Commonwealth Bank of Australia v Pankaj Oswal in His Own Capacity and ATF the Burrup Trust [No 2] - [2012] WASC 180

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: COMMONWEALTH BANK OF AUSTRALIA -v- PANKAJ OSWAL IN HIS OWN CAPACITY AND ATF THE BURRUP TRUST [No 2] [2012] WASC 180

CORAM: LE MIERE J

HEARD: 16 MAY 2011

DELIVERED : 31 MAY 2012

FILE NO/S: CIV 1118 of 2011

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA
Plaintiff
AND
PANKAJ OSWAL IN HIS OWN CAPACITY AND ATF THE BURRUP TRUST
Defendant

Catchwords:

Costs - Review of taxing officer's decision upon the taxation of costs - Whether error in principle disclosed - Turns on own facts

Legislation:

Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Mr S V Forbes
Defendant: Mr D J Garnsworthy

Solicitors:

Plaintiff: Corrs Chambers Westgarth
Defendant: Hotchkin Hanly

Case(s) referred to in judgment(s):

Cruickshank v Producers Co‑Operative Ltd [1960] WAR 184

LE MIERE J: On 23 March 2011 I dismissed the defendant's application for inspection and detention of, or alternatively an interlocutory injunction in relation to, a jet aeroplane. I ordered the defendant to pay the plaintiff's costs. On 4 April 2011 I dismissed the defendant's application to discharge or set aside or vary a freezing order I had previously made against the defendant. I ordered the defendant to pay the plaintiff's costs of the application. The plaintiff filed a bill of costs claiming the costs due under both orders. The taxing officer taxed the bill. The defendant contended that the taxing officer had made an error in principle in allowing items 1 and 2 of the bill in the amount claimed in the bill and applied to the taxing officer to review the taxation in respect of those items. The taxing officer did not allow the objections and certified that she had taxed the plaintiff's bill of costs and had allowed the sum of $26,954.38 inclusive of the costs of the review. The taxing officer delivered reasons for her decision. The defendant has now applied to a judge in chambers for an order to review the taxation as to the items objected to.

The objections

The defendant's objection to item 1 is as follows:
$10,230.00 is the maximum allowed under the scale for this item and is based on two days preparation and one full day of hearing. The affidavit evidence was relatively brief and the issues were not particularly complex. The application does not warrant the maximum allowed under the scale. It is submitted that 80% of the maximum is more than reasonable, especially when regard is had to section 4.7.1 of the Consolidated Practice Directions and the Schedule of Standard Costs Orders set out in section 4.7.1.1 [7].
The defendant's objection to item 2 is as follows:
$10,230.00 is the maximum allowed under the scale for this item and is based on two days preparation and one full day of hearing. The affidavit evidence was relatively brief and the issues were not particularly complex. The defendant's solicitor's timesheet for the hearing on 23 March 2011 shows 15 units (or 90 minutes). The application does not warrant the maximum allowed under the scale. It is submitted that 50% of the maximum is more than reasonable, especially when regard is had to section 4.7.1 of the Consolidated Practice Directions and the Schedule of Standard Costs Orders set out in section 4.7.1.1. In any event, it is submitted that the maximum that can be allowed in respect of this item and item 3 of the Bill, is $10,230.00 (ie both items relate to the inspection application).

The defendant's argument

The defendant's written submissions submitted that the taxing officer erred in principle by failing to have any or any proper regard to the structure of the relevant item, that is item 10, in the scale, that is the Supreme Court Scale of Costs 2010 which is contained in the table subjoined to cl 11 of the schedule to the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010. The argument concerns item 10 of the scale which is in the following terms:

10.

Chambers ‑

(a)   Proceedings in Chambers other than proceedings to which item 11 applies

2 days preparation, 1 day hearing;

C

10,230

(b)   Attending on a reserved judgment in Chambers (including preparation, consideration of reasons for decision and all necessary work and attendances to obtain final orders)

(c)   Consent Orders including conferral but excluding extraction

per hour

1.5 hours

SP

JP

429

440

The defendant's argument proceeds as follows. Item 10 is divided into three parts. The first part has regard to time spent in preparing the application. The second part deals with time spent in court. Third, the maximum allowable only applies where all the criteria are met and the taxing officer considers it is appropriate in the circumstances to allow the maximum. As I understand it, the argument is that the taxing officer may only allow the maximum amount of $10,230 if two days were spent on preparation and the hearing lasted for a whole day. The defendant says that, in relation to item 2 on the bill of costs, the time spent in court was only one and a half hours and therefore the taxing officer erred in principle in allowing the maximum amount.
I do not accept that argument. Before the costs rules were amended in 1996 costs were based not on work done but on the value of the subject matter of the lis, a value to be fixed by the court where the claim was not for a liquidated sum. Costs allowable were not measured by the work actually done. Those relating to the initial steps in the action, to pleadings and to interlocutory proceedings, were fixed sums, differing only in accordance with the value of the subject matter which brought them within one or other of the three scales provided. The principal items in the scale comprising getting up case for trial and conduct of trial were sums fixed under the three scales, together with percentage increments: see Cruickshank v Producers Co‑Operative Ltd [1960] WAR 184, 192 (Virtue J). In 1996 the Legal Costs Committee introduced a new basis for fixing costs in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996 (the 1996 Determination).
The 1996 Determination stated in r 6(4) that the new scale of costs set out in the Schedule to the Determination reflects the fact that the costs of legal services provided in relation to Supreme Court actions are in the main calculated by reference to the time reasonably spent in the provision of those services and by applying to that time a reasonable hourly rate, that rate varying according to the seniority and experience of the practitioner and the complexity of the work. In r 7(2) the 1996 Determination stated that the new scale of costs shows the time and the fee earner whose hourly rates have been used to calculate the dollar amount in the scale. Examples are given in r 7 of the 1996 Determination of how the scale is to work. The example given in r 7(4) is illuminating:
Thus, by way of further example, it can be seen that item 2 of the Schedule applies a maximum of $540. It has been calculated on the basis of a junior practitioner taking three hours to perform the work and charging at a rate of $180 per hour. However, if in a particular case a senior practitioner performed the work and took 2.45 hours at a reasonable hourly rate of $220 per hour, the result would still be within the maximum amount allowed by the scale. It would then be a matter for the Taxing Officer to decide whether the time spent in performance of the work was reasonably spent by a practitioner of that seniority.
The example given shows that in assessing costs the taxing officer is not confined to consideration of the hourly or daily rate applicable to the fee earner specified in the fee earner column of the Scale.
I see no reason to interpret the scale to limit the amount allowable by reference to the time specified in the time column of the Scale. For example, item 1(c) in the Scale set out in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (the 2010 Determination) provides that in relation to a statement of claim the time is 10 hours, the fee earner is a senior practitioner (SP) and the maximum amount recoverable by one party from another party in relation to that item of work is $4,290. That has been calculated by allowing 10 hours of time by a senior practitioner at an hourly rate of $429. If in a particular case a junior practitioner performed the work and took 12 hours at a reasonable hourly rate of $297, as set out in the table subjoined to cl 10 of the 2010 Determination, the result would still be within the maximum amount allowed by the scale. I can see no reason why a plaintiff should not be able to recover an amount calculated by allowing 12 hours work by a junior practitioner at the rate of $297, if the time spent in performance of the work was reasonably spent by a practitioner and the hourly rate was appropriate to a practitioner of that seniority. Item 10(a) in the scale is a single item which relates to both preparation and hearing. There are not separate allowances for preparation and for hearing. There is no reason to treat the item as if it consisted of two separate items ‑ one for preparation and one for hearing - each with their own maximum. In taxing costs under item 10 the taxing officer will have regard to the amount of time spent on preparation and the amount of time spent at the hearing. But the taxing officer is not bound to lower the maximum amount that might be allowed because the hearing lasts less than one day.
The taxing officer made no error in principle in allowing the maximum amount allowed under the scale for matters in chambers notwithstanding that the time spent in court was one and a half hours and not one day as stated in the time column of item 10 in the Scale.
On the hearing of the review counsel for the defendant advanced a different argument. In essence, counsel for the defendant submitted that the taxing officer committed an error in principle in failing to have regard to the time spent on the hearing in court.
It is an error of principle for a taxing officer to fail to take into account a matter that he or she is bound to have regard to. In taxing the costs to be allowed for proceedings in chambers a taxing officer is bound to have regard to the amount of time spent in court. That is a matter specifically referred to in item 10 of the Schedule.
The defendant submits that the taxing officer did not take into account, or give proper consideration to, how long was spent in court as a consideration relevant to the costs to be allowed. Whether a particular matter has been considered properly is a question of fact to be determined upon an examination of the relevant material.
I am not satisfied that the taxing officer failed to have regard to the time spent in court. Counsel for the plaintiff informed me, without objection by the defendant, that on the taxation of costs the taxing officer examined the amount of time spent on preparation and in court as well as the seniority of the practitioners who did the work and the complexity of the case.
The objections to the amount allowed by the taxing officer did not object that the taxing officer had erred in principle by failing to have regard to the time spent in court as a relevant consideration. The objection in relation to item 2 stated that the time spent on the hearing was 90 minutes and 'the application does not warrant the maximum allowed under the scale. It is submitted that 50% of the maximum is more than reasonable'. It appears from the taxing officer's reasons for decision that at the review by the taxing officer the defendant based his objection on two grounds. One ground related to items 2 and 3 of the plaintiff's bill being considered separately. That matter is not pursued and need not be referred to further. The relevant ground argued on the review was characterised by the taxing officer as an argument based on 'proportional assessment'. The taxing officer summarised the argument put forward by the defendant's counsel as follows:
… I should give consideration to the length and complexity of the matter and should fix the costs according to the percentage of the maximum allowed, taking the maximum amount as being appropriate for the most difficult and lengthy matters [12].
The taxing officer rejected that argument. The defendant did not pursue it before me. Having disposed of that argument the taxing officer concluded:
In considering the amounts claimed in items 1 and 2 of the plaintiff's bill, I heard submissions from each party about the complexity and importance of the matter and the time spent in preparation. I had regard to the amount of time spent, the seniority of the practitioner who carried out the work and the hourly rate charged by that practitioner.
I then made a determination about whether the amount claimed was reasonable [14] - [15].
I am not satisfied that the taxing officer made any error in principle. The defendant's application to review items 1 and 2 allowed by the taxing officer will be dismissed.