Hall v City of Burnside (No 10) - [2013] SASC 140

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
HALL & ANOR v CITY OF BURNSIDE & ORS (No 10)
[2013] SASC 140
Reasons of Judge Dart a Master of the Supreme Court
5 September 2013
PROCEDURE - COSTS - TAXATION - PARTICULAR ITEMS
Item of work has a dual purpose - what allowance appropriate.

HALL & ANOR v CITY OF BURNSIDE & ORS (No 10)
[2013] SASC 140
JUDGE DART:

A point of principle has arisen during the adjudication of a bill of costs.
The second defendant seeks an adjudication of a bill of costs prepared as a consequence of a costs order made by Justice Bleby on 28 March 2008. The proceeding before Justice Bleby was an application for judicial review challenging the validity of a development approval granted by the first defendant, the City of Burnside (“Council”), in favour of the second defendant, City Apartments Pty Ltd (“City Apartments”).
The issue to be determined is what allowance should be made for an item which was necessarily incurred for the litigation, but was also necessary for another purpose. For the reasons that follow, I propose to allow the claim for the item in full.
In the proceeding the plaintiffs agitated, inter alia, issues arising in relation to the building rules consent granted with respect to the construction of a retaining wall.
Separately and apart from the litigation, the plaintiffs complained to the Council about the design of the retaining wall and continued to agitate that issue with the Council. The complaint of the plaintiffs was that the design of the retaining wall and its footings was inadequate. I am advised by counsel that a Development Act 1993[1] notice was served on City Apartments with respect to the original design of the retaining wall. As a result, City Apartments were obliged to continue dealing with the Council on the subject of the retaining wall at the same time as contesting the proceeding.
[1] See s 84 Development Act 1993 (SA).
On 15 December 2006, well after the commencement of the proceeding, the Council made a variation to its building rules consent to permit a retaining wall with a revised design to be constructed. Eventually the proceeding was dismissed by Justice Bleby and the costs order followed the event.
The issue of principle which is said to arise is whether a particular item of work of a solicitor was necessary both for the conduct of proceedings in this Court, and also for dealing with the retaining wall issues raised by the Council, should be allowed in full or should be discounted.
The costs order provided for the costs to be adjudicated on a party and party basis. It also provided for some costs on an indemnity basis, but that related only to some costs incurred near the end of the proceedings. For present purposes, the fact that there was an order for some costs to be paid on an indemnity basis is not relevant.
At the heart of an order for costs is the principle that a successful party is entitled to be indemnified in respect of its costs.[2]
[2] Wentworth v Rogers (2006) 66 NSWLR 474.
The Rules of Court relevantly set out the basis on which an order for costs may be made. Rule 264 provides as follows:
264—Basis for awarding costs
(1)The Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers appropriate.
(2)As a general rule, however, costs are awarded as between party and party (that is, on the basis that the party entitled to the costs will be reimbursed for costs reasonably incurred by the party in the conduct of the litigation to an extent determined by reference to the scale of costs in force, under these rules or the previous rules, when the costs were incurred).
As mentioned, the costs order made by Justice Bleby was a costs order on a party and party basis. Therefore, City Apartments is entitled to be reimbursed for the costs reasonably incurred by it in the conduct of the litigation calculated on the relevant scale.
The parties have requested a decision with respect to item 66 of the bill, which is as follows:
20-Oct-05Drafting statement of Mr Jenkins re earthworths $62.00

2p (23(a))
The parties accept that:
1.It was reasonably necessary for the conduct of the litigation to undertake the work with respect to the statement of Mr Jenkins;
2.The costs claimed is an appropriate amount claimed on the relevant scale.
The parties also both accept that the statement of Mr Jenkins was necessary for dealing with the Council in respect to the design of the retaining wall.
Counsel for City Apartments says the work was both reasonable and necessary and that his client should be allowed the full amount claimed. Counsel for the plaintiffs opposes that and says by reason of the dual purpose for obtaining the statement of Mr Jenkins, the Court should only allow 50 per cent of the amount claimed. I am informed that there are many other items in the bill of costs that had a similar dual purpose.
Both counsel are very experienced in the area of adjudication of costs. Neither is aware of any relevant authority which would give guidance as to how the Court should adjudicate on this particular item.
The parties both made submissions in respect of the case of Ricciardi v Philmac Pty Ltd , a decision of the Full Court of this Court.[3]
[3] (1987) 45 SASR 290.
In Ricciardi the Full Court was dealing with an appeal from an order of a taxing Master. The appellant had brought proceedings against the respondent in the Industrial Court claiming worker’s compensation. The appellant then also commenced proceedings in the Supreme Court for common law damages.
Eventually the parties settled both sets of proceedings. The terms of settlement were recorded in an order made in the Industrial Court which required the respondent (employer) to pay the appellant’s (worker’s) costs of proceedings to be agreed or taxed. There were a number of special conditions to the order made in the Industrial Court, one of which provided that the respondent pay the appellant’s costs in the Supreme Court proceedings.
Thereafter, the appellant sought to tax her costs in the Supreme Court first. The scale applicable to the Supreme Court costs was greater than the scale allowed in the Industrial Court. On the taxation the parties agreed that there were costs referrable to work which was necessary for both the Industrial Court and the Supreme Court proceedings, such as the obtaining of medical reports and the proofing of witnesses. The taxing Master disallowed all of the items which were referrable to both the Supreme Court and Industrial Court proceedings.
The principal judgment of the Full Court was by Johnston J. Jacobs and Millhouse JJ agreed with the reasons of Johnston J.
In the result, the decision of the Full Court turned on an interpretation of the consent order made in the Industrial Court. It was held:[4]
That order is capable of being interpreted to mean one thing only in my view, namely that the employer is to indemnify the worker in respect of all items of work which were reasonably necessary to be done for the purpose of and incidental to those proceedings in terms of the order to which the parties consented. It is a matter of no consequence that some of this work might have been used in the Supreme Court proceedings; if the work was work necessary to the compensation proceedings it is covered by the consent order.
[4] Supra, at 295.
The Court therefore held that the items had to be taxed in the Industrial Court and on its scale. The Ricciardi case deals with the interpretation of a consent order made by the parties and what they must have intended as a result of that consent order.
The Ricciardi case is not the same as this case. Nonetheless, City Apartments submitted that this Court should have regard to the fact that Johnston J said that it was a matter of no consequence that some of the work used in the Industrial Court may have been used in the Supreme Court proceedings. It sought to extrapolate that out and say it is of no consequence if the work claimed for was also of use in dealings with Council. In my opinion, however, the Ricciardi case is of limited relevance to the current situation.
The Court is left to make a judgment as to what the appropriate order is in the circumstances of this matter.
In arriving at my decision I have had regard to the fact that:
1. The plaintiffs initiated the proceeding before Justice Bleby.
2.The institution of the proceeding obliged City Apartments to undertake work to protect its position.
3.The plaintiffs complained to Council about the design of the retaining wall which caused the Council to revisit the design of the retaining wall.
4.As a result of the Council revisiting the design of the retaining wall, City Apartments was obliged to undertake discussion with the Council about the retaining wall.
In my opinion, the justice of the situation is best served by permitting the second defendant to recover fully for item 66. The work was necessary for the litigation and would, in any event, have had to be undertaken for the litigation. The fact that the work was able to be, and was, utilised for another purpose is not, in my opinion, a sufficient reason to disallow part of the claim for costs