Frigger v Clavey Legal Pty Ltd [No 4]
[2016] WADC 106
•12 JULY 2016
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: FRIGGER -v- CLAVEY LEGAL PTY LTD [No 4] [2016] WADC 106
CORAM: DEPUTY REGISTRAR HEWITT
HEARD: 21 JUNE 2016
DELIVERED : 12 JULY 2016
FILE NO/S: CIV 1221 of 2011
BETWEEN: ANGELA FRIGGER
First plaintiff
HARTMUT FRIGGER
Second plaintiffAND
CLAVEY LEGAL PTY LTD
Defendant
Catchwords:
Practice and procedure - Taxation of costs - Turns on its own facts
Legislation:
Rules of the Supreme Court 1971 O 66 r 53 and r 54
Result:
Objections disallowed
Representation:
Counsel:
First plaintiff : In person
Second plaintiff : Not applicable
Defendant: Mr A Macknay
Solicitors:
First plaintiff : Not applicable
Second plaintiff : Not applicable
Defendant: MDS Legal
Case(s) referred to in judgment(s):
DEPUTY REGISTRAR HEWITT: This action was tried before Judge Herron on 15 to 19 September, 13 to 17 October and 22 to 23 October. The decision was delivered on 12 March 2015 and it reserved liberty to the defendant to apply for special costs orders. That application was brought and it was ordered:
1.The plaintiffs pay the defendant's costs of the action, including reserved costs before 14 June 2013 on a party/party basis to be taxed.
2.The plaintiffs pay all the defendant's costs of the action from 14 June 2013 except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to the above exclusions the defendant is completely indemnified for the plaintiffs for its costs from 14 June 2013 including the costs on this application for costs.
3.The defendant's costs under item 17, 20B and 20D be taxed without reference to the limits fixed under the Supreme Court's scale of costs.
4.The plaintiffs pay the defendant's costs of obtaining the transcript incurred by the defendant.
Pursuant to that order, the defendant brought in a bill of costs which came before me in May 2016. At that time I determined that it was appropriate for the plaintiffs to have access to the defendant's file in order to properly prepare themselves to argue the indemnity costs issues. Unsurprisingly, in the light of his Honour's findings as to the conduct of the plaintiffs, the defendant was unprepared to allow the inspection of its file until all appeal processes were exhausted. As a consequence, I concluded that it would be appropriate to tax that part of the bill which related to the party/party costs and reserve the remainder of the bill to be dealt with on a later date. At the conclusion of the taxation I held my certificate open to allow the plaintiffs to bring in objections. Those objections were filed on 23 May 2016. I determined that the objections should be heard in the context of a court proceeding and ordered that the objections be listed for hearing as a special appointment. That occurred on 21 June 2016. Following the delivery of argument, the plaintiffs sought an opportunity to file further submissions and I made arrangements to provide her with a copy of the transcript of the proceedings to assist in that process and ordered that any further submissions be filed within 14 days. Those submissions have now been received, although the court record does not indicate when they were received.
The objections which were filed by the plaintiffs are extensive and the first of them is conceded by the defendant. The balance of the objections are as follows:
Item 16 and 28 – Getting Up
1.Getting up is claimed at items 16, 28, 45 and 76. The total amount claimed is $199,758.33. If the items in a bill are inextricably mixed up and it is impossible to say what was really chargeable, the bill should be rejected and required to be re-drawn.
2.In fixing a figure for getting up it was necessary for the taxing officer to conduct an analysis of what was needed to be done, by whom was it appropriate to be carried out, and what a reasonable allowance for the work was and was the work proper and necessary. In considering the reasonableness of the amount to be allowed on taxation, regard must be had to the total value of the amount in issue.
3.The taxing officer stated he would 'arbitrarily' fix an amount of $60,000 for items 16 and 28. By arbitrarily fixing an amount for getting up without undertaking a proper analysis as required under paragraph 2 above, and not considering the whole of the amount claimed for getting up, has resulted in an error of principle.
4.The taxing officer is required to consider what is proper and necessary for the Scale Item, but by exercising the discretion in an arbitrary manner without considering the total claim, has resulted in an exercise in principle.
5.Furthermore, the taxing officer failed to consider four schedules A‑D, filed with the bill, which shows there has been substantial doubling up and duplication of work in getting up:
(a)In Schedule A-item 1 25.5 hours is claimed for preparing brief to counsel, which by definition would include considering quantum of damages, analysis of loss claimed, chronology, evidence for trial and agreed facts. The plaintiffs' request to inspect the brief was refused. The taxing officer may not look at and rely on documentary material proffered by one side without giving the other side the opportunity of seeing it and commenting on it: Hobouse J in Pamplin v Express Newspapers Ltd[1985] 2 All ER 185 at 186. Item 5 claims a further 28.65 hours for the same matters. That is duplication of work.
(b)At item 7, another 35 hours is claimed for correspondence with counsel and client, giving advice and seeking instructions.
(c)In Schedule B item 10, again claims 18 hours for the same work at item 7 in schedule A.
(d)In Schedule A item 3, 14 hours is claimed for proofing three employees of the defendant. In schedule B item 1, another 81 hours are claimed, including for two people who did not give evidence at trial. The fact evidence was prepared but not used raises the issue about whether it was necessary in the first place. Proofing Mr Lenhoff and Mr Kitay was entirely unnecessary. The subpoena issued to Mr Kitay was entirely unnecessary because the Master's decision to wind up CAT in insolvency was based on a statutory presumption of insolvency because of the failure to satisfy a statutory demand. No further investigation of documents held by the liquidator was necessary. The fact the statutory demand was issued by two entities that were not owed any money by CAT is the reason the plaintiffs pleaded CAT was not insolvent. No reason was given for proofing witnesses on two separate occasions, where no new evidence had been forthcoming after the first proofing, and for proofing two people who gave no evidence. By failing to analyse what work was required, the duplication and doubling up of work has been overlooked, resulting in error in principle.
(e)In those circumstances, a proper analysis of the above work would show that there has been substantial doubling up and duplication of work. By allowing an arbitrary amount of $60,000 results in an error in principle.
(f)If the proper analysis had been undertaken then $45,000 (Schedule A items 5, 7 and Schedule B items 1 and 10) should have been disallowed from the two items, if, which is denied, such an analysis could be undertaken without considering items 45 and 76.
6.It is further submitted that $200,000 claimed in getting up points to an excessive and overcautious approach to the matter. Costs that are luxuries in litigation are payable by those who indulge in them, and only necessaries are paid for by the losing side. In this instance, the claim of $200,000 for getting up is so excessive, and the amount allowed for the first two items of $60,000 is indicative that an error in principle has occurred: Schweppes Ltd v Archer (1934) 34 SR (NSW) 181 at 183, which states that a decision as to quantum alone might be so outrageous as to speak for itself and show that the Taxing Officer did not exercise his discretion in a proper manner.
7.In circumstances where the entire claim for getting up has not been analysed at the same time, then the discretion to tax two of four items and fixing an arbitrary amount of $60,000 for getting up is an error in principle.
8.No oral objections were allowed by the paying party on most of the items listed in the schedules. A failure to give the paying party an opportunity to be heard that the costs claimed were not necessary or proper, is an error in principle.
9.The taxing officer is not permitted to sign an allocator for only some items on a bill. The only time such an exercise of the discretion is permitted is where objections are raised to some items, and the other items are not objected to: RSC O 66 r 53(2).
Item 20 and 33
1.In fixing a figure for fee on brief it was necessary for the taxing officer to conduct an analysis of what was needed to be done, by whom was it appropriate to be carried out, and what a reasonable allowance for the work was and was the work proper and necessary. In considering the reasonableness of the amount to be allowed on taxation, regard must be had to the total value of the amount in issue.
2.By fixing an amount for fee on brief without undertaking a proper analysis as required under paragraph 1 above, and not considering the whole of the amount claimed for getting up, has resulted in an error in principle.
3.The taxing officer allowed $31,537.50 for fee on brief which does not include attendance at first day of trial. Items 57 and 81 claim a further $83,314 for fee on brief.
4.Without considering the further $83,314 claimed for this item, it was not possible for such an analysis to be carried out properly, which results in an error in principle in taxing the items.
10. The total amount claimed is $120,851.50, which is 4 times the maximum allowed for item 20(b) at the most recent 2014 scale ($30,195). That does not take into account that the item has been claimed in four separate items at different periods when different scales applied. In this instance, the claim of $120,851.50 for fee on brief is so excessive, and the amount allowed for the first two items of $31,537.50 is indicative that an error in principle has occurred: Schweppes Ltd v Archer (1934) 34 SR (NSW) 181 at 183, which states that a decision as to quantum alone might be so outrageous as to speak for itself and show that the Taxing Officer did not exercise his discretion in a proper manner.
5.The decision not to tax the entire bill at the same time, but rather to sign an allocator for half the bill, results in the scale item described as 'fee on brief and first day of trial' not being considered in its entirety in the bill, resulting in failure to conduct a proper analysis and an error in principle.
11. The taxing officer is not permitted to sign an allocator for only some items on a bill. The only time such an exercise of the discretion is permitted is where objections are raised to some items, and the other items are not objected to: RSC O 66 r 53(2).
Item 37, 40, 43
1.The amount claimed by the expert I the above items is $7,293 equating to 16 hours of work. The work involved sitting in front of a computer and checking the 'Properties' of some 10 computer files. All of the computer files are Word documents of not more than one page. The 'expert' was required to make a note of the date when the first was first created and when the files had been modified and accessed. The taxing officer stated that the report was 'important' and impliedly that it didn't matter what was charged to do the work. Such a conclusion is an error in principle. Even if work is important, an analysis of what work was required and what was a reasonable time to do it is still required. If the work had been properly analysed, it would show that no more than 3 hours was required to check 10 documents and prepare a report as to the date when the file was first created and the date/s when it was edited.
2.Furthermore, the plaintiffs say it was not necessary to employ the most expensive expert for a matter that any computer professional would not charge more than $100/hour. There was no value judgment to be made in the report, only to record the date when a document had been first created and the date/s when it had been edited. A charge of $450/hour for such work is entirely unnecessary and therefore not proper.
12. Furthermore, a further disbursement for the same expert is claimed at item 34 for $3,814.80 representing a further 8.5 hours for the same simple report prepared by an expert in computers. Without considering the entire fees charged and a reasonable fee for it, and results in an error in principle. In considering the reasonableness of the amount to be allowed on taxation, regard must be had to the total value of the amount in issue.
13. The taxing officer is not permitted to sign an allocator for only some items on a bill. The only time such an exercise of the discretion is permitted is where objections are raised to some items, and the other items are not objected to: RSC O 66 r 53(2).
Item 41 and 42
1.Fees charged by Mervyn Kitay to comply with subpoena. No order was made pursuant to RSC Order 36B r 11(1). In those circumstances, payment to Mr Kitay's invoices was entirely the defendant's decision, and Mr Kitay's costs cannot be claimed from the plaintiffs. No order was made that the plaintiffs are liable to pay Mr Kitay's costs of complying with subpoena.
2.Furthermore, the documents that was allegedly required to be produced by Mr Kitay to prove that Computer Accounting & Tax Pty Ltd could have been obtained from the plaintiffs. Mr Kitay has no documents or other evidence to prove the insolvency or otherwise of that company, and has never had any such evidence, because it does not exist.
3.The fact evidence was subpoenaed but not used raises the issue about whether it was necessary in the first place.
4.Master Sanderson's decision to wind up the company was based on a 'statutory presumption of insolvency' for failure to comply with a statutory demand. There was no other evidence relied on by the Master, and the entire subpoena was issued unnecessarily for the purposes of proving the insolvency of CAT and the disbursement was not reasonably incurred and by allowing it the taxing officer has made an error in principle.
Before embarking on a detailed consideration of the objections, I review the basis upon which an objection can be made. The process of objection and review is set out in r 53 and r 54 of O 66 of the Rules of the Supreme Court 1971:
53.Party dissatisfied with taxation may object and apply for review
(1)A party who contends that the taxing officer has made an error in principle in allowing or disallowing any item or part of an item in a bill of costs taxed by him may, at any time before a certificate of taxation dealing finally with that item is signed, or at such earlier time as made, in any case, be fixed by the taxing officer –
(a)deliver to the other party interested in the allowance or disallowance and carry in before the taxing officer, an objection in writing to the allowance or disallowance specifying in the objection by a list, in a short and concise form, the items or parts of items objected to, and the grounds and reasons for the objections; and
(b)thereupon apply to the taxing officer to review the taxation in respect of those items or parts.
(2)Pending the consideration and determination of the objection, the taxing officer may if he thinks fit issue a certificate of taxation for or on account of the remainder or of part of the bill of costs. Any further certificate which may be necessary shall be issued by the taxing officer after his decision upon the objections.
54.Review of taxation by taxing officer
(1)Upon an application under rule 53 to review the taxation, the taxing officer shall reconsider and review his taxation in relation to the objections, and he may, if he thinks fit, receive further evidence in respect of the objections.
(2)If so required by a party, the taxing officer shall state in his certificate of taxation or by reference to the objection, the ground and reason of his decision on the objection, and any special facts or circumstances relating to his decision.
(3)The taxing officer may tax the costs of the objections and add them to or deduct them from, any sum payable by or to a party to the taxation.
(4)Except as provided by this rule, the taxing officer shall not, after a certificate of taxation is signed, review his taxation or amend his certificate, except to correct a clerical or manifest error before payment or process issued for recovery of the costs.
(5)If a party fails to appear on the taxation the taxing officer may, upon an application in that behalf made in writing within 7 days, set aside or vary his certificate of taxation on such terms as he thinks just.
I now turn to consider the individual objections which have been raised. The first objection is to items 16 and 28. Each of those items relate to getting up case for trial and they could have quite properly formed a single claim for that work on a party/party basis. The taxing party chose to separate getting up into two amounts on the basis of the fact that the cost scale changed during the course of the action. That is unobjectionable. Insofar as other items of the bill claim for getting up on an indemnity basis, that is, in my view, completely irrelevant. When those items are taxed they will be taxed according to their tenor. I therefore deal with items 16 and 28.
In order to assess a proper amount it is necessary to form an opinion as to the work which was necessary to be undertaken, the seniority of the person who should properly carry out that work, and a reasonable allowance (bearing in mind the scales) for that work. The bill identified what work was done by what practitioners of what seniority and I formed the view that appropriate personnel were employed to carry out the tasks required. I was also satisfied that the tasks which were undertaken were properly undertaken, but I formed the view that the amounts claimed were excessive and a deduction was required. As a consequence, I came to a conclusion as to what a reasonable fee for the work which was undertaken would be. That required a deduction to be made from the amount claimed. For mathematical convenience I chose to make one deduction from the larger of the two items rather than contrive to separate the deduction according to the scale upon which the work was charged. I see no error in that and, that being the case, the objection becomes one as to quantum, notwithstanding the plaintiffs' attempts to dress it up as an error of principle. The simple fact is I reached the conclusion that the work deserved the allowance which I gave it.
As to the complaint about viewing the brief, I did not view the brief save to the extent to satisfy myself that it existed and that it was in a format which I was satisfied was a properly prepared brief account. As to the contents of the brief, I was not concerned with the specifics but simply the existence of what I would describe as a properly prepared and formatted brief and one that should command a significant allowance.
As to the remainder of the objection, on my analysis it is clearly an objection on quantum masquerading as an objection on a matter of principle. Having perused the responsive objections filed by the plaintiff, I am unable to discern anything which should dislodge that conclusion.
As to the allegation that no oral objections were allowed by the paying party on most of the items listed, it is simply untrue. The paying party was given an opportunity to make objections, did make objections and many of her objections were upheld.
It is next said that I am not permitted to sign allocators for only some items on a bill. As will be seen from O 66 r 44(f), a taxing officer has the power to make separate or interim certificates or allocators. The objection raised by the plaintiff is simply misconceived.
The next objections concern items 20 and 33 which are fee on brief. Consideration as to the work required to be done by senior counsel in mastering the brief was given and led me to the conclusion that a deduction of $6,000 from the second of the items was appropriate. Once again, in my view, this is an objection as to quantum dressed up as an error of principle. I am unable to see how it can possibly be reasonably said that the quantum allowed is so outrageous as to show an error in principle particularly when his Honour the trial judge saw fit to remove the limits on these items when making his costs order. That decision is no doubt reflective of his Honour's view of the tasks which were faced by senior counsel and it is a view which I also adopted save that I thought the charges were somewhat higher than they should have been.
The next objection concerns the costs of subpoenaing one Mr Kitay. Mr Kitay was the liquidator of a company which had previously been run by the plaintiff. The financial status of the company was made relevant by an allegation by the plaintiff that notwithstanding the liquidation of the company, it was nonetheless solvent. In my view, it was perfectly proper to subpoena Mr Kitay to deal with this issue. He was not called as a witness because the plaintiff abandoned the issue and his evidence was therefore irrelevant. To raise issues, put the opposition to the trouble of dealing with those issues and then abandon them is not a basis for denying the defendant its costs.
As to the allegation that the relevant documents could have been obtained from the plaintiffs, as far as I am aware they were never discovered by the plaintiffs but even if they were, his testimony would still have been required. Put in a nutshell, I do not accept that the issuing of the subpoena to Mr Kitay was unnecessary. It was made necessary by the actions of the plaintiffs and, to the extent that it put the defendant to expense, I allowed that expense.
The final objections is to items 37, 40 and 43 of the bill, those being obtaining an expert report of one Adam Stafford. An allegation was made by the plaintiffs that certain computer records held by the defendant were effectively forgeries brought into existence at a date after the conversations which they purported to record and concocted in order to support the evidence of the witnesses to those conversations. It was effectively an allegation of fraud. That was an extremely serious allegation and one which had to be dealt with extremely seriously. It was necessary to deal with the allegation with a properly qualified witness whose expertise and competence had been tested and proved in court proceedings. Mr Stafford was a former police investigator with experience in matters relevant to the issue and whose evidence would have been, in my view, convincing. The objection relies on the plaintiffs' assertions as to the tasks which were required to be undertaken, their simplicity and so forth, she is effectively purporting to give expert evidence to undermine the claim made for Mr Stafford's fees. In my view when a party makes an allegation which is effectively one of fraud or intended perjury it must be treated with the utmost seriousness. The plaintiffs suggest that it would have been adequate to refute the accusations which she had levelled by simply clicking on the properties tag relating the relevant document and establish the date that they were created. I do not accept the plaintiffs' purported expert evidence on this score. Such a process would have been entirely unconvincing to a court and what was required, and what was obtained, was an expert who:
(a)would be received as an expert; and
(b)would be credible in the evidence which he gave.
Nothing in the responsive objections changes my view and my overall view of the responsive objections is they had nothing, or very little to the objection. As a consequence, I am of the view that all of the objections raised by the plaintiffs should be disallowed save for those relating to item 7. An appropriate adjustment will be made to the total allowed on the bill. I have listed the taxation in general chambers on Thursday 21 July 2016 at 9.30 am to deal with the costs of the objection after which I shall sign the allocation.
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