Jewel Walk Pty Ltd v Kondinin Group Inc
[2001] WASC 197
JEWEL WALK PTY LTD & ANOR -v- KONDININ GROUP INC [2001] WASC 197
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2001] WASC 197 | |
| Case No: | CIV:1706/2000 | 18 JULY 2001 | |
| Coram: | ROBERTS-SMITH J | 30/07/01 | |
| 16 | Judgment Part: | 1 of 1 | |
| Result: | Special costs order made | ||
| PDF Version |
| Parties: | JEWEL WALK PTY LTD (ACN 068 635 145) KONDININ GROUP PUBLISHING PTY LTD (ACN 070 754 639) KONDININ GROUP INC |
Catchwords: | Costs Special costs order "Good or sufficient reason" for making order Whether inadequacy in item prescribed in Determination of Legal Costs Committee Whether amount claimed shown to be necessary and reasonable Evidence |
Legislation: | Rules of the Supreme Court, O 66 r 12(1) |
Case References: | Benfield v Australian National Railways Commission (1992) 8 WAR 285 Briggs & Briggs v Glentham Pty Ltd, unreported; FCt SCt of WA; Library No 930223; 21 April 1993 Collins v Westralian Sands Ltd (1993) 9 WAR 56 Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 Schmidt v Gilmour [1988] WAR 219 Tenbohmer v Eden (1992) 6 WAR 366 Barfield v Friedman & Lurie, unreported; SCt of WA (Parker J); Library No 970441; 5 September 1997 Cole v Western Australian Coastal Shipping Commission, unreported; DCt of WA (Registrar Kingsley); Library No 3248; 7 June 1991 Lewandowski v Lovell, unreported; SCt of WA; Library No 960310; 14 June 1996 Retawil Pty Ltd v Olivetti Pty Ltd, unreported; SCt of WA (Wallwork J); Library No 8836; 26 April 1991 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- First Plaintiff
KONDININ GROUP PUBLISHING PTY LTD (ACN 070 754 639)
Second Plaintiff
AND
KONDININ GROUP INC
Defendant
Catchwords:
Costs - Special costs order - "Good or sufficient reason" for making order - Whether inadequacy in item prescribed in Determination of Legal Costs Committee - Whether amount claimed shown to be necessary and reasonable - Evidence
Legislation:
Rules of the Supreme Court, O 66 r 12(1)
(Page 2)
Result:
Special costs order made
Representation:
Counsel:
First Plaintiff : Mr D J Garnsworthy
Second Plaintiff : Mr D J Garnsworthy
Defendant : Mr M P Cornes
Solicitors:
First Plaintiff : John Picton-Warlow
Second Plaintiff : John Picton-Warlow
Defendant : R M Legal
Case(s) referred to in judgment(s):
Benfield v Australian National Railways Commission (1992) 8 WAR 285
Briggs & Briggs v Glentham Pty Ltd, unreported; FCt SCt of WA; Library No 930223; 21 April 1993
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Schmidt v Gilmour [1988] WAR 219
Tenbohmer v Eden (1992) 6 WAR 366
Case(s) also cited:
Barfield v Friedman & Lurie, unreported; SCt of WA (Parker J); Library No 970441; 5 September 1997
Cole v Western Australian Coastal Shipping Commission, unreported; DCt of WA (Registrar Kingsley); Library No 3248; 7 June 1991
Lewandowski v Lovell, unreported; SCt of WA; Library No 960310; 14 June 1996
Retawil Pty Ltd v Olivetti Pty Ltd, unreported; SCt of WA (Wallwork J); Library No 8836; 26 April 1991
(Page 3)
1 ROBERTS-SMITH J: This application for a special order as to costs was made by way of a chamber summons dated and filed 24 May 2001, which came before me listed for hearing as a special appointment on 18 July 2001.
2 The application arises out of proceedings instituted by originating summons on 21 June 2000, primarily seeking orders for the removal of a trustee, the appointment of a new trustee and the vesting of the assets of the trust in him.
3 Those proceedings were an off-shoot of then existing proceedings in action no CIV 1553 of 2000 in which the present defendant was the plaintiff and the present plaintiffs were the defendants.
4 The proceedings the subject of the originating summons were listed for hearing before Heenan J on 12 October 2000. In fact on that day his Honour dealt with an application on behalf of the present defendant filed on 6 October 2000 that the two matters be heard together. Heenan J dismissed that application and made orders, ultimately by consent, disposing of the issues raised in the present proceedings CIV 1706 of 2000 by the following orders:
"1. The Defendant is removed as the trustee of the trust created by Clause 2.9 of the agreement made between the parties dated 29 June 1998 ('the Trust'), pursuant to Section 77 of the Trustees Act 1962.
2. Dennis Wise be appointed as trustee of the Trust, pursuant to Section 77 of the Trustees Act 1962.
3. Pursuant to Section 78 of the Trustees Act 1962, the assets of the Trust be vested in Dennis Wise as trustee of the Trust.
4. There be liberty to apply generally.
5. The Defendant pay the Plaintiffs' costs of this Originating summons to be taxed."
5 The plaintiffs filed a bill of costs for taxation on 9 November 2000 claiming a total of $42,791.49 inclusive of disbursements and which included the following:
(Page 4)
Number | Item | Description | Amount |
1 | 21 |
|
|
3 | 13A |
|
|
4 | 23 |
|
|
5 | 13A |
|
|
6 | 23 |
|
|
7 | 30 |
|
|
14 | 30 |
|
|
(Page 5)
7 The plaintiffs filed an amended bill of costs on 24 May 2001 ("the Amended Bill"), claiming costs of $25,978.70 plus disbursements of $10,387.39, a total of $36,366.09. According to the Legal Practitioners' (Supreme Court) (Contentious Business) Determination 1999 made by the Legal Costs Committee pursuant to s 58Z of the Legal Practitioners' Act 1893 (WA) on 8 June 1999, ("the Determination") the maximum which could be allowed for the solicitor's costs was $24,681.
8 The only item in the Amended Bill claimed above the scale prescribed in the Determination is item no 21, "Originating Summons" for which $16,297.70 is claimed as against the prescribed maximum of $15,000. There is no itemised claim for counsel's fee either as a disbursement or otherwise. That claim is advanced in an affidavit of Mr John Picton-Warlow dated 16 July 2001 by reference to the bill of costs filed 9 November 2000.
9 The chamber summons for a special order as to costs filed on 24 May 2001 seeks the following orders:
"1. The plaintiffs be grants (sic) the following special orders as to costs:
(a) That the scale limit applying to originating summons not apply;
(b) That reasonable allowance be made for the fees of Blyth's Legal Process Servers of an incidental to the conduct of the originating summons;
(c) that the services rendered by the practitioner be assessed at $280.00 per hour.
2. The plaintiffs also move for the following directions to the taxing officer to assist in the efficient and equitable conduct of the taxation, being:
(a) That the taxing officer make separate and reasonable allowance for the counsel fees of
- Mr M J McCusker QC in the conduct of the originating summons.
(b) That appropriate and reasonable allowance be made for the fees payable to Mr Clifton in preparing himself for and swearing an affidavit in support of the plaintiff's originating summons.
(c) That separate and distinct allowance be made for the practitioner's costs of and incidental to the preparation of Mr Clifton's affidavit in support of the originating summons.
(d) That reasonable allowance be made by the taxing officer for the photocopying of and incidental to the affidavit of Mr Clifton in support of the plaintiff's originating summons.
(e) That the taxing officer make reasonable allowance for the goods and services tax liability incurred by the plaintiffs.
(f) That the defendant pay the plaintiffs' costs of the application to be agreed or in default taxed.
- 3. The defendant pay the practitioner's costs of this application to be agreed or in default taxed."
The plaintiff's claim at 1(c) above was abandoned at the hearing.
"1. I am the solicitor for the Plaintiffs in this action.
2. I am authorised to swear this affidavit on behalf of the Plaintiffs.
3. I refer to the Amended Bill of Costs filed in this matter and in particular to the Schedules attached to that Bill and I declare that the entries set out in those schedules are copies of diary notes made by me at the time of carrying out the acts and attendances set out in those notes.
(Page 7)
- 4. The notes and time entries show the true nature of and time taken for the various acts and attendances carried out by me during the course of this matter.
5. The records of disbursements set out in the Schedules are accurate statements of the disbursements paid by either myself or the Plaintiffs' in the matter on the dates indicated.
6. The fees to counsel and the fees to the accountant are statements of the bills received by me or the Plaintiffs with respect to the work done by counsel or the accountant as indicated in those bills."
"1. I crave leave to refer to my affidavit file (sic) sworn and filed in this application
2. Annexed marked JP - W3 is a copy of fee note of Senior Counsel rendered in relation to the conduct of the proceedings.
3. Such fee note is already annexed to the bill of costs in this matter which was filed 9 November 2000.
4. I also refer to the references to the affidavit prepared for Mr Clifton ('the Affidavit') and say that the reason for the preparation of the Affidavit was the receipt of the affidavits of Mr Marcelli on 6 October 2000.
5. The Affidavit was intended for use at the hearing of this action but it was obviated when the defendant did not elect to read the affidavits of Mr Marcelli at the hearing."
12 The substance of the plaintiff's submission is that in the present circumstances there is an inadequacy in relation to item 21 of the Determination in respect of which the Committee has set a limit of $15,000, whereas the services necessarily and reasonably rendered by the practitioner are costed at $16,297.70. It is further submitted that as senior counsel was necessarily and properly instructed, his fee note should either be added to the costs of the originating summons or in the alternative, taken into account by the taxing officer in making an allowance for the (Page 8)
- costs recoverable concerning the originating summons. I take this to mean it should be allowed as a proper disbursement. The counsel fees claimed for McCusker QC are $660.00. Thus, the extent to which the plaintiffs claim the costs should be allowed beyond the existing scale is $1,297.70, plus senior counsel's fees of $660, a total of $1,957.70.
14 The application seeks an order pursuant to O 66 r 12(1) of the Rules of the Supreme Court ("SCR"). That order provides that:
"12.(1) Where the Court is of opinion that a Special Order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason the Court may order that any particular allowances in any relevant scale be raised or a limit removed and in giving any such direction the Court may fix a limit within which the Taxing Officer may allow such costs."
15 There are therefore three separate bases upon which a special costs order may be made. They are by reason of:
(a) the unusual complexity of the case; or
(b) the importance of the case; or
(c) any other good or sufficient reason.
16 The first two are not relied upon here; this application is put upon the basis that in the circumstances of the present case there is an inadequacy in the Determination. It is said the scale will not allow for payment to the value of work which was necessarily and reasonably done.
17 In Schmidt v Gilmour [1988] WAR 219 the trial Judge had made a special costs order and that was upheld on appeal. The basis for the challenge on the appeal was that it was wrong to hold that the view that the taxed costs recoverable were inadequate for the work actually done in getting up for trial was a good and sufficient reason to make the order, Burt CJ (with whom Kennedy J agreed) said (at 220):
"The rule clearly contemplates the possibility of there being 'good and sufficient' reason for making an order increasing the scale in that Schedule notwithstanding the fact that the case is
- not one of unusual complexity or of importance. For myself I can see no reason for saying that the amount of work which of course must fairly fall within the scale item of getting up case for trial, and whether it does or not will be for the Taxing Master to determine, cannot of itself constitute a good and sufficient reason for doing so. I am unable to accept the appellant's submission that it is 'wrong in principle' to make an order based upon a finding that a party and party taxation would be inadequate for the work done in getting up the case for trial.
Whether the amount of such work does in any particular case constitute a good and sufficient reason to depart from the scale is of course another matter and the discretion which the rule confers upon the court - 'the court may order' - is not one which must be exercised upon a finding of inadequacy of any degree. So to hold would be inconsistent with the policy of the scale. The inadequacy must be such as to constitute a good and sufficient reason and whether it does is a question for judgment in every case." (Emphasis added)
"What persuaded the learned judge in the matter before him was a carefully prepared affidavit by the respondents' solicitor detailing an extraordinary number of hours involved in preparing the first respondent for trial. The amount of work conscientiously carried out would on a party and party basis have confined the solicitor's entitlement to a scale limit of $3,120. As the solicitor concerned spent almost 200 hours in obtaining instructions at the rate of $98 per hour a sum of $14,000 would require to be allowed under 'getting up case for trial' if the solicitor was to be remunerated in terms of hours spent. Thus his Honour was satisfied that the maximum amount provided by the scale could not be regarded as an adequate return to the respondents' solicitor for the work done in respect of that item."
19 Not only is it necessary for me to decide whether the extent of the inadequacy (ie the differential between the maximum prescribed fee and the amount of the costs claimed) is of such a degree as to be a good and sufficient reason to depart from the scale, but for the same purpose I must also determine as a matter of judgment whether, prima facie, the work charged for appears to have been reasonably done: per Malcolm CJ in (Page 10)
- Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 at 404. Apropos that requirement, his Honour said:
"That is a judgment which is essentially preliminary and provisional in nature for the purpose of the exercise of the discretion granted by the rule. A judge will no doubt draw on his own experience, the impression gained during the course of the litigation, and his appreciation of the issues which have been involved, in making the judgment."
21 In Esther Investments the actual expenditure by the defendant in respect of counsel fees, solicitors' costs and disbursements was approximately $55,000; counsel estimated that if a special costs order were not made the defendant was likely to recover not more than $19,000 on the taxation of costs. Malcolm CJ refused the application because although due to inadvertence it was not made until nearly three and a half years after judgment and the interests of finality of litigation militated against it.
22 Earlier in the same year, in Benfield v Australian National Railways Commission (1992) 8 WAR 285, the Full Court allowed an appeal against a single Judge decision not to make a special costs order following the compromise of a plaintiff's claim for personal injuries.
23 The respondent was ordered to pay the appellant's costs to be taxed on the basis that the limits imposed by O 66 r 16 SCR were not applicable, but counsel had overlooked the limitation for getting up contained in item 13 of the Fourth Schedule to the SCR. Consequently the maximum figure which could be recovered under that item was $21,100. The amount actually claimed was $82,201.07. A District Court Judge refused an application for a special costs order to remove the limit in item 13 because in his view the compromise order was final and binding. The Full Court held it did not displace the court's jurisdiction and remitted the application. That application was based on unusual complexity and the amount of work involved but the extent of the claimed inadequacy was stark.
(Page 11) 24 The need for the court to determine, on an application of this kind, whether, on the face of it, the work done appears to have been reasonable so as to constitute good and sufficient reason for granting it, was reiterated in Collins v Westralian Sands Ltd (1993) 9 WAR 56. That case also affords an illustration of the nature of the evidentiary material which may be required to support an application for a special costs order.25 The case itself was an action for damages for personal injury arising out of the appellant's employment. The action was settled. The District Court Judge refused an application for special costs orders. That appears to have been on the basis the learned Judge perceived a fundamental distinction between party/party costs and solicitor/client costs and his view that the appellant was seeking to mulct the respondent with liability for costs that were properly as between solicitor and client; and furthermore, that the amount of costs claimed (though necessarily and properly incurred) was irrelevant to an application under O 66 r 12(1).
26 Ipp J (with whom Malcolm CJ and Rowland J agreed) held the scale drew no distinction between party/party and solicitor/client costs and that in making a determination under O 66 r 12(1) a Judge is required to make a prima facie assessment whether the amounts claimed are reasonable and the extent of any inadequacy.
27 In that case the amount claimed was $30,892.18; the maximum amount recoverable under the scale was $21,800. The claim therefore exceeded the prescribed maximum by $9,092.18 (the amount of $19,368.52 claimed for getting up exceeded the amount of approximately $8100 allowed in the scale for that item by about $11,268.52!).
28 The chamber summons had been supported by an extensive affidavit from the appellant's solicitor setting out details of the wide range of issues that had arisen between the parties, preparation of the action and the organisation of the availability of some 24 witnesses and the work done by the appellant's solicitors and the fees charged for it.
29 The Full Court allowed the appeal and made the orders which had been sought in the appellant's chamber summons. The Court followed Schmidt v Gilmour (supra) and Tenbohmer v Eden (1992) 6 WAR 366 in holding that if the work done was reasonable and necessary that would constitute a good and sufficient reason for increasing or dispensing with the limit. However, Ipp J emphasised (supra, 66) that even if it be established that a taxation based on the scale would be inadequate
(Page 12)- compensation for work reasonably and necessarily done, the court's discretion still remains and must be exercised.
31 It is apposite at this point to say that I accept Mr Garnsworthy's submission that the effect of my making the special costs order sought - should I do so - would not impede the discretion of the taxing officer. If made, the order would merely allow that officer to consider the charges made beyond the scale limit. It would remain entirely for the exercise of the taxing officer's discretion to determine whether or not they should be allowed as being reasonable charges for work necessarily or reasonably done.
32 I also acknowledge the principle upon which the Legal Costs Committee determinations have been made since February 1997, namely that a successful litigant should be entitled to recover costs reasonably and properly incurred.
33 It is pertinent to observe that the special order sought in the chamber summons is only in relation to the item "Originating Summons". On the hearing Mr Garnsworthy conceded the claim in par 1(b) in respect of legal process servers could be left to the taxing officer in the normal way and as I have already observed, the claim in par 1(c) was abandoned. It was put that the orders sought at par 2 were only in the nature of procedural directions to the taxing officer.
34 The proceedings arose out of arrangements in place by the plaintiffs and defendant for the development and promotion of a farming newsletter. The newsletter was to be developed by the first plaintiff. The first plaintiff acquired the second plaintiff company for the purposes of this joint venture and the defendant was to provide certain services relating to the distribution and subscription lists for the newsletter. Documentation was produced, setting out the way in which accounting was to be done between the parties. The source of income was to be subscriptions payable for the newsletter and it was necessary for the defendant to account to the plaintiffs because the subscriptions were being paid to it. The arrangement broke down and the defendant instituted proceedings seeking damages for wrongful repudiation of the agreement and injunctions preventing the plaintiffs using trademarks which the defendant maintained were its property. In the course of those proceedings the plaintiffs made an interlocutory application for removal of the trustee. That matter apparently came before Wheeler J. It is sufficient for present
(Page 13)- purposes simply to note that as a consequence of what transpired on that occasion the plaintiffs initiated the present proceedings seeking that relief by way of originating summons. Mr Cornes, counsel for the defendant, put it to me on the hearing that the content of the originating summons is largely transposed from the plaintiffs' defence and counterclaim its the related proceedings.
36 Prior to that concession, and as the result of the late filing of what Mr Garnsworthy described as a 948 page affidavit (t 39) of Mr Liu Marcelli which the plaintiffs' solicitor received on 6 October 2000 ("the Marcelli affidavit of 6 October"), it became necessary to seek the assistance of an accountant and to analyse the voluminous financial records annexed to that affidavit. As events transpired the exercise was ultimately fruitless because of the late admission made by the defendant as to the relevant amount.
37 Counsel for the plaintiffs' submission in substance is that considerable additional work was necessarily done as a result of the late filing of the 948 page affidavit of Mr Marcelli some six days before the hearing, which affidavit was not in fact relied upon by the defendant at the hearing.
38 There are two affidavits of Mr Liu Marcelli on file CIV 1706 of 2000 which run to seven and eight pages respectively. One of them was made in support of the defendants' summons proceedings heard with action number CIV 1553 of 2000. By par 3 of the other affidavit Marcelli referred to "my affidavits sworn and filed in CIV 1553 of 2000".
39 In that action the court file contains the following affidavits of Liu Marcelli:
Doc No.Date filedNo of pages (inc. annexures
- 11 4 July 2000 20
12 4 July 2000 24
19 7 August 2000 43
- 25 30 October 2000 7
30 30 January 2001 7
41 In the plaintiffs' Amended Bill the claim for "originating summons" is supported by reference to schedule 1 of the bill. The last entry before 9 October 2000 is for 28 September 2000. Thereafter and to the date of hearing, the schedule sets out:
No Date Detail Time Rate Amount
79 9.10.00 Call to Supreme Court regarding $56.00
listing and new chambers summons.
Mr Truglio's assistant said the trial
Will take precedence and she will
Note the situation on their file
80 9.10.00 Call to Mr Wise arranging from him
to see documents $13.50
81 9.10.00 Attending on Mr Wise with copy of $140.00
affidavits and summons and asking
him to see Mr Clifton to get report
and enable me to complete an
affidavit in reply to one of their
paragraphs and reporting on the
failure of duty by KG as trustee
82 9.10.00 Letter from RM Legal with copy of $25.00
amended summons directed to judge
on Thursday morning hearing time
83 9.10.00 Calls from Mr Wise as to report $54.00
from accountant - further work
needed to be done
84 10.10.00 Call from Associate to Heenan J $27.00
confirming that two summonses will
be heard on Thursday
85 10.10.00 Long call to Mr Clifton who has $81.00
now completed his report and will
be able to sign an affidavit
tomorrow. He is making copies of
attachments to his report for
affidavit
86 11.10.00 Work on affidavit for Mr Clifton; $1,080.00
settling affidavit and exhibits.
Receiving affidavit from Mr Clifton
For lodgement if needed tomorrow
- 87 11.10.00 Preparation for hearing of summons $2,800.00
and defendant's application
88 12.10.00 Further pretrial preparation and $1,080.00
attending at court conducting
hearing of the originating summons
and chambers summons for
consolidation
43 The only other evidentiary material before me as to the Marcelli affidavit of 6 October is the references at par 4 and par 5 of Mr Picton-Warlow's affidavit of 16 July 2001, which in turn refer to the original bill of costs filed 9 November 2000. None of this material explains the content of the affidavit, the extent to which (if at all) it recapitulated or related to matters pertaining to the related action, what work had to be done to respond to it, nor why. I consider the material adduced in support of the application for the special costs order to be barely adequate. In the end, however, and in the absence of any evidentiary challenge to it, I am prepared to accept the plaintiff has shown on the face of it that a substantial affidavit in excess of 900 pages was served (but not filed) shortly before the hearing which necessitated substantial additional work. In an appropriate case the fact that an unusual amount of work is required to be carried out may itself be a good or sufficient reason for making a special order: (see Briggs & Briggs v Glentham Pty Ltd, unreported; FCt SCt of WA; Library No 930223; 21 April 1993 per Malcolm CJ at 5). The need to respond urgently to the very lengthy Marcelli affidavit and the costs prima facie associated with that, demonstrating an apparent inadequacy in the scale fee to the extent of some $1,297.70, in the context of a total solicitor's costs bill of $25,978.70, in my view constitutes a good and sufficient reason for the purposes of O 66 r 12(1).
44 I am accordingly prepared to make a special costs order in relation to the originating summons limit.
45 Whether or not in the end that work will be shown to have been necessarily and reasonably done or whether an amount should in fact be allowed in excess of the limit, will be for the discretion of the taxing officer.
46 As to the order for directions sought by par 2 of the chamber summons, it seems to me the matters there raised are all capable of being
(Page 16)- dealt with by the taxing officer in the ordinary way. I am not persuaded there is any reason why particular directions should be given and I decline to do so.
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