Hall v City of Burnside

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
HALL & ORS v CITY OF BURNSIDE & ORS
[2023] SASC 173
Decision of Judge Dart a Master of the Supreme Court
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - APPEAL, REVIEW OR REFERENCE
Taxation of costs - large number of items taxed - lump sum assessment adopted for balance of the bill - nature of lump sum assessment - ex tempore judgment delivered - applicants seek review of the outcome - nature of a review - review grounds not made out.
Held:
1. Review dismissed.
2. Applicants to pay the second respondent's costs of the review.
Uniform Civil Rules 2020 (SA) r 195.9 and r 195.12; Supreme Court Civil Rules 2006 (SA) r 271(6), referred to.
Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346; Catto & Ors v Hampton Australia Ltd (In Liq) & Ors [2008] SASC 231, considered.

HALL & ORS v CITY OF BURNSIDE & ORS
[2023] SASC 173

The first and second applicants in this proceeding seek a review of a decision made to progress a taxation of costs. The application for review is dismissed.
Background
This proceeding commenced in 2006. It started with an application for an interlocutory injunction to restrain the respondents from proceeding with the construction of a residential property on land adjacent to the land of the applicants.
The second respondent was the developer of the residential property. It obtained the relevant approvals from the first respondent to proceed. The basis for the injunction was a complaint about the approved retaining wall. It was alleged it was not sufficiently engineered to perform the task that was required of it.
The land is sloping, and it was necessary for a retaining wall to be built once the relevant block was excavated for the purpose of footings. The matter resolved when a new planning approval was granted for an improved design of the retaining wall.
In 2007 Bleby J made costs orders requiring the first and second applicants to pay the costs of the second respondent. Some of the costs were awarded on an indemnity basis.
The taxation for the claim for costs has been a long and tedious process. The claim for costs extends to more than 3,000 items. Along the way a number of judgments have been delivered in relation to various issues of principle. Usually matters such as this eventually become capable of settlement. Not so this matter.
A part of the difficulty in undertaking the taxation has been that the lawyers and engineers involved in the litigation were also involved in the dealings with the first respondent in relation to gaining approval for the variation of the retaining wall design.
It has been necessary to remove from the claim for costs the costs of the lawyers and engineers which related to dealings with the City of Burnside for the variation. Those issues did not form part of the litigation.
A lump sum taxation
The taxation has proceeded for a long time. More than 1,400 individual items have been adjudicated upon. There remains a greater number yet to be dealt with.
I suggested to the parties that the time had come to finalise the taxation by way of a lump sum assessment of the remaining items. The Court has the power to make a lump sum assessment. Presently, that power is expressed as follows:
195.9—Hearings
(1) A taxing officer may use any one or more of the following methods to undertake a taxation—
(a)     a lump sum assessment, or otherwise determination of the amount of costs to be awarded in a wholesale manner, rather than undertaking an item by item assessment;
(b)     an item by item assessment;
(c)     assessments in successive stages;
(d)     separate assessments of different components of the costs claimed; or
(e)     any other method.
The lump sum process occurred pursuant to UCR 195.9. There was a similar provision in the 2006 Rules.[1] A lump sum taxation is not a line-by-line taxation.
[1] Supreme Court Civil Rules 2006, Rule 271(6).
The principles in relation to lump sum taxations were set out by Foster J in Bayley & Associates Pty Ltd v DBR Australia Pty Ltd, who said:[2]
[2] [2014] FCA 346 at [17].
I intend to approach the applicant’s present application by applying the following principles:
(a)Rule 40.02(b) of the Federal Court Rules 2011 provides for the award of a lump sum costs order in appropriate circumstances. That rule gives to the Court a broad discretion which should be exercised whenever the circumstances warrant it (see Dunstan v Human Rights and Equal Opportunity Commission (No. 3) [2006] FCA 916 at [23]; Black and Decker Inc v GMCA Pty Limited (No. 4) (2008) FCA 1737 at [3]; and Playcorp Group of Companies Pty Limited v Peter Bodum A/S (No. 2) (2010) FCA 455 at [3]).
(b)The Court should not be slow to exercise the relevant discretion in an appropriate case.
(c) Any exercise of the discretion to make a lump sum costs order should reflect the overarching principle embodied in s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth). The discretion should be exercised logically, fairly and reasonably (see Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at 120F and 123C; Ginos Engineers Pty Limited v Autodesk Australia Pty Limited [2008] FCA 1051; (2008) 249 ALR 371 at 377 [22]; and Sony Entertainment (Australia) Limited v Smith [2005] FCA 228; (2005) 215 ALR 788 at 813 [198] and [199]).
(d) The rule serves to avoid the expense, delay and aggravation involved in a formal taxation of costs and associated litigation. In particular, in cases where the incurring of additional costs in taxing bills would result in an additional burden on the successful party, there is strong reason for making a lump sum costs order. A relevant factor in favour of a lump sum costs order will often be that the party against whom the order is sought is in financial difficulties with the consequence that the prospects of the successful party recovering its costs of taxation are poor (Bitek Pty Limited v IConnect Pty Limited [2012] FCA 506; (2012) 290 ALR 288 at 292 [15] per Kenny J).
(e)The approach to be taken by the Court in deciding whether to make such an order and in arriving at the quantum thereof should be a broad brush approach. It is one of estimation or assessment and not of arithmetic. The Court should avoid, in effect, carrying out a taxation under the guise of performing a lump sum costs assessment.
(f) The fact that the making of such an order may cause hardship on the party against whom the order is made is not relevant.
(g)The evidence of an expert costs assessor is both relevant to and probative of whether a lump sum costs order ought to be made and the quantum of any such order.
The process is a broad brush one rather than one of precise calculation. It is an intuitive process which seeks a just outcome.
The process adopted
To assist in the making of a lump sum assessment the parties were directed to file written submissions. The matter was then set for hearing, at which the written submissions were supplemented by oral submissions. At the conclusion of that hearing I delivered an ex tempore decision fixing various of the unresolved costs categories on a lump sum basis. After that there remain several unresolved issues. Those issues remain unresolved.
A review
The first and second applicants were dissatisfied with the outcome of the lump sum taxation. A review was lodged. At first instance on a taxation a review proceeds before the judicial officer who conducted the taxation.
The relevant rules are as follows:
195.12—Review of provisional order
(1)If the taxing officer makes a provisional order under rule 195.10(1), the claimant or liable party may within 14 days after the date of the order request a review of the provisional order by filing and serving an application to the Registrar in accordance with rule 13.2(5).
(2) If neither party requests a review within 14 days after the date of the order, it becomes a non-provisional order as if it had been made under rule 195.10(2).
(3) If either party requests a review within 14 days after the date of the order, the Registrar will convene a hearing and give notice of the hearing to the parties in the prescribed form, and the hearing will be conducted—
(a) if the order was made by a taxing officer other than a Registrar or Judicial Registrar— by the same taxing officer who made the order (however, it may be before a different taxing officer if, for some reason, it is not possible or convenient for the same taxing officer to conduct the hearing); or
(b) if the order was made by a taxing officer who is a Registrar or Judicial
Registrar—by a taxing officer other than a Registrar or Judicial Registrar.
(4)A taxing officer conducting a review under this rule will reconsider the provisional order the subject of the review and may exercise any of the powers identified in rule 195.8 and proceed in any manner identified in rule 195.9.
(5) A taxing officer conducting a review under this rule may confirm or vary the provisional order, which (as varied, when applicable) then becomes a non‑provisional order as if it had been made under rule 195.10(2).
It is an unusual process. The process was considered by the Full Court in Catto & Ors v Hampton Australia Ltd (In Liq) & Ors.[3] The principal judgment was delivered by White J, with whom Vanstone and Anderson JJ agreed. His Honour said:[4]
Finally, my opinion is that the review process contemplated by r 278 was inappropriate as a means of review of the issues in dispute between the present parties. The review process is best adapted to a review of decisions concerning the actual quantification of claimed costs. It is adapted to the correction of mistakes, errors or oversights which have occurred in the detailed adjudication process. That explains why r 278 contemplates, rather unusually, a first stage review by the original decision-maker. In my opinion, the process is not well adapted to the review of decisions on issues of principle decided under r 271(6). I do not mean by this to indicate that the review process would be inappropriate if the adjudication of the whole of the defendants' Schedules of costs had been completed, and the issues of principle were some of several to be determined on the review.
The process of appeal provides a more appropriate process for review of issues of principle. An appeal lies against a judgment of the court constituted by a master. For this purpose, a judgment is defined to include an order or direction. The master's rulings on 11 October 2007 were not, of themselves, an order or direction but the subsequent order made by the master on 17 December 2007 that the adjudication of costs proceed (in effect in accordance with his previous rulings) on 29 January 2008 was such an order. It was an appealable order. In my opinion that is the course which should have been followed in the present case. Because the master's decision concerned a question of costs only, an appeal would lie only with permission (r 281(b)). If there was to be any further appeal to the Full Court, that too would require permission (r 281(a)(ii); r 281(b)). In this way the Court may control the extent of appeals in such cases.
(Footnotes omitted)
[3] [2008] SASC 231.
[4] Ibid, at [27]-[28].
A review is well suited to addressing errors or omissions that arise during the taxation process. It can also lead to a reconsideration of an issue. The process is long standing.[5] However, where there are competing contentions of substance put forward by the parties, the Court will usually prefer one to the other. In that situation an appeal works better. There is a right of appeal.[6] In light of the recent Court of Appeal decision in Collins v Djunaedi[7] it is likely leave to appeal would be required.
[5] For example the Supreme Court Rules 1947, Order 65 Rule 40 allowed for a review on similar terms as now provided for.
[6] UCR 196.1.
[7] [2023] SASCA 97.
What was the decision
As mentioned, I delivered an ex tempore decision which had regard to both the written submissions and the oral submissions made. For present purposes the relevant part of the decision is as follows:[8]
There are slight differences between the parties as to what the present position is in relation to untaxed items. The applicants say untaxed solicitors' fees are $56,059.58, whereas the second respondent says $57,346.74. The only sensible thing to do at the moment is split the difference on that and allow the solicitors' claim at, say, $56,600.
Mr Hall then says the items which have been reserved because there were no documents produced, or there was no proper explanation of a basis of a charge, amount to $3,000 or thereabouts. He says all of those should be taxed off. I think certainly a significant portion should be taxed off. Adopting a lump-sum approach, I would fix the untaxed solicitors' fees in the amount of $54,000.
City Apartments are prepared to apply the percentage that they have been obtaining during the course of the taxation to that, which is 45%. That leaves the solicitors' fees to be fixed in the amount of $24,300.
The other major item is counsel fees. The applicants say that they are $28,010. City Apartments says $29,459. All parties agree that the costs of the mediation of the dispute are not costs that fall within the scope of the costs order made by Bleby J.
It is clear from the fee notes from counsel that there were charges for preparing for and attending at the mediation. Those fees are intermingled with general preparation and advice matters. I think as a reasonable compromise on counsel fees we come to a figure of $28,700. We can round counsel fees down to, say, $24,000, to make an allowance for the costs of counsel preparing for and attending at mediation.
Counsel fees were being reduced by a much lesser percentage than the solicitors' fees. Part of the reduction was GST, which is not normally allowed on a taxation. So, applying the 68%, which was the overall figure in the taxation to date to the counsel fees, the number is $16,320. That, combined with the solicitors' fees, produces a figure of $40,620.
There are $2,268 worth of disbursements claimed by the second respondent. Most of that appears to be transcript fees. I am prepared to allow that at $2,000, which would bring the total figure for the untaxed amounts in the bill of costs to $42,620.
[8] Ex tempore ruling of Judge Dart delivered in court on 13 October 2022 (settled on 14 October 2022).
After settling on the untaxed amounts, all that occurred was that the percentages that had been obtained by the second respondent over the 1,400 items that had been taxed was applied. In relation to solicitor’s fees, 55% had been taxed off. In relation to counsel fees, 32% had been taxed off. As mentioned above, this was because the claim for costs intermingled legal and engineering costs involved in dealing with the City of Burnside to obtain an amended planning approval for a different design for the retaining wall. The taxing off of such large amounts is unusual but explained by the circumstances of this matter.
Grounds of review
The first and second applicants seek a review of the taxation outcome. The grounds of review are as follows:[9]
1.In making the orders the court has not given sufficient weight to the matters referred to in the Applicants’ submissions FDN 159 and, in particular, in paragraphs 1-7, 12‑33, 35, 36-37, and 38-44 thereof.
2.The application of a 55% reduction for solicitor’s fees to arrive at a lump sum is insufficient to arrive at a fair and reasonable result having regard to the matters referred to in the said paragraphs 12-33 and 35.
3.The application of a 32% reduction for counsel fees to arrive at a lump sum is insufficient to arrive at a fair and reasonable result having regard to the matters referred to in the said paragraphs 35 and 38-44.
4.Alternatively, it would have been reasonable to tax counsel fees in the normal way having regard to the matters referred to in the said paragraphs 35 and 38-44.
5.The allowance of $2,000 for miscellaneous disbursements was made when the nature and status of those amounts remained in question and uncertain as insufficient information had been provided, and does not sufficiently allow for the matters referred to in the said paragraphs 36 and 37.
[9] Application to Registrar, FDN 172 , filed 27 October 2022.
Consideration
The first ground of review is a catch all. It covers the matters which are set out more specifically in the other four grounds of review. In suggesting that I did not give sufficient weight to the applicants’ written submissions, I expect what is meant is that I erred in failing to accept those submissions. There is no real need to deal with ground of review one because the other four grounds deal in a more specific way with the complaints of the applicants.
Grounds of review two and three are the substantive complaints. The applicants contend that if the taxation proceeded, the second respondent’s position would have worsened. A taxation where 55% of solicitor’s fees are taxed off is a rare outcome. It arose because of the mixing of litigation costs and the costs of negotiating with the Council about planning matters. The same issue caused the 32% reduction for counsel fees.
The critical question on review is whether there is merit in the applicants’ submission that if the taxation had proceeded the reductions would have been greater for the remaining items.
This is a very unusual taxation. The Court does not normally have the advantage, on a lump sum assessment, of having taxed 1,400 items. That is a very large sample size. I am not convinced that the applicants are correct that, if the taxation had continued, the deduction of solicitor and counsel fees would have been greater than for the items taxed. I regard the applicants’ position as optimistic speculation.
There is an equal prospect, in my view, that if the taxation had continued that the position of the second respondent would have improved. That is, the percentage of solicitor’s and counsel fees to be taxed off would have diminished. There was a real prospect of that occurring. If that is correct, then the outcome achieved on the lump sum taxation was generous to the applicants.
The fourth ground of review is a complaint that counsel fees should not have been dealt with on a lump sum taxation basis. The applicants say that a line-by-line taxation of counsel fees should have been continued. I do not accept that. The purpose of the lump sum taxation was to find a fair and cost effective way to bring the taxation to a conclusion. Dealing with the counsel fees on the same basis as solicitor’s fees achieved that aim.
The fifth ground of review is a complaint about miscellaneous disbursements. Having regard to the principles set out in Bayley & Associates Pty Ltd, supra, the Court is using a broad brush approach. It was of estimation or assessment, not arithmetic. The Court is to avoid carrying out a taxation process under the guise of a lump sum assessment. That is what occurred with the disbursements. That is the correct approach.
The applicants have not satisfied the Court that it is appropriate to change the outcome of the lump sum assessment. The application for a review is dismissed.

[2023] SASC 173

5 December 2023