Electrona Carbide Industries Pty Ltd v Baillieu Bowring (Tas) Pty Ltd
[1987] TASSC 79
•31 March 1987
Serial No B9/1987
List "B"
COURT: SUPREME COURT OF TASMANIA
CITATION: Electrona Carbide Industries Pty Ltd v Baillieu Bowring (Tas) Pty Ltd [1987] TASSC 79; B9/1987
PARTIES: ELECTRONA CARBIDE INDUSTRIES PTY LTD
ATTORNEY-GENERAL (TASMANIA)
v
BAILLIEU BOWRING (TAS) PTY LTD
FILE NO/S: 2650/1983
DELIVERED ON: 31 March 1987
JUDGMENT OF: Nettlefold J
Judgment Number: B9/1985
Number of paragraphs: 11
Serial No B 9/1987
List "B"
File No 2650/1983
ELECTRONA CARBIDE INDUSTRIES PTY LTD & ATTORNEY-GENERAL FOR THE STATE OF TASMANIA v BAILLIEU BOWRING (TAS) PTY LTD
REASONS FOR JUDGMENT Nettlefold J
31 March 1987
The successful defendant applied for the following orders:–
“1. Order that the defendant‘s costs including all reserved costs be taxed and when taxed be paid by the plaintiffs.
2. Subject to the Taxing Officer exercising his powers under Order 80 of the Rules of Court order that the said costs are to include all costs so that subject to the above exercise of the Taxing Officer’s powers the defendant will be completely indemnified by the plaintiffs for its costs.”
I decline to make the second order. The order should be on the usual party and party basis. There are a number of factors which, in combination, produce that result.
It is not the policy of the courts in hostile common law litigation to give the successful party an indemnity against the expense to which he has been put and, therefore, to compensate him for the loss which he has inevitably suffered save in very special cases (Bartlett & Ors. v. Barclay Bank Trust Co. Ltd.(No. 2) [1980] 2 All E.R. 92 at 98 and [1980] Ch. 515 at 547: Bowen–Jones v. Bowen–Jones & Ors. [1986] 3 All E.R. 163 at 165). This case is not within the category of “very special cases”.
A perusal of a number of cases where an order of the nature sought here was made shows that the words “very special cases” were very well chosen. I refer to the following cases as examples:–
Preston v. Preston [1982] 1 All E.R. 41 – matrimonial proceedings between husband and wife for appropriate financial provision to be made by a very wealthy husband for the wife, the husband’s solicitors having increased “enormously” the costs incurred by the wife by extreme dilatoriness and lack of co–operation.
Degmam Pty. Ltd. (In Liq.) v. Wright (No. 2) [1983] 2 N.S.W.L.R. 354 at 358 – defences and causes of action falsely and deliberately concoted, by a litigant who conducted herself in the proceedings by multiplying allegation upon allegation and prevaricating in the witness box with a consequent “gross” prolongation of the litigation.
Packer v. Meagher [1984] 3 N.S.W.L.R. 486 – proceedings brought by a plaintiff predominantly for a purpose ulterior, or collateral, to that for which the proceedings are properly designed and exist dismissed as an abuse of the process of the court.
Australian Guarantee Corporation Ltd. v. De Jager & Anor. [1984] V.R. 483 – pursuit of the action by the plaintiff “high handed presumption”.
The contempt cases constitute a familiar group of cases where an order of the nature sought here is often made. The explanation of that practice is contained in the following passage from Degmam Pty. Ltd. (In Liq.) v. Wright (No. 2) (supra) at p.358:–
“It is, in my experience, quite common to find, in cases where an application is made to the court for committal for contempt such orders being made in an endeavour to ensure that the party that has been enforced to take that extra step, in order to obtain his rights, after they have been adjudicated by the court, may be relieved entirely of the expense of doing so and, although there is nothing in the rules about it, it is in my experience common to find an order designed to give a party a complete indemnity against such costs, usually by an order that the contemnor pay the other party‘s costs on a solicitor and client or solicitor and own client basis but the object is to ensure an indemnity.”
Of course, my task is to dispose of the application doing what is just as between the parties on the facts of this case; comparing this case with the cases set out above is of limited value. But, in seeking to do what is just, one must keep in mind that the policy stated in Bartlett’s case (supra) is an important guide.
Here, essentially, what is said to bring the case into the “very special” category is that the claim was without foundation and misconceived, in circumstances where the plaintiffs had ready access to the essential facts and the defendant was forced to litigate it for a long time (the hearing lasted 74 days). Where the application is on that foundation two propositions should not be overlooked. They are:–
(1) I should infer that it cannot be contended successfully that the claim was frivolous or vexacious. If it were in that category no doubt it would have reached a summary conclusion long ago.
(2) The court should not use the power to award costs as a de facto vehicle for delivering an award of damages or imposing a penalty. (Cockburn v. Edwards (1881) 18 Ch.D. 459; Willmott v. Barber (1881) 17 Ch. D. 772). The severe limitations on actions for malicious prosecution or abuse of legal process should not be varied by a side wind. (See Quartz Hill Gold Mining Co. v. Eyre (1883) 11 Q.B.D. 674 at 690).
In Tasmania there is a good deal to be said for the view that on any taxation of costs between the parties to hostile common law litigation allowance for a given item of work should be the same whether the taxation is as between party and party or between party and party as between solicitor and client. (See 0.80 rs. 68 and 69 and Appendix M to the rules; In re Marsland and Marsland [1902] Q.S.R. 219, a judgment by Sir Samuel Griffith and others; article by Mr. A.S. Saddington (1952–53) 27 A.L.J. 369).
The Tasmanian Rules O.80 rs. 68 and 69 reflect O.65 r. 27 sub. r. 29 of the English Rules in the form in which that English sub–rule appeared in The Annual Practice 1958, vol. 1, p.1935. Concerning that sub–rule Atkin L.J. in Société Anonyme Pêcheries Ostendaises v. Merchants‘ Marine Insurance Company [1928] 1 K.B. 750 at p. 762 said:–
“Upon that question it appears to me to be very important to bear in mind that the Taxing Masters have got to apply the words of Order LXV, r. 27, sub–r. 29. That rule is the guiding rule in the taxation of costs. It is intended to sum up generally the principles upon which costs are awarded; and I cannot help thinking that if that rule were really rigorously applied by everybody – and by ’rigorously applied‘ I mean applied in all cases and giving full effect to the width of its language – there would be many fewer complaints by successful litigants than there are at the present moment. It is a rule which is intended to give to the successful litigant a full indemnity for all costs reasonably incurred by him in relation to the action. It says in terms that the Taxing Master is to allow ’all such costs, charges and expenses, as shall appear to him to have been necessary or proper for the attainment of justice.‘ That is the whole principle that the Taxing Master has got to apply.”
His Lordship recognised that the sub–rule was not being rigorously applied and, hence, the result which, in his view, the law required was not being obtained. That result was that the successful litigant got “a full indemnity for all costs reasonably incurred by him in relation to the action”.
It will be noted, of course, that these reasons begin with a proposition taken from Bartlett & Ors. v. Barclay Bank Trust (supra) to the effect that it is not the policy of the courts in hostile common law litigation to give the successful party an indemnity against the expense to which he has been put and, therefore, to compensate him for the loss which he has inevitably suffered save in very special cases. His Lordship’s dictum does not fit comfortably with that proposition although technically, perhaps, it is not in head–on conflict with it because he spoke of a full indemnity for all costs “reasonably incurred”.
In England there has been a change in the rules which expressly recognises that a taxation on the common fund basis is “a more generous basis” than a taxation on a party and party basis. (See English Rules O.62 r. 28) . E.M.I. Records v. Ian Cameron Wallace Ltd. [1983] 1 Ch. 59 was decided on those new rules and it is not a guide for Tasmanian practice. The authors of the Annual Practice (Eng.) for 1982, 1982 vol. 1 pp. 1053–4 expressly recognise that the law as expounded by Atkin L.J. may have been displaced by O.62 r.28(4) (Eng.). In other words, it may have been the law before that change. In Tasmania, of course, the rules remain in the form in which they were when Atkin L.J. uttered the above dictum.
On the face of it the Tasmanian rules appear to be, perhaps, a better vehicle for Lord Justice Atkin‘s proposition than the sub–rule to which he referred. Concentrating on the bare bones of rs. 68 and 69 of O.80 the following propositions appear to emerge:–
1. On every taxation the taxing officer shall allow all such costs, charges and expenses as shall appear to him to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of any party (r.69).
2. Costs which do not appear to the taxing officer to have been necessary or proper for the attainment of justice, or for maintaining or defending the rights of the party shall not be allowed to any party to be paid or borne by another party (part of r.68).
3. Costs which appear to the taxing officer to have been incurred through over–caution, negligence, or mistake or merely at the desire of the party, shall not be allowed to any party to be paid or borne by another party (the balance of r.68).
In proposition 1 above the expression ’‘every taxation“ obviously includes a party and party taxation as well as a taxation between party and party the costs being taxed as between solicitor and client.
Proposition 2 above appears to prohibit the allowance of costs beyond what is necessary or proper for the attainment of the purposes stated in the proposition.
Proposition 3 obviously prohibits the allowance of certain classes or costs against another party which might be payable by the client to his own solicitor.
If an order were made as requested by the defendant each of the above propositions 1, 2 and 3 would apply in the taxation. And it would seem to be quite fair that they should. As at present advised I have great difficulty envisaging what items of costs, charges or expenses could be allowed fairly although not necessary for the attainment of justice and not properly incurred for that purpose and not caught by the fair prohibition contained in proposition 3 (above). I can understand that, if an order were made as requested, the taxing officer might use the form of order as, perhaps, lending some support to an argument for an exercise of discretion favourable to the defendant under discretionary rules such as O.80, rs. 45, 76 and 85 and in determining to what extent costs, charges or expenses were ”necessary“ or ”proper“ in all the circumstances of the case. But even that proposition is open to some question because of the principle enunciated by Sir Samuel Griffith in Marsland and Marsland (supra). The true guide is the value of the work done whatever the form of taxation. The proposition asserted in the E.M.I. Records’ case (supra) at the top of p.72 of the report is not relevant to Tasmanian practice.
It has not been made clear what the additional items are which it is said would attract an assessment of costs if the form of order sought was made. One feels very much in the dark on that aspect.
The conclusion is that the defendant should have its costs of and incidental to the action to be taxed as between party and party. A review of the authorities shows that this Court, when exercising common law jurisdiction in a case like this, will not go beyond a taxation as between party and party save in very special cases. That rule reflects a deep seated policy of the common law.
In all the circumstances of this case it would not be just to deprive the defendant of the costs of any part of the action or to adopt the submission to reduce the defendant‘s costs by some percentage. Justice will be done if the defendant gets its costs of and incidental to the action to be taxed as between party and party.
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