Graziano v Graziano - [2010] SASC 320

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
GRAZIANO v GRAZIANO
[2010] SASC 320
Reasons for Decision of Judge Lunn a Master of the Supreme Court
18 November 2010
PROCEDURE
Application to set aside allocatur entered under 6R 271(4) after appellant’s failure to respond to the respondent’s short form claim for costs under 6R 271(1) – nature of allocatur and whether a default judgment – no proof of any merits in resisting quantification of the costs – application refused.

PROCEDURE
Review under 6R 21 of act of Registrar in issuing an allocatur for costs under 6R 271(4) – whether fresh evidence – review dismissed.

GRAZIANO v GRAZIANO
[2010] SASC 320
JUDGE LUNN:
Reasons on appellant’s application to set aside an allocatur

The appellant[1] as plaintiff sued the respondent[2] as defendant in a civil action in the District Court. On 14 January 2008, partway through the trial of that District Court action, the appellant issued a summons in this Court seeking permission to appeal against two alleged interlocutory orders made by the Trial Judge in the District Court action, and extensions of time to appeal against those orders. On 27 May 2008, Bleby J dismissed all of the appellant’s applications and appeals and ordered that the appellant pay the respondent’s costs of the appeal to be taxed.[3]
[1]    That is Bruno Graziano.
[2]    That is Antonio Graziano.
[3]    This order was amended into that form, nunc pro tunc, by an order made by Bleby J on 6 October 2010.
On 4 August 2010 pursuant to 6R 271(1) the respondent’s solicitors filed a short form claim for their costs under the order of 27 May 2008 claiming $84,336.70. It was duly served upon the appellant’s solicitors. The appellant made no response to it. As a result of a request made by the respondent’s solicitors to the Registrar under 6R 271(5), on 3 September 2010 the Registrar sealed an allocatur, FDN13, which was in the following terms:
It is Certified that by default the costs payable herein by the Appellant to the Respondent have been fixed at $84,336.70 and that sum is now payable for costs by the Appellant to the Respondent.
On 15 September 2010 the appellant issued an application, FDN15, that this allocatur be set aside, or in the alternative:
… that the sealed Allocatur signed by the Court on 2 [sic] September 2010 in this action be reviewed.[4]
It was supported by an affidavit of the appellant saying that he had received the claim for costs[5] from his solicitors on 6 August 2010 and that his solicitor had then sought instructions from him to deal with it. He did not depose to what, if any, advice he had received from his solicitor about the claim. He deposed to a belief about the costs waiting until an appeal to the Full Court from the final judgment of the District Court action had been disposed of, which has still not occurred.
[4] There was a reference to 6R 21 which is apparently the rule under which the review was sought.
[5] Incorrectly referred to in the affidavit as a Bill of Costs in taxable form.
The claim document, which was given to him by his solicitor, begins:
If you wish to dispute any item in this claim you must, pursuant to R271(4) of the Supreme Court Rules, within 28 days of service of the claim
(1)set out in the appropriate column below, your response to each disputed item; and
(2)serve a copy of the claim containing such responses on the Defendant/Respondent
It also contained a prominent notation at its conclusion:
NOTE CAREFULLY: If you do not file and serve a response to this Claim as required by Rule 271 within 28 days of its service on you, you will be taken to have admitted the Claim in full, and judgement may be entered against you for its total amount.
He said nothing about why he had disregarded these parts of the document. He deposed that he wanted the allocatur set aside and the costs taxed. The only ground he deposed to challenge his liability for the costs was that “no junior or other counsel was present at the hearing of the appeal” (other than Mr Hoffmann QC for the respondent). He took no action in response to the claim until he was contacted about a warrant for sale, which had been issued to enforce the allocatur.
The relevant parts of 6R 271 are as follows:
271 (1)      A person (the claimant) who claims to be entitled to costs from another person (the respondent) that are liable to adjudication under an order of the Court or these rules, must file in the Court a claim for the costs prepared in an approved form.
….
(3)     The claimant must, at the request of the respondent, produce for inspection by the respondent all documents on which the claimant proposes to rely if the claim proceeds to adjudication.
(4)     Within 28 days after service of the claim on the respondent, the respondent must respond to the claim by filing a notice in the Court—
(a) admitting the claim in full; or
(b) admitting the claim to an extent stated in the response; or
(c) rejecting the claim in its entirety,
(and if the respondent fails to respond as required by this subrule, the respondent will be taken to have admitted the claim in full).
(5)     The Court will, on administrative request, make an order for payment of costs to the extent they are admitted or presumed to be admitted under subrule (4).
(6)     If the claim is not admitted in full, either party may apply to the Court for a preliminary assessment of the issues in dispute and, on such an application, the Court may exercise any one or more of the following powers—
…
(d) order that the claim for costs proceed in whole or in part to detailed adjudication.
The appellant sought to have the allocatur set aside on the basis that it was a default judgment. Although it was not referred to in argument, the nature of the allocatur, and the power of the Court to set it aside, are not entirely clear. Sub‑r (5) empowers the Registrar on behalf of the Court to “make an order for payment of costs to the extent they are… presumed to be admitted under sub‑r (4)”.[6] In former times, and under different rules about the taxation of costs, the administrative quantification of costs resulted in a certificate for their payment which was neither an order for payment nor a judgment of the Court which could be enforced.[7] Sub-r (5) gives the allocatur the status of an order for payment, but not the status of a judgment strictly so called. It is to be contrasted with 6RR 277 and 279 which provide:
277—Adjudication by adjudicating officer
(1)     This rule applies if costs are adjudicated upon by an officer (an adjudicating officer) who is not a judicial officer of the Court.
….
(4)     On completion of adjudication, the adjudicating officer may make a provisional order for the payment of costs or any other amount found to be payable on the adjudication (a provisional costs order).
[6]    This is not a case where there is any admission under sub-r (4)(a)(b), but it proceeded on the deemed admission created by the rider at the end of sub-r (4).
[7]    See generally G E Dal Pont Law of Costs (2^nd ed) para 18.28.
279—Unchallenged provisional costs order may be entered as judgment
A provisional costs order is to be entered, at the request of the person entitled to costs, in the Court's record as a judgment of the Court if no application for review of the order is made within 14 days after the date of the order.
The issuing of the allocatur here under 6R 271(5) was not a provisional costs order within 6RR 277(4) and 279. In issuing the allocatur the Registrar was not acting under 6R 277, but under sub-r 271(5). The Registrar was performing an administrative function in which he had no power to exercise a discretion about the amount for which the allocatur was to be issued. If the requirements of 6R 271(1) and (4) were satisfied, he was required to issue an allocatur for the amount for which the costs had been taken to be admitted by the rider to sub-r (4).[8] This allocatur was not a judgment of the Court for the purposes of 6R 279. It is not necessary for me here to go into precisely what status it had as “an order for payment”.
[8] In Perkins v Viney (2003) 227 LSJS 87, Master Burley said that under the earlier 1987 Rules the Registrar had a discretion to refer the matter to a Master to be dealt with, but that was only where there was some indication that the costs were disputed although a response had not been filed. That is not the case here.
By 6R 4 “judgment” is defined as including “an order or direction”. 6R 230 provides:
The Court may, on conditions it considers just, set aside or vary a default judgment.
By virtue of the extended definition of “judgment” in 6R 4, an order for payment under 6R 271(5) is a judgment for the purpose of 6R 230. Whether it is a “default judgment” is not so straightforward. Strictly speaking, it is a judgment based on a deemed admission. However, in Perkins v Viney (above) Master Burley categorised a similar judgment under the repealed 1987 Rules as a default judgment. The terms of the allocatur itself refer to “by default”. In reality, there has been no determination by the Court on the merits of the claim for costs, and the deemed admission has arisen solely by the appellant having failed to comply with the Rules. That omission by the appellant is not to be treated as an implied conscious admission by him that the costs payable by him are all of those contained in the claim. Thus the allocatur should be treated as a default judgment for the purposes of 6R 230.[9] The respondent’s counsel did not dispute that the allocatur should be treated as a default judgment.
[9] In any event a similar result can probably be obtained either by using 6R 242(2)(b) or under the inherent jurisdiction of the Court.
Where a judgment has been regularly obtained, the Court does not usually set it aside unless the defendant has filed an affidavit of merits showing that he has an arguable defence to the claim.[10] The onus is on the defendant to depose a bona fide and plausible defence, and the application will fail if he does not do so.[11] The practice of the Court is that if the defendant only deposes to a good defence to part of the judgment, the Court does not set aside the whole judgment, but at the best for the defendant merely varies it by reducing to the undisputed amount.
[10] Evans v Bartlam [1937] AC 473.
[11] S & V Nominees Pty Ltd v Rignanese Lunn M, 12 May 2006, Jud No [2006] SASC 138.
The only substantive defence to the costs claim deposed to by the defendant was that no junior counsel for the respondent was present at the hearing of the appeal. The transcript for the hearing on 29 April 2008 records Mr D Blight as appearing with Mr Hoffmann QC for the respondent. Likewise the CCMS report of the hearing signed by Bleby J records Mr Blight as appearing as junior to Mr Hoffmann QC for the respondent. The respondent’s solicitor has filed an affidavit deposing that Mr Blight was present. Mr Blight, as an officer of the Court, has informed me from the bar table on the hearing of this application that he was present. I reject the appellant’s assertion to the contrary as being implausible.
It is beyond argument that a significant amount is owed to the respondent under the order of 27 May 2008. What is potentially in issue is whether it was as much as $84,336.70. The appellant’s counsel submitted that it was an extremely high amount for the costs of such an appeal and would be likely to be reduced significantly on a taxation. I agree that, from my experience as a taxing Master, the amount seems high. However, it is not so high that I am prepared to state without conducting a formal adjudication that it could not possibly be justified.
If the appellant had filed a response to the claim under 6R 271(4), he should have admitted under its sub-para (b) the claim to the extent to which he conceded it was justified. If he had done this, the respondent could have obtained an interim allocatur under sub-r (5) for the admitted amount. In practice, many who are served with a claim fashion their response under sub-r (4) in terms of sub‑para (c), rejecting the claim entirely, even though it is beyond argument that a significant amount must be payable for the costs. In those cases what often happens is that on the hearing of the preliminary assessment under sub-r (6), Masters exercise their discretion to issue an interim allocatur for an amount which they consider as a conservative estimate of what costs must be payable.[12]
[12] Russo v Buck (No 7) Lunn M, 12 October 2010.
If a recipient of a claim under 6R 271(1) is acting bona fide, he or she will endeavour to ascertain the extent to which he or she can properly argue that the costs claimed are excessive and then will admit the balance. The contents of a claim under sub-r (1) usually do not give a recipient enough information to be able to assess the reasonableness of the claim. In those cases recipients usually exercise their right under sub-r (3) to inspect the claimant’s documents and that gives them the information which they need. Here the appellant did not avail himself of that right, and apparently has still not done so.
If I was otherwise in favour of the application, the best result which the appellant could have obtained on this application would have been that the amount of the allocatur would have reduced by the amount of the costs which could be reasonably disputed. I do not accept the submission of the appellant’s counsel that the appropriate course is to set aside the whole allocatur and then to grant an interim allocatur for the undisputed amount after the appellant has filed his response under sub-r (4), and possibly inspected the respondent’s documents under sub-r (3). As the onus is on the appellant to show that he had a bona fide defence, he must take the consequences if he has not put forward on this application the evidence needed to establish that defence. As he has not shown any reasonably arguable ground to dispute any part of the costs which make up the allocatur, his application to set it aside must fail.
This is sufficient to decide the application and I need not go into the other issues which were raised in submissions.
This decision does not bar the appellant from having the costs taxed. He can still seek a preliminary assessment under sub-r 271(6) for a detailed adjudication. Sub-r (6), when viewed against sub-r (5), does not apply where the costs have been presumed to be admitted under sub-r (4), as sub-r (5) mentions costs which are presumed to be admitted, but sub-r (6) does not. If the result of the taxation is that the appellant has overpaid the costs, then the Court can order a refund of the excess under 6R 275.
The appellant’s alternative application was under 6R 21, which relevantly provides:
(1)The Court may, on application by a person with a proper interest in the matter, review a decision or act of the Registrar…. in or in relation to a proceeding in the Court.
….
(5)On the review, the Court may confirm, vary or reverse the decision or act under review.
It has not been shown that the Registrar did anything which he should not have done, or did not do something which he should have done, in the circumstances which then prevailed. A review under 6R 21 does not mean that the Court re-evaluates the act of the Registrar in issuing the allocatur on the evidence which is now put forward and on the circumstances as at the present time. If the appellant wishes additional circumstances to be taken into account which were not taken into account by the Registrar, he has to provide a proper basis for it. It is not necessary to go into the question of whether on a review the same restrictions apply to fresh evidence as on an appeal under 6R 286(3)(a). The onus was on the appellant to produce the necessary further evidence, but for the same reasons as given in respect of default judgment, he has not established any proper basis of challenge to the costs claim or any other new circumstance. His counsel relied upon Perkins v Viney above, but that is distinguishable as in that case there was material on the Court file which should have alerted the Registrar to a dispute about the costs. If, as in Perkins v Viney, the Registrar had referred the issuing of the default allocatur to the Master, the Master under 6R 20 would have directed the Registrar to issue the allocatur. I refuse the application for a review of the Registrar’s act.
I have today made the following orders:
1The application in FDN15 to set aside the allocatur of 3 September 2010 is refused.
2A review of the Registrar’s act in issuing the allocatur is dismissed.
3Costs of FDN15 as adjudicated or agreed are to be paid by the appellant to the respondent.
4Fit for counsel.
5Liberty to apply for any further consequential costs order on FDN15.