Elder Trustee and Executor Company Ltd v E.g. Reeves Pty Ltd

[1990] FCA 49

NOT FOR DISTRIBUTION

JUDGMENT No. ..... @,2,%~?,,.,

IN THE FEDERAL COURT OF AUSTRALIA )	No. G419 of 1986
NEW SOUTH WALES DISTRICT REGISTRY )	NO. G664 of 1987

GENERAL DIVISION 1 No. G340 of 1988

BETWEEN:  ELDERS TRUSTEE AND EXECUTOR
COMPANY LIMITED

Applicant/Appellant

AND :  E.G. REEVES PTY. LIMITED

First Respondent

EDWARD GEORGE REEVES

Second Respondent

DAPHNE JOAN REEVES

Third Respohdent

CORAM:  GUMMOW J.

PLACE: SYDNEY.

DATE :  20 FEBRUARY 1990.

REASONS FOR JUDGMENT

On 6 December 1989, the Registrar certified for the

following sums in costs:

Matter No. G419 of 1986
First respondent's bill allowed at $83,175.59

The Registrar gave reasons for the issue of the certificate

Second and third respondents1 bill allowed at

$67,686.09

Matters No. G664 of 1987 and G340 of 1988
First respondent's bill allowed at $5,602.99
Second and third respondents1 bill allowed at

$5,602.99.

in this form. Various objections have been taken by each side. In order to appreciate what is involved, it is necessary to recapitulate briefly the history of this litigation.

In matter No. G419 of 1986, the applicant ("Elders") failed on its case and the first respondent ("the Reeves company") succeeded on its cross-claim. The principal judgment is reported (1988) 78 ALR 193. There was then debate as to the carriage of costs. On 12 February 1988, I ordered that there be taken before the Registrar.an account of all items of costs and expenses of ihe Reeves company in proceedings No. G419 of 1986, including the cross-claim, up to the date of those orders, such account to be taken as between solicitor and client which was to be understood as being on a common fund basis and as not including items unreasonably incurred or for costs and expenses of an unreasonable amount. The Court directed that "the proceedings be relisted . . . for further directions

.	after the Registrar has certified the results of the account"; the Court noted that in addition to the sum already recovered on the cross-claim, the Reeves company
would seek judgment for such further sum as might be found in its favour upon the taking of that account.

The provision for the taking of the account followed upon the conclusion that pursuant to a covenant in a certain second mortgage upon which the Reeves company sued on its cross-claim, there was included as principal moneys the amount that would be found owing on the account. The Court observed in the reasons delivered in support of the orders of 12 February 1988 that questions might arise as to the time or times at which the items of costs and expenses allowed for by the Registrar were to be deemed to have become principal moneys within the terms of the secutity and thus have carried interest as provided for in the security; viz. 20% per annum, payable by equal half yearly instalments.

As to the costs of the second and third respondents, the order was that Elders pay their costs, including any reserved costs, limited to such items as were allowable on a party and party basis and which were not included in the items allowed for on the taking of the account.

An appeal against these orders, insofar as they
related to the taking of the account, was dismissed by the

- Full Court on 16 December 1988. These proceedings are matter No. G 3 4 0 of 1988. The decision is reported (1988) 84

ALR 734. The Full Court dealt with the costs of the appeal

of all items of costs and expenses of the Reeves company, in	by providing for an account to be taken before the Registrar
similar terms to those provided for as to the costs of the Reeves company at first instance.
Elders had previously instituted an appeal against the judgment reported (1988) 78 ALR 193. This appeal,

S - ' 4.

a.

matter No. G664 of 1987, was discontinued by Elders on 26
May 1988, with the ordinary consequences as to costs.

The proceedings before the Registrar were conducted on the footing that he was to deal concurrently with both the account in respect of the Reeves company, and with the party and party costs of the second and third respondents. In this latter respect, the Registrar was acting as taxing officer pursuant to Order 62 of the Rules. As I have indicated, the second and third respondents were not parties to the security in question, and did not have the benefit.of the covenant given to the Reeves company.

There have now been before me (i) in respect of the account, the proceedings as relisted after the Registrar certified the account, and (ii) as regards the costs of the second and third respondents, a review pursuant to Order 62 Rule 44 of the Registrar's certificate.

I should mention that there have been on foot since

1986 proceedings in the Equity Division of the Supreme Court

of New South Wales to which Elders and the Reeves company

are parties. In those proceedings, certain moneys were paid

into that Court and I was informed during the hearing of the present proceedings that orders concerning the disbursement of that money were made very recently in the Supreme Court.

The matters came before the Registrar on a number
of occasions in the course of 1989. After discussions with

the parties, a procedure was adopted whereby bills were presented by the respondents and various objections were made by Elders. The bills presented for the respondents divided the fees and expenses claimed for legal work, '

between the Reeves company on the one hand and the second and third respondents on the other. The methods adopted by the solicitor for the respondents were adopted with advice of costs consultants retained for the purpose. They were not the result of inadvertence, a point of some significance, as will later appear. Any item identified by an asterisk in the bill of the Reeves company also was claimed as an item of work in the bill for .the other respondents. However, in the bill for the Reeves company, an additional amount (described as a "premium") which represented 50% of the items claimed in the bill of the Reeves company, was added to the amount over and above that which appeared in the bill for the other respondents. For exa:,~ple, if an item had a scale allowance of $10, $5 was claimed for that item of work in each of the two bills, and

.	a further $2.50 was added to the amount claimed in the bill for the Reeves company. Fees for counsel were split evenly between the two bills.
The bill for the Reeves company in matter No. G419 of 1986 was brought in $116,735.81; as I have indicated, the bill was allowed by the Registrar at $83,175.59. The bill for the second and third respondents in matter No. G419
of 1986 was brought in at $88,863.59; this was allowed at

$67,686.09. The first respondent's bill in matter No. G340 of 1988 (which appears to have been combined with the discontinued appeal in matter No. G664 of 1987) was brought in at $6,025.49; $5,602.99 was allowed. The same sum was allowed in respect of the second and third respondentsf bill of costs in relation to the same litigation, this bill also having been brought in at $6,025.49, on the stated footing that there was an equal division of costs between the Reeves company on the one hand and the second and third respondents on the other.

In the Reeves companyfs bill in matter No. G419 of 1986, $7,991.00 was claimed in respect of a gloljal amount for skill, care and responsibility. In the bill in the same matter for the second and third respondents the sum claimed under this head was $4,377.00; of this, $877.00 was allowed on a party and party basis. In the larger claim, for $7,991.00, the Reeves company was allowed $6,000. In giving his reasons for allowing this sum, the Registrar said:

"I was advised by the First Respondent that it represented something less than 20% of the profit costs claimed. Assessing this amount . . always

was a most complex case as the reasons of

Officer. . . . It is clear that this presents a difficulty to the Taxing

Gummow J. and of the Full Court indicate. I considered, in the absence of time spent working on the case which is some- times included to guide a taxing officer, that a sum of $6,000 should be allowed having regard to the nature of the case. That figure was fixed after noting from the Reports of Listing the number of times the matter had been listed for hearing in the Court and the amendments allowed to the claim."

The Registrar referred to a statement in Volume 1 of Ritchie's Supreme Court Procedure New South Wales made when dealing with Part 52 Rule 30 of the Supreme Court Rules: ..

"Where costs are awarded on a common fund basis the parties receive costs which do not amount to an indemnity but yet allow counselst fees on a solicitor and client basis and a reasonable amount in respect of all other costs."

The Registrar said that the costs of the Reeves company, the first respondent, in matter No. G419 of 1986 were allowed'on a more generous basis than would have been the case on a party/party taxation. However, the Registrar disallowed the 50% premium claimed by the first respondent on each profit cost item. He said that the generosity which he was charged to use in taking the account was exercised not in allowing for the premium, but in the circumstances in which he permitted scale charges to be applied in circumstances which would be inappropriate in a party/party bill. The Registrar referred to what was said by Griffith C.J. in In re Marsland and Marsland [l9021 St R Qd 219 at 235 as to what was

party, and on the other as between solicitor and client. I	involved in taxations on the one hand as between party and
have referred already to the allowance by the Registrar of $6,000 of the $7,991 claimed in the bill for the Reeves company on account of skill, care and responsibility, and to the much lower proportion allowed for that claimed in the bill for the other respondents.
The solicitor for the respondents now complains in respect of the equal division of many items between the first respondent on the one hand and the second and third respondents on the other. He now says the appropriate division would be 80% to the Reeves company and 20% to the other respondents. However, this division resulted from the adoption by the solicitor for the respondents of the particular method in drawing the bills, as I have earlier outlined. The account was taken on that footing and the Registrar has certified accordingly.
Further, insofar as the issue is one which arises upon review of the costs certified in respect of the second and third respondents, I am not satisfied that the division adopted before the Registrar was erroneous. The time spent in the litigation was very largely devoted to the claims by Elders rather than to the cross-claim against it by the Reeves company. The nature of the claims by Elders appears from the report, (1988) 78 ALR 193 at 199-200. Mr. Reeves, the second respondent, was said to 'be a promoter and to owe certain fiduciary duties. He was said to be involved in the
alleged contraventions by the Reeves company of the Trade Practices Act 1974 and a very large question was whether he
had acted dishonestly so as to bring him within the principles in Yorke v Lucas (1985) 158 CLR 661. Of course, Mr. Reeves was the principal actor on behalf of the Reeves company, but his personal liability was very much at stake. The equal division initially favoured by his solicitor and adopted before the Registrar, was, to my mind, a very reasonable attempt at apportionment.
The primary burden of the complaint is agalnst the disallowance of the 50% premium. The Registrar was criticised for referring, when dealing with In re Marsland and Marsland (supra) to Order 62 Rule 12 of the Federal Court Rules, and it was submitted that he should have gone beyond the scale there referred to, particularly having regard to Order 62 Rule 19, and to In re Ermen (19031 2 Ch
156.
The terms of the orders pursuant to khich the account was conducted were set out at the foot of page 2 of the Registrar's certificate, and plainly he had them in mind. Counsel for Elders submitted that the Registrar correctly directed himself to the issues that were involved, and that it was open to him to reject the notion of the premium and instead, by other meins, to act generously towards the Reeves company, as he did, even though the result was that the Reeves company did not fare as well as it would have if the submission as to the 50% premium had been accepted by the Registrar. I agree, and in this
Registrar, even assuming, that as regards the account, it is respect would not disturb what has been done by the
open now to go behind the certificate.
The solicitor for the respondents complained also of the treatment of fees for counsel. He said that the total claimed by the respondents in respect of fees paid to counsel were $95,800, the amount disallowed comprised $28,469, and that the disparity indicated the account and taxation had miscarried.
The Registrar allowed what he considered reasonable in the circumstances for preparation time for counsel. In matter No. G419 of 1986, the brief fee of senior counsel, rendered at $2,000, was allowed at that sum. Senior counsel's refreshers, which were rendered at $2,000, were allowed at $1,500. The Registrar noted that many conferences were included in refresher fees and not separately charged. Conferences which appear to 'have been rendered by senior counsel at $300 per hour were allowed at that sum.
The fee on brief of junior counsel in matter No. G419 of 1986 was $1,000 which was allowed at that sum. Refreshers which in the Registrar's ordinary practice would be allowed at $670 were allowed at $1,000, in the circumstances of the case and having regard to fees charged by senior counsel. Conferences were allowed to junior
counsel at $150 per hour. In my view, the complaint directed by the respondents at the Registrar in his treatment of counselsr
fees has not been made out.
On its part, Elders directed various complaints at the Registrar's certificate. Elders sought an order that each party should bear its own costs for all attendances relating to the taking of accounts between 3 March 1989 and 6 December 1989. This is a reference to what was provided by the Registrar in respect of Item 7968 in the bill of costs in matter No. G419 of 1986 prepared for the Reeves company. The Registrar allowed attendances commencing 3 March 1989, and extending to 14 November 1989, but excluding attendances on 4 September 1989 and 8 November 1989, when each party was to bear its own costs. In all, attendances were involved on twelve days.

The Registrar dealt with this matter as fbllows:

"I was . . . asked by [Elders] to give reasons why I allowed a sum of $350 at Item 796B. This matter was first listed on 3 March 1989 and thereafter until 14 November 1989 when taking of accounts commenced. During the early directions hearings, I endeavoured to have the parties reach some agreement on the manner in which accounts could be taken without the need to prepare four bills such as eventually occurred. The parties were unable to agree. I did not allow [the Reeves companyls] costs for 4 September 1989 or 8 November 1989 as, for a number of reasons, the bills were either not prepared promptly, had

been brought to Court. Each party bore substantial omissions or files had not

its own costs for those days, a total of

2 1/2 hours. [The Reeves company] was clearly entitled to the other attendances allowed."

Notwithstanding the submissions to the contrary put for Elders, in my view, nothing was said to cast doubt upon the way in which the Registrar approached this aspect of the matter.

Elders sought an order staying any order that might be made for the payment of interest under the security in respect of the costs and expenses allowed the Reeves company on the account for the period from the date when the same were incurred up to 9 February 1990.

Elders submitted that such a result was justified by reason of delay of the respondents in the preparation of the four bills which were filed only on 13 September 1989. The development of matters before the ~e~istrdr in the period 3 March 1989 is dealt with in several affidavits which were read before me. The account relied upon by the respondents is given by their solicitor, Mr. Campbell, in his affidavit sworn and filed 5 February 1990. The account relied upon by Elders is that which appears from the affidavits of its solicitor, Mr. Baldry, filed 15 January 1990 and 7 February 1990. Voluminous correspondence passing

.

between the solicitors is annexed to Mr. Baldry's first affidavit.

As the Registrar indicated in the reasons for his certificate, the present was the first time in which such an account had been taken in this Court, and there was little guidance in the case law or the texts as to the approach to be followed. The Registrar and the parties spent some time in endeavouring to find some shorter path to deal with the matter than that which had ultimately to be followed. In the events that happened, the Registrar was of the view that the Reeves company was clearly entitled to its costs for most of the attendances involved. Having reviewed the materials placed before me, I have formed the clear view that, even if it were otherwise open to the Court to do so, I would not deny to the Reeves company enjoyment of its contractual right to Interest in respect of the costs and expenses allowed to it and added to the principal moneys in question.

In the result, upon the cross-claim by the Reeves company, judgment will be entered, in addition td that sum for which judgment has already been entered, in the sum of

$88 ,778 .58 . This will be together with that sum

representing interest at the contractual rate provided for in the security, the subject of the cross-claim, from the respective dates when the relevant costs and expenses were paid up to the date at which judgment is ordered. I will stand the matter over for short minutes to be prepared to give effect to that result.

stand in a different position. As regards the Reeves of the second and third respondents. As I have said, they The short minutes should also provide for the costs

company, I have been acting, in respect of the account, pursuant to the orders I made on 12 February 1988, supplemented by those made in the Full Court when the appeal was dismissed on 16 December 1988.

As regards party and party costs of the second and third respondents, in substance what has been before me has been a review pursuant to Order 62 Rule 44 of the certificate of the Registrar. The short minutes should provide that the certificate of the Registrar is confirmed, and that interest at the rates specified in Order 35 Rule 8 should be payable from the date of the order confirming the Registrar's certificate; see Order 62 Rule 45 (4).

Neither side succeeded on the points debated before

me on 9 February 1990. I would make no order for costs .in respect of that day, nor in respect of the appearances before me on 8 and 15 December 1989.

I certify that this and the thirteen (13)

preceding pages are a true copy of the Reasons for Judgment of the Honourable Mr. Justice Gummow.

Associate:

Date:  20 February 1990.

Counsel and Solicitors for Mr. N.A. Cotman and

the Applicant/Appellant:	Mr. R.J. Brender
instructed by
Messrs. Madgwicks.

Solicitor for the Respondents:	Mr. P.L. Campbell of Messrs. Cutler Hughes and Harris.
Date of Hearing:	9 February 1990.
Date of Judgment:	20 February 1990.