| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : PERTH CITATION : COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD) -v- CHEMBRO PTY LTD [2012] WADC 128 (S) CORAM : SCOTT DCJ HEARD : 3-5 APRIL, 21 MAY & 23 OCTOBER 2012 DELIVERED : 20 AUGUST 2012 SUPPLEMENTARY
DECISION : 6 NOVEMBER 2012 FILE NO/S : CIV 1993 of 2007 BETWEEN : COSMAG PTY LTD (formerly known as TRUGRADE PTY LTD) Plaintiff
AND
CHEMBRO PTY LTD
First Defendant
PETER MICHAEL KEARNEY
Second Defendant
DENNIS KERRY McILWAIN
Third Defendant
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Catchwords: Costs order - Removing limits under Costs Determination - Plaintiff generally successful in action - Second and third defendants successful as to certain issues - Percentage reduction in plaintiff's costs Legislation: Nil Result: Second and Third defendant's to pay 90% of the plaintiff's costs
Limits not removed Representation: Counsel:
Plaintiff : Mr R I Viner QC & Ms N Robinson
First Defendant : No appearance
Second Defendant : Mr A W Pass
Third Defendant : Mr A W Pass
Solicitors:
Plaintiff : Mony De Kerloy
First Defendant : Not applicable
Second Defendant : Frank Unmack & Cullen
Third Defendant : Frank Unmack & Cullen
Case(s) referred to in judgment(s):
Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Hannell [2007] WASCA 158 (S)
Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S)
Como v Helmers [2011] WASC 179 (S)
Frigger v Lean [2012] WASCA 66
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Mackinnon v Peterson, (Unreported, NSWSC, Case No 14017 of 1988, 19 April 1989)
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Miller v Evans [2010] WASC 127 (S)
O'Rourke v P & B Corp Pty Ltd [2008] WASC 36
Oshlack v Richmond River Council [1998] HCA 11
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Pourzand v Telstra Corp Ltd [2012] WASC 210 (S)
Smith v Madden (1946) 73 CLR 129
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1 SCOTT DCJ: Following my reasons published on 20 August 2012, the parties were left to confer on the calculation of interest and the matter of costs.
2 Agreement has been reached with respect to the calculation for interest and on 23 October 2012, following written submissions there was a short appearance by counsel with respect to costs. 3 The unresolved matters in issue as to costs are as follows.
Trugrade Pty Ltd Second and third defendants 4 The second and third defendants contend that they should have their costs for those issues in the set-off in respect to which they were successful. Alternatively, the costs awarded to Trugrade ought to be reduced by an appropriate percentage to reflect those issues.
Costs determination – removing limits 5 Section 280(2) of the Legal Profession Act 2008 provides: … if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following – (a) order the payment of costs above those fixed by the determination; (b) fix higher limits of costs than those fixed in the determination; (c) remove limits on costs fixed in the determination; and (d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
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6 There are two matters that fall for determination. The first is whether, in my opinion, the amount of costs allowable with respect to these three items is inadequate. The second is whether any inadequacy is because of the unusual difficulty, complexity or importance of the matter. 7 The requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit which would be imposed by the relevant Costs Determination: HeartlinkLtd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [15], [16], [22]; Pourzandv Telstra Corp Ltd [2012] WASC 210 (S) [11]. Evidence of the costs actually incurred by an applicant will not always be required. In some cases it may be necessary to prove the criteria in s 280(2) by specific evidence. In other cases the court may be able to form a view from its knowledge of the case particularly when the judge hearing the application was the trial judge: Frigger v Lean [2012] WASCA 66 [81] – [82]. 8 An applicant is not required to demonstrate that a limit is inadequate by reference to a detailed evaluation of a draft bill for taxation: Heartlink [20] – [21]; Frigger [82]. All that is required of a court is that it form a view on the question of whether there is an arguable case to be put before a taxing officer to the effect that the limit imposed by the relevant scale would be inadequate because of the 'unusual difficulty, complexity or importance of the matter': O'Rourke v P & B Corp Pty Ltd [2008] WASC 36 (S) [20 – 21]. 9 'Unusual difficulty' suggests that a matter was more difficult than would ordinarily be expected in a matter of the kind under consideration: Como v Helmers [2011] WASC 179 (S) [18]. 10 The reference to 'importance' includes consideration of whether the work done was appropriate to the significance of the issues that arose in the litigation. The significance can be to the parties themselves or to other prospective parties, or to the public, or to the community generally: Heartlink [17- 19]. However, the fact that the matter is considered to be of great importance to the parties or even a matter of significance to others beyond parties may not be enough: Miller v Evans [2010] WASC 127 (S) [36] – [37].
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11 The assessment of the question of whether or not there is 'unusual difficulty, complexity or importance' is essentially a value judgment having regard to the court's experience of the particular case and compared to the usual run of cases: O'Rourke [23] – [24].
Whether scale items inadequate 12 The relevant scale items are as follows: Item | 2006 Scale | 2010 Scale |
Statement of claim | 3,630 | 4,290 |
Giving discovery of documents | 3,630 | 4,290 |
Getting up | 36,300 | 51,480 | 13 There is no evidence in support of Trugrade's application detailing the chargeable time spent with respect to each of these items. True it is that as the trial judge I can rely upon my knowledge of the case to gain an impression as to the tasks which were likely required to be undertaken by the solicitors for Trugrade. 14 However, without any evidence as to the chargeable time spent by the solicitors for Trugrade it is extremely difficult to form an opinion as to the asserted inadequacy of any scale item.
Statement of claim 15 As to the statement of claim counsel for Trugrade submits that the limit is inadequate because there were four amendments to the statement of claim largely due to the ongoing accounting reconciliation by Trugrade and amendments to the defence and set-off. 16 Because there were amendments to the statement of claim both the 2006 Scale and the 2010 Scale will apply. 17 The statement of claim comprised 17 paragraphs plus the prayer for relief. Essentially what was pleaded were the material facts relating to the guarantee alleged by Trugrade to have been entered into by the second (Page 7)
and third defendants, the asserted repudiation by Chembro in November 2006 and the consequences flowing from it. The sum claimed by Trugrade against the defendants reflected the conclusions in Mr Pickup's report. 18 The pleading was neither lengthy nor evidently complex. I am not persuaded that the limit in either scale is inadequate.
Discovery 19 Counsel for Trugrade submits that the discovered documents in the plaintiff's trial bundle numbered 385 pages consisting primarily of single page invoices and emails. Counsel says that the defendant's discovered documents in its trial bundle comprised 315 pages in one volume and a further 43 pages in another and that there was progressive discovery given by the defendants. 20 As to the defendant's discovery I note that there is a separate item in those scales affording costs to Trugrade for inspecting those documents. 21 Because of the nature of this case there was inevitably a need to collate invoices and other documents relating to the business transacted between Trugrade and Chembro. I have no way of knowing the time spent by Trugrade's solicitors in undertaking that task. 22 From the evidence at trial I know that Trugrade had an MYOB accounting system which generated the invoices. I assume that the invoices were readily retrievable. 23 On the evidence before me and the matters known to me as the trial judge I am not satisfied that there is a fairly arguable case that the taxing officer may tax the discovery item in an amount which is greater than the limit in either scale.
Getting up 24 As to this item counsel for Trugrade submitted that great deal of work was undertaken as part of the preparation for trial including: (a) detailed proofs of evidence from non-expert witnesses in relation to the complex legal issues of termination/repudiation and the scope of the guarantee. A number of witness statements were not used at trial; (Page 8)
25 Counsel said that there were 90 exhibits at trial in addition to which Trugrade prepared a number of lever arch files containing documents which may have been required at trial. 26 Primarily the issues in this case related to: 27 Again, I am hampered in my determination by the absence of any evidence with respect to the time taken in getting this case up for trial. I would expect that the majority of work under this item was undertaken after the implementation of the 2010 Scale as to which the total allowed (item 17) is $51,480. 28 This was a four day trial plus a further short appearance during which counsel spoke to written closing submissions. There were four witnesses who gave evidence at trial including Mr Pickup, the independent expert retained by Trugrade. One of the witnesses, Patrick Kennedy, was a brief witness. 29 On the evidence available to me and having regard to my overall impression of this case and the work reasonably required to get it up for trial, I am not persuaded that the relevant item is inadequate.
Whether there was unusual difficulty, complexity or importance 30 Given my determination with respect to the adequacy of the items in the respective scales there is, in reality, no need to deal with the issue of (Page 9) difficulty, complexity, or importance to which s 280(2) refers. Nonetheless I will briefly do so. 31 Counsel for Trugrade submitted that this was a case where there were unusual difficulties or complexities. They involved, she said, consideration as to whether there was an enforceable guarantee by the second and third defendants and whether there was conduct which amounted to a repudiation of the agreements between Trugrade and Chembro. There was an examination of voluminous materials relating to the accounting between the parties, the identification and collation of those documents to which reference needed to be made at trial and the requirement to brief an appropriate accounting expert to give evidence at trial. 32 This was not a lengthy trial. Whilst there were a number of discovered documents as I say, in the main, they comprised invoices and emails between the parties. Whilst the parties were not ad idem with respect to the documents which related to particular transactions and specifically the manner in which there were credits which pertained to various orders and deliveries, those matters were no more difficult nor complex than issues about which one would ordinarily expect to require exploration during the course of a civil trial. 33 In, my view of the issues raised in this case were not unusually difficult nor complex. 34 Certainly, as is the case with all litigation, the outcome is important to the parties. This was not a case which raised issues which were important in the public interest. Nor was it a case in which there were issues or an outcome which was of relevant interest to other than the parties.
Briefing senior counsel 35 Until the 2006 Costs Determination, there was a need for the trial judge to certify the retention of senior counsel or second counsel. In the 2006 Costs Determination that requirement was removed, leaving it to the taxing officer to make an assessment as to whether he/she is satisfied that the briefing of senior counsel was reasonably necessary in the circumstances. Consequently, that is not a matter for me. Counsel agree. (Page 10)
Issues in respect to which Trugrade not successful 36 In Amaca Pty Ltd (formerly James Hardy & Co Pty Ltd) v Hannell [2007] WASCA 158 (S), the court said: The power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernable way [7]. 37 Whilst the court may, in the exercise of its discretion, order that a successful party recover only a portion of its costs where that party has been unsuccessful in respect of certain discrete issues, that should not be done as a matter of course. To embark as a general practice upon an analysis of which party was successful on each issue, or necessarily to deprive a successful party of some portion of its costs if it has lost on a particular issue, would be likely to add further uncertainty and complexity to the outcome of litigation, derogate from the prospect of settlement and oblige the court to hear lengthy and frequent arguments in relation to costs as an additional burden on its resources and the costs of the parties: Bowen v Alsanto Nominees Pty Ltd [2011] WASCA 39 (S) which cited with approval, Mackinnon v Peterson, (Unreported, NSWSC, Case No 14017 of 1988, 19 April 1989); Oshlack v Richmond River Council [1998] HCA 11. 38 In Bowen the court added that while parties should be encouraged to consider carefully what matters they put in issue, justice may not be served if by too ready a resort to deciding questions of costs according to success on particular issues, parties are dissuaded by the risks of costs from canvassing all issues which might be material to the decision in the case. 39 In the event that a defendant succeeds on its counterclaim then generally the defendant should have the costs of the counterclaim which ought to be referable to the further or increased costs reasonably incurred in bringing the counterclaim: Smith v Madden (1946) 73 CLR 129, 133. That is particularly so where the claim and the counterclaim deal with different issues. 40 Counsel for the first and second defendants submitted that in this case if Chembro was not deregistered, it would have raised as a counterclaim matters asserted in the set-off. (Page 11)
41 The items which could conceivably have been the subject of a counterclaim are those pleaded in par 15 of the set-off which I dealt with in par 236 and par 237 of the Reasons. Those items totalled $6,711.94. Out of 11 items, only three were determined in a manner favourable to the first and second defendants. The matters the subject of those items occupied very little time in the context of these proceedings. 42 The issues in which Trugrade was unsuccessful and which were of more significance comprised: 43 These were matters which were raised by the first and second defendants in response to Trugrade's claim and in respect to which the first and second defendants were successful, thereby resulting in Trugrade being awarded a sum significantly less than that which it claimed. To that end the first and second defendants were successful in contending that: (a) Trugrade was not entitled to reverse the commission payments which it had credited to Chembro after November 2006. Those payments were in the vicinity of $17,000; (b) the total sum of $32,312.50 was not an amount for which Chembro was liable to Trugrade having regard to the date from which Chembro ordered goods; and (c) the sum of $25,740 related to rent for which the first and second defendants were not liable pursuant to the guarantee Trugrade had maintained that the amount of the rent outstanding was $7,880. 44 The court needs to consider the realities of the case (in respect to costs) in an attempt to do justice between the parties: see Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 574. (Page 12)
45 In my view, the first and second defendants in the context of this case, have had success in respect to certain issues which were sufficiently discrete in their nature to make an appropriate determination as to the costs consequences which ought to favourably flow to them. 46 Those issues in which the second and third defendants were successful were of some consequence in the scope of this litigation – bearing in mind that, in the end, Trugrade was the generally successful party. 47 The repudiation issue required exploration in the evidence given by Richard Kennedy and the second defendant. The issues of the date from which Chembro was liable to Trugrade and the appropriation of payments were the subject of examination and cross-examination of Mr Pickup, Richard Kennedy and the second defendant. In addition these matters were dealt with albeit rather briefly, by counsel for the second and third defendants in oral and written submissions. 48 In my view the order which I consider reflects the justice between the parties is to reduce the costs recoverable by Trugrade by 10%. 49 I will hear the parties as to the costs of this application.
Summary 50 The orders which should be made are: 1. There be judgment for the plaintiff against the second and third defendants jointly and severally in the sum of $157,231.29 being $76,646.01 for claim and $80,585.28 for interest. 2. The limits fixed in the Costs Determinations shall not be removed. 3. The second and third defendants to pay 90% of the plaintiff's taxed costs. Those costs to include one expert witness, the plaintiff's additional written submissions dated 30 July 2012 and all reserved costs.
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