Electricity Generation Corporation T/As Verve Energy v Woodside Energy Ltd

[2011] WASC 268 (S2)

ELECTRICITY GENERATION CORPORATION t/as VERVE ENERGY -v- WOODSIDE ENERGY LTD [2011] WASC 268 (S2)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2011] WASC 268 (S2)
Case No:	CIV:1548/2009	Heard:	14-17 MARCH 2011
Coram:	LE MIERE J	Delivered:	30/09/11
Supplementary Delivered:	17/02/12
No of pages:	8	Judgment Part:	1 of 1
Result:	Application allowed
Category:	B
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Parties:	ELECTRICITY GENERATION CORPORATION t/as VERVE ENERGY WOODSIDE ENERGY LTD BP DEVELOPMENTS AUSTRALIA PTY LTD CHEVRON TEXACO AUSTRALIA PTY LTD BHP BILLITON PETROLEUM (NORTH WEST SHELF) PTY LTD SHELL DEVELOPMENT (AUSTRALIA) PTY LTD
Catchwords:	Costs Order removing limits in determination Turns on own facts
Legislation:	Legal Profession Act 2008 (WA), s 280(2)
Case References:	City of Mandurah v Hull [2000] WASCA 353 Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); 28 WAR 95 Smith v Madden (1946) 73 CLR 129; [1946] ALR 337 Stanley v Phillips (1966) 115 CLR 470; [1967] ALR 197; (1966) 40 ALJR 34 Sundell v Queensland Housing Commission (1954) 94 CLR 531; (1954) 28 ALJR 296; [1955] St R Qd 175

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : ELECTRICITY GENERATION CORPORATION t/as VERVE ENERGY -v- WOODSIDE ENERGY LTD [2011] WASC 268 (S2) CORAM : LE MIERE J HEARD : 14-17 MARCH 2011 DELIVERED : 30 SEPTEMBER 2011 SUPPLEMENTARY
DECISION : 17 FEBRUARY 2012 FILE NO/S : CIV 1548 of 2009 BETWEEN : ELECTRICITY GENERATION CORPORATION t/as VERVE ENERGY

Plaintiff

AND

WOODSIDE ENERGY LTD
First Defendant

BP DEVELOPMENTS AUSTRALIA PTY LTD
Second Defendant

CHEVRON TEXACO AUSTRALIA PTY LTD
Third Defendant

BHP BILLITON PETROLEUM (NORTH WEST SHELF) PTY LTD
Fourth Defendant

SHELL DEVELOPMENT (AUSTRALIA) PTY LTD
Fifth Defendant

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Catchwords:

Costs - Order removing limits in determination - Turns on own facts

Legislation:

Legal Profession Act 2008 (WA), s 280(2)

Result:

Application allowed

Category: B

Representation:

Counsel:

Plaintiff : Mr N P Gentilli
First Defendant : Mr I R Freeman
Second Defendant : Mr I R Freeman
Third Defendant : Mr I R Freeman
Fourth Defendant : Mr I R Freeman
Fifth Defendant : Mr I R Freeman

Solicitors:

Plaintiff : Jackson McDonald
First Defendant : Lavan Legal
Second Defendant : Lavan Legal
Third Defendant : Lavan Legal
Fourth Defendant : Lavan Legal
Fifth Defendant : Lavan Legal

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

City of Mandurah v Hull [2000] WASCA 353

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Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); 28 WAR 95
Smith v Madden (1946) 73 CLR 129; [1946] ALR 337
Stanley v Phillips (1966) 115 CLR 470; [1967] ALR 197; (1966) 40 ALJR 34
Sundell v Queensland Housing Commission (1954) 94 CLR 531; (1954) 28 ALJR 296; [1955] St R Qd 175


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1 LE MIERE J: On 30 November 2011 I ordered that the plaintiff pay the defendants' costs of the action, including any reserve costs. The defendants seek a special costs order that all limits on costs prescribed by any applicable legal costs determinations be removed, including any limits with respect to maximum hourly rates that may be fixed in any such costs determination. The plaintiff agrees that a special costs order should be made but says that it should be an order that the limits on costs prescribed by any applicable legal costs determinations in respect of giving discovery and getting up case for trial be removed, excluding any limits with respect to maximum hourly rates that may be fixed in any such costs determination.

2 Section 280(2) of the Legal Profession Act 2008 (WA) provides:

(2) … 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.

3 The defendants' application is supported by an affidavit of Christine Arthur sworn 28 November 2011. I have the advantage of having case managed this action as well as being the trial judge. Having regard to the matters in Ms Arthur's affidavit and my knowledge of the action as case manager and trial judge, I am of the opinion that the amount of costs allowable in respect of the matter under the relevant costs determinations is inadequate because of the unusual difficulty and complexity and importance of the matter. Generally speaking, the special costs order sought relates to three aspects of the determinations. First, the special order is sought to apply to all items of work covered by the determination. Secondly, the defendants contend that the time allowed by the scale for performance of the work is inadequate. Third, an order is sought to remove the limits on the hourly rates provided for the items in the determination.

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Items of work

4 The plaintiff concedes that the amount of costs allowable under the relevant cost determination is inadequate in respect of giving discovery and getting up case for trial but not for the other items of work covered by the scale. The plaintiff says that in her affidavit Ms Arthur has set out the work that was done in relation to discovery, inspection and getting up for trial but does not establish that the amount allowed by the determination or other items of work is inadequate.

5 The other items of work covered by the determination that are principally relevant include pleadings, interlocutory applications, mediation conferrals or other conferences, counsel fees and fees for solicitors attending trial. I am of the opinion, based on my knowledge and experience as case manager and trial judge, that the amounts allowable in respect of those items under the costs determination is inadequate and is inadequate because of the unusual difficulty and complexity and importance of the matter.

Number of hours allowed

6 The scale of costs in the legal costs determination fixes the maximum amount allowed for each item of work by applying an hourly rate and a number of hours to complete the work. The number of hours to complete an item of work will obviously vary from one matter to another. The number of hours allowed for in the scale may be inadequate in cases of unusual difficulty, complexity or importance. In this case I am of the opinion, having regard to my knowledge and experience as case manager and trial judge, as well as Ms Arthur's affidavit, that the number of hours allowed for in the scale is inadequate to properly carry out the work performed in this case.

Hourly rates

7 The plaintiff accepts that the hourly rates charged by the solicitors and counsel for the defendants, and incurred by the defendants, exceeds the hourly rates allowed under the scale. The court should not order that the hourly rates to apply in assessing costs should be in excess of the hourly rates allowed in the scale merely because a party's solicitor or counsel have charged at a higher rate. As explained by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); 28 WAR 95 [22]:

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

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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.

8 Clause 3(b) of the schedule to the Legal Profession Act 2008 (Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 states that the Determination does not apply to the remuneration of law practices based on a written agreement as to costs under the Legal Profession Act 2008. However, that the party awarded costs has entered into a costs agreement with its solicitor does not oust the applicability of the scale in the assessment of party and party costs and the terms of any such agreement do not determine any allowance exceeding the scale.

9 This is an unusual case. It is one of unusual difficulty and complexity and importance. It was reasonable and proper for the defendants to retain a large legal team and to retain very senior practitioners and counsel. Both the defendants and the plaintiff retained senior, very experienced practitioners and counsel. It is appropriate that the limits on the hourly rates be raised.

Rates should be removed

10 The court may either fix higher limits of costs than those fixed in the determination by raising the hourly rates and number of hours allowed for items of work in the scale or may remove limits on costs fixed in the determination.

11 Counsel for the plaintiffs referred to counsel's fees. The defendants were represented by three counsel. It is no longer necessary to obtain a certificate for senior counsel. The taxing officer now considers whether the briefing of second, or senior counsel, was reasonably necessary in the circumstances. The taxing officer is to allow the fees of more than one counsel where he or she is satisfied that the nature and circumstances of the case are such that the services of two counsel are required if the case is to be presented to the court in such a manner that justice can be done between the parties: Stanley v Phillips (1966) 115 CLR 470; [1967] ALR 197; (1966) 40 ALJR 34, 479. In a superior court the employment of two counsel upon the trial of a really substantial suit or action is usual and is regarded as a reasonable and proper precaution on the part of a suitor: Smith v Madden (1946) 73 CLR 129; [1946] ALR 337, 132; City of

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Mandurah v Hull [2000] WASCA 353 [5]. In Sundell v Queensland Housing Commission (1954) 94 CLR 531; (1954) 28 ALJR 296; [1955] St R Qd 175, 534 - 535, Webb J considered the engagement of three counsel. His Honour referred to the test: would a reasonable and prudent man acting with ordinary prudence have ventured into court without three counsel? His Honour also referred to dicta that the considerations when dealing with the question of a third counsel were the length of the documents, the time the case was likely to last, the amount involved and the commercial importance of the case. In this case, there were many lever arch files of documents. The case was listed for 10 days although in the end it was completed in four. Ms Arthur says in her affidavit that the amount in dispute was said by the plaintiff to be in the order of $40 million. The commercial importance of the case extends not only to the amount in dispute in this case but also to the fact that the issues in question were relevant to the contract between the plaintiff and the defendants which will not be concluded for several more years. The difficulty, complexity and importance of the case in the minds of both parties is attested to by the legal teams and the leading counsel retained by each party. In addition, there were five defendants, although they had the same interest in the proceedings. I am satisfied that this is an unusual case where the defendants were justified in retaining three counsel.

12 I have considered whether it would be appropriate to assist the taxing officer by setting a limit on the hourly rates allowable to the solicitors and counsel. I have decided not to do so. The taxing officer must consider whether or not it was reasonable to carry out the items of work to which the claimed costs relate, whether or not the work was carried out in a reasonable manner, and what is a fair and reasonable amount of costs for that item.

13 This is not a case where it is appropriate to fix higher limits of costs than those fixed in the determination. It is appropriate to remove the limits on costs fixed in the determination for each item. I will remove the limits of costs fixed in the determination. It will be for the taxing officer to determine, in relation to each item of work, whether it was reasonable to incur the costs of doing that work and if so the number of hours that were reasonably employed in doing the work and having regard to the work that was done and the person who did it what is a reasonable hourly rate. I will make an order in the terms sought by the defendants; that is, all limits on costs prescribed by an applicable legal costs determination be removed, including any limits with respect to maximum hourly rates that may be fixed in any such legal costs determinations.