Catto v Hampton Australia Limited (in Liquidation) - [2007] SASC 360

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CATTO & ORS v HAMPTON AUSTRALIA LIMITED (IN LIQUIDATION) & ORS
[2007] SASC 360
Reasons of Judge Lunn a Master of the Supreme Court
11 October 2007
PROCEDURE - COSTS
Order for plaintiffs to pay the defendants' costs of action on an indemnity basis - defendants alleging agreement with their solicitors entitling them to charge on time costing basis - held plaintiffs entitled to raise ss 42(6) and (7) of Legal Practitioners Act to contest costs charged on a time costing basis - held with minor exception no sufficient agreement in writing to satisfy s 42(6) - what constitutes such an agreement in writing - variations of such agreements - proof of such agreements by secondary evidence - recovery of charges of interstate solicitors for work done in the action.

CATTO & ORS v HAMPTON AUSTRALIA LIMITED (IN LIQUIDATION) & ORS
[2007] SASC 360
Reasons on rulings on time charging.

JUDGE LUNN: After a long trial, on 8 September 2004 Justice Vanstone ordered, inter alia:
4All the plaintiffs and Robert John Charles Catto in his own right pay the costs of the first, second and third defendants in defending the claims, inclusive of costs reserved, on an indemnity basis.
The expression “indemnity basis” is to be interpreted in accordance with R101.07(6) of the 1987 Rules which provided:
In any rule or order unless the contrary meaning is indicated by the context or other factors:
…..
(d)Costs as between solicitor and own client, or a like expression, means costs as a complete indemnity against the costs incurred by the party in respect of the litigation provided that they are not to include any amount shown by the party liable to pay them to have been incurred unreasonably in the interests of the party incurring them;
(e)Indemnity costs, or a like expression, mean the same as costs as between solicitor and own client.
On 2 April 2007 the first and third defendants (collectively referred to as “Hampton”) took out an application seeking a determination of the proper procedure for the taxation of the costs under the order, and in particular whether it should proceed on a time costing basis or in accordance with the applicable Supreme Court scales of costs. There was also a similar issue raised for the second defendant (“KLV”), but it did not issue any application. Ultimately the parties agreed on a statement of preliminary issues on which I was asked to rule before any taxation proceeded further. All parties agreed to my giving such a ruling without any further interlocutory steps being taken by any party. However, if any party wishes to contest my rulings before the conclusion of the taxation, it will be necessary first to provide a suitable foundation for an appeal or a case stated.
On 23 August 2006 KLV had lodged a bill of costs for taxation prepared on a time costing basis and claiming costs and disbursements totalling $624,119. Hampton has served a short form bill…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] SASC 360
Decision Date: 11 October 2007

CaseChat Overview and Summary

The case of Catto v Hampton Australia Limited (in Liquidation) concerned a dispute over the legal costs incurred during the proceedings. The matter was heard in the Supreme Court, where the plaintiffs sought to challenge the defendants' claim for costs on an indemnity basis, arguing that there was an agreement in place with their solicitors to charge on a time costing basis. The defendants contended that they were entitled to the costs based on an agreement that allowed them to recover costs on an indemnity basis. The central legal issues before the court were whether the plaintiffs could raise sections 42(6) and (7) of the Legal Practitioners Act to contest the time costing basis of the charges and whether there was a sufficient written agreement to allow the defendants to recover costs on an indemnity basis.

The court held that the plaintiffs were indeed entitled to contest the costs charged on a time costing basis by invoking sections 42(6) and (7) of the Legal Practitioners Act. The court found that there was no sufficient agreement in writing to satisfy the requirements of section 42(6) of the Act. The court also explored what constitutes a sufficient agreement in writing and considered variations of such agreements and the admissibility of secondary evidence to prove the existence of such agreements. Furthermore, the court addressed the issue of whether the defendants could recover the charges of interstate solicitors for work done in the action. The court concluded that, with minor exceptions, there was no sufficient agreement in writing to allow the defendants to charge on an indemnity basis.

The court ultimately ruled in favour of the plaintiffs, finding that the defendants could not recover costs on an indemnity basis due to the lack of a sufficient written agreement. The court further determined that the defendants were not entitled to recover the charges of interstate solicitors for work done in the action. The plaintiffs were therefore not required to pay the defendants' costs of the action on an indemnity basis. The court's decision provides guidance on the interpretation and application of sections 42(6) and (7) of the Legal Practitioners Act in relation to agreements concerning the basis of cost recovery in legal proceedings. The final orders of the court were that the plaintiffs were not required to pay the defendants' costs of the action on an indemnity basis, with minor exceptions noted by the court.

Orders