Kahu NZ Ltd v Aviation Utilities Pty Ltd [No 4] - [2024] WASC 395 (S)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   KAHU NZ LTD -v- AVIATION UTILITIES PTY LTD [No 4] [2024] WASC 395 (S)
CORAM:   SOLOMON J
HEARD:   ON THE PAPERS
DELIVERED          :   21 FEBRUARY 2025
PUBLISHED           :   21 FEBRUARY 2025
FILE NO/S:   CIV 2012 of 2022
BETWEEN:   KAHU NZ LTD
Plaintiff
AND
AVIATION UTILITIES PTY LTD
Defendant

Catchwords:

Practice and procedure - Special costs order - Whether matter of 'unusual difficulty, complexity or importance' - Application to remove limits imposed by Table B of Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 - Whether costs of interim injunction eligible for exemption - Whether matters were beyond the usual scope of court determinations

Legislation:

Legal Profession Act 2008 (WA)
Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 (WA)
Legal Profession Uniform Law Application Act 2022 (WA)

Result:

Application granted in part

Category: B

Representation:

Counsel:

Plaintiff	:	No appearance
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Peter May McAuliffe Legal (Busselton)
Defendant	:	Norton White

Cases referred to in decision:

Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2023] WASCA 108 (S)
Heartlink Ltd v Jones as Liquidator of Hl Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Kahu NZ Ltd v Aviation Ltd v Aviation Utilities Pty Ltd [No 3] [2024] WASC 347
Kahu NZ Ltd v Aviation Utilities Pty Ltd [2022] WASC 405
Kahu NZ Ltd v Aviation Utilities Pty Ltd [No 4] [2024] WASC 395
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S)

SOLOMON J:

On 25 September 2024 I published my reasons in the substantive trial of this matter; see Kahu NZ Ltd v Aviation Ltd v Aviation Utilities Pty Ltd [No 3][2024] WASC 347 (Kahu [No 3]). The plaintiff (Kahu) was largely successful in its claim. On 24 October 2024, I published brief reasons dealing with matters relating to depreciation, interest and costs.[1]
[1] Kahu NZ Ltd v Aviation Utilities Pty Ltd [No 4] [2024] WASC 395.
On 28 October 2024, I made final orders. Those orders included leave to Kahu to file documents in support of an application under s 141(3) of the Legal Profession Uniform Law Application Act 2022 (WA) (Uniform Act) that the limits on costs imposed by Table B of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2022 be removed and that Kahu's costs of the action be assessed without regard to those limits. Pursuant to those orders, on 15 November 2024, Kahu filed a minute of proposed orders, a supporting affidavit which included a draft bill of costs and submissions in support of the application. On 10 December 2024, the defendant (United) filed an affidavit and submissions in opposition to Kahu's application. The orders of 28 October 2024 included an order that the application would be determined on the papers.
By its minute of proposed orders, Kahu clarified that the items in respect of which it sought orders for the costs to be assessed without reference to the limits provided by Table B were limited to:
1.Item 10(a) in respect of Kahu's application for an interim injunction dated 25 October 2022; and
2.Item 19 in respect of its preparation of the case.
Section 141(1) of the Uniform Act provides:
The following are regulated by an applicable costs determination —
(a)the taxation of bills of law practices;
(b)any other aspect of the costs charged by law practices.
Section 141(3) provides:
Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do any or all of the following —
(a)order the payment of costs above those fixed by the determination;
(b)fix higher limits of costs than those fixed in the determination;
(c)remove limits on costs fixed in the determination;
(d)make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
The principles to be applied in considering whether to make a special costs order pursuant to s 141(3) of the Uniform Act are well established and were set out by the Court of Appeal in Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76 (S) (Sino Iron) in which the Court of Appeal considered and set out the principles in respect the now repealed s 280 of the Legal Profession Act 2008 (WA). That section is in identical terms to s 141 of the Uniform Act. In Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd [2023] WASCA 108 (S), the Court of Appeal applied the principles set out in Sino Iron to an application under s 141 of the Uniform Act. I adopt those principles. They are clearly set out by the Court of Appeal, and it is unnecessary to repeat them.
I must first determine whether the maximum amounts allowable under each of Items 10(a) and 19 are inadequate in the sense that there is a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than the maximum amount. If I am satisfied that there is a fairly arguable case to that effect, then I must also form the view that the inadequacy of costs arises because of the unusual difficulty, complexity or importance of the matter.
In its application, Kahu relied upon the affidavit of Mr Mark McAuliffe, the solicitor with principal conduct of the matter on behalf of Kahu. The affidavit annexed a draft bill of costs. The draft bill of costs disclosed the following in relation to the two items the subject of Kahu's application:
1.In respect of Item 10(a) the scale maximum is $14,190 whereas the sum claimed in the draft bill is $34,824.50;
2.In respect of Item 19, the scale maximum is $65,780.00 whereas the sum claimed in the draft bill is $253,834.50.
I turn first to Item 10(a). The item relates to Kahu's application for an interim injunction dated 25 October 2022, which was heard and determined on 4 November 2022. Reasons were published on 24 November 2022: Kahu NZ Ltd v Aviation Utilities Pty Ltd [2022] WASC 405 (Injunction Application). As noted, the maximum allowed by the scale is $14,190 whereas the sum claimed in Kahu's draft bill of costs is $34,824.50. The amount claimed thus exceeds the scale amount in a sum exceeding $20,000. Kahu submitted that the costs incurred as reflected in the draft bill of costs as compared to the scale maximum demonstrates the inadequacy of the scale item.
As the Court of Appeal has made clear, the fact that the amount incurred and claimed exceeds the scale item is not of itself sufficient to justify an order. Beyond that circumstance alone, it is not evident to me that there exists a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than the maximum amounts. Nor in any event am I persuaded that the application was attended by any usual complexity or difficulty. I accept that the matter was very important to Kahu and indeed to both parties. However, in the circumstances, it is not apparent that this importance led to expenditure that exceeded the scale by such a degree. The matters contained in Mr McAuliffe's affidavit and the submissions filed on behalf of Kahu were directed largely to matters that concerned the substantive proceedings, not the application for interlocutory injunctive relief.
It is also noteworthy that although the costs of the Injunction Application were ordered to be in the cause, the plaintiff was unsuccessful. In circumstances where the application was unsuccessful (even if reasonably advanced), I would in any event be reluctant to exercise the court's discretion to permit recovery in excess of the scale.
In the circumstances, I am not prepared to make the order sought by Kahu in respect of Item 10(a).
In respect of Item 19, the material filed by the parties was directed in large part to particular aspects of the conduct of the case. For example, Kahu pointed to the number of lay and expert witnesses and to aspects of United's conduct that were said to have caused additional or unnecessary costs. This included putting Kahu to proof in relation to its financial accounts (in respect of which it was successful), the defendant's failure to admits facts contained in a Notice to Admit Facts (all of which were proved), the number of pleaded breaches of contract, the length of the trial, the volume of submissions and the volume of documents - including documents produced late that were added to the trial bundle. United, on the other hand, complained that substantial time and resources were absorbed by allegations against personnel of United that were not accepted by the court and which United characterised as 'completely groundless'. United rejected the criticism of its conduct of the proceedings.
Ultimately, while all or some of these matters may well have cost consequences, they are individual matters for the assessment of the taxing officer. As the Court of Appeal has made clear, even where orders lifting the scale limit are made, it nevertheless remains the task of the taxing officer to consider the reasonableness of and necessity for the work undertaken, and to make a judgment about the remuneration reasonably required.[2]
[2] Sino Iron [11].
The task at this stage is the one described at [7] above. Having regard to all the circumstances of the matter I am satisfied that there is a fairly arguable case that, on taxation, costs may properly be allowed in an amount greater than the maximum amount. I am also satisfied that the inadequacy of costs arises because of the unusual difficulty, complexity or importance of the matter. I accept that many aspects of the case were not unusually difficult to the extent of being beyond the scope of matters considered routinely by the court. However, the combination of all the facts and issues and the defendant's review of many facets of the parties' history and relationship did colour the proceedings with a fair degree of complexity. The defendant was quite entitled to take that course. Equally, Kahu is entitled to the opportunity to seek compensation for the complexity that such a course brought with it.
In Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq),[3] Martin CJ said at [19] that:
[B]y reference to 'importance' in this context, the legislature is allowing the court to have regard to the question of whether the work done was appropriate to the significance of the issue that arose in the litigation. Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally.
[3] Heartlink Ltd v Jones as Liquidator of Hl Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S).
I also consider that given the subject matter of the proceedings and the nature of the parties' businesses, the proceedings held a considerable degree of importance. The proceedings concerned factually complex aspects of matters that were central and indeed critical to the parties' business operations, their maintenance and their success.
In the circumstances I am satisfied that the fairly arguable inadequacy of costs arises because of the complexity and/or importance of the matter. Accordingly, I will make the order sought by Kahu in respect of Item 19.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
LZ
Associate to the Honourable Justice Solomon
21 FEBRUARY 2025