Cachia v Hanes

[1994] HCA 14

HIGH COURT OF AUSTRALIA

MASON CJ, BRENNAN, DEANE, DAWSON, TOOHEY, GAUDRON AND McHUGH JJ

CACHIA v HANES AND ANOTHER

(1994) 179 CLR 403

13 April 1994

Practice (N.S.W)

Practice (N.S.W)—Costs—Taxation—Litigant in person—Compensation for time spent in preparation and conduct of case—Whether entitlement—Supreme Court Act 1970 (N.S.W), ss. 19(1), 76(1) Supreme Court Rules 1970 (N.S.W), Pt 52, r. 23(2).

Orders

Appeal dismissed.

Decisions

MASON CJ, BRENNAN, DEANE, DAWSON AND McHUGH JJ The respondents failed in proceedings against the appellant in the Supreme Court of New South Wales. They unsuccessfully sought orders requiring the appellant to restore structural support to their land at Castle Hill. The respondents were legally represented but the appellant was not. On 7 October 1987 costs were awarded in favour of the appellant against the respondents. On taxation, a Master disallowed many items claimed by the appellant in his bill of costs.

2. This appeal is from a judgment of the Court of Appeal of New South Wales dismissing by a majority (Clarke and Handley JJA.; Kirby P dissenting) an appeal from the order of the Master on the review of the taxation of the appellant's costs ((1) Cachia v. Hanes (1991) 23 NSWLR 304.). The grant of special leave, pursuant to which this appeal is brought, was confined to the disallowance of the appellant's
claim for compensation for the loss of his time spent in the preparation and conduct of his case and for out of pocket expenses, being travelling expenses, associated with the preparation and conduct of his case.

3. The claims for loss of time were quantified in the bill of costs at $85.00 per hour. This figure was based on the fees charged by the appellant as a self-employed consulting engineer. However, the taxing officer found that there was insufficient evidence to show that the appellant had lost money from his consulting practice in defending the case.

4. Section 76(1) of the Supreme Court Act 1970 (N.S.W.) ("the Act")
provides:

"Subject to this Act and the rules and subject to any other Act:

(a) costs shall be in the discretion of the Court; (b) the Court shall have full power to determine by whom and to what extent costs are to be paid; and

(c) the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis."

So far as is relevant, s.76(2) defines "costs" to include "costs of or incidental to proceedings in the Court", although a definition of "costs" as including "fees, charges, disbursements, expenses and remuneration" is provided by s.19(1).

5. Under s.122 of the Act, the rules in the Fourth Schedule to the Act came into operation on the commencement of the Act, subject to and together with rules made by the Rule Committee. Section 123 provides that rules may be made by a Rule Committee consisting of the Chief Justice, certain other judges and representatives of the legal profession. Section 124 provides that any of the rules in the Fourth Schedule may be altered, added to or rescinded and any further or additional rules may be made by the Rule Committee for the purpose of carrying the Act into effect. Without limiting the generality of that provision, that purpose includes "(j)... regulating any matters relating to the costs of proceedings in the Court" and "(k)... regulating any matters relating to the taxation or other ascertainment of costs, under the inherent jurisdiction of the Court or under any Act".

6. Part 52 of the Supreme Court Rules 1970 (N.S.W.) ("the Rules") deals with costs. Under r.3, the provisions of that Part "apply, subject to their terms, to and in respect of costs payable or to be taxed under any order of the Court or under the rules and costs to be taxed in the Court under any Act". Under r.4(1), the "powers and discretions of the Court under section 76 of the Act (which relates to costs generally) shall be exercised subject to and in accordance with" Pt 52. Rule 23(1) provides that, save for immaterial exceptions, "costs shall be taxed on a party and party basis". Rule 23(2) provides:

"On a taxation on a party and party basis there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed."

It is fundamental to the appellant's argument that the time he lost in preparing and conducting his case constitutes "costs" within the meaning of this rule. He is, however, unable to sustain that proposition. The "costs" provided for in the Rules do not include time spent by a litigant who is not a lawyer in preparing and conducting his case. They are confined to money paid or liabilities incurred for professional legal services. It is only in that sense that the Rules speak of "costs".

7. Rule 67(1) provides:

"Subject to this rule, the provisions of Schedule G or of any costs determination, as the case requires, shall apply to the taxation of costs incurred in relation to proceedings commenced in the Court after the commencement of these rules or in respect of business done in any proceedings in the Court after the Act applies to the proceedings."

Schedule G, which contains the relevant scale of costs, as in force when the appellant did the work and now, contains nothing, apart from its provision for allowances to witnesses, which indicates that the costs for which it provides are otherwise than costs in the conventional sense, namely remuneration for work performed by a solicitor or a solicitor's clerk. Indeed, the clear indications are that the costs provided for are costs of that kind.

8. Rule 67(2) gives to the taxing officer a discretion to allow costs in relation to items not mentioned in, or of an amount higher than that prescribed by, Sched.G. In exercising that discretion he is required by r.67(3) to have regard to a number of matters:

"(a) the complexity of the item or of the proceedings in which it arose and the difficulty or novelty of the questions involved;

(b) the skill, specialised knowledge and responsibility required of and the time spent and work done by the solicitor or counsel;

(c) the number and importance of the documents (however brief) prepared or perused;

(d) the place and circumstances in which the business involved was transacted;

(e) the importance of the proceedings to the client; (f) where money or property was involved, its amount or value;

(g) any other fees and allowances payable to the solicitor or counsel in respect of other items in the same proceedings, but only where work done in relation to those items has reduced the work which would otherwise have been necessary in relation to the item in question."

9. Paragraph (g) suggests that r.67(3) was intended to provide an exhaustive list of matters to which the taxing officer should have regard ((2) cf. Minister for Aboriginal Affairs v. Peko-Wallsend Ltd. (1986) 162 CLR 24 at 39.). At the very least, any other matter considered by the taxing officer would need to be ejusdem generis ((3) cf. Santos Ltd. v. Saunders (1988) 49 SASR 556 at 563, 570-571.). The list of factors in r.67(3) assumes that the costs in the taxing
officer's discretion are for work done by a practitioner or practitioner's employee. Paragraphs (a), (b), (e) and (g) are in their very terms inapplicable to a litigant in person. The other paragraphs might be applied to work done by a litigant in person, but there is no mention of the considerations which might be thought to be central to the taxation of the costs of a litigant in person such as the nature of the work done, the time taken to do it, and the skill with which it was performed.

10. To use the Rules to compensate a litigant in person for time lost would cut across their clear intent. Costs, within the meaning of the Rules, are reimbursement for work done or expenses incurred by a practitioner or practitioner's employee. Compensation for the loss of time of a litigant in person cannot be said to constitute costs within the meaning of the Rules.

11. This is hardly surprising. It has not been doubted since 1278, when the Statute of Gloucester ((4) 6 Edw.I c.1.) introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation. They were never intended to be comprehensive compensation for any loss suffered by a litigant. As Coke observed of the Statute of Gloucester, the costs which might be awarded to a litigant extended to the legal costs of the suit, "but not to the costs and expences of his travell and losse of time" ((5) Coke, Second part of the Institutes of the Laws of England at 288. See also Howes v. Barber (1852) 18 QB 588 at 592 (118 ER 222 at 224); Dowdell v. The Australian Royal Mail Co. (1854) 3 El and Bl 902 at 906 (118 ER 1379 at 1381).).

12. A somewhat anomalous exception was introduced by London Scottish Benefit Society v. Chorley ((6) (1884) 13 QBD 872.) in which a solicitor successfully acted for himself in litigation. It was held that he was entitled to the same costs as if he had employed a solicitor, except for items such as obtaining instructions or attendances, which were unnecessary because he was his own client. The justification given for the privileged position afforded to a solicitor acting for himself is somewhat dubious, but it serves to emphasise the general rule. Brett MR put it thus ((7) ibid. at 875.):

"I cannot think that any privilege of a solicitor exists. I am wholly unable to agree to any argument standing upon that footing. I should have thought that a person wrongfully brought into litigation ought to be indemnified against the expenses to which he is unjustly put; but there cannot be a perfect indemnity, because it is impossible to determine how much of the costs is incurred through his own over-anxiety. When an ordinary party to a suit appears for himself, he is not indemnified for loss of time; but when he appears by solicitor, he is entitled to recover for the time expended by the solicitor in the conduct of the suit. When an ordinary litigant appears in person, he is paid only for costs out of pocket. He cannot himself take every step, and very often employs a solicitor to assist him: the remuneration to the solicitor is money paid out of pocket. He has to pay the fees of the court, that is money paid out of pocket; but for loss of time the law will not indemnify him. When, however, we come to the case of a solicitor, the question must be viewed from a different aspect. There are things which a solicitor can do for himself, but also he can employ another solicitor to do them for him; and it would be unadvisable to lay down that he shall not be entitled to ordinary costs if he appears in person, because in that case he would always employ another solicitor."

And Bowen LJ, after observing that costs are the creature of statute and referring to the passage in Coke's Institutes to which we have
referred, said ((8) ibid. at 877.):

"Professional skill and labour are recognised and can be measured by the law; private expenditure of labour and trouble by a layman cannot be measured. It depends on the zeal, the assiduity, or the nervousness of the individual. Professional skill, when it is bestowed, is accordingly allowed for in taxing a bill of costs; and it would be absurd to permit a solicitor to charge for the same work when it is done by another solicitor, and not to permit him to charge for it when it is done by his own clerk."

Those assertions that it would be "unadvisable" or "absurd" to refuse to allow a solicitor who acts for himself "to charge" for the work done by himself or his clerk ignore the questionable nature of a situation in which a successful litigant not only receives the amount of the verdict but actually profits from the conduct of the litigation.

13. Both the general principle and the exception have been accepted in this Court. In Guss v. Veenhuizen (No.2) ((9) (1976) 136 CLR 47.), Gibbs ACJ, Jacobs and Aickin JJ, after citing London Scottish Benefit Society v. Chorley and H. Tolputt and Co. Ltd. v. Mole ((10) (1911) KB 87 and 836.), said of a solicitor who acts for himself ((11) (1976) 136 CLR at 51.):

"Those authorities establish that the litigant in person does not recover such costs in such circumstances in the capacity of a solicitor, but because, he happening to be a solicitor, his costs are able to be quantified by the Court and its officers."

They went on to cite with approval the passages from the judgments of Brett MR and Bowen LJ in London Scottish Benefit Society v. Chorley which we have cited above. It is, however, important to note that no general submission was advanced in Guss v. Veenhuizen (No.2) to the effect that a successful solicitor litigant who acts for himself is never entitled to recover "costs" in respect of his own time and services. The argument in the case was about whether the solicitor litigant was precluded from recovering "costs" in respect of his own time and services in relation to an appeal to this Court by reason of the fact that he was not on this Court's Register of Practitioners.

14. If the explanations for allowing the costs of a solicitor acting for himself are unconvincing, the logical answer may be to abandon the exception in favour of the general principle rather than the other way round ((12) Note, in so far as New South Wales is concerned, the express references to a solicitor acting for himself in Table 2 of Sched.G from the introduction of Table 2 by an amendment to the Supreme Court Rules (Gaz.70 of 7 July 1972) until the amendment
of the Table by a Determination of the Legal Fees and Costs Board (Gaz.49 of 21 May 1993).). However, it is not necessary to go so far for the purposes of the present case. It suffices to say that the existence of a limited and questionable exception provides no proper basis for overturning a general principle which has, as we have said, never been doubted and which has been affirmed in recent times.

15. Nevertheless, at first instance in Buckland v. Watts ((13) (1970) 1 QB 27.) Donaldson J, whilst feeling constrained by authority to hold that a litigant in person was not entitled to claim costs for time spent in preparing his case, expressed the view ((14) ibid. at 29.) that "the reasoning which supports the reported decisions that
solicitor litigants in person should recover more than their out-of-pocket expenses seems to me to support a similar decision in favour of lay litigants in person". The Court of Appeal, on the other hand, sought to support both the general principle and the exception. Sir Gordon Willmer said ((15) ibid. at 37-38.):

"What a successful party who has got an order for costs is entitled to recover falls, as is well known, under two headings. One heading covers his disbursements; that is to say, money which he has actually had to pay out to other people, such as witnesses, counsel, professional advisers and so forth. The other heading is described as 'costs'. This is intended to cover remuneration for the exercise of professional legal skill. ... It is because there has been an exercise of professional legal skill that a solicitor conducting his own case successfully is treated differently from any other successful litigant in person conducting his own case. We are not concerned with the exercise of other professional skills. Other professional people, who become involved in litigation and conduct their own cases, may recover something in respect of their own professional skill in so far as they qualify as witnesses and are called as such. Nobody else, however, except a solicitor, has ever been held entitled to make any charge, as I understand it, in respect of the exercise of professional legal skill and it is this which the appellant has sought to do in the present case. I have much sympathy for him, as indeed had Donaldson J, but I can find no ground, either in principle or on authority, for allowing him anything by way of remuneration for the exercise of a professional skill which he has not got."

16. Rather too much emphasis may have been given in the cases to costs which are awarded to a solicitor acting for himself. They are awarded upon an exceptional basis and not upon the basis upon which costs are ordinarily awarded, namely, as an indemnity for legal costs actually incurred. It is, we think, not possible to reason by way of the exception that litigants in person are treated unequally and then to conclude that the very basis upon which costs are ordinarily awarded should be abandoned so that the exception becomes the rule.

17. Not only is it false reasoning, but it is not a course which is available having regard, not only to the quite clear case law upon the subject, but also, more importantly, to the plain import of the Rules which govern the jurisdiction of the Court to make an order for costs and any subsequent taxation of costs. Taxation is to take place, not at large, but "on a party and party basis". Taxation on a party and party basis is required to be in accordance with the relevant table in Sched.G and that makes no provision for the reimbursement of a litigant for time lost in the preparation or presentation of his case. It does provide for solicitors' costs which have been incurred. That affords some basis (although insufficient in our respectful view) for an award of costs in favour of a solicitor acting for himself and so performing professional duties, but it affords no basis whatsoever for an award by way of recompense to a litigant for time lost in the preparation or presentation of his case.

18. Even less do the Rules provide for the substitution of an antithetical basis for the accepted basis upon which a taxation of party and party costs is conducted. We speak of antithesis because, as we have said, the accepted basis for an award of costs is that they are by way of indemnity. They are intended to reimburse a litigant for costs actually incurred; they are not intended to compensate for some other disadvantage or inconvenience suffered by the litigant.

19. If costs were to be awarded otherwise than by way of indemnity, there would be no logical reason for denying compensation to a litigant who was represented. That would in some cases dramatically increase the costs awarded to a successful litigant. In corporate
litigation of complexity, for example, a litigant may expend considerable time and effort in preparing its case.

20. Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.

21. That choice has been made in New South Wales at least in the rules which govern the taxation of costs - rules which are in accordance with established law. The Rule Committee may or may not be able to use its statutory powers to change the basis upon which costs are awarded so that they become, not costs in the accepted sense of the word, but compensation of a more comprehensive kind. We express no view upon that. No doubt the Rule Committee, if it had such power, would wish to inform itself adequately of the reasons for and against such a change and no doubt it would be able to do so in a way in which a judge or court cannot.

22. Whilst the right of a litigant to appear in person is fundamental, it would be disregarding the obvious to fail to recognize that the presence of litigants in person in increasing numbers is creating a problem for the courts ((16) The problem is well documented in the United States: see Mueller, "Abusive pro se Plaintiffs in the Federal Courts: Proposals for Judicial Control", (1984) 18 Journal of Law Reform 93 at 101; Rubin, "The Civil Pro Se Litigant v. The Legal System", (1989) 20 Loyola University Law Journal 999; Gillies, "Who's Afraid of the Sanction Wolf: Imposing Sanctions on pro se Litigants", (1989) 11 Cardozo Law Review 173.). It would be mere pretence to regard the work done by most litigants in person in the preparation and conduct of their cases as the equivalent of work done by qualified legal representatives. All too frequently, the burden of ensuring that the necessary work of a litigant in person is done falls on the court administration or the court itself. Even so, litigation involving a litigant in person is usually less efficiently conducted and tends to be prolonged ((17) See Powles, "Litigant in Person - Discussion Paper" in Australian Institute of Judicial Administration, The Litigant in Person, (1993) 7 at 10-11.). The costs of legal representation for the opposing litigant are increased and the drain upon court resources is considerable. On the other hand, there is no doubt that the inability of a litigant in person to obtain recompense for time spent in the conduct of successful litigation must on occasions be a significant deterrent to the exercise of his right to come to court in person ((18) cf. British Columbia, Law Reform Commission, Report on Civil Procedure: Pt 1 - Costs of Successful Unassisted Lay Litigants, (1975); South Australia, Law Reform Committee, Report Relating to the Award of Costs to a Litigant Appearing in Person, (1974).). We mention these matters not to express any view, but merely to indicate that there are considerations
which must be weighed before any reasoned conclusion can be reached. A court engaged in litigation between parties, even if it were not constrained by the legislation and rules, is plainly an inappropriate body to carry out that exercise or to act upon any conclusion by laying down the precise nature of any change required.

23. In England, where change was considered desirable, legislation was thought necessary. Section 1(1) of the Litigants in Person (Costs and Expenses) Act 1975 (U.K.) provides:

"Where, in any proceedings to which this subsection applies, any costs of a litigant in person are ordered to be paid by any other party to the proceedings or in any other way, there may, subject to rules of court, be allowed on the taxation or other determination of those costs sums in respect of any work done, and any expenses and losses incurred, by the litigant in or in connection with the proceedings to which the order relates."

And limits have been prescribed by the Rules of the Supreme Court 1965 (U.K.). Order 62, r.18 provides:

"(1) Subject to the provisions of this rule, on any taxation of the costs of a litigant in person there may be allowed such costs as would have been allowed if the work and disbursements to which the costs relate had been done or made by a solicitor on the litigant's behalf together with any payments reasonably made by him for legal advice relating to the conduct of or the issues raised by the proceedings.

(2) The amount allowed in respect of any item shall be such sum as the taxing officer thinks fit but not exceeding, except in the case of a disbursement, two-thirds of the sum which in the opinion of the taxing officer would have been allowed in respect of that item if the litigant had been represented by a solicitor.

(3) Where it appears to the taxing officer that the litigant has not suffered any pecuniary loss in doing any item of work to which the costs relate, he shall be allowed in respect of the time reasonably spent by him on that item not more than 8.25 pounds per hour.

(4) A litigant who is allowed costs in respect of attending court to conduct his case shall not be entitled to a witness allowance in addition.

... (6) For the purpose of this rule a litigant in person does not include a litigant who is a practising solicitor."

24. We should add that the English legislation and rule represent a straightforward approach to the problem, in contrast to the approach adopted in some cases where courts have treated the loss in earnings of a litigant incurred in the course of the presentation or conduct of his case as a disbursement ((19) See Kerridge v. Foley, unreported, Supreme Court of New South Wales in Equity, 19 August 1970; Secretary, Department of Foreign Affairs and Trade v. Boswell (1992) 111 ALR 553; cf. Petrunic v. Barnes (1989) VR 927; Australian Blue Metal v. Hughes (1970) 2 NSWR 119.). Clearly, that is merely an indirect way of recompensing a litigant for time spent in the preparation or conduct of his case which, if it is not contemplated by the relevant legislation or rules, is not permissible. Of course, a litigant who qualifies as a witness is entitled to the ordinary witness's fees.

25. The disbursements claimed by the appellant and disallowed upon taxation were, on the one hand, travelling expenses in addition to a witness's fee for preparation and, on the other hand, travelling expenses to hear judgment. Either the appellant was entitled to the witness's fee or he was not; he was not entitled to travelling
expenses in addition to or in lieu of the fee. And since the appellant was not entitled to any recompense for his appearance in court to hear judgment, it was, we think, within the discretion of the Taxing Master to disallow any travelling expenses as an out-of-pocket expense incurred for that purpose. They were not an out-of-pocket expense which would have been recoverable by him or his solicitor in this case had he been legally represented.

26. For these reasons, we think that the appeal should be dismissed.

TOOHEY AND GAUDRON JJ This appeal concerns the costs which the appellant is entitled to recover from the respondents, consequent upon an order for costs in his favour made by the Supreme Court of New South Wales.

2. Questions have arisen as to that entitlement because the appellant was unrepresented in the Supreme Court. In the Court of Appeal Kirby P observed ((20) Cachia v. Hanes (1991) 23 NSWLR 304 at 305.):

"Litigants in person are an increasing phenomenon in the superior courts of this State at this time."

No doubt that observation applies to the other States; certainly it applies to this Court ((21) See generally, The Litigant in Person, Australian Institute of Judicial Administration, (1993).).

The litigation

3. The appellant was the defendant in proceedings brought by the respondents seeking an order that the appellant restore structural support to their land at Castle Hill. The respondents' claim was dismissed and costs were awarded against them. The appellant claimed party and party costs in the sum of $9,415.63; costs were allowed at $1,179.35. The appellant contested the items disallowed and there were hearings before the taxing officer and a Master. This Court is not concerned with the details of all the items claimed because special leave to appeal was confined "to the claim for costs in relation to loss of earnings and out of pocket expenses being travelling expenses". Even as to those items, argument focused on the entitlement to costs rather than on the actual sums involved.

4. As to the claim for costs in relation to loss of earnings, the
taxing officer identified four categories: 1. Work done in the preparation of the appellant's defence, being

work which would have been done by a solicitor had the appellant been represented.

2. Attendances by the appellant at court to supervise the conduct of

the case.

3. Work done by the appellant in preparation of the case which is

not of a legal nature and for which an expert in the field would otherwise have been retained.

4. Attendances by the appellant at court to give evidence as an

expert witness.

5. The appellant, who is a consulting engineer, claimed for loss of earnings at the rate of $85 an hour, his usual charge for professional services. As to the disputed claims for travelling expenses, these related to expenses incurred by the appellant as a litigant in person because those travelling expenses incurred as an expert witness were allowed. The expenses were incurred in travelling from the appellant's home in Carlingford, an outer suburb of Sydney. In some cases the appellant paid his wife a fee, including travelling expenses, for tasks such as filing or serving a document but these claims were allowed and are not the subject of this appeal. The taxing officer allowed (at a reduced rate) the appellant's claims for loss of earnings and travelling expenses incurred in his capacity as an expert witness ((22) Categories 3 and 4 above.). However, those items claimed for loss of earnings for preparation and conduct of the case were disallowed in full as were any associated travelling expenses ((23) Categories 1 and 2 above.). That decision was upheld by the Master and by a majority in the Court of Appeal (Clarke and Handley JJA., Kirby P dissenting).

6. In the Court of Appeal Handley JA., with whom Clarke JA. agreed, said ((24) Cachia v. Hanes (1991) 23 NSWLR at 317.) that the weight of authority compelled him to the conclusion that "fees, charges ... and remuneration" in s.19 of the Supreme Court Act 1970 (N.S.W.) "refer to remuneration for the exercise of professional legal skill". This interpretation, his Honour said, "has been settled for centuries" ((25) ibid.). On the other hand, Kirby P, while recognising the force of the common law approach, said ((26) ibid. at 308.) that "it is the Rules of the Court, if they apply by their terms, to which the Court must ultimately return in order to decide the entitlement of a party to costs".

The legislation

7. In truth any relevant statute or subordinate legislation must be the starting point for a consideration of the appellant's entitlement to costs. That is not to say that the interpretation of any statutory provision or rule of court should be divorced from the historical context in which it was introduced or from the understanding of the time. But the ultimate question is one of interpretation.

8. While s.19 of the Supreme Court Act defines costs as including "fees, charges, disbursements, expenses and remuneration", the source of the power to award costs is to be found in s.76(1) ((27) The scope of such a provision was considered in Knight v. F.P Special Assets Ltd. (1992) 174 CLR 178.) which provides that:

"(a) costs shall be in the discretion of the Court;

(b) the Court shall have full power to determine by whom and to what extent costs are to be paid; and

(c) the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis."

Part 52 r.23(2) of the Supreme Court Rules 1970 (N.S.W.) reads:

" On a taxation on a party and party basis ((28) Pt 52 r.23(1) provides that "Costs shall be taxed on a party and party basis" except in certain specified circumstances which do not apply in this case.) there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed."

9. The first and most obvious comment to make about these provisions regarding costs is that they draw no distinction between litigants who are represented and litigants who are not. Nor was any such distinction drawn in the Statute of Gloucester ((29) 1278, (U.K.) 6
Edw.I, c.1.) which first accepted in England the rule that a successful party might recover costs. It did so in language which related to the real actions referred to in the statute:

" And whereas before Time, Damages were not taxed, but to the Value of the issues of the Land; ... it is provided, That the Demandant may recover against the Tenant the Costs of his Writ purchased, together with Damages abovesaid."

10. Coke ((30) Second part of the Institutes of the Laws of England at 288.) treated the provision as entitling the successful party to all the costs of the suit other than the "costs and expences of his travell and losse of time".

The authorities

11. Because of the emphasis placed by Handley JA. and by counsel for the respondent on what was said to be the settled state of authority, it is necessary to look at some of the decisions which have contributed to the situation. So far as the Court of Appeal was concerned, an earlier judgment of that Court in Cachia v. Isaacs ((31) Unreported 23 March 1989.) had held that a litigant in person is not entitled on taxation to recover compensation for time spent in preparing and conducting the proceedings, other than sums properly allowable as witness's expenses. In the present case Clarke JA. and Handley JA. declined to enter into an argument that Cachia v. Isaacs had been wrongly decided.

12. In Cachia v. Isaacs Samuels JA., with whom Clarke JA. agreed,
said ((32) ibid. at 8.):

" There is a well established line of authority in England and Australia which establishes the proposition that a litigant in person, who is not a solicitor, is not entitled to claim costs in respect of the time expended in preparing and presenting his or her case, but may recover only out-of-pocket expenses."

13. The usual starting point in this discussion is London Scottish Benefit Society v. Chorley ((33) (1884) 12 QBD 452; affd (1884) 13 QBD 872.). It was there held that where an action is brought against a solicitor who defends it in person and obtains judgment, the solicitor is entitled on taxation to the same costs as if he had employed a solicitor, except in respect of items which the fact of his acting directly renders unnecessary.

14. Because the litigant in that case was a solicitor, the decision is not directly in point. But it has been argued inferentially that, had the litigant not been a solicitor, he would not have been entitled to be indemnified "not merely for the time he must necessarily expend as a witness in his own case, but also for the pains, trouble, and skill which he has to incur and to exercise in order to bring it to a successful conclusion" ((34) (1884) 12 QBD at 455 per Denman J).

15. A decision directly in the respondents' favour is Buckland v. Watts ((35) (1970) 1 QB 27.). Mr Buckland was awarded the costs of an action which he had conducted in person. He sought to recover for the time he had spent looking up the law, preparing documents and attending court. The Court of Appeal held that he was not entitled to costs in respect of the time he had spent in preparing his case, but only his out of pocket expenses. The matter was put this way by Danckwerts LJ ((36) ibid. at 35.), with whom John Stephenson J and Sir Gordon Willmer agreed:

"(T)he principle is well settled that though a solicitor who acts in person for himself can claim to be remunerated for his professional services in so far as they are not rendered unnecessary or impossible - as, for instance, with regard to consultations with himself and that kind of thing - and such costs are recoverable by the solicitor, in the case of a layman who is not a skilled legal person he can only recover his out-of-pocket expenses".

16. In Buckland v. Watts the Court of Appeal took the position of the litigant in person rather for granted although Chorley had not dealt directly with that situation. In that regard there is much force in the comment of the Law Reform Commission of British Columbia ((37) Report on Civil Procedure, Pt 1 - Costs of Successful Unassisted Lay Litigants, (1975) at 11.) quoted by Kirby P in Cachia v. Hanes ((38) (1991) 23 NSWLR at 310.):

"Buckland v. Watts involved a lay litigant in person, with respect to whose position all the statements in Chorley were obiter dicta, since Mr Chorley was not a lay litigant. Moreover, the basic rule, to which the case of the solicitor-litigant was treated in Chorley as an exception, was in that case assumed. It was one which, so far as appears, had never been directly litigated, although it was no doubt reflected in the practice of the courts. Indeed, Buckland v. Watts was the first case in which the point had been squarely presented. Nevertheless, the English Court of Appeal in the later case somewhat strangely concluded that it was bound by the earlier decision."

17. Likewise, in Guss v. Veenhuizen (No.2) ((39) (1976) 136 CLR 47.), upon which Handley JA. relied, the point at issue was the entitlement to costs of a solicitor who was a party to litigation and who acted as solicitor on the record, instructing counsel. Through error his name was not entered in the Register of Practitioners as required by the
Judiciary Act 1903 (Cth). By majority (Gibbs ACJ, Jacobs and Aickin JJ, Mason and Murphy JJ dissenting), he was held entitled to his professional costs. The majority, after referring to Chorley and other English decisions, said ((40) ibid. at 51.):

"Those authorities establish that the litigant in person does not recover such costs in such circumstances in the capacity of a solicitor, but because, he happening to be a solicitor, his costs are able to be quantified by the Court and its officers."

But to the extent that that statement identifies the position of an unrepresented litigant who is not a solicitor, it must be regarded as obiter dicta since the decision turned primarily on the operation of the Judiciary Act.

18. Petrunic v. Barnes ((41) (1989) VR 927.) is not directly in point. The parties were represented. What was at issue was a claim by the successful defendant, a medical practitioner who was sued for negligence, for costs for the time spent by him instructing counsel or being in court ready to instruct counsel. The claim was disallowed by
the Taxing Master but, on appeal, was upheld by Murphy J The relevance of the decision is the primacy Murphy J gave to the language of the relevant rule of court ((42) O.63 r.69 of the General Rules of Procedure in Civil Proceedings 1986 (Vict.).) which provided:

"All costs shall be allowed as are necessary and proper for the attainment of justice or for enforcing or defending the rights of any party."

His Honour considered various decisions touching the question whether costs may be allowed to a party other than in his or her capacity as a witness. Murphy J observed ((43) (1989) VR at 929-930.):

" In my opinion, the appropriate approach that should be taken by the Taxing Master is to consider whether the attendance of the party or witness was necessary or proper for the attainment of justice or for enforcing or defending the rights of any party.

To approach the matter with a preconception that a party is not entitled to claim expenses save for time that he or she spends as a witness ready to give and giving evidence is not correct."

19. But directly in point is the recent decision of the Federal Court (Sheppard, Hill and Cooper JJ) in Secretary, Department of Foreign Affairs and Trade v. Boswell ((44) (1992) 111 ALR 553.). The respondent, who was unrepresented, succeeded in an appeal brought by the appellant against a decision in the respondent's favour. The Full Court gave the respondent liberty to apply for an order that the appellant pay her costs of the appeal. She exercised that liberty. The Full Court's view was that authority dictated that the respondent might recover out of pocket expenses but not remuneration for work done in the preparation of her case or for appearing in court to present it. The Full Court considered that the Federal Court Rules envisaged the taxation of bills of costs and fees payable to legal practitioners only ((45) O.62 r.8.). It is apparent that the Full Court had considerable sympathy for the position of the respondent and that it did not share the view of Handley JA. in Cachia v. Hanes that any principle that entitled litigants in person to be remunerated for time spent in preparing and conducting their own cases would be mischievous in practice ((46) (1992) 111 ALR at 557.). In the end the Full Court made a special order that the appellant pay to the respondent "her out of pocket expenses necessarily and reasonably incurred in relation to the appeal, such out of pocket expenses to include earnings (if any) actually lost as a result of the need to prepare her case and to attend court to present it" ((47) ibid. at 560.).

20. In making this order the Full Court took a broad view of out of
pocket expenses, saying ((48) ibid. at 557.):

"We can find nothing in the cases which obliges this court to hold that a litigant in person who has had to have time away from his or her employment or business in order to prepare a case or to attend court to present it should not recover an indemnity for any loss of earnings suffered in consequence. That is not to permit a litigant in person to charge a sum in the nature of professional costs; rather it is to provide an appropriate indemnity against loss of earnings incurred whether in the preparation of a case or in actual attendance at court. Of course the touchstone is that of what was necessary and reasonable in all the circumstances. So long as this is the approach, no injustice can result."

21. While Clarke JA. had considerable sympathy for the financial position of the unrepresented litigant who is successful, his Honour was of the view ((49) (1991) 23 NSWLR at 316.) "that if the law is
to be changed then this must be done by the High Court or by Parliament" ((50) See the Litigants in Person (Costs and Expenses) Act 1975 (U.K.).). But the law is not so entrenched as these observations would suggest. Rather, as Kirby P said in the Court of Appeal ((51) (1991) 23 NSWLR at 311.):

" The principle that a lay litigant in person is not entitled to costs beyond out of pocket expenses is borne more of a curious course of judicial presumption rather than 'a long line of authority'."

The quantification issue

22. Underlying the principle expressed or assumed in the cases is the difficulty of quantifying the costs, other than out of pocket expenses, of a litigant in person. Undoubtedly there are difficulties in quantifying such costs, particularly as there is no scale of costs
directly applicable. In Cachia v. Hanes Handley JA. saw the difficulty in this way ((52) ibid. at 317.):

"The taxation of costs is ordinarily an accounting assessment. In the case of litigants in person it could become the equivalent of a Local Court or District Court trial."

23. But difficulties of quantification should not obscure any principle which is reflected in statute or subordinate legislation. If, as in the case of Pt 52 r.23(2) of the Supreme Court Rules (N.S.W.), "there shall be allowed all such costs as were necessary or proper" and if "costs" is defined to include "fees, charges, disbursements, expenses and remuneration", it is hard to see the justification for a rule that an unrepresented litigant may recover no more than out of pocket expenses.

Assessment of costs

24. So far as principle is concerned, the matter is determined in this case by the Act and the rules of court. Of course the question arises immediately as to what is meant by necessary and proper costs. We do not underestimate the difficulties which may arise on taxation. In that regard it is important that there be some guiding method of approach. The Law Reform Committee of South Australia thought that the successful lay litigant should be entitled to reimbursement for money lost in taking off time from work in the necessary preparation of a case, "provided however that the total cost involved does not exceed the alternative expense of employing a solicitor to act in the matter" ((53) See Twenty-ninth Report, Relating to the Award of Costs to a Litigant Appearing in Person, (1974) at 5.). The Law Reform Commission of British Columbia rejected this approach as turning too much on the employment position of the litigant at the time ((54) See Report of British Columbia Law Reform Commission, op.cit. at 17-20.). That body recommended applying the scale of costs applicable to the litigation and awarding "whatever the tariff allows for those activities covered by the tariff upon proof that the activities were actually undertaken" ((55) ibid. at 19.). Kirby P preferred this approach.

25. Either approach could be accommodated within the principle expressed in Pt 52 r.23(2) of the Supreme Court Rules that there shall be allowed "all such costs as were necessary or proper". However, subject to one qualification, we are persuaded, as was Kirby P, by the views of the Law Reform Commission of British Columbia. The qualification is that the total costs awarded should not exceed the total detriment involved in consequence of the various steps and actions necessarily and properly involved in the preparation and conduct of the trial. It will be for the taxing officer to determine by what means that qualification should be given effect in the particular case. In this regard, it must be acknowledged, as in the British Columbia Report, although in a different context ((56) ibid., by way of support for its proposal for tariff costs notwithstanding that a lay litigant may recover more than the detriment which he or she
suffered in the preparation and conduct of the trial.), that "this is a situation in which purity of principle should give way to administrative convenience and practicality" ((57) ibid.).

26. As mentioned at the outset of these reasons, this Court is not concerned with the details of the appellant's claim for costs. It would seem, however, that the items presently in dispute, can be dealt with by reference to Sched.G. But, in the end, that must be a matter for the taxing officer. It is enough for present purposes that the appeal be allowed and that an order be made as envisaged by Kirby P, namely ((58) Cachia v. Hanes (1991) 23 NSWLR at 315.):

"Items 1, 3, 5, 9, 10, 11, 12, 13, 16, 18, 20, 21, 22, 23, 27, 29, 31, 33, 35, 37, 40, 42, 44 and 45 to be remitted to the taxing officer to be assessed in accordance with the Supreme Court Rules".