Frigger v Clavey Legal Pty Ltd [No 5]
[2017] WADC 11
•27 JANUARY 2017
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: FRIGGER -v- CLAVEY LEGAL PTY LTD [No 5] [2017] WADC 11
CORAM: STEVENSON DCJ
HEARD: 23 JANUARY 2017
DELIVERED : 27 JANUARY 2017
FILE NO/S: CIV 1221 of 2011
BETWEEN: ANGELA FRIGGER
HARTMUT FRIGGER
Applicants (Plaintiffs)AND
CLAVEY LEGAL PTY LTD
Respondent (Defendant)
Catchwords:
Costs - Review of taxation of bill of costs by judge - Whether error in principle made by taxing officer - Leave to extend time for review - Application for a suspension order to stay enforcement of costs judgment - Whether special circumstances exist to grant stay
Legislation:
Civil Judgments Enforcement Act 2004 s 15
Legal Profession Act 2008
Rules of the Supreme Court 1971 O 66 r 55
Result:
Application for leave to extend time for review of taxation refused
Application for review of taxation dismissed
Application for suspension order dismissed
Representation:
Counsel:
Applicants (Plaintiffs) : In person
Respondent (Defendant) : Mr A T Macknay
Solicitors:
Applicants (Plaintiffs) : Not applicable
Respondent (Defendant) : MDS Legal
Case(s) referred to in judgment(s):
Bray v Ryan [1999] WADC 66
Eastland Technology Australia Pty Ltd v Whisson (2003) 28 WAR 308
Forbes v Frigger [2009] WASC 77
Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21
Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21 (S)
Frigger v Clavey Legal Pty Ltd [No 3] [2016]WASCA 209
Frigger v Clavey Legal Pty Ltd [No 4] [2016] WADC 106
Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112
Rankilor v Circuit Travel Pty Ltd [2012] WASCA 155
Tey v Optima Financial Group Pty Ltd [No 2] [2012] WADC 19
Webb v Bateman (Unreported, WASC, Library No 6305, 27 May 1986)
STEVENSON DCJ:
Introduction
This is an application by Mr and Mrs Frigger (the applicants) for leave out of time to review a costs certificate issued against them on 21 July 2016 for $122,533.96 (the taxed costs) following an unsuccessful action against their former lawyers, Clavey Legal Pty Ltd (the respondent).
The applicants also seek a suspension order pursuant to s 15 of the Civil Judgments Enforcement Act2004 (the Act) to stay enforcement of the costs judgment of this court dated 19 October 2015, which now includes the obligation on them to pay the taxed costs to the respondent.
The stay is sought pending determination of an application for special leave to appeal to the High Court dated 19 January 2017 from the judgment of the Court of Appeal in Frigger v Clavey Legal Pty Ltd [No 3] [2016] WASCA 209.
For the reasons that follow, the applications should be refused.
Background
On 30 March 2010, the respondent terminated its retainer agreement to provide legal services to the applicants. As a result, the applicants commenced action CIV 1221 of 2011 in this court against the respondent alleging breach of contract, breach of fiduciary duty and breach of duty of care.
On 12 March 2015, Herron DCJ dismissed the applicants' action for damages and ordered the applicants to pay the respondent's costs of the action including reserved costs: Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21.
On 19 October 2015, Herron DCJ, in supplementary reasons, made the following costs orders: Frigger v Clavey Legal Pty Ltd [No 3] [2015] WADC 21 (S):
1.The plaintiffs pay the defendant's costs of the action, including reserved costs before 14 June 2013 on a party and 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 by the plaintiffs for its costs from 14 June 2013, including the costs of this application for costs.
3.The defendant's costs under items 17, 20(b) and 20(d) be taxed without reference to the limits fixed under the Supreme Court scale of costs.
4.The plaintiffs pay the defendant's costs of obtaining the transcript incurred by the defendant.
The applicants appealed both the substantive decision dismissing their action, as well as the adverse costs decision made against them by Herron DCJ in his supplementary reasons. The applicants' appeals were dismissed by the Court of Appeal on 30 November 2016: Frigger v Clavey Legal Pty Ltd [No 3] [2016] WASCA 209.
Pursuant to the decision of Herron DCJ, the respondent filed a bill of costs dated 18 March 2016 (the bill of costs). The respondent's bill of costs was prepared in two parts in accordance with Judge Herron's costs orders namely, that the applicants pay the defendant's costs of the action on a party and party basis before 14 June 2013 and thereafter on an indemnity basis.
After receiving written submissions from the parties, Deputy Registrar Hewitt dealt with the applicants' objections. On 12 July 2016, the learned Deputy Registrar, in his capacity as taxing officer, published reasons for decision: Frigger v Clavey Legal Pty Ltd [No 4] [2016] WADC 106. He foreshadowed in his reasons at [15] that he would sign the allocator after dealing with the taxation in general chambers on 21 July 2016.
On 21 July 2016, Deputy Registrar Hewitt informed the applicants by letter, copied to the respondent's solicitors, that he had 'concluded [his] consideration of [their] objection and have allowed the Bill in the sum of $122,533.96.'
On 9 August 2016, the applicants filed a chamber summons seeking review by a judge in chambers pursuant to O 66 r 55(1) of the Rules of the Supreme Court 1971 (WA) (RSC) 'to review the taxation of those items which were unsuccessful in the plaintiffs' objections'. After various iterations, including amendments made at the hearing of the application, the applicants sought the following orders:
1.An order for leave to bring this application out of time in relation to the review.
2.An order pursuant to RSC O 66 r 55 to review the taxation of those items which were unsuccessful in the plaintiffs' objections.
3.An order pursuant to s 15 Civil Judgments Enforcement Act 2004 suspending the costs judgment dated 12 March 2015 pending the plaintiffs' special leave application to the High Court dated 19 January 2017.
Extension of time for review of taxation by a judge
An application by a party who is dissatisfied with the certificate of the taxing officer as to any item, or part of an item, objected to under r 53 is required to be filed within 14 days of the date of the certificate, or such other time as the court may allow: O 66 r 55(1) RSC.
Accordingly, leave of the court is required if the application for review is not made within 14 days of the date of the costs certificate, namely when the taxing officer signs the allocator and thereby becomes functus officio.
The applicants' chamber summons for review should have been filed on or before 4 August 2016. The chamber summons is dated 8 August 2016 but was filed on 9 August 2016.
Mrs Frigger in her affidavit sworn 3 October 2016 at [4] deposed that she filed the original chamber summons '14 days after receiving the final signed allocator'; that she believed that time started running from the day of receipt of the costs certificate; that she was unaware that the time started running from the day the allocator was signed; and was unaware of this date until the time she received it in the mail.
This is consistent with what Mrs Frigger said from the bar table during the hearing, namely that at all times she was aware of the 14 day period but thought it commenced from the day she received notice of the existence of the costs certificate.
The applicants are self‑represented. I accept Mrs Frigger's evidence of her belief at the relevant time. The timeframe within which the applicants lodged the chamber summons in its original form is consistent with this version of events.
I also interpose that, as a matter of fairness, in my view the time period in any event should commence from the date of notice that the certificate of costs has issued. The present requirement could easily lead to an injustice, for example to a rural based party.
Section 295(7) of the Legal Profession Act 2008 provides that in certain cases, if an application by a client to review a costs assessment is made out of time, then the application may be determined 'after having regard to the delay and the reasons for the delay, that it is just and fair for the application for assessment to be dealt with after the 12 month period'. As prescribed, these are relevant mandatory considerations in this context which must be taken into account in exercising a judicial discretion to extend time for the purpose of such an application.
The discretion in this case is different because the beneficiary of the costs order is a successful party to the litigation, as opposed to a party (the client) to a fiduciary relationship in a professional context.
Bearing in mind the context and purpose of such an application the authors of Civil Procedure Western Australia, vol 1 [66.55.3] suggest that the reasoning of Franklyn J in Webb v Bateman (Unreported, WASC, Library No 6305, 27 May 1986) as to the principles to be applied in granting an extension of time under analogous provisions of the Legal Practitioners Act 1893 should be taken into account. At page 14, Franklyn J said:
In my opinion a proper exercise of the discretion given under s 68A includes a consideration of:
(a)the apparent purposes of ss 65 – 71 of the Legal Practitioner's Act to provide machinery to protect a client against excessive charges by a practitioner, and to enable a client to be satisfied that bills of costs are not excessive, whilst imposing time limits (which in a proper case may be extended) to prevent a client unfairly taking advantage of the provisions to delay the obligation to pay proper costs, and to avoid frivolous objections.
(b)the reasons for the delay in question.
(c)whether there are valid reasons for believing that a refusal to enlarge time might result in injustice to the client.
(d)whether there is evidence suggesting that the bill might be excessive.
(e)the nature and degree of prejudice to the practitioner.
(f)the practitioner's reasons for opposing the enlargement (if he does so), it being of importance that as an officer of the court he be seen to be acting honestly, ethically, and with proper motives, and that he not be acting merely to prevent taxation of the bill taking place.
In addition, Master Newnes in Monopak Pty Ltd v Maxim Litigation Consultants [2007] WASC 112 observed that the criteria set out by Franklyn J in Webb were not immutable or exhaustive and in each case it will be a question of determining what is in the interests of justice in the particular circumstances of the case. The authors of Civil Procedure Western Australia opine that it is likely similar principles would apply to an extension of time under O 66 r 55(1).
I understand it is common ground the parties agree that relevant considerations include the need for an explanation for the delay; a consideration of the prospects of success of the proposed review which requires a consideration of the merits of the objections sought to be maintained by the applicants; and the interests of justice.
In the circumstances of this particular matter, it is convenient to deal with the applicants' contentions sought to be relied upon as if an extension of time has been granted. In this case it is expedient to proceed in this way. Accordingly, whether the application to extend time should be granted will be determined by a consideration of the grounds of review sought to be relied upon and the prospects of a successful review order being made.
Notwithstanding the approach to be taken, in my view the reason for the delay has been adequately explained by the applicants. The period of delay is short and it cannot be said there is any tangible prejudice caused to the respondent (and nor is it suggested there has been). These factors would not preclude the grant of an extension of time.
The nature of a review of taxation by a judge
The applicants seek to review the taxation of those items upon which they were unsuccessful in their objections in the first instance before the taxing officer pursuant to O 66 r 55(1) RSC.
The starting point is to consider the principles which govern a review application by a judge of a taxation undertaken by a taxing officer.
In Forbes v Frigger [2009] WASC 77 [37] and [38] Hasluck J said:
It follows from my review of the relevant rules, and especially O 6 r 55(1) that it is necessary, in order for relief to be afforded to the applicant, that the judge be of the opinion that the taxing officer has made 'an error in principle'. Thus, in Mossensons (a firm) v Coastline Associates, unreported; SCt of WA (Parker J); Library No 970166; 8 April 1997 Ipp J made these observations:
The point is that there must be an error in principle before a judge will carry out a review under O 66 r 55. Although it is possible for an error in principle to be made in regard to the quantum allowed in respect of a particular item, that is generally regarded as unusual. In my opinion, an error in principle on this basis could only be established if it is shown that no taxing officer, acting reasonably, could ever have taxed the particular item in the amount in question.
The reason for such a view is, of course that a judge will not usually be as familiar with the taxing process as a taxing officer, and therefore not nearly as competent to say what is the proper amount to be allowed. Hence, in only a very exceptional case will a judge review a taxing officer's decision as to quantum. See Clay & Clay v Karlson & Kurelic, unreported; SCt of WA (Heenan J); Library No 970424; 21 August 1997. (emphasis added)
In Rankilor v Circuit Travel Pty Ltd [2012] WASCA 155 Murphy JA stated the relevant principles as follows:
75.Order 66 r 53 and O 66 r 55 refer to an 'error in principle'. In this context, errors in principle have been contrasted with questions of mere quantum. In Re Catlin [1854] 18 Beav 508 [52 ER 200], Sir John Romilly said:
The petition is to review the taxation made by the Taxing Master of a bill of costs delivered by Mr Catlin, and complaining of the disallowance of various items. It is admitted, on both sides, that this Court can only be called upon to determine on the propriety of allowing or disallowing items which involve some principle, and not where a question only of quantum arises. (Alsop v Lord Oxford 1 Myl & K 564.)
76.Nevertheless, errors in principle may be made both in determining whether an item should be allowed and in determining how much should be allowed: Schweppes Ltd v Archer (1934) 34 SR (NSW) 178, 183; Australian Coal & Shale Employees' Federation v Commonwealth (628).
77.An error in principle may be inferred from a decision of the taxing officer if the result is such that the discretion appears not to have been exercised at all, or where it has been exercised in a manner that is manifestly wrong: Australian Coal & Shale Employees' Federation v Commonwealth (628 - 629).
The objections to taxation by the applicants
Although the respondent, in its written submissions dated 9 November 2016, indicated that the applicants had not made any submissions in support of this part of their application, they did not seek to do so in writing before the hearing on the premise that they 'simply proposed to rely upon the objections made to the taxing officer'.
Mrs Frigger informed the court that she did not understand it was necessary to file written submissions again on this part of the application and that, if she had known, she would have done so.
Mrs Frigger also maintained they had not received or seen a copy of the respondent's written outline of submissions dated 9 November 2016. The respondent says the submissions were served at the same time as the affidavit of Ms Duthie sworn 9 November 2016 in opposition to the application for review and suspension.
It should be observed that Mrs Frigger's initial affidavit in support of the review application only dealt with the need for leave out of time and also 'the special circumstance' relied upon for the suspension order under s 15 of the Act.
At that time, the applicants were relying on the existence of their appeal from this court to the Court of Appeal which was listed for hearing on 12 October 2016. This was the basis of the stay application. Since then, as mentioned, the Court of Appeal dismissed the applicants' appeal on 30 November 2016. For this reason, the chamber summons was amended at the commencement of the hearing to reflect the fact of the application for special leave to appeal to the High Court having been lodged on 19 January 2017.
Notwithstanding the failure of the applicants to file written submissions in response to the grounds for review of the taxation, counsel for the respondent, Mr Macknay, indicated he was not prejudiced and was able to respond to the detail of the objections which had been maintained by the applicants before the taxing officer. He was also effectively 'armed' in this regard with the taxing officer's reasons for decision dated 12 July 2016.
The taxing officer's reasons for decision
The applicants seek to review the taxing officer's decision in relation to three separate areas of the bill of costs. Mrs Frigger identified the following paragraphs of the learned registrar's reasons for decision as containing the matters in issue:
5.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.
6.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.
…
10.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.
12.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.
13.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.
14.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.
I will now deal with each ground on which the applicants contend the taxing officer made an error of principle, and which is sought to be corrected on review.
Review of the applicant's objections to taxation
(a) Numbers 16 and 28 (getting up and preparation of case); and Numbers 20 and 33 (fee on brief for senior counsel)
The bill of costs is dated 18 March 2016. As mentioned, it is prepared in two parts by reference to 14 June 2013, being the point in time before which the applicants are required to pay the respondent's taxed costs on a party and party basis and, thereafter, on an indemnity basis.
In addition, the bill of costs is drawn in a chronological order by reference to the relevant Legal Practitioners (Supreme Court) (Contentious Business) Determination, either 2010 or 2012 depending on when the work was undertaken.
I understand the applicants' objection is that the taxing officer cannot lawfully or reasonably tax the identified items without also having taxed the same items for the indemnity period following 14 June 2013. The applicants say that the taxing officer has committed an 'error in principle' because he has not considered the entire getting up or fee on brief for senior counsel as a single amount before exercising his discretion to tax the bill of costs.
It is plain, in my view, from the learned registrar's reasons for decision that necessarily he must have had regard to the totality of the total of the two separate amounts claimed for the periods 2010 and 2012 under the determination because in doing so, for practical purposes, he only deducted a single amount from the second amount in each case for the item (No 28 and 33).
I note that the taxing officer, in the exercise of his discretion, deducted $19,073.95 from the amount he allowed for getting up and preparation of the respondent's case prior to 14 June 2013 from the total amount of $30,032.25 and $49,050.70 claimed (total $79,082.95). Most unsuccessful litigants would be satisfied with this percentage reduction, which represents an actual irrecoverable financial loss to the successful party, which is an out of pocket expense.
All amounts claimed are subject to separate schedules providing particularisation and details of the work undertaken and the period of time when it was undertaken.
The applicants rely on Tey v Optima Financial Group Pty Ltd [No 2] [2012] WADC 19 and Bray v Ryan [1999] WADC 66 as authority for the proposition that the taxation (to this point in time) is invalid because the process required is for the taxing officer to have regard to a total single amount in each case of each item as claimed before he or she is in a position to exercise their discretion as a taxing officer. The Tey v Optima case can be distinguished because there the court was 'fixing' the costs to be paid as opposed to 'taxing' a bill of costs, albeit it is accepted the processes are analogous.
I assume the applicants rely upon what Commissioner Reynolds said at [37] in Bray v Ryan about the process of taxation and how the taxing officer should go about their task:
In the final analysis it is necessary to first, identify what services were necessary in the particular case and secondly, objectively assess a reasonable allowance for such services by applying the Rules, the Determination and the underlying principles thereof and thirdly, measure the amount actually claimed in the bill for the services against the objective assessment in order to determine whether or not the amount claimed is reasonable and what adjustment, if any, should be made.
The respondent contends in this case that the separation of the party and party, and indemnity costs order is a natural consequence of the orders made by the trial judge. With respect to the indemnity costs part of the bill of costs, these have not yet been taxed because the taxing officer, in his discretion at the time, deemed it appropriate that the applicants have access to the respondent's files. To this point in time, such access has been denied by the respondent on the basis that the decision of Herron DCJ was under appeal (initially to the Court of Appeal and currently to the High Court).
The respondent submits that it is not unfair and contends the applicants cannot point to any actual or real prejudice if the bill of costs is taxed in two stages. In my view, this submission is correct. The way in which the taxing officer has taxed part of the bill of costs is the practical consequence of the costs orders made by the trial judge.
There is no proper discernible reason why the respondent should be prejudiced by further delay as a result of the applicants' appeals. This is incongruous, especially as the matter is being delayed by the applicants seeking to exercise their rights of appeal, which of course, is their right. But this right, in the circumstances of this matter, is subject to payment of any outstanding costs orders (unless a suspension order is made, which involves different considerations).
In my view, the taxing officer, when he comes to tax the indemnity costs component of the bill of costs obviously will be seized with the previous taxation for the period prior to 14 June 2013 when determining what allowance should be made for the same items for the period thereafter. The taxing officer will know how much he has allowed to 14 June 2013 and will plainly ensure that the taxation of the respondent's indemnity costs does not include, for example, any duplication of work or tasks already undertaken.
In fact, as submitted by the respondent, in my view it would be an error of principle on the part of the taxing officer not to have regard to the extent to which he has allowed the respondent's costs on a party and party basis and the work undertaken in that regard during the relevant earlier period. It should be borne in mind that litigation is an organic process with the issues and the evidence required will 'wax and wane' until judgment is entered. To demonstrate, a good example can be found in this case in relation to an aspect of the costs objected to. It concerns an issue that was not pursued at trial by the applicants with no or little notice of it being abandoned.
It is also arguable that it is relevant to bear in mind that taxation of costs on an indemnity basis requires some different considerations than taxation on a party and party basis, in any event.
In my view, the applicants' objection to the taxing officer's assessment of these items goes merely to quantum and does not admit to any discernible error of principle.
In the circumstances of this case, the approach taken by the taxing officer to tax part only of the bill of costs was open and there is nothing precluding the respondent from seeking to enforce payment of that part only. The applicants should not be permitted as a matter of principle, nor is it in the interests of justice, to create the cause of the delay to then rely upon it to frustrate the taxation of the bill of costs, and thereby avoid the need to make payment to the successful party.
In any event, the taxing officer is permitted to make separate or interim certificates or allocaturs: RSC O66 r 44(e).
(b) Numbers 37, 40 and 43 (Mr Adam Stafford)
The applicants contend the taxing officer made an error in principle in allowing claim numbers 37, 40 and 43 on the bill of costs. At the outset, Mrs Frigger quite properly made the concession that the complaint was about the quantum of the amount allowed, a total of $7,293. These costs were incurred and paid by the respondent to Mr Adam Stafford.
Mr Stafford was engaged to provide an expert opinion on whether 'certain computer records held by the (respondent) were effectively forgeries bought into existence at a date after the conversations they purported to record and concocted in in order to support the evidence of the witnesses to those conversations': Deputy Registrar Hewitt at [14] Frigger v Clavey Legal Pty Ltd [No 4] 2016 WADC 106.
By inference (after allowing an amount for GST and disbursements) and on the basis of Mrs Frigger's statement that the total time spent on the matter by Mr Stafford was 16 hours, it seems his hourly rate was about $400.
The evidence of Mr Stafford was sought in response to the applicants' allegation of fraud. But for the allegation the respondent would not have incurred the costs of Mr Stafford.
An allegation of fraud is easy to make. The mere making of the allegation has the potential to destroy the reputation and good standing of the affected person. The consequences of a baseless allegation of fraud or perjury can have far reaching impacts, including the need to declare the fact of the allegation when seeking professional indemnity insurance, the possible loss of the ability to practice in the relevant profession and the risk of an irrecoverable loss of reputation and income. Often, there will also be an unquantifiable emotional cost due to the psychological impact on the person and those associated with them, including family members. Accordingly, the professional duty placed on lawyers, as officers of the court, whose clients wish to make such serious accusations is higher than for matters of less import.
There is no reasonable doubt that it was entirely appropriate, in the circumstances, for the respondent to retain Mr Stafford to provide expert opinion evidence to refute the allegations made by Mr and Mrs Frigger. Mr Stafford is a former police investigator and has the necessary experience and training to deal with the issue, and provide expert evidence.
On this allegation, I note Herron DCJ in his supplementary reasons for decision on 19 October 2015 found at [28] – [29]:
I am satisfied there was no proper or sufficient basis upon which the allegation of fraud could be made. No evidence was, or has been, produced to support or justify the allegation. Essentially, the only thing relied upon in support of the allegation was Mrs Frigger's unsubstantiated allegation that the defendant's contemporaneous file notes were not prepared when they were purported to be prepared and were created at some later time. It was an allegation entirely devoid of merit and ought not have been made or maintained. Certainly it is an allegation which ought not have been renewed or persisted with. The renewed allegation of fraud and the fresh allegation of perjury are equally lacking in substance and merit.
I am satisfied the plaintiffs by maintaining the allegation of fraud against the defendant after receiving legal advice to withdraw the allegation when they were represented by counsel, Mr Brooksby, and then to renew the allegation after they withdrew it at the commencement of the trial, after receiving further legal advice from counsel, constitutes improper and unreasonable conduct on the part of the plaintiffs. I am satisfied that in those circumstances it is appropriate that an order for indemnity costs be made. Subject to what I will shortly explain in relation to the consequences of the defendant's Calderbank offer dated 21 May 2013, I would have been prepared to make an order that the plaintiffs pay the defendant's costs of the action on an indemnity basis from 25 March 2014 to reflect my disapproval of the plaintiffs' improper and unreasonable conduct in persisting with the fraud allegation after receiving legal advice to abandon the allegation.
I am not persuaded by the applicants that the amount allowed by the taxing officer for this item was not within a reasonable range for the work undertaken. It could never be suggested that the amount allowed is such to invoke the 'outrageous' threshold level raised in submissions. In any event, it is not arguable that a taxing officer, acting reasonably, could never have taxed the particular item in the amount in question and allowed it at that amount. I reject the evidence of Mrs Frigger from the bar table that 'the fair market value (for the report) was five hours at $100 because that is what any computer expert would charge'.
With respect, it is incongruous for the applicants to contend that 'the report was a simple report and any person could have done it', especially after the findings made by the trial judge. Such a submission is naïve and admits to a cavalier approach to the seriousness of the matter, and a disregard for the other party. At stake was the professional reputation of the respondent's lawyers and those involved in the preparation of the file notes.
There is no demonstrable error of principle by the taxing officer in allowing the claim and the total amount claimed. The decision, in both respects, concerns the question of quantum and is entirely reasonable and appropriate.
(c) Numbers 41 and 42 (Mr Kitay)
The taxing officer in his reasons for decision on 12 July 2016 made findings at [12] – [13] on this issue (see above):
The applicants contend the taxing officer made an error of fact because they did not 'abandon' the issue of the solvency of the company and therefore it cannot be said the evidence of Mr Kitay was unnecessary. Accordingly, they submit the costs of Mr Kitay should not have been incurred because he did not give evidence and, even though the taxing officer reduced the amount claimed, they maintain no amount should have been allowed.
The respondent says a forensic decision was made not to call Mr Kitay even though the solvency of the company was a live issue. I accept that Mr Kitay was a relevant witness and this required the respondent to take instructions from Mr Kitay as to the financial affairs and status of the company, including the preparation of a draft proof of evidence and service of a witness subpoena to compel his attendance at trial.
In my view, the applicants have not established any discernible error of principle in the exercise of judgment by the taxing officer in allowing part of the costs incurred by the respondent with respect to Mr Kitay. It is irrelevant that, in the end, Mr Kitay was not called to give evidence – a decision which was borne out to be a correct in the final outcome.
Application for a suspension order
Irrespective of the outcome of the review of taxation, the applicants seek a suspension order under s 15 of the Civil Judgments Enforcement Act2004 to prevent the respondent from enforcing the costs judgment and the resultant taxed costs pending determination of an application to the High Court for special leave to appeal.
Section 15 of the Act relevantly provides:
(1)A person against whom a judgment is given may apply for an order suspending the enforcement of all or part of the judgment to ‑
(a)the court that gave the judgment; or
(b)a court that is dealing with an appeal against the judgment.
(3)On such an application, the court may only make such an order if there are special circumstances that justify doing so.
(4)A suspension order may be made for any period (including an indefinite period) and may be made on terms as to costs or otherwise.
A suspension order has effect according to its content and, while operative, the enforcement of the judgment is suspended to the extent stated in the order: s 16 of the Act.
The application for the stay is based solely on the fact that the applicants filed an application for special leave to appeal in the High Court on 19 January 2017: affidavit of Angela Frigger dated 19 January 2017. The special leave application contends, among other things, that 'in circumstances where the primary judge was plainly wrong, the Court of Appeal (WA) failed in its duty to re-hear the case, to reconsider the evidence, to make up its own mind, which resulted in a substantial miscarriage of justice and losses in excess of $1.3 million suffered by the applicants'.
It is observed that an extension of time to file the application for special leave is also required by the applicants.
The power of this court to grant a stay of the costs judgment is conditioned by the mandatory consideration that it can only do so 'if there are special circumstances that justify doing so': s 15(3).
When the applicants initially sought a stay of execution on the costs judgment, it was premised on the existence of their then appeal to the Court of Appeal, which appeal was dismissed unanimously on 30 November 2016. The appeal also sought to overturn the costs orders made by Herron DCJ at first instance, including his order that the costs scales for items 17, 20(b) and 20(d) were inadequate and that those items should be taxed without reference to the limits fixed by the scales.
By reason of the dismissal of the appeal to the Court of Appeal, the application for the stay is now premised on the application to the High Court for special leave to appeal from that decision.
The relevant legal principles in determining whether to grant a suspension order are found in the decision of the Full Court of the Supreme Court of Western Australia in the joint reasons of Murray & Parker JJ in Eastland Technology Australia Pty Ltd v Whisson (2003) 28 WAR 308 at [9]:
In the light of the authorities, we may attempt to distil what we take to be the generally applicable relevant principles –
1.The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.
2.It is for the applicant for a stay to move the court to a favourable exercise of its discretion.
3.It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.
4.The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.
5.If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.
6.If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion hardship to the respondent which may not be alleviated by the terms upon which the stay may be granted.
[NB: Letters have been inserted instead of bullets as in the original judgment for ease of reference.]
In Eastland Technology, the court was concerned with its power under the RSC to grant a stay of execution pending an appeal. Section 15 of the the Act came into force on 1 May 2005.
In my view, the principles applied in Eastland Technology are analogous and applicable to the exercise of the judicial discretion to grant a suspension order under s 15 of the Act.
Paragraph 7 of the affidavit of Mrs Frigger sworn 3 October 2016 sets out the primary ground for the relief sought:
I believe the defendant has no assets and should the plaintiffs pay the costs order, if the appeal is successful, it will be rendered nugatory because our funds would have been dissipated.
Mrs Frigger also deposes (in the same affidavit) knowledge that the respondent is covered by the Legal Practice Board insurance scheme and an alleged belief that 'as much as 50%' of the costs to be paid will be paid to the respondent. With respect, she is wrong in this regard, and her reasoning is incorrect.
In her affidavit dated 9 November 2016 Ms Duthie, a solicitor employed by the respondent's legal representatives, states that, following the applicants' claim against the respondent in 2011, the respondent claimed indemnity under a certificate of insurance issued by Law Mutual (WA) in its favour.
Ms Duthie's affidavit confirms that underwriters, under the certificate of insurance, granted indemnity to the respondent in relation to the plaintiffs' claim, subject to the terms and conditions of the certificate of insurance and on the facts as presently known. Following the grant of indemnity, Law Mutual (WA) and the underwriters have conducted the defence of the applicants' claim on behalf of the respondent and have incurred the legal costs associated with the defence.
In par 8 of Ms Duthie's affidavit, she deposes 'the payment of funds under the certificate of taxation will be to Law Mutual (WA) for payment to the underwriters in accordance with the master policy applicable for the period the subject of the certificate of insurance.'
As can be seen from the annexed certificate of professional indemnity insurance the underwriters are QBE Insurance (Australia) Limited, Vero Insurance Limited, Newline Syndicate 1218 at Lloyds and Amlin Syndicate 2001 at Lloyds for their respective portions as detailed in the master policy.
Counsel for the respondent, Mr Macknay, by reference to the attachments to the affidavit, confirmed that the taxed costs, if paid by the applicants, would be paid first to the underwriters and then to Law Mutual (WA). In view of the costs incurred and the terms and conditions of the indemnity policy of insurance, no funds will be paid from the taxed costs payable by the applicants to the respondent.
In the circumstances, I am not persuaded by the applicants that there is any tangible, let alone reasonable or discernible, risk (in the event the applicants are successful in obtaining a reversal of the costs judgment against them) that the funds will be 'lost' or not repaid. The reputational risk of the underwriters associated with Law Mutual (WA), and Law Mutual itself, is such that I have no doubt repayment would be made (if the need arose).
For these reasons it cannot sensibly be said that there is any risk that if the proposed appeal is successful it will be rendered nugatory because the funds will have been dissipated by the respondent's insurers.
There is therefore no special circumstance which can justify a stay of execution of the costs judgment and the respondent (and its insurer) is entitled to be paid without further delay.
As a result, there is no need to make any observations about the applicants' prospects of success of obtaining special leave to appeal to the High Court or the result if leave is granted. It is noteworthy counsel for the respondent observed that some of the issues sought to be raised in the application for special leave do not arise directly out of the issues the subject of the decision of the Court of Appeal or the judge at first instance.
If there was a special circumstance justifying departure from the rule that the respondent, as the successful party at first instance, should be deprived of the benefit of the costs judgment, consideration would need to be given to whether the suspension order should be made 'on terms as to costs or otherwise': s 15(4).
Ordinarily a suspension order, if made, will be made on terms requiring the amount of the taxed costs in issue to be paid into court as a means of providing security for the party who is prima facie entitled to receive them (unless there is good reason otherwise). Such a condition in this case would be one which it would appear the applicants could not meet in any event based on the statement of Mrs Frigger that they, in effect, would be unable to make the payment and will be left bankrupt if the current appeal is unsuccessful.
Conclusion
For these reasons, an extension of time for a judge to review the taxation of part of the respondent's bill of costs dated 19 October 2015 pursuant to O 66 r 55 RSC is refused on the basis that there is no discernible or reasonably arguable error of principle by the taxing officer when he issued the certificate of costs on 21 July 2016.
The special circumstances relied upon by the applicants for a suspension order to stay payment of the taxed costs has not been made out (bearing in mind the indemnity costs order for the period 14 June 2013 onward has not yet been taxed). Accordingly, there is no proper basis for the making of an order.
In the circumstances, subject to hearing submissions from the parties, I propose to make an order that:
(a)The applicants' re‑amended chamber summons for review and suspension dated 9 August 2016 be dismissed.
(b)The applicants pay the respondent's costs of the application (including any reserved costs) to be taxed, unless otherwise agreed.
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