Giller v Procopets
[2012] VSC 658
•25 October 2012
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COSTS COURT
S CI 2010 04742
| ALLA GILLER | Applicant |
| v | |
| BORIS PROCOPETS | Respondent |
---
JUDGE: | WOOD AsJ | |
| DATE OF DECISION AND REASONS ON REVIEW | 25 October 2012 | |
CASE MAY BE CITED AS: | Giller v Procopets | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 658 | |
DECISION AND REASONS ON REVIEW OF TAXATION
BACKGROUND
On 14 March 2012 the Applicant filed a Notice of Review pursuant to Rule 63.56.2 of the Supreme Court (General Civil Procedure) Rules 2005. The proceedings (“Review”) therefore relate to rulings made by a Costs Registrar in a taxation completed 8 March 2012. The taxation was to quantify the Applicant’s costs arising from paragraph 1 (c) of an order of the Court of Appeal on 8 April 2009 in proceeding AS CI 1999 7804 (reported at [2008] VSCA 236), with such costs to be paid by the Respondent to the extent of 75%. Paragraph 1 (c) deals with the costs of the proceeding before Gillard J (reported at [2004] VSC 113) in proceeding S CI 1999 7804. My reasons of 3 May 2012 deal with the review of taxation of the costs of the actual appeal.
The base figure claimed in the bill of costs was $569,368.25. The individual who drew the bill then applied a 25% reduction to all the costs including the costs of the taxation. This issue features in the reasons below. The bill was reduced to $275,989.01 on taxation. The Notice of Review sought to review rulings made in relation to 29 items.
The review was listed for hearing on 12 July 2012. On that day the parties appeared and the Respondent applied for an adjournment based on a medical certificate of Dr Lebedev, a general practitioner, who certified that the Respondent was receiving medical treatment for depression and was unfit to conduct court proceedings for 3 months. The Applicant did not oppose the adjournment per se but proposed that the review proceed on that day by way of oral submissions with the Respondent to be given the opportunity to participate by way of written submission in due course.
The Respondent consented for the matter to be conducted by way of written submission. Having regard to the content of the Respondent’s medical certificate, I formed the view that it was not appropriate for the Applicant to present oral argument on 12 July 2012 and the Respondent be required to take notes and digest the Applicant’s oral submission without the benefit of having it committed to writing, given his medical condition.
Directions were given for written submissions to be filed on behalf of the Applicant by 19 July 2012, with the Respondent given until 12 October 2012 to respond. Costs of the day were ordered to be costs in the Review. At the hearing on 12 July 2012, the Applicant withdrew objection to items 465, 582 (the reading component), and 1241, thereby reducing the scope of the Review in a minor way.
The Respondent did not file any written submissions by 12 October 2012. On 15 October 2012 the Respondent filed further medical material, the effect of which certified the Respondent as unfit to participate in litigation until 28 December 2012. Inconsistent with this certification he filed a large amount of material between 15 and 22 October 2012. The vast majority of this did not relate to the items sought to be reviewed by the Applicant and included correspondence to the solicitor for the Applicant, the Sheriff and the Appeals Costs Board. One item however was relevant to the order under review as it questioned the accuracy of the figure of $275,989.01 in the order of the Costs Registrar. This aspect will be addressed further below.
The Review proceedings were initiated by the Applicant in relation to a limited number of items dealt with at taxation. The Respondent did not initiate his own review so the scope of the Review or controversy before the Court was in effect defined by the Applicant’s Notice of Review. The available options on a review initiated by the party favoured by the costs order are to increase allowances for items under review in their favour or maintain the rulings made at taxation. The best the Respondent can hope to achieve in this Review is to make submissions to maintain the rulings made at taxation and persuade the Court not to increase the entitlement of the Applicant. There is no controversy initiated by the Respondent arising out of the taxation (see Shrapnel v Laing (1887) 20 QBD 334).
The Respondent told the Court on 12 July 2012 that he owned multiple properties. He has had ample time and resources to engage representation if he wished to participate in the Review, but in any event, there is no prejudice to the Respondent by finalising the Review in the absence of written submissions from him for the reasons outlined below.
The nature of the review of a taxation was dealt with by the Court of Appeal and at first instance, by Justice Beach in Kuek v Devflan Pty Ltd & Anor,[1] when reference to the High Court case of Australian Coal and Shale Employees Federation v The Commonwealth occurred.[2] The following passage from the judgment of Kitto J appears in that case at pages 626 to 629 :
“………the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is that there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v. The King (1936)55 CLR 499. So, too, in my opinion, the exercise of the jurisdiction to review a taxation of costs is subject to no narrower limitation than that which was stated by Bovill C.J. and Brett J. in Hill v. Peel (1870) L.R. 5 C.P. 172 at 180-181:—‘A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the Court that he is wrong. Where a principle is involved, the Court will always entertain the question, and, if necessary, give directions to the master; but, where it is a question of whether the master has exercised his discretion properly, or it is only a question as to the amount to be allowed, the Court is generally unwilling to interfere with the judgment of its officer, whose peculiar province it is to investigate and to judge of such matters, unless there are very strong grounds to shew that the officer is wrong in the judgment which he has formed”.
[1] [2011] VSCA 25 and [2009] VSC 91 respectively.
[2] (1953) 94 CLR 621.
What follows in these reasons are the items under Review in bold (utilising their numbers as they appear in the bill of costs) with the Applicant’s grounds of objection in italics. The scope of the Applicant’s written submissions then appear, followed by the relevant rulings made on Review. The Applicant’s written submissions grouped some items together with the same submission being made for each item in the group. For ease of reference the same groupings have been utilised in these reasons.
The first group is comprised of items 582, 616 and 969.
ITEM 582 – This is a claim for $900 for Junior Counsel to appear at the directions hearing on 31 January 2001. The hearing went for less than an hour. On taxation $600 was allowed. The orders made on that day merely dealt with a timetable for any request for particulars and request for particular discovery.
‘The Costs Registrar did not allow sufficient time for Counsel’s appearance. The Costs Registrar should have allowed 3 hours for counsel’s appearance at $300 per hour, as marked by Counsel”
The Applicant’s written submissions state: “It is submitted that 3 hours for…attendance should be allowed to take into account counsel’s preparation for the hearing”.
On the Review - it is apparent from the order on 31 January 2001 arising from the directions hearing that it was a simple matter. There is no change.
ITEM 616 – This is a claim for $900 for Junior Counsel to appear on 20 April 2001. It was reduced to $600 on taxation. The hearing went for less than one hour. The orders made on that day dealt again with particular discovery, particulars and any foreshadowed application for interim litigation costs.
“The Costs Registrar did not allow sufficient time for Counsel’s appearance. The Costs Registrar should have allowed 3 hours for counsel’s appearance at $300 per hour, as marked”
The Applicant’s written submissions state: “It is submitted that 3 hours for…attendance should be allowed to take into account counsel’s preparation for the hearing”.
On Review - it is apparent that the matter was a simple directions hearing on that day. There is no change on Review.
ITEM 969 – This is a claim for $1,250 for Junior Counsel to appear at a call over on 20 October 2003. On taxation this was reduced to $500. There was no evidence of how long he was occupied at the call over.
“The Costs Registrar did not allow sufficient time for Counsel’s appearance. The Costs Registrar should have allowed 3 hours for counsel’s appearance at $330 per hour”
The Applicants written submissions state: “It is submitted that 3 hours for…attendance should be allowed to take into account counsel’s preparation for the hearing”. The submission then incorrectly refers to item 616. The reference should be to item 969 and the submission states that this item is “…further supported by the annexure attached hereto and marked ‘B’ being counsel’s backsheet indicating that the hearing on 20 October 2003 also dealt with the Defendant’s application for exchange of all documents filed in electronic form. This application was dismissed. It is submitted that an allowance of 2 hours for counsel’s time is too low for this appearance”.
Counsel’s back sheet records that there was an appearance before the Listing Master and that orders were made fixing the proceeding for trial for “2 February 2003”. This is plainly an error as the trial was fixed for 2 February 2004 with an estimate of 15 days subject to part heard matters, and it was also ordered that the Respondent’s application for exchange in electronic form of all documents filed and served was dismissed. This oral application was merely a request that the parties exchange, in electronic format, documents already discovered in paper format. This was a simple matter. The Court record on the file makes no reference to this oral application by the Respondent, so it can be presumed to have been of no particular significance.
On the Review - no increase. The Applicant bears the onus of proof to establish that $1,250 was a proper fee and it was proper to brief counsel. The scale rate for a solicitor to attend a call over was $107 at that time. The allowance of $500 was a proper one.
The second group is comprised by items 840 (the reading/preparation component), 884 (for work on 26 May 2003), 919, 946, 1004, 1005, 1011, 1053, 1095 and 1139. The same written submission was common to all these items.
ITEM 840 – This is a claim for Senior Counsel for 2.5 hours reading and preparation on 15 May 2003, 1 hour conference on 16 May 2003, 4 hours reading and preparation on 18 May 2003, 4 hours reading, preparation and conference on 19 May 2003, 4 hours reading preparation and conference on 22 May 2003. His hourly rate was $450. On taxation a total of 4 hours was allowed.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear and to confer given the novelty and complexity of the legal issues and facts, volume of material and the trial occupied 26 days with extensive cross‑examination.
The Applicant’s written submissions address all the items in this second group and state : “These items relate to the claims for senior and junior counsel’s time in conferring, reading and preparing for trial.
The applicant relies upon the findings of the Costs Registrar (see paragraph 18 of his Ruling dated 29 August 2011) that the substantive proceeding involved complex and novel issues of the law.
The applicant further relies upon the summary of costs that were claimed by counsel and allowed on taxation (relating to these items) that was handed up to Associate Justice Wood on 12 July 2012.
At the hearing on 12 July 2012 before Associate Justice Wood, the respondent made oral submissions regarding Mr North’s illness in February 2004 that prevented him from appearing at the Trial on 11 and 12 February 2004. attached hereto and marked ‘C’ is a copy of a letter from North SC dated 28 November 2011 that was provided to the Applicant’s costs lawyer for the purposes of the Taxation Hearing. The Applicant relies upon this letter in support of Mr North’s claims for conferencing, reading and preparation on 11, 12 and 15 February 2004”.
Attachment C is a letter from Mr North SC dated 28 November 2011 which confirms that he was ill with a chest infection and fever and was taking prescribed medication. He confirms he was working on all three days in February 2004 (the first two at home and the third in chambers) and charged whole days, for working and dictating submissions.
On the Review - there is no change to the allowance for item 840. The allowances made at taxation are sufficient for Senior Counsel. By way of comment, Senior Counsel was allowed in the vicinity of $17,000 for all work prior to trial. Junior Counsel was allowed over $50,000 for all work up to the start of the trial (but this was not just confined to trial preparation but included appearances at directions hearings and in relation to interlocutory applications and drawing various documents).
ITEM 884 – This is a claim for Senior Counsel of 8 hours preparation ($3,600) on 26 May 2003. This was disallowed on taxation. The preparation related to a hearing on 28 May 2003 in respect of the Respondent’s summons dated 21 May 2003. The summons sought leave to issue 11 subpoenas, an order that restricts inspection of any documents produced, vacating the trial date, the repayment of $500, and costs.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear and to confer given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
The summons on 21 May 2003 led to the order of 28 May 2003. The order made a cosmetic amendment to the Applicant’s statement of claim, removed the matter from the list of cases awaiting trial and fixed a timetable for notices to admit, any further affidavits, a chronology, any counterclaim, a Court Book, outlines of argument and list of authorities. The claim for Senior Counsel fees is not justified. On the Review - there is no change.
ITEM 919 – This is a claim for 4 hours reading and preparation on each of 30 May 2003 and 2 June 2003, and 3 hours preparation and reading on each of 3 June 2003 and 4 June 2003. A total of 14 hours. This was disallowed on taxation. Notices to admit were due by 18 August 2003, and any further affidavit by 11 August 2003. The Respondent had the ability to file a counterclaim by 3 July 2003, a chronology was due 27 June 2003, and outline of arguments due by 25 August 2003.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - there is no change. There is insufficient justification for Senior Counsel to be engaged in work at this time.
ITEMS 946 – This is a claim for $3,960 on each of 4 and 5 September 2003 (total $7,920) for Settling Outline and Research. On taxation this was reduced by a total of $1,584 to $6,336 (a little over 14 hours). On taxation Junior Counsel was allowed 16 hours ($5,280) for drawing the Outline.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review – there is no change as the Costs Registrar made sufficient allowance. The comments in paragraph 16 above are apposite.
ITEM 1004 – This is a claim for Senior Counsel for $1,500 representing a 3 hour conference with Junior Counsel and the applicant on 30 January 2004 and further conciliation. Two hours at $500 per hour were allowed on taxation.
The Costs Registrar did not allow sufficient time for Counsel’s conferences given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - the Costs Registrar made sufficient allowance. The comments made in paragraph 16 above are apposite.
ITEM 1004 – The balance of this item is a claim for Senior Counsel of 4 hours reading and preparation on 1 February 2004 ($2,000), and a further three full days reading and preparation on 2, 3 and 4 February 2004 (claimed at $4,000 per day). On taxation all these claims were allowed with the exception of $4,000 for the full day on 3 February 2004. The first day of the trial was 4 February 2004.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - the taxation ruling is confirmed. The allowance of one day and 4 hours for preparation is sufficient at this point given the previous allowances to Senior Counsel for preparation including written outline of argument and research.
ITEM 1005 – This is a claim for 17.5 hours for conferences by Junior Counsel between 15 January and 15 March 2004. On taxation this was reduced to 14 hours at $330 per hour. The trial ran between 4 February and 18 March 2004.
The Costs Registrar did not allow sufficient time for Counsel’s conferences given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - sufficient allowance was made by the Costs Registrar. There is no change. The comments made in paragraph 16 above are apposite.
ITEM 1005 – This is a claim for 26.25 hours ($8,662.50) for Junior Counsel for reading and preparation during the trial between 1 and 15 February 2004. On taxation it was reduced to 15.5 hours at $330 per hour ($5,115). The trial ran for 7 days between these dates.
The Costs Registrar did not allow sufficient time for Counsel’s reading and preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - sufficient allowance was made by the Costs Registrar. There is no change.
ITEM 1011 – This is a claim for $4,000 for “reading and preparation and conference with various witnesses” for a day on 5 February 2004. This was the day before the trial resumed its second day on 6 February 2004. At taxation the sum of $2,000 was allowed.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - the allowance at taxation was sufficient.
ITEM 1053 – This is a claim for Senior Counsel for $4,00 for reading and preparation on 15 February 2004. It was taxed off at taxation, however two days reading and preparation and conferences with Junior Counsel on 11 and 12 February 2004 were allowed. Day 7 of the trial was on 13 February 2004 and day 8 of the trial occurred on 16 February 2004.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - there is no change as the allowances on taxation were sufficient.
ITEM 1095 – This is a claim for Senior Counsel for $4,000 for reading and preparation on 20 February 2004. This fell between day 11 of the trial on 19 February 2004 and day 12 of the trial on 23 February 2004. This was in addition to the daily hearing fees of $4,000 per day on those days. The claim for $4,000 preparation was reduced to $2,000 on taxation.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - this was sufficient allowance given the other allowances made for reading and preparation both prior to and during trial.
ITEM 1139 – This is a claim by Senior Counsel for $4,000 for reading and preparation on 28 February 2004. This was between day 16 of the trial on 27 February 2004 and day 17 of the trial on 1 March 2004. This was in addition to the daily hearing fees of $4,000 per day on those days. It was disallowed on taxation.
The Costs Registrar did not allow sufficient time for Counsel’s preparation to appear given the novelty and complexity of the legal issues and facts, volume of material and the trial occupying 26 days.
The Applicant’s written submissions are those reproduced under item 840 above.
On the Review - there is no variation. The daily fee includes an allowance for some preparation and this is adequate having regard to the other allowances made.
The following are the single ungrouped items 840 (in relation to the affidavit), 884 (the work on 28 May ) and 919 (in relation to pleadings).
ITEM 840 – This is a claim for 8 hours conference and settling an affidavit on 23 May 2003. It was disallowed on taxation. Junior Counsel was allowed $5,377.40 on taxation for settling the affidavit, a little over 16 hours at $330 per hour.
The Costs Registrar held that it was not necessary nor proper to brief senior counsel to settle the Applicant’s affidavit. Given the novelty and complexity of the legal issues and facts and volume of material, it was necessary and proper for senior counsel to settle this affidavit.
The Applicant’s written submissions state “The affidavit referred to in this item is that claimed at item 837.”
On the Review - it is apparent that a generous allowance was made for Junior Counsel for the affidavit. In the circumstances I am not prepared to allow any more for Counsel fees on this task.
ITEM 884 – This is a claim for $3,600 for Senior Counsel to appear on 28 May 2003. It was disallowed on taxation. The hearing dealt with the Respondent’s summons dated 21 May 2003 which sought the relief outlined below.
The Costs Registrar held that it was not necessary nor proper to brief senior counsel to appear at the return of the Respondent’s summons. Given the novelty and complexity of the legal issues and facts and volume of material, it was necessary and proper for senior counsel to appear at the return of the Respondent’s summons.
The Applicant’s written submissions state: “This item is further supported by the annexures attached hereto and marked “D” being the summons and affidavit in support”.
The Annexure was the Summons issued by the defendant seeking leave to issue 11 subpoenas, an order that restricts inspection of any documents produced, vacating the trial date, the repayment of $500, and costs.
On the Review - the comments made in relation to item 884 above apply. There is no change on Review.
ITEM 919 – This is a claim for drawing and settling Reply and Defence to Counter Claim of $2,640.
The Costs Registrar did not allow any costs time for Senior Counsel drawing and settling the pleadings. Given the novelty and complexity of the legal issues and facts and volume of material it was necessary and proper to engage Senior Counsel to draw and settle these pleadings.
The Applicant’s written submissions state “This item is further supported by the annexure attached hereto and marked “E” being the Reply and Defence to Counterclaim”
There was a claim at item 921 for Junior Counsel for $1,980 to perform the same task. The document comprised 10 folios. Having sighted the document the allowance for Junior Counsel was sufficient. There is no change on Review.
There are three further items, namely items 758, 998 and 1011, which were part of the review but were not addressed further in the written submissions of the Applicant.
ITEM 758 – This is a claim for Junior Counsel to settle 12 subpoenas. On taxation one hour was allowed at his rate of $330.
The Costs Registrar only allowed an hour for counsel settling 10 subpoenas, this equates to 6 minutes per subpoena which is too low.
The subpoenas included ones to the Bank of Melbourne, Commonwealth Bank of Australia, the Sheriff of Victoria, Balaclava Real Estate Pty Ltd, Detective Sergeant Cain, Max Gray (an accountant), John Pesutto (a solicitor), the Police Criminal Records Branch, Goldie Kelmann (a solicitor), the Alfred Hospital, and one to give evidence only (Detective Trimble). Leaving aside whether it is necessary for Counsel to settle them, the one hour allowed on taxation was sufficient allowance. There is no change on the Review.
ITEM 998 – This is a claim for $6,484.50 for 4,323 pages of photocopying for Senior Counsel’s brief ($1.50 per page). On taxation this was reduced by $750 (500 pages).
The Costs Registrar reduced the number of pages copied for Counsel’s brief by 500 pages on the basis he had a discretion to do so but no discretion to reduce the scale copying rate.
Given the complexity of the legal issues and facts it was necessary and proper for all the documents included in the brief to have been provided to Counsel and the Costs Registrar should not have reduced the number of pages allowed by 500.
Any discretion to reduce the rate per page is only triggered once more than 10 copies of the same document occurs. However, a claim is made for 4,323 pages at $1.50 per page. This was the rate for the years 2002 and 2004. However, not all copying occurred between those years. Documents date from as far back as 1996. Assuming no copying by the solicitor occurred until 1999 when the proceedings were issued, the rates for the relevant years were $1.20 in 1999, $1.30 in 2000 and $1.40 in 2001. Counsel was engaged throughout so it is reasonable to assume copying was done around the date of the document involved. On that basis around 580 pages were over claimed by 30 cents per page, 50 pages over claimed by 20 cents per page and 400 pages over claimed by 10 cents per page. There was a claim for 1,028 pages of the Respondent’s discovery and 856 pages of the subpoenaed documents. It is safe to assume that not all were of probative value to justify copying for counsel. In the circumstances a reduction of $750 from a claim for $6,484.50 was a reasonable approach by the Costs Registrar. There is no change on the Review.
ITEM 1001 – This claim for $6,484.50 as per item 998 above, was made for Junior Counsel’s brief.
The Applicant refers to, repeats and relies upon objection to item 998.
On the Review - the decision in relation to item 998 above has equal application.
The final category of items relate to the impact of the 25% reduction to the costs of the proceeding imposed by the Court of Appeal.
ITEM 1232 to 1243 – These items represent the items that relate to the costs of the taxation. They were reduced on taxation by 25% to reflect the Applicant’s entitlement to 75% of the costs of the proceeding as per the order of the Court of Appeal.
“The Costs Registrar has only allowed 75% of the cost of the taxation on the basis Order 1(c) of the Orders made by the Court of Appeal on 8 April 2009 provide for the Respondent to pay 75% of the costs of the trial and that the costs of the taxation are costs of the trial.
The Applicant relies upon the comment by Justice Von Doussa in Beach Petroleum NL and Anor v Johnson and Oths [1995] FCA 1250 at paragraph 21 where he states that “whatever may have been the justification in the respondents’ conduct for making the indemnity costs orders to the point of judgement, that conduct has no bearing beyond the point of judgment when it comes to taxing the costs.”
The Court of Appeal ordered the Respondent to only pay 75% of the costs of the trial due to the conduct of the Applicant during the proceedings and at the trial.”
A clarifying point should be made here. The Applicant’s Notice of Review refers to the Court of Appeal order utilising the phrase “costs of the trial”. This is not accurate. The order of the Court of Appeal awarded 75% of the costs of the proceeding to the Applicant. The same error is repeated in the following written submissions.
The Applicant’s written submission states:
“The Applicant refers to and relies upon her submissions made to the Costs Registrar on the question of whether she is entitled to 100% of the costs of the taxation or only 75%. Her submissions are summarised by the Costs Registrar at paragraph 9 of his Ruling dated 2 March 2012.
The Applicant also submits that Rule 63.36 does not mean that the costs of the taxation must always be on the same basis as the costs orders.
Firstly, Rule 63.36 does not take away the Cost Court’s discretion to allow costs of the taxation, which party is to pay costs and on what basis such costs are paid. For example, if a party paying costs serves a successful Offer of Compromise or Calderbank letter, then the costs of the taxation from the date of such offer are to be paid by the party seeking costs. Or if the party paying costs serves a successful Offer of Compromise or Calderbank letter, then the costs of the taxation from the date of such offer are to be paid by the party seeking costs. Or, if the party seeking costs serves a successful Offer of Compromise or Calderbank letter, then the costs of the taxation from the date of such offer are to be paid by the party paying costs on an indemnity basis. These two circumstances, whereby the costs of the taxation are paid by a party or on a basis other than that provided by the original costs order, occur reasonably frequently in the Costs Court.
Secondly, there are many costs orders whereby costs are to be paid on a party party basis up to a certain date and then on another basis (usually indemnity) after that date. If Rule 63.36 is to be strictly applied, then this would involve the exercise of determining which particular costs of the taxation relate to the period of time whereby costs are on a party party basis and applying a party party test to the costs of the taxation and then applying a different test to the other costs of the taxation. This would make determining the costs of the taxation unnecessary complex. In these circumstances, all of the costs of the taxation are awarded on a party party basis unless there have been successful Offers of Compromise or Calderbank letters.
The Applicant refers to and repeats her submission that her conduct that lead to the Court of Appeal awarding her only 75% of the costs of the Trial has been taken into account by the Court of Appeal. As His Honour Justice Von Doussa of the Federal Court remarks in Beach Petroleum NI v Claremont Petroleum NI v Malcolm Keith Johnson and Others [1995] FCA 1250 at paragraph 21, whatever may have been the justification for the making of a costs order, other than on the standard party party basis, to the point of judgment, that conduct has no bearing beyond the point of judgment when it comes to taxing the costs. The Respondent should not be continued to be punished for her conduct in the taxation by only being allowed 75% of the costs of the taxation”.
The critical Rule is contained in the Supreme Court (General Civil Procedure) Rules 2005. The Rules state as follows :
63.36 Costs of taxation
(1)Costs to be taxed under these Rules shall include the costs of the taxation.
(2)Costs to be taxed under a judgment or order shall, unless the judgment or order otherwise provides, include the costs of the taxation.
(3)After service of a summons under Rule 63.38 for the taxation of costs—
(a)the party entitled to costs and the party liable for them may serve on one another an offer of compromise in respect of the amount of the costs to be taxed; and
(b)Order 26, with any necessary modification, shall apply as if in Rule 26.03(3) and (4) "seven days" were substituted for "14 days" and as if the order of the Costs Court on the taxation were a verdict or judgment at trial.
(4)Subject to this Rule and to any order of the Court, the Costs Court may make orders for the costs of a taxation.
(5)Paragraphs (1) to (4) apply subject to any Act and to Rule 63.85.
The reasons of the Costs Registrar, published 2 March 2012, dealt with the wording of this Rule as follows:
“13. ...The question here is whether the Rule can be interpreted to mean that the costs of the taxation should be taxed on the same basis and, in this case, with the imposition of the same reduction as the costs of the proceeding and whether that was the intention of the Court of Appeal.
14. The Court of Appeal judgement dated 8 April 2009 in relation to costs in this proceeding makes the following statements:
[19] In these circumstances, and having regard to our conclusion that the offers made by Mr Procopets do not avail him, we accept the submission for Ms Giller that the adverse credibility findings made against Ms Giller by the trial judge do not justify an order requiring her to pay Mr Procopet’s costs of the trial.
[20] In our view, Ms Giller should have her costs of the proceeding. But the costs, save in respect of the appeal, should be reduced to some extent to reflect his Honour’s finding that Ms Giller lied in giving her evidence and that she induced others to lie. That is a very serious adverse finding indeed, and it is plainly relevant to the exercise of the costs discretion. The proceeding was made more complicated, and the length of the trial prolonged, because of the need to identify areas where Ms Giller’s evidence was untrue. On the other hand, Mr Procopets’ behaviour was equally deserving of censure, for the above reasons. In the circumstances, we would order that, save in respect of the appeal, Mr Procopets pay 75 per cent of Ms Giller’s costs on a party/party basis.
15. It is clear that the Court of Appeal reduced the applicant’s costs by 25% because of her conduct during the trial. The court concluded at [20] that her conduct was “plainly relevant to the exercise of the costs discretion” and that “the proceeding was made more complicated, and the length of the trial prolonged, because of the need to identify areas where Ms Giller’s evidence was untrue”. Clearly, the applicant’s conduct during the trial led to additional time and resources being expended and work being undertaken by her solicitors, additional fees being billed by her counsel and additional court time. As a consequence, additional costs were incurred in the trial that would otherwise not have been incurred.
16. In its’ judgement and commentary at [20] the Court of Appeal drew a distinction between the costs of the proceeding and the costs of the appeal.
17. The decision of Justice Von Doussa in “Beach Petroleum”, referred to by the applicant’s representative, was made in an application to have gross sums fixed by the Court against three respondents in lieu of cost orders obtained through the taxation procedure.
At paragraph [21] His Honour states:
“I also agree with Mr Rice that under the indemnity costs order the drawing of the bill of costs should not exceed the scale rate. Whatever may have been the justification in the respondents’ conduct for making the indemnity costs orders to the point of judgement, that conduct has no bearing beyond the point of judgement when it comes to taxing the costs.”
18. My research confirms that, at the time of this decision, the Federal Court Rules (SR 1979 No. 140 as amended, prepared on 30/04/1995) did not contain an equivalent Rule to the Victorian Supreme Court’s Rule 63.36. Therefore, Von Doussa J. was not constrained by the instrument that existed and still exists in Victoria and, in my view, that decision has limited application here.
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20. I accept the respondent’s submission that Rule 63.36 is clear and unambiguous and I believe that I am bound by it. I do not believe that the Rule can be interpreted to mean that the costs of the taxation can be taxed other than in accordance with the court’s order. The costs of the taxation are included in the costs of the proceeding and, as the judgement does not otherwise provide, they must be taxed on the same basis and in accordance with the order. “
In my view, the starting point arising from the order of the Court of Appeal is that the Applicant is entitled to 75% costs of the taxation, unless there is conduct in the taxation that would alter that position.
The wording of sub-paragraph (2) of Rule 63.36 means that any costs must be taxed on the same basis as the order in relation to the costs of the proceeding. Therefore, a 25% reduction in costs as a result of the conduct of the substantive litigation automatically flows through to the costs of the taxation when costs are sought to be quantified and recovered. The bill of costs that was prepared and filed included the 25% reduction on all items (including the costs of the taxation), consistent with the provisions in Rule 63.36(2). It was only in oral argument before the Costs Registrar that the Applicant sought to resile from that position and sought leave to amend the bill of costs.
Bearing in mind that the Costs Court taxes costs arising from the orders of Victorian Civil and Administrative Tribunal, Magistrates’, County and Supreme Court proceedings, there is another interpretation of sub-paragraph (2) that is open, and that is that the costs of the taxation arising from say, a Magistrates’ Court matter, ought to be assessed on Magistrates’ Court scale. In other words, just because the taxation occurs in the Costs Court (a division of the Supreme Court) this does not justify the costs of taxation being on Supreme Court scale. It would be inconsistent with the object of establishing the Costs Court if this meant that irrespective of which Court or Tribunal the entitlement originated from, Supreme Court costs were justified. Sub-paragraph (2) of Rule 63.36 can also be interpreted in a manner consistent with that object.
However, sub-paragraph (4) of Rule 63.36 is consistent with preserving, to a limited extent, a discretion in the Costs Court to make orders for the costs of the taxation “subject to this rule and to any order of the court”. In other words, making an order that alters the effect of sub-rule (2) so that, for example the 25% discount does not flow through to the taxation costs of the Applicant.
The phrase “subject to this rule “ is a reference to sub-paragraph (3), which incorporates by reference the Offer of Compromise provisions and therefore, provides a discretion to make an order for costs in the taxation that potentially alters the burden of costs in the judgment or any percentage reduction in entitlement to costs arising from the judgment. For example, if the party who had the obligation to pay costs made an effective Offer of Compromise so that the party with the entitlement to costs failed to obtain a taxation figure more favourable than the offer, then the paying party would be entitled to the costs of the taxation despite the fact that the party seeking taxation had an entitlement to 75% costs of the trial and by operation of the sub-paragraph (2), 75% of the costs of the taxation.
The inclusion of sub rule (3) in Rule 63.36 incorporates the Offer of Compromise rule provisions into the taxation of costs. The impact of this inclusion therefore, is to treat the taxation of costs as a separate proceeding in the event that a party successfully seeks to utilise the provisions. The incorporation of Rule 26 into the taxation process has this effect. The operation of Rule 26, if utilised by parties, can entirely shift the costs burden in relation to the costs of the taxation and the basis under which they are to be quantified. This clearly must be intended to take precedence over an order giving a party 75% of costs of the proceeding for unrelated conduct and have this flow through to the taxation. Commentary in Quick on Costs (Volume 2 at [5.5910]) supports this view where it states that “Order 26 (Vic) then applies to determine the costs of the taxation as if the Taxing Master’s order on the taxation were a verdict or judgment at trial : O 63.36(Vic)”.
If the intention of the Court of Appeal was to restrict the recovery of costs of the taxation to 75% irrespective of any conduct in the taxation, or utilisation of Offers of Compromise, and fetter any discretion in relation to costs of proceedings in the Costs Court, then clear language in the order would be required.
Here, there was no Offer of Compromise and so the Costs Registrar was entitled to make a ruling that the 75% entitlement flowed through to the costs of the taxation consistent with the wording in Rule 63.36(2).
The comments made by Von Doussa J quoted in the grounds for objection above are not directly on point. His Honour was not considering any equivalent rule to Rule 63.36. In fact, there was no equivalent Federal Court Rule. He made the comment when he was asked to fix a gross sum for costs in lieu of a taxation. In his calculations he assessed the solicitors work on their hourly charge out rate when quantifying costs on an indemnity basis, but assessed the work in drawing part of a sample bill on a different basis, namely, on scale.
The 25% discount contained in the Court of Appeal order in relation to the costs of the proceeding extends to the costs of the taxation, in the absence of any effective, valid Offer of Compromise.
In the written submission, the Applicant argues that the Applicant should not continue to be punished in the taxation for her conduct in the trial by only allowing recovering 75% of her taxed costs.
This submission misses the point. The Applicant’s entitlement to costs arising from directions hearing, call overs (including counsel fees for these and other activities like drawing pleadings and affidavits) are similarly reduced even though there is no disentitling conduct in relation to them. It was the Applicant’s actions in the trial that resulted in the discount and this flowed through to the costs of the whole proceeding. There is no reason the costs of the taxation should be treated differently (absent any superseding conduct in the taxation).
Further, by way of analogy, the 20% reduction to costs applied to serious injury applications under the relevant scheme applies to the costs of the taxations as well.
The ruling of the Costs Registrar was correct and there is no change on the Review.
CONCLUSION
The Review initiated by the Applicant has not been successful. However, in relation to the mathematical calculations referred to in paragraph 6 above, the Respondent alleges an error of $86,862.01. A recalculation of the figures discloses an error of $863.09 only.
The total in the bill filed (without any 25% adjustment) was $569,368.25. The sum of $95,289.88 was taxed off representing the Family Court work to which there was no entitlement. The Costs Registrar then taxed off a further $121,498.77 reducing the bill to a total of $352,579.60 to that point. However, included in these calculations were two “taxed on” matters at page 81 ($618) and page 95 ($532.80). They were taken into account in the running totals that appear at the foot of each of these pages in the bill. These two figures were then ‘double counted’ when the ‘taxed on’ exercise was undertaken at the end of the bill. The further sums of $90.95, $13,520 and $644 were entitled to be taxed on at page 124. The total arrived at therefore should have been $366,834.55. Applying the 25% discount to this total then results in a final allowance of $275,125.91.
The taxation figure of $275,989.01 is varied to $275,125.91.
THE COURT ORDERS THAT:
1. Pursuant to Rule 63.56.2(6)(b) of Supreme Court (General Civil Procedure) Rules 2005 the taxation figure of $275,989.01 in the amended order of the Costs Registrar dated 8 March 2012 is varied to $275,125.91.
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