Carey v Korda and Winterbottom [No 2]
[2011] WASC 220 (S)
•26 AUGUST 2011
CAREY -v- KORDA & WINTERBOTTOM [No 2] [2011] WASC 220 (S)
Pending Appeal
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2011] WASC 220 (S) | |
| Case No: | COR:147/2010 | 26 JULY 2011 & 7 OCTOBER 2011 | |
| Coram: | EDELMAN J | 26/08/11 | |
| 10/10/11 | |||
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Orders made including that the plaintiffs pay the first defendants costs to be taxed without regard to the limit in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 | ||
| B | |||
| PDF Version |
| Parties: | NORMAN PHILLIP CAREY QUARTS NOMINEES PTY LTD MARK ANTHONY KORDA and DAVID JOHN WINTERBOTTOM In Their Capacity as Receivers and Managers of Huntingdale Village Pty Ltd (Receivers and Managers Appointed),Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (in liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (in liq), Westpoint Management Ltd (Receivers and Managers Appointed) (in liq) PERPETUAL NOMINEES LTD and/or FOR CUSTODIAN of the ING MORTGAGE POOL for ING FUNDS MANAGEMENT LTD ABN 21 002 800 as the Responsible Entity of THE ING MORTGAGE POOL |
Catchwords: | Practice and procedure Costs Special costs order Whether special costs order should be made that costs be assessed without limit by the scale Whether order should be made fixing costs and making them payable forthwith Circumstances in which a fixed costs order should be made |
Legislation: | Legal Profession Act 2008 (WA), s 280 |
Case References: | Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 Brookvista Pty Ltd v Meloni [2009] WASCA 180 Bryen & Langley Ltd v Boston [2005] EWCA Civ 973 Carey v Korda & Winterbottom [No 2] [2011] WASC 220 Gallaher International Ltd v Tlais Enterprises Ltd [2008] EWHC 2046 Hadid v Lenfest Communications Inc (No 2) [2000] FCA 628 Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738 Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
DECISION : 10 OCTOBER 2011 FILE NO/S : COR 147 of 2010 BETWEEN : NORMAN PHILLIP CAREY
- First Plaintiff
QUARTS NOMINEES PTY LTD
Second Plaintiff
AND
MARK ANTHONY KORDA and DAVID JOHN WINTERBOTTOM In Their Capacity as Receivers and Managers of Huntingdale Village Pty Ltd (Receivers and Managers Appointed),Silkchime Pty Ltd (Receivers and Managers Appointed), Vannin Pty Ltd (Receivers and Managers Appointed), Warwick Entertainment Centre Pty Ltd (Receivers and Managers Appointed), Paragon Apartments Ltd (Receivers and Managers Appointed), Westpoint Corporation Pty Ltd (Receivers and Managers Appointed) (in liq), Bayview Port Melbourne Ltd (Receivers and Managers Appointed) (in liq), Westpoint Management Ltd (Receivers and Managers Appointed) (in liq)
First Defendants
- PERPETUAL NOMINEES LTD and/or FOR CUSTODIAN of the ING MORTGAGE POOL for ING FUNDS MANAGEMENT LTD ABN 21 002 800 as the Responsible Entity of THE ING MORTGAGE POOL
Second Defendant
Catchwords:
Practice and procedure - Costs - Special costs order - Whether special costs order should be made that costs be assessed without limit by the scale - Whether order should be made fixing costs and making them payable forthwith - Circumstances in which a fixed costs order should be made
Legislation:
Legal Profession Act 2008 (WA), s 280
Result:
Orders made including that the plaintiffs pay the first defendants costs to be taxed without regard to the limit in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010
Category: B
Representation:
Counsel:
First Plaintiff : Mr A Metaxas
Second Plaintiff : Mr A Metaxas
First Defendants : Mr M Feutrill
Second Defendant : Mr L D Ayres
Solicitors:
First Plaintiff : Metaxas & Hager
Second Plaintiff : Metaxas & Hager
First Defendants : Mallesons Stephen Jaques
Second Defendant : Minter Ellison
Case(s) referred to in judgment(s):
Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119
Brookvista Pty Ltd v Meloni [2009] WASCA 180
Bryen & Langley Ltd v Boston [2005] EWCA Civ 973
Carey v Korda & Winterbottom [No 2] [2011] WASC 220
Gallaher International Ltd v Tlais Enterprises Ltd [2008] EWHC 2046
Hadid v Lenfest Communications Inc (No 2) [2000] FCA 628
Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
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- EDELMAN J:
Introduction
1 The question in this application is whether an order should be made to fix the costs in Carey v Korda & Winterbottom [No 2][2011] WASC 220 above the prescribed amount in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (the Scale). The plaintiffs accept that costs should be taxed without the limit of the Scale but they say that there is no power to make an order fixing costs, alternatively that any such power should not be exercised, and that the matter should be referred to taxation.
2 In these reasons I explain why there is a power to make an order fixing costs, and making those costs payable forthwith, but why this is not an appropriate case for the exercise of the power.
Background
3 On 26 August 2011 I delivered my reasons for decision in Carey v Korda [No 2]. At the request of the parties, I adjourned the matter (twice) to allow the parties sufficient time to confer in respect of orders. When it was apparent that the parties could not reach agreement in relation to the orders the matter came back before me on 7 October 2011.
4 The application on 7 October 2011 related only to the orders to be made as to costs. The first three orders were agreed. I set out those orders in my conclusions to these reasons.
5 As to the fourth order, concerning costs, the first defendants applied for orders on a cumulative basis. The first defendants sought an order under s 280(2)(c) of the Legal Profession Act 2008 (WA) removing the limit as to costs which is prescribed in Item 10 of the Scale. The maximum costs recoverable under Item 10 of the Scale in relation to Carey v Korda [No 2] are $10,230 based on 30 hours of preparation at a rate of $341 for counsel. The second, and cumulative, aspect of the order sought by the first defendants was that costs should be fixed, above the Scale amount, at $91,200, payable forthwith. On the evidence before me, this was approximately 60% of the costs incurred by the defendants which were $152,079.71. That evidence was contained in an affidavit of Ms Lara Lukich sworn on 3 October 2011 and filed on 4 October 2011.
6 Counsel for the second defendant did not make any substantive submissions. His only submission was that the second defendant's costs should be taxed.
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7 The plaintiffs initially opposed any order under s 280 of the Legal Profession Act, including opposing any order removing the costs limit imposed by Item 10 of the Scale. In written submissions provided on the morning of this hearing, counsel for the plaintiffs also objected to each and every paragraph of Ms Lukich's affidavit, with numerous different grounds of objection.
8 After hearing oral submissions concerning the objections, I delivered my decision and reasons in relation to these objections, striking out some of the paragraphs in the affidavit, but maintaining others. One of the objections was in relation to Ms Lukich's evidence concerning costs incurred by the first defendants. As Ms Lukich said (at [19]), this evidence was derived from the invoices and time entries of her firm. One of the bases upon which I dismissed objections to that evidence was that it was evidence of facts derived from a genuine business record: Evidence Act 1906 (WA), s 79C(2a). In the course of Carey v Korda [No 2], I had seen invoices and time entries of the firm and I was satisfied from Ms Lukich's evidence that her summary of costs derived from a genuine business record. Further, there was no suggestion by counsel for the plaintiffs that these paragraphs of Ms Lukich's evidence did not derive from genuine business records. Whilst direct oral evidence could have been called from each of the relevant fee earners at the firm, I explained that s 79C(2a) rendered this unnecessary.
9 After delivery of my reasons concerning these objections, I invited submissions in relation to the costs orders. At the commencement of his submissions, counsel for the plaintiffs sought to reopen my ruling in relation to my decision on s 79C(2a). He sought to make new submissions based upon s 79C(6) of the Evidence Act. I do not consider it appropriate to reopen my ruling. Counsel for the plaintiffs provided the grounds of his objections only on the morning of the hearing. Submissions on s 79C(2a) were made orally and he responded to them. In any event, I do not accept his assertion that it would 'necessitate undue consumption of time', 'create undue prejudice [or] confuse the issues' to allow Ms Lukich to give affidavit evidence derived from her firm's business records: s 79C(6).
Should an order be made for assessment of costs without reference to the Scale?
10 Despite the stance taken in written submissions, in oral submissions counsel for the plaintiffs conceded that an order under s 280(2)(c) of the
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- Legal Profession Act could be made, removing the limit as to costs which is prescribed in Item 10 of the Scale (ts 263).
11 This was an appropriate concession for a number of reasons. First, the plaintiffs in Carey v Korda[No 2] raised four broad issues, all of which raised substantial issues of law and which required detailed consideration of the relevant authorities. At least one issue was entirely novel, and all issues were important: see Carey v Korda[No 2] [106]. Secondly, the plaintiffs and the first defendants both instructed senior and junior counsel; in contrast the Scale makes provision only for one counsel. Thirdly, the volume of material involved in the application was substantial. Lengthy submissions were filed; the plaintiffs' own submissions ran to 20 pages, single spaced. Three lever arch folders of authorities were provided. In relation only to the bills of costs, my inspection of those documents involved consideration of more than 1,200 pages.
12 Even without the affidavit evidence of Ms Lukich, the complexity and importance of the matter is sufficient that I am 'of the opinion that the amount of costs allowable in respect of [Item 10] ... is inadequate because of the unusual difficulty, complexity or importance of the matter': s 280(2) Legal Profession Act. As to the independence of each of 'unusual difficulty', 'complexity' and 'importance', see Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [17] (Martin CJ).
13 It is appropriate to remove the limit as to costs prescribed in Item 10 of the Scale.
Can an order fixing costs be made by this court?
14 In written submissions, the plaintiffs submitted that this application 'involves the plaintiffs' rights in the process of taxation being extinguished'. It was asserted that '[t]here is no basis in law for such an order to be made. The plaintiffs are entitled to require the taxing officer to be satisfied as to the appropriate costs to be allowed, the same right afforded to almost every other litigant in this [S]tate': [34]. That submission is not correct.
15 Order 66 r 10(1) of the Rules of the Supreme Court 1971 (WA) empowers the court to make an order for the payment of costs, including that costs be paid forthwith, notwithstanding that proceedings have not been concluded. Order 66 r 51 empowers the court, in a case where taxation of costs is not ordered (as to which power see O 66 r 32), to 'fix
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- the amount of costs payable, or the amount of such special costs'. Counsel for the plaintiffs did not deny that these rules were a source of power. His submission essentially focused upon the novelty of such an order in this jurisdiction. Novelty is a reason for caution in the exercise of a power. It is not, of itself, an argument supporting the absence of power.
16 I consider that this court has power to fix costs and power to order that they be payable forthwith.
Should an order fixing costs be made by this court?
17 Counsel for the plaintiffs correctly pointed out that an order fixing costs and making them payable forthwith is reasonably novel in this jurisdiction.
18 As I have mentioned, novelty may be a reason for caution but it is not a substantive legal argument. In other jurisdictions, fixing costs is much more common. Since the Woolf reforms in England and Wales an immediate fixing of costs (described as a 'summary assessment') is the ordinary practice in cases occupying no more than a day: Bryen & Langley Ltd v Boston [2005] EWCA Civ 973 [51] (Rimer J, as his Lordship then was).
19 Further, the size of a potential award of fixed costs is not, of itself, a reason to refuse to make the order. A summary assessment of costs in England and Wales has even been made in excess of ₤5 million, albeit involving extreme facts where the taxation could have taken months and might have proven fruitless in terms of ultimate recovery: Gallaher International Ltd v Tlais Enterprises Ltd [2008] EWHC 2046 (Comm). In Beach Petroleum NL v Johnson(No 2) (1995) 57 FCR 119 the award of indemnity costs against two of the parties was fixed after trial by von Doussa J at $8,119,370, for similar reasons.
20 Nevertheless, there are reasons to be cautious before making an order fixing costs and making those costs payable forthwith. These reasons relate to the broad brush manner in which those costs are calculated. As Newnes JA explained in Brookvista Pty Ltd v Meloni [2009] WASCA 180 [26]:
The purpose of fixing costs is to avoid the expense and delay involved in taxation. Consistent with that objective, in fixing the sum the court will not subject the costs to the detailed scrutiny often applied in taxation of costs. It is appropriate instead to apply a 'much broader brush' than would be applied on a taxation.
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21 Again, in Hadid v Lenfest Communications Inc(No 2) [2000] FCA 628 [35] (Lehane J) it was said that the evidence enabled fixing a gross sum 'only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates'.
22 The reason for caution in fixing costs derives from this very rationale. The efficiency gained by the application of the broad brush comes at the expense of the accuracy of the outcome. The broad brush provides certainty and efficiency, but these are not the only criteria of justice. Courts have insisted that a broad brush approach to fixing costs must still be logical, fair and reasonable: Beach Petroleum NL v Johnson(No 2)(123) (von Doussa J).
23 In order for a court to be satisfied that the 'broad brush' approach is sufficiently just, the court must, at least, 'have available to it sufficient material that it is confident it can arrive at an appropriate sum': Brookvista v Meloni [27] (Newnes JA); Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738, 743 [22] (Giles JA).
24 For the following six reasons I do not consider either that I have sufficient material to be confident of arriving at an appropriate sum, or to be confident that any award I could make in this instance would be just as between the parties.
25 First, I consider that a relevant factor in the exercise of my discretion whether to make an order fixing costs is the complexity of the case. Even in England where 'summary assessment' of costs is the ordinary practice in hearings of less than a day, it is accepted that '[i]t may not be appropriate to carry out a summary assessment if a case lasts more than half a day or involves leading Counsel since in those circumstances the case is likely to be complex and weighty': Civil Procedure Rules (2011), Guide to the Summary Assessment of Costs [48.42].
26 The more complex the case, the more significant may be that the difference between the parties concerning the allowable costs, and the less just will be an assessment on a 'rough and ready' approach. As I have explained at [11], this application involved issues of complexity and importance, which required more information relating to costs than was before me.
27 Secondly, and related to the first point, even though I have held that the costs should not be limited by the Scale, there is still a vast disparity between the Scale amount ($10,230) and the costs incurred by the first defendants ($152,079.71). To fix an amount of $91,200 would involve a
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- considerable degree of arbitrariness. There was no evidence of the costs incurred by the plaintiffs or the second defendant, nor any other basis upon which I can assess the extent to which the work done for the first defendants was justified. In comparison with this case, in Beach Petroleum NL v Johnson(No 2) the evidence before von Doussa J included a detailed bill of costs in taxable form to provide 'a useful cross-check as it exposes for scrutiny ... the items of work covered' (123).
28 Thirdly, in written submissions the plaintiffs raised a number of matters in which it was said that there had been duplication of effort. It is impossible on the evidence before me to assess the extent to which, if at all, there has been duplication of effort, and it is certainly not possible to approximate a monetary amount, or percentage reduction, for any duplication.
29 Fourthly, there was no evidence before me concerning the second defendant's costs. If I were to fix the costs of the first defendants then this would only deal with part of the costs issues arising from Carey v Korda[No 2].
30 Fifthly, there is no suggestion that the plaintiffs will be unable to pay any or all of any costs award. In Gallaher, one significant factor in favour of a discretion to fix costs was that costs might not be recovered, in whole or in part, from the party against whom they were ordered. Where those circumstances exist then there is a stronger case for fixing an award of costs rather than putting the successful party to the expense of a taxation of costs which might never be recovered.
31 Sixthly, there was no suggestion that a taxation of the costs in this case would involve a cost which was disproportionate to the potential recovery. This contrasts with large costs awards in cases like Beach Petroleum NL v Johnson(No 2) or Gallaher where there was evidence that a taxation could extend over several months.
32 For these six reasons, I do not consider that the power should be exercised to fix costs, whether in the amount of $91,200, or in any amount. It is appropriate that costs should be taxed by a taxing officer without the limit of the Scale, unless the costs are agreed.
Conclusion
33 I have explained my reasons for the costs order 4 below in relation to the costs of the first defendants in Carey v Korda[No 2]. However, I do not consider that this costs order should include costs of the application
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- for a special costs order. Both the plaintiffs and the first defendants have had a degree of success in relation to the application for a special costs order which, until oral submissions, was resisted in its entirety by the plaintiffs. No order for costs should be made in relation to the application for a special costs order.
34 The second defendant also sought an order as to costs in relation to Carey v Korda[No 2], although he did not seriously press for his costs of this special costs order hearing in which the second defendant took no stance. The order was opposed by counsel for the plaintiffs on the basis that the second defendant could have agreed to abide by the decision of the court in Carey v Korda[No 2] and that, whilst sending counsel to attend the hearing, the second defendant had not taken any active part in the hearing itself. However, Carey v Korda[No 2] was only a small part of much wider litigation between the parties. I consider that the second defendant could reasonably have expected that, depending on how the hearing developed, matters raised by the plaintiffs in Carey v Korda[No 2] might have had the potential to affect the second defendant. Counsel for the plaintiffs did not suggest the contrary. The second defendant is entitled to costs, to be taxed. The very limited role played by the second defendant will be a matter for the taxing officer to consider.
35 For these reasons I make the following orders:
1. The plaintiffs' application to inspect the redacted portion of the invoices of Corrs Chambers Westgarth identified as annexure RHM 8 of the affidavit of Russell Harry Morgan sworn on 1 February 2011 and annexures RHM 1 and RHM 2 of the affidavit of Russell Harry Morgan sworn on 4 February 2011 is dismissed.
2. The plaintiffs' application to inspect the redacted portion of the recharge schedules prepared by the first defendants identified as annexure RHM 7 of the affidavit of Russell Harry Morgan sworn on 1 February 2011 is dismissed.
3. The matter be relisted before the Honourable Justice Le Miere, on a date to be fixed, for further directions concerning the production and inspection, subject to any claim for privilege, of any recharge schedules prepared by the first defendants that are not the subject of order 2 above.
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- 4. The plaintiffs pay the first defendants' costs to be taxed without regard to the limit in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010, if not agreed.
5. The plaintiffs pay the second defendant's costs to be taxed.
6. Orders 4 and 5 do not include the costs of this application concerning the special costs order, as to which no order is made as to costs.
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