Charitopoulos v DJH Crowd Management (No 2)
[2009] SASC 241
•14 August 2009
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
CHARITOPOULOS & ORS v DJH CROWD MANAGEMENT (No 2)
[2009] SASC 241
Reasons of Judge Lunn a Master of the Supreme Court
14 August 2009
PROCEDURE - COSTS
Costs on an interlocutory order refusing extension of time for caveat to be payable forthwith - bankruptcy of a plaintiff and substitution of his trustee precluding any set off on costs - fixing party and party costs at a lump sum - process applicable - not reduction on amounts charged as between solicitor and own client but fixing amounts for items of work done - lump sum fixed.
CHARITOPOULOS & ORS v DJH CROWD MANAGEMENT (No 2)
[2009] SASC 241Reasons on defendant’s applications for costs to be fixed as a lump sum and to be payable forthwith.
JUDGE LUNN:
Background.
Pantelis Charitopoulos, Marina Nikolakakis and Rosa Charitopoulos (“the initial plaintiffs”) instituted this action on 19 December 2008. The only relief sought in their summons was an extension of the time for the removal of a caveat which they had previously placed over land in South Australia owned by the defendant to secure repayment of an alleged loan by them to the defendant. The defendant is a company which carries on business in Victoria. It denies it was the borrower and has warned the caveat. On 19 December the initial plaintiffs took out an interlocutory application seeking an order for the extension of the caveat. At a hearing on 22 December I extended the caveat until 22 January 2009, gave directions for the filing of affidavits and set 20 January for the hearing of an argument about whether the caveat should be further extended. On 20 January I heard the argument and reserved my decision. I further extended the caveat until further order to allow me to consider my judgment. At a hearing on 11 February I discharged the order for the extension of the caveat but stayed the operation of the order until 16 February for the initial plaintiffs to consider whether they wished to appeal. I ordered that the initial plaintiffs were to pay to the defendant its costs of the interlocutory application as agreed or adjudicated upon. On 16 February I was informed there would be no appeal and I gave directions for the initial plaintiffs to extend their claim by filing a statement of claim seeking further relief other than the extension of the caveat.
In early May 2009 the first initial plaintiff, Pantelis Charitopoulos, was declared bankrupt and Phillip Aggs became his trustee in bankruptcy. On 26 May 2009 I gave permission to substitute that trustee for Pantelis Charitopoulos as the first plaintiff in the action. This was not done properly, but has been subsequently amended to make the action heading correctly read that it is between the initial plaintiffs up until 26 May 2009 and thereafter between Phillips Aggs, Marina Nikolakakis and Rosa Charitopoulos as plaintiffs and the defendant.
By an application of 16 June 2009 the defendant has applied under 6R 265 that the costs ordered on 11 February in its favour be payable forthwith and that those costs be fixed under 6R 264 at a lump sum.
Costs payable forthwith.
I consider that the Court should order the costs to be payable forthwith on the exercise of a general judicial discretion for the following reasons:
Firstly, the costs relate to a discrete issue in the action which has been concluded: Alsom Power Ltd v Yokogawa Australia Pty Ltd (No 2) (2006) 243 LSJS 65.
Secondly, the statement of claim filed on 27 April 2009 raises substantial issues which are contested by the defendant. It is likely to take considerable time for these issues to be resolved and for the principal proceedings to be concluded.
Thirdly, one of the reasons for interlocutory costs not being payable immediately is because of the possibility of other interlocutory costs orders being made in the action in favour of the plaintiffs and there being a set-off between such orders: H Stanke & Sons Pty Ltd v von Stanke (No 2), White J, 16 May 2007, [2007] SASC 109. The bankruptcy of the first initial plaintiff means there cannot be any set-off against costs orders made in the future in favour of the present plaintiffs.
Fourthly, there is a reasonable prospect that if the defendant is to prove in the bankruptcy of the first initial plaintiff for the costs payable under the order of 11 February, it will need to do so before this action is finalised. It also may wish to test whether it can recover those costs from the second and third initial plaintiffs before deciding whether it needs to prove in that bankruptcy.
Fixing of lump sum costs.
Under 6R 264(5)(c) the Court may award costs by way of a lump sum. Although I have already ordered that the costs be as agreed or adjudicated, I can vary that order to substitute a lump sum. The plaintiffs’ solicitor does not oppose my now fixing a lump sum for these costs.
A formal adjudication of the costs under 6R 273 would be likely to cost the parties some thousands of dollars. I estimate that if the initial plaintiffs did not make a sufficient offer on these costs, the defendant would be likely to recover as between party and party at least an additional $2,000 for the costs of a full adjudication on the order of 11 February 2009. In the light of the amount of the costs at stake, as set out below, this is an unwarranted expense if it can be avoided without injustice to any of the parties.
As a taxing Master in the Court I am in the fortunate position of having a good working knowledge of what costs are likely to be allowed on an adjudication. The parties all invited me to use that experience in fixing a proper lump sum for the costs ordered on 11 February 2009.
The defendant put before me the bills which the Melbourne solicitors for the defendant, its Adelaide solicitors and its Adelaide counsel had rendered for their work in the matter. These bills are between solicitor and own client and are not confined to the work which is the subject of the order. The only papers which I have seen are those which have been filed. I have not seen the solicitors’ files. The various accounts which I have been given are in fairly general terms and in the case of the Victorian solicitors do not show the amounts claimed for individual items of work. The solicitors’ bills are also formulated in time costing units and not on items under the Court Scale. I can only do the best that I can with the material which the defendant has seen fit to put before me. Insofar as there is any uncertainty about what work was done and the basis upon which it can be costed under the Scale, fairness requires that I should favour the initial plaintiffs on those issues: Harrison v Schipp (2002) 54 NSWLR 738.
The defendant’s counsel submitted that I should assess the lump sum amount by deducting a percentage of the amounts actually charged by the defendant’s Victorian and the Adelaide solicitors. While this was the approach endorsed in Cornwall v Rowan (No 4), Full Court, 13 April 2006, Judgment no [2006] SASC 111, I do not consider it is the most appropriate method of assessing the lump sum costs in the circumstances of this case. Where the costs are of a discrete interlocutory application, as here, the better approach for a Master experienced in taxing costs is to look at the items of work properly chargeable under the Scale and fix the amounts properly allowable for that work. In this matter a percentage discount approach is also complicated because the solicitors’ bills include a substantial amount of other work in the action which is not the subject of the costs order.
In fixing the costs I act on the following principles of adjudication:
Firstly, the costs allowable under 6R 274(3)(a) are only those which I find to be for work which was necessary and reasonable, ie on a party and party scale.
Secondly, the profit costs are those set out in the First Schedule to the Supreme Court Civil Rules 2006 for the items of work contained in that Scale.
Thirdly, the Adelaide solicitors are to be treated as the principal solicitors and work is only to be allowed which was done by the Victorian solicitors where it was necessary and reasonable that such work should have been done in Victoria. It is not reasonable that the initial plaintiffs should have to pay for “double handling” by both the Victorian and the Adelaide solicitors. It would have been reasonable for the defendant to have instructed Adelaide solicitors directly and for those Adelaide solicitors to have used the Victorian solicitors as their agents for the small amount of work that needed to be done in Victoria. Insofar as work was done by the Victorian solicitors which ought to have been done by the Adelaide solicitors I have allowed costs for it as if it was done by the Adelaide solicitors. Insofar as work was properly done by the Victorian solicitors I have allowed it on the South Australian Scale as I do not have sufficient information to apply any Victorian scale to it.
Fourthly, the defendant only has an order for the costs of the interlocutory application and not for the costs of the action. It is difficult to differentiate whether some work was specifically for the interlocutory application rather than for defence of the action generally. Insofar as that work is not being allowed, it can be claimed later if the defendant ultimately obtains an order for the costs of the action.
The lump sum costs are assessed as follows:
21 Drawing of defendant’s affidavits – 6 pages
22 $390.00
23 Perusal of plaintiffs’ affidavit – 17 pages at $10
24 $170.00
25 Perusal of exhibits to plaintiffs’ affidavits and to the defendant’s affidavits, the interlocutory application, 2 sealed orders and the reasons for judgment – 103 pages at $7.20
26 $741.00
27 Instructions for affidavit of Mr Hedgcock
28 $263.00
29 Instructions for affidavit of Mr di Russo
30 $263.00
31 Attendances to swear Mr Hedgcock and Mr di Russo to their affidavits and marking exhibits
32 $100.00
33 Mr Hamilton attending to be sworn to his 2 affidavits and marking the exhibits
34 $42.00
35 Copying of exhibits to defendant’s affidavit – 29 pages
36 $29.00
37 Copies to serve of defendant’s affidavits and exhibits – 35 pages
38 $35.00
39 Filing and serving affidavits
40 $63.00
41 Obtaining copy of District Court file
42 $100.00
43 Photocopying documents for counsel’s brief – 120 pages
44 $48.00
45 Paging and collating etc of brief for counsel
46 $195.00
47 Attendances to instruct counsel
48 $263.00
49 Real estate searches
50 $100.00
51 Communications with Victorian agents both ways and including initial instructions on application
52 $500.00
53 Communications with plaintiffs’ solicitors
54 $100.00
55 Reporting to defendant
56 $120.00
57 Mr Hamilton attending on hearing 22 December 2008
58 $163.00
59 Instructing solicitor attending on argument 20 February 200 (1 ½ hours)
60 $400.00
61 Ms Flavell attending on hearing on 16 February 2009 ( ½ only)
62 $82.00
63 Subtotal:
64 $4,167.00
65 Increase on First Schedule 6R 264(3B) 6.2%
66 $258.00
67 Reading fee to Mr Dal Cin
68 $600.00
69 Hearing fee to Mr Dal Cin
70 $870.00
71 Mr Dal Cin attending on judgment
72 $145.00
73 Copying fee to District Court
74 $80.30
75 LTO search fees
76 $35.28
77 Allowed at
78 $6,155.58
I have today ordered:
1Paragraph 3 of the order of 11 February 2009 varied to substitute “fixed at $6,158.88” for “as agreed or adjudicated”.
2Such costs to be payable forthwith.
3Question of costs of FDN 24 reserved.
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