial Judge found the solicitor “did not advise her [the client] at any stage what fees were to be charged by counsel he engaged or advert to the consequences of that on a party/party taxation in due course if it came to that and therefore, absent any warning, it does not assist him to fall back on anything she might have said about her ‘team’”.
At paragraph 3.3 of his submissions the solicitor seeks to recover the fees of Ms Diana Bryant QC, as she then was, in the total sum of $1,400.00 and the fees of Dr Richard Ingleby in the sum of $2,000.00. The solicitor’s evidence about these fees was without controversy, Ms Bryant QC and Dr Ingleby were retained in the family law proceedings because Mr Udorovic QC was unable to appear in the matter due to prior commitments and alternate senior counsel was required to be briefed.
We would not regard the circumstance of replacement counsel being briefed where counsel retained had become “jammed” to be an unusual situation.
It appears to us that the fees for Ms Bryant QC and Dr Ingleby fall within a category of fees which related to the family law proceedings and which were properly included in the bill of costs. Whilst we note that the solicitor did not avail himself of the opportunity to make specific submissions about these fees, he did in his affidavit material clearly set out the circumstances in which Ms Bryant QC and Dr Ingleby were retained. We find merit in his submissions.
In his submissions to us, counsel for the solicitor sought that the appeal should be allowed and the matter remitted to a trial Judge for further review. Given the quantum of the fees for Ms Bryant QC and Dr Ingleby are relatively modest sums, and that their fees were in respect of the family law proceedings, we do not see any practical utility in referring this item back to a trial Judge for reconsideration. The costs and expense which would follow from such a course would be disproportionate to the sums involved. We are satisfied it is appropriate we should re-exercise our discretion to include these fees as an addition to the expenses allowed in the Certificate of Taxation.
Item 669 refers to costs incurred in September 1999 for search fees totalling $7,621.15. No details are provided as to the searches obtained. No submissions are made in relation to these searches. The Registrar’s notes on the taxation disclose she disallowed the amount claimed for searches on the basis that such searches were unnecessary. The solicitor in his affidavit sworn 6 June 2003 said:
In relation to item 669 an amount of $7,621.15 was taxed off in its entirety. These searches related to obtaining company searches and accounting documentation relating to many dozens of companies, which were associated with Sir Peter Abeles. These were companies, which Sir Peter Abeles was either a Director, Shareholder or other Officer. It was necessary to search these companies to ascertain their identity, and Sir Peter Abeles [sic] interest in them. It was also necessary to attempt to value the equity in companies where he was a shareholder. The whole of the amount was taxed off on the basis that it was unreasonable without any reason being given as to my explanation, which I gave to the Registrar at the time as to the necessity of these searches being made and being vitally important in terms of understanding the pool of family law assets. The objection was made to these costs on the basis that they were indiscriminate searches but in fact in order to properly examine the assets of Sir Peter Abeles it was necessary to do a methodical and routine search through the records of ASIC relating to Sir Peter Abeles. It was not possible to determine the relevance or significance of these searches unless or until you had carried out the search and incurred the expense in so it was not a proper objection to say that they were quote “indiscriminate” and yet this objection was allowed by The Registrar without reason.
The solicitor in his affidavit sworn 19 May 2000 deposed to receiving instructions from the client that he was instructed, if necessary, to obtain new searches without first receiving the client’s former solicitor’s file. The solicitor deposed to giving instructions to obtain searches during his first visit to Sydney, such searches being ordered in the presence of the client.
At the beginning of our reasons we noted the circumstances of the solicitor’s retainer. We accept that the solicitor’s retainer involved advising the client in relation to her husband’s complex financial affairs, both in Australia and overseas. The trial Judge accepted the client’s solicitor’s submission that the searches were unnecessary at that stage of the proceedings where the only document filed in Court by the solicitor was a Notice of Address for Service.
The solicitor gave evidence and was cross examined by the solicitor for the client in the course of the review. The solicitor conceded not all the searches were in respect of the proceedings under s 79 of the Family Law Act 1975 (Cth) (“the Act”), and they included searches conducted of corporate entities in which one of the executors of the late Sir Peter Abeles’ estate had an interest. The solicitor conceded he was unable to give a precise estimation of the percentage of the searches referable to the family law proceedings and those relevant to proceedings in the Supreme Court of New South Wales. This was an unusual case. In circumstances where the solicitor’s unchallenged evidence was that he received specific instructions to conduct searches, notwithstanding that some of the searches were not relevant to the family law proceedings, we are satisfied there was error of principle by the Registrar in making no allowance for the searches. As with the question of Ms Bryant QC’s and Dr Ingleby’s fees, we are satisfied we should re-exercise the discretion. Taking into account the solicitor’s affidavit evidence and his answers given in cross examination we would allow 50 per cent of those fees namely $3,810.58.
Item 670 relates to fees incurred by Mr Pritchard who was retained initially to provide independent legal advice to the client concerning the solicitor’s costs agreement. The trial Judge noted:
This is the cost of Mr Pritchard’s involvement, the extent of which is apparent from his own affidavit. It will also be recalled that in her evidence Lady Abeles said she offered to pay Mr Pritchard but he told her not to worry and that Mr Brott would take care of it. Not even in his evidence did Mr Brott indicate advising her of what those fees would be. [paragraph 71]
We see no error by the trial Judge in her determination that the Registrar was not in error in disallowing these fees.
The final amount sought by the solicitor is a sum for skill, care and responsibility. The basis for such a claim is set out in rule 19.35 of the rules, which provides:
19.35 Allowance for matters not specified
(1) A Registrar may allow a reasonable sum for work properly performed that is not specifically provided for in Schedule 3.
(2) When considering whether to allow an amount for costs or an expense, the Registrar may consider:
(a) any other fees paid or payable to the lawyer and counsel for work to which a fee or allowance applies;
(b) the complexity of the case;
(c) the amount or value of the property or financial resource involved;
(d) the nature and importance of the case to the party concerned;
(e) the difficulty or novelty of the matters raised in the case;
(f) the special skill, knowledge or responsibility required, or the demands made, of the lawyer by the case;
(g) the conduct of all the parties and the time spent on the case;
(h) the place where, and the circumstances in which, work or any part of it was done;
(i) the quality of work done and whether the level of expertise was appropriate to the nature of the work; and
(j) the time in which the work was required to be done.
The criteria in the Supreme Court Rules 1970 (NSW) considered by Waddell CJ in Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (unreported, judgment delivered 14 April 1986: Waddell CJ in Eq, Supreme Court of New South Wales) is largely replicated in rule 19.35(2)(f) of the rules, as set out above. In that case, Waddell CJ held:
The complexity and length of this matter was such that it required a great deal of time, effort, management and skill on the part of the solicitors. By the very length of the application this matter could only be described as unusual, therefore, I was of the view that it was a matter which warranted an allowance in excess of 15%. In my view a proper allowance was 30% of the profit costs.
The solicitor in the bill of costs claimed a 15 per cent “loading” on profit costs claimed as a “loading” for skill, care and responsibility. The narration in the bill was extremely generalised and lacked any real foundation for the amount claimed.
Absent any foundation for this claim we discern no error of principle by the Registrar in disallowing the skill, care and responsibility “loading” and that the trial Judge was correct in her review of the Registrar’s decision in not allowing this item.
Conclusion
From our examination of the case law and the rules the following matters are relevant to an assessment of costs between a solicitor and client:
·the role of the Registrar in conducting the assessment is administrative in nature;
·the review process provided in the rules is not a hearing de novo;
·the present rules appear deficient in that they do not have a provision for a request for reasons in respect of items disallowed after a preliminary assessment and formal assessment process;
·the review conducted by a Judge is akin to an appeal limited to matters of error of principle, or failure to exercise discretion, or the exercise of discretion in a manner which is manifestly wrong;
·it is generally appropriate to deal with objections in identified categories rather than individual items in a bill;
·the principles espoused in Re Blyth are codified in the rules;
·in the unique circumstances of this case the Registrar appears not to have exercised her discretion appropriately in respect of fees for counsel retained in the family law proceedings, and disbursements incurred in obtaining ASIC searches; and
·the trial Judge, by reason of the omission in the rules of a provision for the Registrar to give reasons in respect of disputed items, may have been constrained in her review of the two identified items.
We are satisfied for the reasons set out above the appeal should be allowed in respect of the issue of counsel’s fees for Ms Bryant QC and Dr Ingleby as well as part of the expense incurred for searches. The Certificate of Taxation should accordingly be amended by the addition of $7,210.58.
Costs of the Appeal
At the conclusion of the appeal we invited the parties to make submissions to us in respect of the costs of the appeal.
Counsel for the solicitor submitted in the event that the appeal was successful in whole or part, he would be seeking either a costs certificate or costs against the estate, but was unable to identify the quantum of costs sought.
On behalf of the client costs were sought in the sum of $3,500.00. In support of that submission the client’s solicitor noted that two of the five grounds of appeal were abandoned, and that he would seek a costs certificate if a retrial was ordered.
It appears to us that although two items have been allowed, that overall the solicitor was substantially unsuccessful in respect of the appeal. On balance we are satisfied it is appropriate that there should be no order for costs. We also do not consider this is an appropriate case for the grant of certificates under the Federal Proceedings (Costs) Act 1981 (Cth).
I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 31 January 2007
0
10
7