Craig v Troy
[2000] WASC 74
•24 MARCH 2000
CRAIG & ORS -v- TROY & ORS [2000] WASC 74
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2000] WASC 74 | |
| Case No: | CIV:2668/1991 | 16 FEBRUARY 2000 | |
| Coram: | McKECHNIE J | 24/03/00 | |
| 13 | Judgment Part: | 1 of 1 | |
| Result: | Application for review dismissed | ||
| PDF Version |
| Parties: | WARREN ASHLEY CRAIG DELYS JOAN CRAIG TRIGG ALEXANDER CRAIG ELSJA ELIZABETH CRAIG MANSON BASIL CRAIG DIAMOND "C" PTY LTD MAXWELL LEONARD TROY ANTHONY ROBERT CONNOLLY PETER JOHN MESSER ROBERT JOHN GRAY RODNEY JOHN LEWIS GEOFFREY JAMES STOKES PETER LAWSON MUNACHEN DOMENIC VINCENT MARTINO ANGUS CLAYMORE PILMER ALAN ROBERT CRAWFORD ALDO BONAVITA |
Catchwords: | Costs Special order Taxation by reference to a schedule Whether appropriate Unpaid expenses for expert Whether claim can be allowed "Necessary expense" |
Legislation: | Supreme Court Rules, O 66 r 19, Fourth Schedule Item 13 |
Case References: | Australian Coal & Shale Employees' Federation v Commonwealth (1953) 94 CLR 621 Bowen Buchbinder Vilensky v Banning, unreported; FCt SCt of WA; Library No 960235; 20 June 1996 Corwest Management Pty Ltd v Deputy Commissioner of Taxation (WA) (1987) 18 ATR 823 Craig v Troy (1997) 16 WAR 96 Cruickshank v Producers' Market Co-operative Ltd [1960] WAR 184 In re Eden; Watkins v Eden [1920] 2 KB 333 McConnell v Nationwide News Pty Ltd, unreported; SCt of WA (Owen J); Library No 920670; 10 December 1992 Ozols & Somerford v Trotman, unreported; SCt of WA (Steytler J); Library No 950412; 9 August 1995 Sadd v Griffin [1908] 2 KB 510 Stobbart v Mocnaj [1999] WASC 252 Tenbohmer v Eden (1992) 6 WAR 366 Email Ltd v Kaddour Weston Milling, unreported; NSW Court of Appeal; No 9601098; 27 March 1996 Grigoletto v Myer Properties WA Ltd, unreported, DCt of WA (Heenan DCJ); 31 March 1993 Magna Alloys & Research Pty Ltd v Coffey [No 2] [1982] VR 97 Re National Safety Council of Australia, Victorian Division (In Liq) (No 2) (1992) 1 VR 485 Schweppes Ltd v Archer (1934) SR (NSW) 178 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- DELYS JOAN CRAIG
First Plaintiffs
TRIGG ALEXANDER CRAIG
ELSJA ELIZABETH CRAIG
MANSON BASIL CRAIG
Second Plaintiffs
DIAMOND "C" PTY LTD
Third Plaintiff
AND
MAXWELL LEONARD TROY
First Defendant
ANTHONY ROBERT CONNOLLY
PETER JOHN MESSER
ROBERT JOHN GRAY
RODNEY JOHN LEWIS
GEOFFREY JAMES STOKES
PETER LAWSON MUNACHEN
DOMENIC VINCENT MARTINO
ANGUS CLAYMORE PILMER
ALAN ROBERT CRAWFORD
Second Defendants
(Page 2)
- ALDO BONAVITA
Third Defendant
Catchwords:
Costs - Special order - Taxation by reference to a schedule - Whether appropriate - Unpaid expenses for expert - Whether claim can be allowed - "Necessary expense"
Legislation:
Supreme Court Rules, O 66 r 19, Fourth Schedule Item 13
Result:
Application for review dismissed
Representation:
Counsel:
First Plaintiffs : Ms K A Vernon
Second Plaintiffs : Ms K A Vernon
Third Plaintiff : Ms K A Vernon
First Defendant : No appearance
Second Defendants : Mr G I Macnish
Third Defendant : No appearance
Solicitors:
First Plaintiffs : Arthur Metaxas & Co
Second Plaintiffs : Arthur Metaxas & Co
Third Plaintiff : Arthur Metaxas & Co
First Defendant : No appearance
Second Defendants : Cocks Macnish
Third Defendant : No appearance
(Page 3)
Case(s) referred to in judgment(s):
Australian Coal & Shale Employees' Federation v Commonwealth (1953) 94 CLR 621
Bowen Buchbinder Vilensky v Banning, unreported; FCt SCt of WA; Library No 960235; 20 June 1996
Corwest Management Pty Ltd v Deputy Commissioner of Taxation (WA) (1987) 18 ATR 823
Craig v Troy (1997) 16 WAR 96
Cruickshank v Producers' Market Co-operative Ltd [1960] WAR 184
In re Eden; Watkins v Eden [1920] 2 KB 333
McConnell v Nationwide News Pty Ltd, unreported; SCt of WA (Owen J); Library No 920670; 10 December 1992
Ozols & Somerford v Trotman, unreported; SCt of WA (Steytler J); Library No 950412; 9 August 1995
Sadd v Griffin [1908] 2 KB 510
Stobbart v Mocnaj [1999] WASC 252
Tenbohmer v Eden (1992) 6 WAR 366
Case(s) also cited:
Email Ltd v Kaddour Weston Milling, unreported; NSW Court of Appeal; No 9601098; 27 March 1996
Grigoletto v Myer Properties WA Ltd, unreported, DCt of WA (Heenan DCJ); 31 March 1993
Magna Alloys & Research Pty Ltd v Coffey [No 2] [1982] VR 97
Re National Safety Council of Australia, Victorian Division (In Liq) (No 2) (1992) 1 VR 485
Schweppes Ltd v Archer (1934) SR (NSW) 178
(Page 4)
- McKECHNIE J:
Introduction
1 This is an application by the plaintiffs who are dissatisfied with the certificate of the taxing officer in relation to two aspects of a taxation of costs.
2 The history of the litigation is set out in Craig v Troy (1997) 16 WAR 96. It can be seen from that decision the action was both long and complex.
History of Taxation
3 On 24 June 1998 the plaintiffs, who were the successful party in the litigation, filed a bill of costs for taxation pursuant to the order of the Full Court made on 13 May 1997. The costs order made by the trial Judge and followed by the Full Court provided that an allowance for getting up be made without regard to the limit set in item 13 of the Fourth Schedule.
4 The amount in issue in the action was $5,346,867.
5 The bill of costs sought an amount of $899,843.70 in total of which the sum of $600,000 was claimed for getting the case up for trial.
6 The matter came before the taxing officer on a number of occasions between August 1998 and May 1999 and eventually two items remained in contention.
7 The first was the allowance to be made in respect of getting up for trial under the Fourth Schedule item 13.
8 The second item in contention comprised fees charged by an expert accountant, those fees being partly unpaid.
9 The taxing officer published written reasons on 9 August 1999 for allowing the sum of $266,705 for getting up for trial under item 13.
10 As to the expert's fees, an amount of $43,492 was sought. The taxing officer allowed the amount actually paid, namely $20,521.65, and the balance of $22,970.35 which remained unpaid was disallowed.
11 Following taxation the plaintiffs sought a review by the taxing officer. On 22 December 1999 the taxing officer published further
(Page 5)
- reasons, dismissing the objections. He then signed the allocatur in the sum of $496,595.12.
12 The plaintiffs seek a review of the taxing officer's decision by a Judge of this Court under O 66 r 55. The grounds advanced for the review to the taxing officer are the same as those advanced to the taxing officer by way of objection.
The amount allowed for getting up: Fourth Schedule Item 13
13 The plaintiffs contend that the Registrar erred on a matter of principle in two respects:
First Ground of Objection: Manifest Inadequacy
"1 an error of discretion in allowing the sum of $266,705 in respect of item 9A of the bill of costs in that the amount allowed was too low having regard to all the relevant considerations;"
14 The ground asserts that the amount allowed was too low.
15 The making of an award of costs is an exercise in discretion. The general principles which govern the exercise of judicial discretion and the limitation on the review of that discretion are well known: Australian Coal & Shale Employees' Federation v Commonwealth (1953) 94 CLR 621 per Kitto J at 627.
16 A person challenging the exercise of a taxing officer's discretion will not generally succeed unless it is shown that the taxing officer acted on a wrong principle, took into account irrelevant considerations, failed to take into account relevant considerations or when the total sum allowed is either manifestly excessive or inadequate. I will assume that by using the words "too low" the plaintiffs are asserting that the amount allowed for getting up in itself manifests error.
17 The maximum allowance on $5,346,867 under the scale in the Fourth schedule was $112,437.34.
18 The Court had ordered that the costs be taxed without regard to the limit on the scale.
(Page 6)
19 The amount allowed by the taxing officer was more than double the scale amount. Although the taxing officer referred to this fact, it is of limited assistance, and liable to distract if not carefully used.
20 The approach of a Judge in deciding to make a special order is set out by Owen J in McConnell v Nationwide News Pty Ltd, unreported; SCt of WA; Library No 920670; 10 December 1992, Owen J said:
"That brings me back to the amount of work done. The task which the Judge must perform is to assess the materials which are available to him or her to decide whether the work was done, whether it was reasonably done and whether the limits in the scale would reasonably compensate for the work done. The judge is not the taxing master.
It would not be appropriate, nor is it necessary to review the schedule of work item by item and to assess its worth. That is the job of the taxing officer. The judge's task is to look at the schedule in the context of the proceedings as they were conducted and to ascertain whether it would be fair and reasonable to make a special order".
- See also Tenbohmer v Eden (1992) 6 WAR 366.
21 An order to tax without regard to the limit in the scale means just that. It is a direction to the taxing officer to have regard to the history, complexity and other special circumstances of the particular matter in making an assessment of a proper amount to be awarded. It is not helpful to refer back to the schedule as a guide once a special order has been made. Rather, the taxing officer should focus upon the subject matter itself.
22 Pursuant to evidence presented by affidavit, the plaintiffs had incurred costs of $1.1M, so that the total amount recoverable by way of taxed costs was slightly less than half the actual costs.
23 It may be observed that party and party costs are not intended to provide a full indemnity for the costs of litigation: Stobbart v Mocnaj [1999] WASC 252.
24 The plaintiffs argue that the action took five years to get to trial and the trial lasted 36 days. Each party had senior and junior counsel. The matter was complex, difficult and important.
(Page 7)
25 The plaintiffs submit that the amount allowed was only 44 per cent of the total amount claimed of $600,000 in respect of getting up. This is an unhelpful argument as it depends on a premise which may not be established, namely that $600,000 is a reasonable amount to claim for getting up the case for trial. The issue is not whether 44 per cent is reasonable, but whether $600,000 is reasonable.
26 The authorities to be applied in assessing whether the quantum of the amount allowed itself demonstrates an error of principle are gathered together by Steytler J in Ozols & Somerford v Trotman, unreported; SCt of WA (Steytler J); Library No 950412; 9 August 1995 at 7 - 9.
27 Counsel for the plaintiff several times used the phrase "taxation of costs is an art, not a science" in supporting her arguments generally.
28 Undoubtedly the old style of taxation line by line, item by item has long gone: Cruickshank v Producers' Market Co-operative Ltd [1960] WAR 184. However, that is not to say a taxation officer is permitted or required to guess at an appropriate figure. The arrival at a proper allowance for the costs for getting up a case for trial is an exercise in judicial discretion. It is an "art" only to the extent that a taxing officer brings to the exercise of his or her discretion, experience gained in other taxations relating to matters of differing complexity, importance and difficulty.
29 Counsel asked the Court to:
"… look at the amount that was allowed having regard to the available material that was before the taxing officer and then to determine if that amounted to an error in his discretion. … It's not the function of the judge to have to go then and tax the bill again."
30 I have done that exercise. As a result there is no basis for concluding the taxing officer's discretion miscarried by reason that the amount allowed for getting up the case for trial is so low as to manifest error.
Second ground of objection: Taxing the Schedule not the Bill
"2 an error of law or an error of discretion in allowing $266,705 in respect of item 9A of the bill of costs in that the learned taxing officer taxed the schedules to the bill of costs when he should have taxed the bill itself;"
(Page 8)
31 In his reasons of 9 August 1999, the taxing officer said as follows:
"In order to arrive at an allowance for getting up I have considered the submissions made in the taxation, the schedules to the bill, the breakdowns provided by the parties and the Court file generally. In doing so and whilst I have on occasions arrived at figures by multiplying a number of hours by an hourly rate, in all cases I have arrived at a figure by an assessment as to what I think is reasonable in all the circumstances. I am conscious in this respect of the enormous difference between the parties as to the amounts that should be allowed in respect of particular pieces of work. For example, the plaintiffs say that I should allow $100,000 for the reviewing of documents by their solicitors whilst the second defendants say that $18,900 would be reasonable. Similarly, the plaintiffs seek $95,000 for the preparation of trial bundles whereas the second defendants say that $4,500 would be reasonable."
32 In dealing with the objection to taxation in his reasons of 9 December 1999, the taxing officer amplified the manner in which he arrived at an allowance for getting up in the following way:
"Bearing in mind that the amount sought for getting up was $600,000 as against a maximum scale allowance of $112,437.34, it was and remains my view that the appropriate way to arrive at an allowance for getting up was to endeavour to break it down into its various elements and consider what should be allowed for each. The amount claimed for getting up was such that I would not have felt comfortable proceeding, as one does in other taxations, by considering the nature of the matter, the amounts in issue, its complexity, the work performed and the like and then arriving at a lump sum figure for getting up. Having decided that I would arrive at an allowance for getting up by allocating an amount to each of the different elements of getting up, it seemed appropriate to give the parties an opportunity to say something about the various elements and the amounts that should be allocated to each by having them provide me with schedules which deal with this. This they then did. I considered the various elements, which from my point of view covered all the work comprised in getting up, and then set out the reasons delivered on 9 August 1999 allocated an amount to each element. By so doing the parties could see how the proposed allowance for getting up is
(Page 9)
- arrived at. This seemed to me to be a fair way of proceeding to assess the allowance for getting up."
33 The plaintiffs submit that on the authority of Ozols & Somerford v Trotman (supra), a taxing officer is not required to tax the bill by reference to the schedule as that would amount to a taxing of the schedule. It is also argued that the categories adopted in the schedule are indicative only of the processes adopted in arriving at an overall allowance for getting up and cannot be regarded as exclusive.
34 I do not consider Ozols & Somerford v Trotman stands for the proposition contended by the plaintiffs.
35 It was submitted to Steytler J in Ozols & Somerford v Trotman that the taxing officer was required to review the schedule item by item in assessing the reasonableness of the work done.
36 Steytler J considered that the taxing officer in the case had made no error of principle when the taxing officer said at p 10 of his reasons:
"I do not believe there is any rule to the effect that schedules detailing each and every piece of work performed, the time taken on each such item and the amount charged for each such item, should be provided in support of a bill. In the event that such a schedule is provided, as is the case here, I do not believe I am required to tax the bill by reference to the schedule. That would effectively amount to the taxing of the schedule. …"
37 In my opinion Ozols & Somerford v Trotman is authority only for the proposition that a taxing officer is not required to calculate costs by reference solely to a schedule. The taxing officer must consider the nature of the matter, its complexity, the amount in issue and the amount and nature of the work performed.
38 Ozols & Somerford v Trotman is not, however, authority for the proposition that a schedule is irrelevant. In assessing the mix of factors necessary to arrive at an amount for reasonable costs, it will often be helpful for a taxing officer to have regard to a schedule.
39 In the present case a schedule was provided by the plaintiffs, giving detailed calculations which led to an overall figure of $600,000 for getting up the case for trial. The categories adopted in the schedule were somewhat more than "indicative only" as counsel for the plaintiffs submit in these proceedings. They were detailed and purported to account for
(Page 10)
- every cent of $600,000. In the plaintiffs' bill of costs for taxation, the following item appears:
"9A Getting up for trial (see schedule B) item 13 Scale amount $113,435 Above Scale $600,000".
41 Provided a taxing officer bears in mind the ultimate purpose of the exercise, there is no error in principle in an appropriate case to use a schedule as a guide. In the present case the reasons of the taxing officer indicate that he had carefully in mind the appropriate object of the exercise of taxation and did not place undue weight on the schedule.
42 For these reasons I dismiss the second ground of objection.
43 It appears that the plaintiffs' solicitors essentially carried the plaintiffs for a long period after the plaintiffs fell into financial difficulties. This is to be applauded. Under the costs scales current during the litigation, this action by the solicitors is not a matter which can be acknowledged by passing on a specific burden of costs to the losing party.
44 Having regard to the manner of approach by the taxing officer and the detailed way in which he proceeded to arrive at the final sum for getting up for trial, I am unpersuaded that the result manifests an error sufficient to disturb the allocutor.
Third ground of objection: The unpaid expert's fees
45 Mr Alan Boys, who is a partner of Coopers & Lybrand (later Horwath & Horwath) was engaged as an expert accountant for the plaintiffs and in that position prepared a comprehensive report which was highly material to the subject matter of the litigation.
46 A bill of $43,492 was rendered by Mr Boys, but the sum of $20,521.65 only was paid. This was because of the straitened financial circumstances of the plaintiffs.
47 The taxing officer took the view that O 66 r 19 precluded the payment of any fee which was unpaid. Order 66 r 19 provides as follows:
(Page 11)
- "19. Allowances on Taxation
In addition to the items of costs allowable under any relevant scale and such counsel fees as may be allowed, all disbursements for fees of court, fees of officers, witness expenses actually paid according to the scale of allowances fixed in the said scale in that regard, agency charges, if specially allowed by the court or by the taxing officer, the reasonable expenses as fixed by the taxing officer of the typing, printing and binding of appeal books, and other necessary payments and expensesincurred in the conduct of the litigation shall be allowable". [my italics]
48 There is no question that if the amount payable to Horwath & Horwath is properly characterised as a disbursement, then the amount unpaid cannot be allowed: Sadd v Griffin [1908] 2 KB 510 at 512 (cf In re Eden; Watkins v Eden [1920] 2 KB 333); Bowen Buchbinder Vilensky v Banning, unreported; FCt SCt of WA; Library No 960235; 20 June 1996.
49 The taxing officer took the view that O 66 r 19 was the source of power. He referred to item 30(4) which provides that the taxing officer may allow amounts for work performed by the witness in order to qualify to give expert evidence. He took the view that although in Bowen Buchbinder Vilensky v Banning (supra) Kennedy J was dealing with a solicitor and client bill of costs under the Legal Practitioners Act, the definition of "disbursement" applies equally to disbursements claimed in a party and party bill.
50 So much may be accepted.
51 However, the question remains whether expenses necessarily incurred in the conduct of litigation are to be regarded as disbursements. The answer to that question depends upon the proper construction to be placed on the rule.
52 The defendants argue that everything in O 66 r 19 is governed by the expression "all disbursements". I do not agree. I consider that the word "disbursements" applies only to fees of court and fees of officers. However, because of my construction of the various categories ejusdem generis which follows the distinction is immaterial.
(Page 12)
53 There may be a distinction between "payments" and "expenses". While a "payment" relates to an amount already disbursed, there is an argument that an "expense" may not so relate but may refer to a liability to pay, or a debt which has been incurred. This argument does not accord with a dictionary definition. "Expense" is defined as:
"a cost or charge - a cause or occasion of spending through the act of expending. Charges incurred in the execution of an undertaking or commission or money paid as a reimbursement for such charges" (Macquarie Dictionary).
54 The plaintiffs argue that "expenses" means the liability to pay rather than money expended and point to the expression "witness expenses actually paid" earlier in the rule as an indication of the distinction. However the proper construction of the earlier expression is to read the clauses as a whole.
55 The expression "witness expenses actually paid" is qualified by "according to the scale of allowances fixed in the said scale in that regard". The scale item is Item 30.
56 The need for witnesses to be actually paid is reinforced by Item 30(4) which refers to an amount paid to a witness for qualifying to give skilled evidence.
57 In my opinion what follows from a proper construction of the earlier phrase is that it gives no clue as to the meaning of the words "necessary expenses" where they appear in the order.
58 The expression italicised in O 66 r 19 was considered by Olney J in Corwest Management Pty Ltd v Deputy Commissioner of Taxation (WA) (1987) 18 ATR 823. At 826 Olney J said:
"In the absence of authority the issue can only be resolved by attempting to construe Order 66 rule 19. If this is done according to accepted principles of statutory interpretation I think that it is appropriate to apply the ejusdem generis rule. There is in my opinion a common characteristic running through the particular items of expenditure referred to in the rule. They are all of the nature of necessary payments and expenses incurred in the conduct of litigation and they are all items relating to the mechanics of preparing a case for trial and presenting the evidence at trial. The general words of the rule ought to be similarly construed".
(Page 13)
59 There is something to be said for a construction of the word "expenses" which indicates a legal liability to pay rather than a payment made. A losing party may be unfairly relieved of the burden of paying a portion of the preparation for a trial which was incurred by the successful party but which, through impecuniosity, they are unable to pay until taxation of costs and consequent recovery.
60 As against this, the other items in O 66 r 19 all presuppose that the losing party has a liability to repay to the winning party moneys already paid out by disbursement or otherwise. Although it is not precisely on point, conformably with the decision in Corwest Management, I hold that the words within O 66 r 19 should be interpreted ejusdem generis. Interpreting the words "necessary expenses" ejusdem generis with "disbursements" and "payments" in this way leads to the conclusion that expenses means moneys paid out for some purpose.
61 The result is that O 66 r 19 only applies to moneys actually paid out. There is no power to make an award of costs under the rule for unpaid fees.
62 I have considerable sympathy with the plaintiffs' position and also the position of the expert accountant who provided such assistance. In these days when there is an increase in unrepresented litigants, it may be that consideration should be given to amending the rule to allow for the situation where expert assistance is given to a litigant who is impecunious by reason of the actions which led to the litigation. When the litigant is successful, those who assisted should be able to receive a sum for expenses, properly incurred but, until costs recovery, unpaid.
63 However, I cannot strain the construction of O 66 r 19 just to arrive at a result which would give a measure of fairness to the plaintiffs' claim in this case but must interpret the order as it stands.
64 Consequently the objection is dismissed.
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