Flotilla Nominees Pty Ltd v Western Australian Land Authority
[2003] WASC 122 (S)
•29 AUGUST 2003
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | FLOTILLA NOMINEES PTY LTD -v- WESTERN AUSTRALIAN LAND AUTHORITY & ANOR [2003] WASC 122 (S) |
| CORAM | : PULLIN J | ||
| HEARD |
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| DELIVERED | : 25 JUNE 2003 | ||
| SUPPLEMENTARY | |||
| DECISION | : 29 AUGUST 2003 | ||
| FILE NO/S |
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| BETWEEN |
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AND
WESTERN AUSTRALIAN LAND AUTHORITY
First Defendant
MINISTER FOR WORKS
Second Defendant
Catchwords:
Procedure - Costs - Indemnity costs - Special costs orders
Legislation:
Nil
[2003] WASC 122 (S)
Result:
Special costs order made
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr M J Feutrill |
| First Defendant | : | Mr J A Chaney SC |
| Second Defendant | : | Mr J A Chaney SC |
Solicitors:
| Plaintiff | : | Phillips Fox |
| First Defendant | : | Minter Ellison |
| Second Defendant | : | Minter Ellison |
Case(s) referred to in judgment(s):
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Cretazzo v Lombardi (1975) 13 SASR 4
Cruickshank v Producers Markets Co-Operative Ltd [1960] WAR 184
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd
(1988) 81 ALR 397
Schmidt v Gilmour [1988] WAR 219
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, unreported; Fed Ct of
Aust, 3 May 1991
Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190
Westgold Resources NL v St George Bank Ltd, unreported; SCt of WA; 9
December 1998
[2003] WASC 122 (S)
Case(s) also cited:
J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers
(No 2) (1993) 46 IR 301
Stobbart v Mocnaj [1999] WASC 252
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2)
[2003] WASC 122 (S)
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PULLIN J: The plaintiff has made an application for an indemnity costs order, or alternatively a special costs order under O 66 r 12(1). The first defendant ("defendant") objects to those orders and seeks an order that the plaintiff's costs be reduced by one-quarter.
Indemnity Costs
2 The plaintiff submits that the defendant's defence in this case was
founded on three premises which, properly regarded, were without any
realistic prospect of success.3 The first premise was said to be that the plaintiff's land had no
potential for subdivision because of restrictions contained in various planning instruments. Accordingly, it is submitted that on well- established principles the effect of those restrictions ought to have been disregarded when considering the highest and best use of the subject land and therefore the value of the land ("Pointe Gourde issue"). The plaintiff points to the fact that the defendant's expert witnesses were instructed, for the purpose of preparing the reports which the defendant was to rely on, to take into consideration the restrictions contained in the planning instrument. It is submitted that it was unreasonable for the defendant not to have conceded the Pointe Gourde issue. It is submitted that the failure to do so meant that the "entire case" was founded upon an untenable proposition.
4 The second premise was said to be that the defendant contended that
some land which was referred to in the case as the "Kruize land" ought not to be considered as a comparable sale. One of the defendant's experts considered that he ought not rely on the price paid by the defendant for the resumption of the Kruize land. The plaintiff says that an inference should be drawn that the defendant deliberately chose to ignore the acquisition of the Kruize land because it would have led to a higher valuation of the plaintiff's land. The plaintiff says the defendant did this because the Kruize transaction, if taken into account, would have led to a higher valuation of the plaintiff's land and caused the defendant to abandon its counterclaim. The counterclaim was formulated on the premise that the amount of compensation which had been paid by the defendant, as resuming authority, was more than the value of the land and that the difference between the true value of the land and the amount of compensation earlier paid by way of advance, should be repaid.
5 The plaintiff submits that the defendant's conduct in pleading the
counterclaim was unreasonable, first because the Kruize land was
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disregarded as a comparable sale, and secondly because the decision of the defendant to pay the plaintiff an advance of $1.9 million plus interest could never have been regarded as a mistake of fact or law. It is submitted that this was based upon an opinion or prediction as to the value of the land, and was a voluntary payment made pursuant to the provisions of the legislation.
6 The third premise advanced was that when valuing the plaintiff's
land, it had to be valued as if each title were sold on the same day, and that this would have had a depressive effect on the value of the plaintiff's land. I rejected that argument, and the plaintiff now argues that this was not a meritorious point and never had any realistic prospect of success.
7 For those reasons, the plaintiff seeks an order that in relation to all of
the plaintiff's costs, they be paid on an indemnity basis. Alternatively, an order is sought on an indemnity basis in relation to the costs of preparing to meet the Pointe Gourde issue and the defendant's counterclaim.
The Principles Applying to Indemnity Costs Orders
8 The usual costs order is one for party and party costs. An order for
indemnity costs will only be made if there is some special or unusual feature in the case to justify a departure from the ordinary practice. In effect, the court has jurisdiction to make an indemnity costs order whenever justice requires such an order. Unioil International Pty Ltd v Deloitte Touche Tohmatsu (1997) 18 WAR 190 at 191; Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233. When the justice of the case does require such an order, then the court will have a discretion as to whether the order should be made.
9 Many examples can be found where an indemnity costs order has
been made. Suffice it to say that most of these involve some element of improper, or at least unreasonable, conduct on the part of the parties or their legal advisors in relation to the case. See the examples given by Sheppard J in Colgate-Palmolive v Cussons (supra) at page 233 and the circumstances referred to in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 and in Unioil's case. Thus, the making of allegations of fraud knowing them to be false, or the commencement of proceedings for some ulterior motive, or in wilful disregard of known facts or the established law, or the making of allegations which ought never to have been made, or the undue prolongation of a case on groundless contentions, and even an unreasonable refusal to accept an offer of compromise, may lead to
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indemnity costs orders. See Colgate-Palmolive v Cussons (supra) at 233. The creation of false issues by tactical denials or failures to admit the facts may, in the circumstances of particular cases, lead to such an order: Unioil's case. An action commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success, may lead to such an order because such action might be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts or the clearly established law. See Fountain Selected Meats (supra).
In this case, the plaintiff submits that there was unreasonable conduct in the running of the defendant's case.
11 Even if there has been such conduct, an indemnity costs order will
not be made if the costs would be covered by an order for party and party
costs (see Unioil's case at 193) or by a special costs order.
The increasing number of indemnity costs orders was remarked upon by Sheppard J in Colgate-Palmolive v Cussons (supra), and on page 227 of that report his Honour said:
"It seems not unlikely that the growing number of these applications is being triggered by a perception that the disparity between costs incurred and costs recovered is widening."
13 His Honour referred to another decision which referred to the
"yawning gap" between costs recovered by a successful party on a party and party taxation of costs and the costs payable by the successful party to its own solicitors. That situation should not arise in Western Australia under the present scale because the cost regime in force in this State means that an order for indemnity costs has less significance than in those jurisdictions where the amounts allowed for party and party costs are materially lower than those allowed for solicitor and client costs. See Unioil's case at 191. The fees allowed under the Supreme Court scale of costs apply both as between party and party and solicitor and client, and for that reason there should not often be any discrepancy between party and party costs and solicitor and client costs in cases where there is no agreement concerning costs under s 59 of the Legal Practitioners Act. This is particularly so under the scales which have applied since 1996. This determination introduced new principles for the calculation of costs. Before that date, the foundation for the scale of costs which applied, and which had applied since 1953, was explained in Cruickshank v Producers Markets Co-Operative Ltd [1960] WAR 184. It was said:
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"… the 1953 amendments to the costs rules … have introduced a novel basis for the fixing of costs, as a result of which, broadly speaking, the remuneration allowable to the profession in litigious works is to be based not on work done but on the value of the subject matter of the lis – a value to be fixed by the court where the claim is not for a liquidated sum …"
14 The 1996 Legal Practitioners (Supreme Court) (Contentious
Business) Determination 1996 made by the Legal Costs Committee under s 58W of the Legal Practitioners Act explained the foundation for the new scale:
"It is the view of the Committee that it is no longer possible to support a scale based on an ad valorem charge for the main item of getting up case for trial. The scale of litigation and the way it is conducted has changed immeasurably since 1953. A survey of costs charged, time spent, and the amount in issue shows that the scale does not reflect the basis on which many solicitors actually charge for the provision of legal services. This has the consequence that solicitors may enter into agreements under section 59 of the Act in order to avoid the constraints of the scale. …
The new scale of costs set out in the Schedule reflects the fact that the costs of legal services provided in relation to Supreme Court and District Court actions are in the main calculated by reference to the time reasonably spent in the provision of those services and by applying to that time a reasonable hourly rate, that rate varying according to the seniority and experience of the practitioner and the complexity of the work."
15 The scale of costs created by that determination describes the various
stages of work involved in litigation, then states the number of hours for the performance of that work and applies an hourly rate of an appropriately qualified practitioner to that number of hours, to arrive at a dollar figure. The determination explains the items in the scale by way of example. It states:
"(3) Thus, for example, item 6(a) of the Schedule which relates to the drawing and settling of a statement of claim, provides for a maximum of 10 hours for the preparation of this document to be performed by a senior practitioner charging at a rate of $270 per hour. In fact, in a particular
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matter, the time reasonably spent in drawing and settling a statement of claim may be only 2 hours and it may be performed by a practitioner who is relatively junior. By reason of the lack of complexity of the case, it may be that such practitioner should only reasonably charge at the rate of $180 per hour. If that be the case, then $360 would be a reasonable charge. Alternatively, if the statement of claim were drawn in complex litigation and 30 hours were reasonably spent on the task by a senior practitioner who might reasonably charge $280 per hour, then it would be appropriate for that party, if it were successful in the litigation to ask for a special costs order to be made by the Court to increase the maximum amount in item 6(a). …"
The determination also says:
"(5) It will be noted from items 13 and 14 of the Schedule that if more than 100 hours must reasonably be spent on getting up the case for trial and if more than 3 days must reasonably be spent by counsel in mastering the brief and preparing for the trial, then the Committee considers that to be a basis to seek a special order for costs under O 66, r 22 of the Rules of the Supreme Court."
17 The investigations which were carried out by the Legal Costs
Committee before settling upon the descriptive item for the work, the number of hours and the hourly rate applicable, was also explained in the determination. The Committee said in the determination:
"5(1) Before making this determination the Committee took the
following steps –
(a)
obtained information from the Supreme Court and District Court about the number of solicitors conducting Supreme Court and District Court litigation;
(b)
reviewed all submissions received following notice given under Section 58Y of the Act;
(c) conducted oral hearings with interested parties;
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(d)
prepared and circulated to relevant parties drafts of the scales with descriptive items covering the work performed by solicitors in the conduct of litigation in the Supreme Court and District Court;
(e)
obtained information as a result of a survey of solicitors about the amount of time which had been spent and the charges which had been made for the last Supreme Court case conducted in the respondent's office;
(f)
conducted a survey of solicitors to ascertain hourly rates charged by them for work performed by senior practitioners, junior practitioners and paralegals and clerks, and
(g)
conducted a survey of members of the Western Australian Bar Association (Inc) to ascertain the hourly and daily rates charged by members of that Association.
(2) The information obtained satisfied the Committee that the existence of competition for the supply of services to parties involved in litigation made it safe to adopt the rates charged by practitioners as a guide to the rates to be used in this determination."
18 Since the 1996 determination, the Legal Costs Committee has carried
out further surveys to adjust the hourly rates to reflect the rates being
charged by practitioners within the profession.19 The result is that where there is no costs agreement under s 59, there
should not often be any need for an indemnity costs order. If costs are likely to exceed the allowances in the scale, the successful party will usually be advised to apply for a special costs order under O 66 r 12(1) by showing that the case involved unusual complexity or importance, or by reason of the amount of work involved in conducting the case.
20 If a special costs order is made, care should be taken in formulating
the orders which are sought. An order may be sought in relation to three
aspects of the scale.21 First, the items describing the work performed might not cover an
area of work in conducting the litigation and which has resulted in the
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incurring of costs. In such a case, the special order sought would be to describe the area of work and to state the hourly rates which should be applied to that area of work. There should not be many areas of work not covered by the existing scale, but there will be some. Counsel's opinion is an example mentioned in Collins v Westralian Sands Ltd (1993) 9 WAR 56 at 64. Item 13A of the Supreme Court scale now allows for recovery of such an item in a solicitor and client bill but does not allow the recovery of work of that kind from the other party unless an indemnity costs order is made, or unless the court otherwise orders pursuant to O 66 r 12(1). It is likely to be rare that any order has to be made about areas of work not described because of the generality of the description in the existing costs scale.
22 Secondly, a special costs order might be made in relation to the
hourly rates provided for an item in the scale. An hourly rate might be thought to be too low for some reason. A special costs order will not be necessary if the amount to be claimed is no more than the maximum dollar amount specified for that item. So, for example, item 8(b), which relates to the giving of particulars of a pleading, provides for a maximum dollar amount based on the assumption that a junior practitioner will carry out the work and take up to five hours to complete such work. It is quite proper on taxation under that item to show that a senior practitioner did the work, but in that case the senior practitioner in the ordinary case would have to complete the work in less than five hours to stay within the dollar limit specified in the scale for that item. If a successful party considers that much more than five hours had to be spent on the task and believes that it can be demonstrated that this was reasonably necessary on a taxation, and also wishes to demonstrate that all of the work was performed by a senior practitioner and that the remuneration should be at the senior practitioner's rate, then a special costs order should be sought. The order that might be sought might be that the "costs in relation to item 8(b) be taxed without regard to the limit in the scale and that the costs be taxed at the senior practitioner's rate" (or "at the rate of $x per hour"). The need for an order of this sort would be necessary if a costs agreement under s 59 of the Legal Practitioners Act has been entered into by the successful party, the hourly rates in the agreement are higher than in the scale, and the party wishes costs to be taxed at that rate. However, the details of the agreement, and in particular the hourly rate which the party applying for a special costs order wants to apply, should be disclosed when the application is made. In my opinion, it is not correct for a party to seek an order lifting limits in the scale without disclosing to the Judge the details of the agreement or the hourly rate which the
[2003] WASC 122 (S)
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applicant wants to use on taxation (and only later inform the taxing officer of the rate). I should also add that 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 Thirdly, the successful party might contend that the time allowed for
performance of the work is inadequate. Say, for example, the time allowed for giving particulars of the pleading in item 8(b) is said to be five hours. If this is considered to be inadequate and there is no wish to seek an increase in relation to the hourly rate, then the appropriate order is to ask that the amount be lifted or taxed without regard to the limit. If that is the only order made, then, in my opinion, the taxing officer should tax on the assumption that above the maximum amount allowed by the scale, the hourly rate will be that fixed by the scale.
24 The consequence is that if a properly formulated special costs order
is made, there should be little need for an indemnity costs order to try and
recover costs incurred above the scale.25 Having said all of that, however, there is still a place for indemnity
costs orders. It will be appropriate in cases where there has been improper or unreasonable conduct on the part of a party or his legal advisors. An order for an indemnity costs order is a mark of disapproval on the part of the court about the improper or unreasonable conduct of litigation, even though there should not be much difference in the costs recovered under such an order compared with recovery under a properly formulated special costs order. If the conditions warrant an indemnity costs order, it is likely that the Judge making the order will be more
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inclined to allow an increase in the hourly rates or an increase in the limits. An order detailing those increases should, in my opinion, be made even where indemnity costs orders are made.
26 A solicitor should not, in my view, resort to an application for an
indemnity costs order merely to secure the recovery which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party.
27 There was one other argument advanced by the plaintiff to support
the claim that there should be an indemnity costs order rather than a special costs order. The plaintiff pointed to Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, unreported; Fed Ct of Aust, 3 May 1991, in which an order was sought for an indemnity costs order in terms that:
"The applicant do pay the respondent's costs of the action, including reserved costs, and such costs are to include all costs except in so far as they are of an unreasonable amount or have been unreasonably incurred so that, subject to the above exceptions, the respondent will be completely indemnified by the applicant for its costs and the amount of such costs be taxed."
28 An indemnity costs order was not made in that case, but the plaintiff
said that if the order had been made, it would have been in the form sought and that the only overriding control on the recoverability of costs would be that those costs not be "unreasonably incurred" or not be of an "unreasonable amount". I agree that an indemnity costs order, if made, would be made in those terms. I pause to mention that this means that even under an indemnity costs order, costs will not be automatically taxed on the basis of the hourly rates provided for in a costs agreement under s 59 of the Legal Practitioners Act. The test of reasonableness will apply even where there is a costs agreement. Unreasonable costs, or costs unreasonably incurred, will not be recovered under an indemnity costs order. Nor will they be recovered under a special costs order. Having referred to the proposed order in Tetijo's case, counsel for the plaintiff then took me to the case of Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, which was a case in which Malcolm CJ would have made a special costs order but for delay in making the application. In his reasons for decision, the Chief Justice said:
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"The making of such an order would in no way limit the decision of the Taxing Master to determine whether any particular item of work, the subject of the defendant's bill of costs for taxation, was reasonably necessary for the purposes of the case, or whether any particular item of costs or disbursements was necessarily or reasonably incurred in connection with the litigation."
29 From this the plaintiff submitted that in relation to the special costs
order, not only was the test of reasonableness applied but, in addition, the costs were scrutinised to determine whether they were "necessarily" incurred in connection with the litigation. I do not interpret the Chief Justice's judgment as introducing some additional test in relation to the taxation of costs under an order pursuant to O 66 r 12(1). In my view, work which has been performed which was not "necessarily incurred" in connection with the litigation would be costs not "reasonably incurred".
30 As I have already said, it is my opinion that if a party wishes to seek
a special costs order or an indemnity costs order to allow costs to be taxed on the rates stated in a cost agreement, then the terms of the costs agreement should be disclosed to the Judge who is being asked to make the order. This should not be left to emerge as an issue before the taxing officer.
The Submissions on the Facts in this Case
31 I turn first to the issue about whether the Pointe Gourde issue was
not taken into account by the defendant's expert witnesses because of the instructions given to them. The defendant denies that its "entire case" was based on the proposition that the Pointe Gourde issue did not apply. It says that this was made clear in its outline of submissions.
32 In my opinion, it is unnecessary to further consider the dispute on
this point. The plaintiff was unable to identify any costs incurred in relation to the issue which would not be covered by an order for party and party costs under a special costs order. In those circumstances, an order for indemnity costs is not warranted. See Unioil's case at 193.
33 In any event, it has to be borne in mind that the Pointe Gourde issue
arose as a sub-issue in relation to one of the major issues in the case, namely whether or not the value of the land should be determined by reference to a hypothetical subdivision, as was proposed by the plaintiff. In the end result, I found that value should not be determined on the basis
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of the hypothetical subdivision and that the hypothetical subdivision was not the highest and best use of the land. It would therefore be an odd result to allow the plaintiff indemnity costs in relation to a sub-issue of a major issue on which the plaintiff was wholly unsuccessful.
34 The second ground advanced in support of an indemnity costs order
is that the defendant's expert considered that the Kruize land sale price ought not to be taken into account in valuing the subject land. As to that, I should observe that both parties paid little attention to the Kruize land transaction until towards the end of the trial. I can see no basis for criticism of the defendant's approach on this point. In addition, I again consider that an indemnity costs order is not warranted, because the plaintiff was unable to indicate that there were any costs which would not be covered by a special costs order.
35 The third submission was that the defendant acted unreasonably in
counterclaiming for repayment of monies which had been paid by the defendant resuming authority and which exceeded the value that the defendant then argued for at the trial. While I agree that the defendant's prospects of success on this counterclaim were slight, I do not consider that the existence of the counterclaim warrants the censure of an indemnity costs order. It also seems clear that the costs in relation to that issue would be covered by a special costs order.
The result is that I dismiss the application for an indemnity costs
order.
Special Costs Order
37 Order 66 r 12(1) confers a discretion on the Court to make a special
order as to costs by reason of the unusual complexity or importance of the case, or for any other good or sufficient reason, and the court may then order that any particular allowance in any relevant scale be raised or a limit removed, and in giving any such direction the court may fix a limit within which the taxing officer may allow such costs.
38 In this case, the plaintiff seeks an order that items 1(a), 6(a), 6(d),
8(b), 9(b), 9(c), 13, 14(a), 14(b), 14(c), 14(d), 14(e) and 14(f) be taxed without regard to the limits in the scale. It is clear that the extent of work involved in preparation may constitute a good and sufficient reason to increase the allowance provided under the scale. See Schmidt v Gilmour [1988] WAR 219 and Esther Investments Pty Ltd v Markalinga Pty Ltd (supra).
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39 I would need very little persuasion on very slight evidence that this
was a case where the time spent exceeded the time provided for in the scale of costs in relation to many items. Resumption cases often involve the parties putting up alternative methods of valuation. If the comparable sales method is involved, the parties often refer to many sales. Each sale can involve the mastery of many facts. In the case where the highest and best use of land is said to be for subdivision, engineers are called in to say what engineering works would be involved and what they would cost. Real estate agents are called to give evidence about what price the subdivided blocks might sell at, and at what rate per annum, both of which points can (and did in this case) produce a multitude of issues between the parties.
40 The plaintiff has filed an affidavit which reveals that a large amount
of work was done in the conduct of this case, and based on that affidavit I am satisfied that a special costs order should be made lifting the limit on some, but not all, of the items which the plaintiff refers to.
41 The plaintiff's affidavit concentrates on describing the hours of work
performed by those involved in the case. There is a reference to the existence of a costs agreement under s 59 of the Legal Practitioners Act, but it has not been produced, and there has been no evidence put before me about the hourly rates which have been charged for the work. In the absence of any evidence on that subject, there is no basis for increasing hourly rates above those provided for in the scale.
42 Further, there is no suggestion that the work performed in the case
was not work which is not covered in descriptive terms by the items in the
scale.43 I am required to draw on my own experience, to act on impressions
gained during the litigation, and to take into account the issues which have been involved. See Esther Investments Pty Ltd v Markalinga Pty Ltd (supra) at 404. I am very conscious of the need not to fall into the trap of making an estimate of the time which I consider would have been spent on the tasks, when I do not have all information before me to make the judgment. Nevertheless, in relation to item 6(d), the 51.1 hours said to have been spent in relation to the preparation of the reply and defence to counterclaim strikes me as very high. The work involved could not have taken that long if regard were only had to the original reply and defence to counterclaim, which consisted of either admissions, non-admissions or denials. However, as counsel for the plaintiff pointed out, there was an amended reply which raised issues about the plaintiff's change of position
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to meet the counterclaim, and this involved more work than simply admitting, denying or not admitting paragraphs in the counterclaim. However, whether the drawing of the amended reply to introduce the new paragraph dealing with change of position warranted over 50 hours, which would be five days' work at 10 hours per day or seven full days' work at seven hours chargeable work per day, will be a matter for the taxing officer and so I will make the order sought in relation to item 6(d).
44 I note that the affidavit filed on behalf of the plaintiff suggests that
over 1,500 hours were spent on "getting up" the case for trial. That amounts to 214 days' work for a practitioner working seven chargeable hours a day. Once again, whether that is reasonable or not, will be a matter for the taxing officer. There were clearly very many issues in this case and a large number of documents were discovered.
45 As the defendant correctly points out, there was no evidence to
support the lifting of the limits in relation to items 14(c) and 14(d) (these
being daily rates for junior and senior counsel).46 As to items 14(e) and 14(f), I do not know who was attending or why
the rates allowed in the scale would be inadequate. In the absence of any evidence at all on the subject, I do not consider that those items should be lifted by any special costs order.
47 I do not consider that item 1(a) should be lifted. This item is intended
to cover the issue of the writ, and if there was work done before the trial which was, in effect, part of getting up case for trial, then Item 13 specifically allows for the recovery of costs necessarily undertaken prior to the commencement of proceedings.
48 Similarly, I do not consider that there should be any uplift in relation
to item 6(a), which relates to the statement of claim. There was no
particular complexity in that document.
I do, however, consider that in relation to items 8(b), 9(b), 9(c), 13, 14(a) and 14(b), costs should be taxed without regard to the limits in the scale. Whether the work was done, and questions of reasonableness (including necessity), are matters for the taxing officer.
The Defendant's Submission that Costs should be Reduced
50 The defendant refers to the fact that I concluded that the comparable
sales method was the correct method of valuation and that the Kruize transaction was the most comparable of all the transactions. The
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defendant points to the fact that the plaintiff's case was overwhelmingly based on the proposition that the highest and best use of the land was for subdivision into 238 rural residential lots. On that basis, the plaintiff argued that the land was worth $5,000,000. A substantial part of the time at trial was taken up in relation to this issue. By all appearances, it would also have involved a lot of work pre-trial. The plaintiff failed on this issue because I concluded that the subdivided lots could not be sold at the rate of 40 per year. No evidence was led by the plaintiff about sales in the Geraldton region which would support the plaintiff's valuers' opinion that these lots would sell at the rate of 40 per year. It was critical to the plaintiff's claim that this sales rate could be achieved, because when the sales rate fell to a certain level per year, the hypothetical subdivision became unprofitable due to holding costs. The only evidence which was led to support the rate of 40 sales per year was based upon sales at Sovereign Hill, which was a location close to Perth. It is true, therefore, that the plaintiff wholly failed on this issue.
51 Generally speaking, a successful party is entitled to recover the
whole of its costs. If the court is of the opinion that the conduct of a party, either before or after the commencement of the litigation, or that a claim by a party for an unreasonably excessive amount, has resulted in costs being unnecessarily or unreasonably incurred, it may deprive that party of costs, wholly or in part. See O 66 r 1(2). The court also has the discretion where a party, though generally successful in the action, has by introduction of some issue or issues on which he has failed and has thereby increased costs, to order such party to pay the costs of such issue or issues.
52 I bear in mind the sentiments expressed by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4 at 16, where he sounded a note of cautious disapproval of applications which he saw being made with increased frequency to apportion costs according only to the success or failure of one party or the other on the various issues of law or fact which arose in the course of the trial. However, such orders are made from time to time. So in Westgold Resources NL v St George Bank Ltd, unreported; SCt of WA; 9 December 1998, Anderson J ordered the defendants to pay three-quarters of the plaintiff's costs of the action to be taxed because there were issues which took a lot of time and which his Honour considered were either not arguable or not understandable. In this case, it is not fair to say that the plaintiff's case based on a hypothetical subdivision was not arguable or not understandable. The plaintiff's case had no element of the hopelessness which led Anderson J to make the decision that he did in the Westgold case. Nevertheless, this was such a
[2003] WASC 122 (S)
PULLIN J
major issue that the defendant submits that the plaintiff should not recover its costs in relation to it. I consider, however, that no such adjustment should be made. The way for a defendant to protect itself in relation to costs is to make a payment into court or an offer of compromise of an appropriate amount and at an early time. No such step was taken in this case, and the plaintiff was therefore left to advance its case as best it could. The fact that the plaintiff failed in the approach it took is no more remarkable than the fact that the defendant failed in its approach.
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