H Stanke & Sons P/L & Cape Banks Processing Company P/L v Von Stanke, O'MEARA (No 2) - [2007] SASC 109

Supreme Court of South Australia
(Civil: Application)
H STANKE & SONS P/L & CAPE BANKS PROCESSING COMPANY P/L v VON STANKE, O'MEARA & ORS (No 2)
[2007] SASC 109
Judgment of The Honourable Justice White (ex tempore)
16 March 2007
PROCEDURE - COSTS - INTERLOCUTORY PROCEEDINGS
Application by second defendant for immediate taxation of costs - first defendant made an interlocutory application for an order restraining the second defendant from continuing to retain a firm of solicitors and from making use of certain information - application dismissed with 90 per cent of costs awarded to the second defendant - consideration of Supreme Court Rule 101.01(7) which precludes a party proceeding, without an order of the Court, to a taxation of costs of an interlocutory proceeding - whether order allowing immediate taxation appropriate.
Held: order for immediate taxation of costs not appropriate - application dismissed.
Supreme Court Rules 1987 (SA) r 101.01(7), referred to.
Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2) (2006) 244 LSJS 65; S, DJ v Channel Seven Adelaide Pty Ltd & Anor [2007] SASC 80, discussed.
All Services Australia Pty Ltd v Telstra Corporation (2000) 171 ALR 330; Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd [1998] FCA 545; Doran Constructions Pty Ltd v University of Newcastle (Unreported, Supreme Court of NSW, Giles J, 16 December 1994); Allstate Life Insurance Company v Australia & New Zealand Banking Group Ltd (No 13) [1995] FCA 626, considered.

H STANKE & SONS P/L & CAPE BANKS PROCESSING COMPANY P/L v VON STANKE, O'MEARA & ORS (No 2)
[2007] SASC 109
WHITE J: (ex tempore)

On 5 October 2006 I delivered judgment on an application by the first defendant, John von Stanke. The effect of my judgment was to dismiss an application by him for injunctions restraining his sister Mrs O’Meara, who is the second defendant, from continuing to retain the firm of Lipman Karas as her solicitors in this action and in two related actions. John von Stanke also sought to restrain his sister and Lipman Karas from making use of certain information which had been provided by his former solicitors.
On 30 October 2006 I made costs orders in respect of the proceedings. Relevantly for today’s purposes I made an order that John von Stanke pay 90 per cent of Mrs O’Meara’s costs, which costs were to be assessed on a party/party basis. I also directed that John von Stanke was not entitled to indemnity from either of the estates of his parents in respect of his own costs or in respect of the costs which he was liable to pay to Mrs O’Meara.
By a Notice for Specific Directions filed on 5 March 2007 [FDN 98] Mrs O’Meara has applied for an order permitting her to have the costs, to which she has been held entitled, taxed immediately. Such an order is necessary because of r101.01(7) of the 1987 Supreme Court Rules which provides that:
An order for costs of an interlocutory proceeding shall not, unless the court otherwise orders, entitle a party to have a bill of costs taxed until the principal proceeding in which the interlocutory order was made is concluded or further order.
It is common ground that it is the 1987 Rules which apply to the conduct of this action. The grounds of Mrs O’Meara’s application are set out in an affidavit sworn by a solicitor in the firm of Lipman Karas on 5 March 2007. After reciting the history which gives rise to the present application, the affidavit identifies the following matters in support of the application:
Mrs O’Meara has paid substantial sums in respect of legal costs in connection with the application to prevent Lipman Karas from acting further in this action and she seeks immediate payment of those costs rather than awaiting until final judgment which may be in the distant future.
Rule 101.01(7) evidences a policy that costs of interlocutory proceedings should not, as a general rule, be taxed until the completion of the proceedings in which the interlocutory dispute arises. However, an order for immediate taxation can and should be made when the interests of justice require it.
There are a number of reasons for the policy which underpins r 101.01(7). Some of those policy considerations were identified by Debelle J in Alstom Power Ltd v Yokogawa Australia Pty Ltd (No 2)[1] and in S, DJ v Channel Seven Adelaide Pty Ltd and Anor.[2] The reasons of policy include, first, the avoidance of multiple taxations in the one action. In general, it is desirable that there should be only one taxation in an action. That avoids possible oppression and a dissipation of the Court’s resources.
[1] [2006] SASC 87; (2006) 244 LSJS 65.
[2] [2007] SASC 80.
Secondly, it is usually inappropriate to require the party who is unsuccessful on an interlocutory application to pay costs immediately when that party may be successful ultimately and may be a beneficiary of costs orders. In that event, it is to be expected that there would be some set-off of the respective costs liabilities.
Thirdly, the process of enforcing costs can itself be expensive and, what is more, distracting of the parties’ energies in the underlying litigation.
Fourthly, and this arises out of the third, because of the prospect of expense of taxations courts seek to avoid the prospect of litigants incurring costs in relation to individual taxations.
Each of those considerations, in my opinion, is pertinent in the present case.
The solicitor’s affidavit identifies, in effect, three matters as justifying an order for immediate taxation in this case. First, that Mrs O’Meara has outlaid significant sums for costs in connection with the interlocutory proceedings. Secondly, that she would like to recover those costs pursuant to the order for costs in her favour, and thirdly, that it may be some time before the underlying proceedings are resolved enabling her to enforce her entitlement.
There is an additional consideration not mentioned in the affidavit, which arises out of the very nature of the interlocutory proceedings in question. That is that the application of John von Stanke raised issues which were reasonably discrete from other issues in the litigation.
I would think that some of the matters upon which Mrs O’Meara relies exist in many cases in which costs orders concerning interlocutory proceedings are made. Those cases will include the feature that the successful party has incurred costs, or has paid costs to solicitors, and will include the feature that the successful party wishes to recover those costs. I do not regard those features as being in any way out of the ordinary.
In addition, it is not suggested in the present case that the inability to tax her costs is causing Mrs O’Meara any financial hardship or that she is likely to suffer some prejudice as a result of a delay in recovering her costs. It is not suggested, for example, that the inability to recover her costs will inhibit in some way her ability to conduct the proceedings or that there is the prospect that at the conclusion of the proceedings, in the event that she is successful, that John von Stanke will not have the means of satisfying orders for costs.
It seems to me that the strongest considerations in favour of the application are the length of time which may elapse until the conclusion of the litigation and the submission that my decision involved issues which were reasonably discrete.
The lapse of time which might be experienced before a party can enforce costs has been considered sufficient in a number of cases to warrant an order for immediate taxation. I refer for example to the unreported decision of Kiefel J in All Services Australia Ltd v Telstra Corporation;[3] to the decision of Branson J in Life Airbag Company of Australia Pty Ltd v Life Airbag Company (New Zealand) Ltd;[4] to the decision of Giles J in Doran Constructions Pty Ltd v University of Newcastle;[5] and to the unreported judgment of the Full Federal Court in Allstate Life Insurance Company v Australia & New Zealand Banking Group Ltd (No 13)[6].
[3] (2000) 171 ALR 330 at [11].
[4] [1998] FCA 545.
[5] (Unreported, Supreme Court of New South Wales, Giles J, 16 December 1994).
[6] [1995] FCA 626.
In this case, the delay may not be as great as Mrs O’Meara fears. I was informed that Sulan J, who is managing the underlying action, has foreshadowed 3 September 2007 as a possible commencement date of the trial.
In relation to whether the issues on the application were discrete, I agree with the submission made by Mr Lipman, in paragraph 25 of his outline, that the interlocutory proceedings in this case were of a kind which does not occur in most actions. They were not related intrinsically to the progressing of the matter towards trial, or to enable the first defendant to prepare for trial. It can reasonably be said that the interlocutory proceedings involved issues which were discrete from those arising in the underlying action.
That characterisation of the issues and the prospect of some delay point in favour of an order for immediate taxation. However, when I have regard to the underlying policy issues, the absence of any suggestion in the solicitor’s affidavit that there is some urgency about taxation, and the absence of any suggestion of the prospect of hardship or prejudice as a result of an inability to proceed immediately to taxation, I am not satisfied that it is appropriate to make the order which is sought.
In addition, the history of this action indicates that many issues are being hotly contested. Based upon what I have heard today, there is no reason to suppose that a taxation of costs, if it were permitted, would be any different. It seems likely to me that a taxation, if it was permitted, would take some time and might well be distractive of the parties’ energies. I regard it as being significant that Sulan J, who is managing the matter, has foreshadowed 3 September 2007 as a possible commencement date for the trial. In my assessment, it is desirable that the parties’ energies be fully concentrated on preparing for that possible commencement date and that they not be distracted by the pursuit of a taxation of costs as presently sought by Mrs O’Meara.
For those reasons the application of the second defendant, in para 1 of the Notice for Specific Directions filed on 5 March 2007, [FDN 98], is refused.