Crawley Investments Pty Ltd v Elman
[2014] WASC 233 (S)
•11 September 2014
CRAWLEY INVESTMENTS PTY LTD -v- ELMAN [2014] WASC 233 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 233 (S) | |
| Case No: | CIV:2713/2013 | 11 SEPTEMBER 2014 | |
| Coram: | EDELMAN J | 11/09/14 | |
| 11 | Judgment Part: | 1 of 1 | |
| Result: | Special costs orders made | ||
| B | |||
| PDF Version |
| Parties: | CRAWLEY INVESTMENTS PTY LTD RICHARD SAMUEL ELMAN NOBLE GROUP LTD PAWAY LTD CRAWLEY RESOURCES LTD |
Catchwords: | Practice and procedure Special costs orders Whether ceiling in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 should be raised Whether the limit for the rate of senior counsel should be raised |
Legislation: | Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 (WA) Rules of the Supreme Court 1971 (WA) |
Case References: | Australian Insurance Brokers Ltd v Hudig Langeveldt Pty Ltd [1988] WAR 44 Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S) Crawley Investments Pty Ltd v Elman [2014] WASC 233 EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 Frigger v Lean [2012] WASCA 66 Mercer v Western Australian Planning Commission [2008] WASC 124 (S) Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
RICHARD SAMUEL ELMAN
First Defendant
NOBLE GROUP LTD
Second Defendant
PAWAY LTD
Third Defendant
CRAWLEY RESOURCES LTD
Fourth Defendant
Catchwords:
Practice and procedure - Special costs orders - Whether ceiling in Item 10 of the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 should be raised - Whether the limit for the rate of senior counsel should be raised
Legislation:
Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 (WA)
Rules of the Supreme Court 1971 (WA)
Result:
Special costs orders made
Category: B
Representation:
Counsel:
Plaintiff : Mr S Lemonis
First Defendant : Ms M L Coulson & Mr D Benson
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Solicitors:
Plaintiff : Lemonis & Tantiprasut Lawyers
First Defendant : Clayton Utz
Second Defendant : No appearance
Third Defendant : No appearance
Fourth Defendant : No appearance
Cases referred to in judgment:
Australian Insurance Brokers Ltd v Hudig Langeveldt Pty Ltd [1988] WAR 44
Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S)
Crawley Investments Pty Ltd v Elman [2014] WASC 233
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95
Frigger v Lean [2012] WASCA 66
Mercer v Western Australian Planning Commission [2008] WASC 124 (S)
Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S)
Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S)
- EDELMAN J:
Introduction
1 On 30 June 2014, I delivered reasons for decision concluding that the writ and service of the writ upon Mr Elman should be set aside. This was ultimately because Crawley Investments had no prospect of successfully establishing that Mr Elman was a party to the pleaded agreement. The application today is by Mr Elman for special costs orders. Mr Elman seeks costs orders that his costs of the application be taxed:
(i) without reference to the limit provided in item 12 (or in the alternative items 10 or 11) of the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2012 (the 2012 Scale);1and
(ii) without reference to the hourly rates and the daily rates provided for in the 2012 Scale; and
(iii) including reasonable allowances for work undertaken by senior counsel.
2 It is appropriate to make proposed orders (i) and (iii), but not proposed order (ii).
The principles concerning special costs orders
3 Section 280(2) of the Legal Profession Act 2008 (WA) provides:
(2) Despite subsection (1), 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;
(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
5 The principles concerning special costs orders under s 280 of the Legal Profession Act were recently set out by the Court of Appeal in Wainwright v Barrick Gold of Australia Ltd.2 They can be summarised, from that decision unless otherwise indicated, as follows:
(i) The court must form an opinion which has two components. First, the court must determine that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate. Second, the court must conclude that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
(ii) Having heard the matter and being familiar with the way in which the case was conducted and the issues which were litigated, the court is in a position to form the opinions required under the section as matters of impression rather than 'detailed evaluation', 'precision', 'science' or 'mathematics'.
(iii) As to the first question (inadequacy) the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination. Until that threshold is crossed, the power will not ordinarily be exercised.
(iv) A conclusion that it is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the Scale does not always require evidence of the costs actually incurred.3
(v) As to the second question (the cause of the inadequacy being unusual difficulty, complexity or importance), the word 'unusual' qualifies only the 'difficulty' of the matter and not its complexity or importance. The word 'unusual' in this context means unusual having regard to what one might describe as the usual run of civil cases determined in the Supreme and District Courts. That essentially involves the making of a value judgment by the court, having regard to the court's experience of the particular case when compared with the usual run of cases. And the word 'importance' in s 280(2) encompasses importance to the parties; it does not require broader importance to the public or a sector of the public.4
(vi) Although replacing the amount of the Scale item with a different ceiling may be appropriate where sufficient information exists to make that assessment, it is not uncommon for an order to be made removing the limit for the Scale item without replacing that limit with a different ceiling.5
(vii) One of the principles that should guide a court in addressing an issue under s 280(2) is that the court should not usurp the role of the taxing officer.6
The items of the 2012 Scale that Mr Elman sought to lift
6 The starting point is the relevant 2012 Scale item that applies. As I have mentioned, Mr Elman brought this application on the alternative bases of items 12, 10, or 11.
7 Item 11 of the 2012 Scale is concerned with the cost of an originating motion, originating summons, or originating application. The time estimate is two days of preparation by counsel and one day hearing, with 50 hours preparation of the case by a senior practitioner. For one day of hearing the Scale cost is $33,110 with an hourly rate for attendance by a senior practitioner at the hearing.
8 Item 10 is concerned with the cost of proceedings in chambers other than the costs in item 11. Provision is made for counsel's preparation for two days with one day of hearing. The Scale cost is $10,560.
9 Item 12 of the 2012 Scale provides for '[p]roceedings in Court not otherwise provided for, including appeals from a Registrar'. The time is estimated at two days of preparation and a half day of hearing. The Scale cost for Counsel is $9,075.
10 At the hearing of this application it became common ground that the appropriate item to be applied is item 10. It suffices to proceed on that basis, which I consider to be correct. The reason why I consider that basis to be correct is because the application to set aside the writ and service of the writ upon Mr Elman was brought by a notice of motion on 11 April 2014, but that notice of motion was not an originating motion. An originating motion commences civil proceedings (Rules of the Supreme Court 1971 (WA) O 4 r 1(c)). The application in this case was heard in chambers but it was not an originating application. It was an application that was required to be brought by motion by a Rule (O 12 r 7) which was designed to relieve defendants from the disadvantage which could arise from the entry of a conditional appearance.7
11 It was also common ground that, as item 10 applied, the 'unusual difficulty, complexity or importance of the matter' is such that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination. Of course, this does not mean that Mr Elman's costs will necessarily tax at an amount greater than $10,560. But these are matters that I consider should be wholly within the discretion of the taxing officer.
12 Mr Elman has provided a draft bill of costs which estimates his costs described as costs of the 'motion' only (assumed in the draft bill to be in relation to item 12) to be $142,278.45. A detailed schedule breaking down this work done was provided.8 The total costs were said to be approximately $196,000, but the total costs claimed by Mr Elman (including drawing and taxing a bill of costs) are approximately $157,000.
13 I express no opinion on the size of this bill. As I explain below, this will be appropriately a matter for the taxing officer. It is enough to observe that as a matter of general impression I consider that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination under item 10. Although general impression is not a matter which is reducible to precise factors, there are two particular points that inform my impression.
14 First, the application was heard over an entire day. At the heart of the application was an issue which was akin to a summary judgment application by Mr Elman in relation to the main proceedings. The affidavit evidence ran to several hundred pages.
15 Secondly, both parties were appropriately represented by senior counsel. The written submissions for both parties were also settled by senior counsel. As I explain below, the submissions canvassed matters that included issues of law that were unusually difficult (having regard to the court's experience of the particular case when compared with the usual run of cases).
16 The focus of the submissions from Crawley Investments on this costs application was the required causal link, namely whether the cause of the inadequacy of the 2012 Scale items was the unusual difficulty, complexity or importance of the matter. Counsel for Crawley Investments submitted that a ceiling should be placed on the amount at which the costs could be taxed having regard to the extent to which the Scale was exceeded by reference to the unusual difficulty, complexity or importance of the matter.
17 There were aspects of the application that were unusually difficult. For instance, substantial written and oral submissions were made by the parties concerning the appropriate test to be applied. There is little Australian authority on the Western Australian (Chancery-derived) test. Although I ultimately concluded that little of substance turned upon the application of those principles,9 the principles were a necessary starting point. It was reasonable, in fact necessary, for the parties to make submissions concerning the legal principles that should apply to the determination of the application.
18 The application was also one which was of real importance to the parties. It concerned the very existence of Mr Elman as a party to substantial proceedings. The proceeding involve a dispute concerning share transactions by which Crawley Investments pleads loss and damage arising from the failure of Crawley Investments to become the sole shareholder of the third defendant which held 18 million shares in a company called Territory Resources.10 It is a fair inference that the loss and damage claimed is very substantial. In the financial accounts of Crawley Resources, that investment, less accumulated impairment, was recorded as having a value of around $9 million.11 Mr Elman submitted that the sale of those shares was for slightly less than $10 million.12
19 For these reasons, I consider that Crawley Investments appropriately conceded that the limit to item 10 should be raised. But I do not consider that a ceiling on the costs for that item should be imposed. There are, of course, cases where a ceiling has been imposed. But the discretion to do so will depend on the circumstances of each case. Analogies are not always helpful. In this case, I did not receive any evidence, even very brief evidence, concerning the costs that were incurred by Crawley Investments. That might have been a useful comparator. Nor did I receive any evidence or any substantial submissions concerning the reasonableness of the amount of time spent by the practitioners representing Mr Elman in preparing for the application. As I have mentioned, there was a considerable volume of evidence involved in the case and, in respect of the issue concerning jurisdiction there would have been more time spent researching the legal test than in the usual interlocutory application. On an impressionistic evaluation of the case, and on the evidence before me, however, I consider that there is only one respect in which a ceiling ought to be imposed. That is in relation to the rates for senior counsel. That point is addressed below.
Provision for senior counsel and whether hourly rates in the 2012 Scale should be disregarded
20 As counsel for Crawley Investments properly conceded, it is appropriate that allowance be made in the taxation of costs for the costs of senior counsel. Both parties instructed senior counsel to appear. The decision to do so was entirely reasonable and appropriate. The unusual difficulty and complexity of the matter, and particularly the importance of the matter to Mr Elman, made it appropriate for senior counsel to be instructed.
21 Item 10 does not provide for the costs of senior counsel. It is appropriate that provision be made for the cost of senior counsel.
22 Senior counsel engaged by Mr Elman charged rates higher than the rates in Table A of the 2012 Scale. Mr Elman sought to lift the Scale entirely, including for those rates. The 2012 Scale sets the hourly rate of senior counsel at $638 and the daily rate at $6,380. The Court does not lift the limit on hourly rates merely because a party's counsel has charged at a rate higher than the Scale.13 As Pullin J said, of a costs agreement that charged rates above Scale, in Flotilla Nominees Pty Ltd v Western Australian Land Authority:14
there should be no expectation that, as a matter of course, rates in the costs agreement which are above scale will be ordered to be the rates to apply in taxation as between party and party. There would have to be evidence justifying the higher rate. The whole point of the existing scale is that the rates are struck by reference to what is being charged within the profession. It is true that the hourly rates can only be an average or mean of the upper rates determined in the survey, and there will be some cases where the unusual complexity or importance of the case warrants the special expertise of the practitioner involved and warrants an increase in the hourly rate. In some cases not involving unusual complexity or importance, the higher rates paid will not be recoverable. A party is always entitled to the luxury of retaining the highest paid practitioners in the conduct of their case, but they cannot always expect to recover these costs from the other party. If the hourly rates in the scale are thought by parties or practitioners to be too low for work which is not of unusual complexity or importance, then submissions should be made to the Legal Costs Committee to increase the rates in the scale.
23 I received no submission, nor any evidence, on behalf of Mr Elman concerning whether the costs of available Western Australian senior counsel for a matter such as this would have been within the 2012 Scale ($638 per hour and $6,380 per day).15 Nor did I receive any submission, or any evidence concerning whether Mr Elman sought to engage senior counsel whose rates were within the 2012 Scale. To the contrary, the evidence before me was that Crawley Investments had engaged a senior counsel, from Sydney, whose rates were comparable with the rates allowed in the costs determination. Although the matter involved some issues of unusual difficulty and complexity, and involved matters of importance to the parties, and although it was reasonable and proper for Mr Elman to engage senior counsel (who presented his submissions with considerable skill and eloquence), I do not consider that it is fairly arguable that the importance, difficulty or complexity of the issues was such that the maximum amount in the 2012 Scale rates for senior counsel would be inadequate. To put the matter another way, in making a special costs order for senior counsel I consider that it is appropriate to fix the ceiling at the maximum available hourly and daily rates in Table A of the 2012 Scale.
Conclusion
24 Although written and oral submissions were filed in relation to this application, the issues on the application really reduced to (i) whether a ceiling should be imposed on any special costs order made in relation to item 10 of the Scale, and (ii) whether an allowance for senior counsel should be made at rates above the 2012 Scale. My conclusions are that (i) the amount in item 10 should be lifted, but no new ceiling should be imposed , and (ii) an allowance for senior counsel should be made but only to a maximum of the rates in the 2012 Scale. All other matters are appropriately left to the taxing officer in this case.
1 The Legal Profession (Supreme Court) (Contentious Business) Determination 2014 commenced operation on 1 July 2014.
2Wainwright v Barrick Gold of Australia Ltd [2014] WASCA 15 (S) [7] - [9] (the Court).
3Frigger v Lean [2012] WASCA 66 [81] (Allanson J, Newnes & Murphy JJA agreeing).
4Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [7] (Beech J).
5EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [8] - [9], [13] (Martin CJ); Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [5] (Beech J).
6Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [6] (Beech J).
7Australian Insurance Brokers Ltd v Hudig Langeveldt Pty Ltd [1988] WAR 44, 46 (Master Seaman QC).
8 Affidavit of Ms Coci sworn on 15 August 2014 [8] - [9].
9Crawley Investments Pty Ltd v Elman [2014] WASC 233 [46].
10 Draft statement of claim [42].
11 Affidavit of Mr Kiernan sworn 29 October 2013, page 181.
12 Affidavit of Mr Kiernan sworn 29 October 2013, page 175.
13Red Hill Iron Pty Ltd v API Management Pty Ltd [2012] WASC 323 (S) [30] (Beech J); Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2011] WASC 268 (S2) [7] (Le Miere J).
14Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95, 101 [22].
15 See Mercer v Western Australian Planning Commission [2008] WASC 124 (S) [66] (Jenkins J); Cockburn Cement Ltd v The Minister for the Environment (WA) [2011] WASC 260 (S) [68].
0
10
2