Lampropoulos v Lynne Kolnik as Executor of the Will of Gerald Thomas Foley
[2010] WASC 193 (S)
•30 JULY 2010
LAMPROPOULOS -v- LYNNE KOLNIK As Executor of the Will of GERALD THOMAS FOLEY [2010] WASC 193 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2010] WASC 193 (S) | |
| Case No: | CIV:1578/2005 | 28-30 APRIL, 1, 4 & 5 MAY, 2-4, 7-10 SEPTEMBER 2009, 30 SEPTEMBER 2010 | |
| Coram: | SIMMONDS J | 30/07/10 | |
| 23/11/10 | |||
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Costs orders to be made | ||
| B | |||
| PDF Version |
| Parties: | PAMELA DENISE LAMPROPOULOS LYNNE KOLNIK As Executor of the Will of GERALD THOMAS FOLEY REGISTRAR OF TITLES |
Catchwords: | Costs of action Approach to be adopted where more than one issue and defendant successful but not on all issues Costs ordered as percentage Costs of action Interest on costs Pre-judgment interest on costs Whether jurisdiction to award such interest Whether any such jurisdiction should be exercised Interest on costs from date of judgment for costs (the incipitur rule) Order for such interest Special costs orders Jurisdiction under Legal Profession Act 2008 (WA) s 280(2) Approach to be adopted to exercise of jurisdiction |
Legislation: | Civil Judgments Enforcement Act 2004 (WA), s 3, s 8 Civil Procedure Act 2005 (NSW), s 101 Federal Court of Australia Act 1976 (Cth), s 51A Legal Practice Act 2003 (WA), s 215 Legal Profession Act 2008 (WA), s 280 Supreme Court Act 1935 (WA), s 32, s 37 |
Case References: | Computer Accounting and Taxation Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) EDWF Holding 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) Flower & Hart v White Industries (Qld) Pty Ltd [2001] FCA 370 Godden v Alford [1960] WAR 235 Green v Wilden Pty Ltd [2005] WASC 83 (S) Hamdan v Widodo [No 2] [2010] WASC 6 (S) Hancock Family Memorial Foundation Ltd v Porteous [2000] WASC 61 Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Hunt v RM Douglas (Roofing) Ltd [1990] 1 AC 398 Lahoud v Lahoud [2006] NSWSC 126 Lai v Tiao (No 2) [2009] WASC 22 (S) Lampropoulos v Kolnik [2010] WASC 193 Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union [No 4] [2006] WASC 317 (S) Olympic Holdings Pty Ltd v Lochel [2004] WASC 61 Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569 Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85 SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) Tranchita v Danehill Nominees Pty Ltd (No 3) [2009] WASC 49 Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 23 NOVEMBER 2010 FILE NO/S : CIV 1578 of 2005 BETWEEN : PAMELA DENISE LAMPROPOULOS
- Plaintiff
AND
LYNNE KOLNIK As Executor of the Will of GERALD THOMAS FOLEY
First Defendant
REGISTRAR OF TITLES
Second Defendant
Catchwords:
Costs of action - Approach to be adopted where more than one issue and defendant successful but not on all issues - Costs ordered as percentage
Costs of action - Interest on costs - Pre-judgment interest on costs - Whether jurisdiction to award such interest - Whether any such jurisdiction should be
(Page 2)
exercised - Interest on costs from date of judgment for costs (the incipitur rule) - Order for such interest
Special costs orders - Jurisdiction under Legal Profession Act 2008 (WA) s 280(2) - Approach to be adopted to exercise of jurisdiction
Legislation:
Civil Judgments Enforcement Act 2004 (WA), s 3, s 8
Civil Procedure Act 2005 (NSW), s 101
Federal Court of Australia Act 1976 (Cth), s 51A
Legal Practice Act 2003 (WA), s 215
Legal Profession Act 2008 (WA), s 280
Supreme Court Act 1935 (WA), s 32, s 37
Result:
Costs orders to be made
Category: B
Representation:
Counsel:
Plaintiff : Mr M J McCusker QC & Mr A Metaxas
First Defendant : Ms G A Archer SC & Mr S R Sirett
Second Defendant : No appearance
Solicitors:
Plaintiff : Metaxas & Hager
First Defendant : Downings Legal
Second Defendant : No appearance
Case(s) referred to in judgment(s):
Computer Accounting and Taxation Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S)
EDWF Holding 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
(Page 3)
Flower & Hart v White Industries (Qld) Pty Ltd [2001] FCA 370
Godden v Alford [1960] WAR 235
Green v Wilden Pty Ltd [2005] WASC 83 (S)
Hamdan v Widodo [No 2] [2010] WASC 6 (S)
Hancock Family Memorial Foundation Ltd v Porteous [2000] WASC 61
Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Hunt v RM Douglas (Roofing) Ltd [1990] 1 AC 398
Lahoud v Lahoud [2006] NSWSC 126
Lai v Tiao (No 2) [2009] WASC 22 (S)
Lampropoulos v Kolnik [2010] WASC 193
Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union [No 4] [2006] WASC 317 (S)
Olympic Holdings Pty Ltd v Lochel [2004] WASC 61
Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569
Phillips Fox (a firm) v Westgold Resources NL [2000] WASCA 85
SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2)
Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S)
Tranchita v Danehill Nominees Pty Ltd (No 3) [2009] WASC 49
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2)
Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295
(Page 4)
- SIMMONDS J:
Introduction
1 This is an application for special costs orders following judgment. The action was on the plaintiff's claim for specific performance, damages and consequential relief as purchaser under an agreement for the purchase of property. The plaintiff claimed the agreement was the result of the exercise of an option granted by a document headed 'Memorandum of Understanding' (MOU). Although the MOU had a provision calling for the preparation within a stipulated period of a written option agreement, and no such agreement had been prepared, the plaintiff claimed the MOU had been varied to delete that provision.
2 The first defendant is an executor of the will of the late Gerald Thomas Foley and the beneficiary under the will in respect of the property the subject of the MOU. Mr Foley was the registered proprietor of the property and the counterparty to the MOU. The first defendant defended the action on the claim that the MOU was no more than an agreement to agree, and that in any event it had not been varied as alleged. The first defendant also claimed that in any event the contract of purchase was voidable and had been duly avoided. It was voidable on two bases. One was that Mr Foley had lacked capacity to enter into the MOU and to vary it, and the plaintiff knew or ought to have known that fact. The other basis was the MOU represented an unconscionable dealing. The first defendant counterclaimed for declaratory and related relief accordingly.
3 For the reasons I gave in Lampropoulos v Kolnik [2010] WASC 193 I concluded that the MOU was not a mere agreement to agree, and that it had been varied as the plaintiff claimed. However, I also concluded that the first defendant had made out her case that the MOU, as varied, had been avoided, in circumstances where Mr Foley had lacked capacity to enter into and vary it, and the plaintiff ought to have been aware of that fact; and where the MOU represented unconscionable dealing. The orders made at delivery of judgment were as follows:
1. The Plaintiff's claim be and is hereby dismissed.
2. A declaration is made that the Memorandum of Understanding executed between the Plaintiff and Gerald Thomas Foley on 23 February 2005 was voidable for lack of contractual capacity on the part of Gerald Thomas Foley and was avoided by him on 2 May 2005.
(Page 5)
- 3. The Second Defendant remove the First Defendant's caveat J198615C forthwith.
4. Consideration of paragraphs 3 and 5 of the First Defendant's minute of proposed orders for judgment dated 30 July 2010 be stood over for further submissions within 21 days hereof.
5. The Plaintiff pay the First Defendant's costs of the action to be taxed on a basis to be determined on further application (to be filed with an affidavit containing supporting evidence) made within 21 days or, in the absence of any application within that time, subject to the provisions of the applicable scales.
6. There be liberty to apply generally.
4 I note that there is an evident error in order 3: 'First Defendant's' should be 'Plaintiff's'.
5 The present application is pursuant to order 5.
Orders sought
6 The first defendant seeks nine orders by her minute of proposed orders dated 20 August 2010 (the first defendant's minute). Leaving aside the proposed order for the costs of the application (proposed order 3), two of the other proposed orders are substantially conceded and another is conceded in part. I consider each of the proposed orders separately. It will be seen that the applicable law is common to a number of them.
Proposed order 1: costs of action and reserved costs
7 Order 1 of the first defendant's minute is:
The Plaintiff pay the First Defendant's costs of the action including any reserved costs.
8 It is not in contest that the first defendant's claim succeeded and correspondingly the plaintiff's claim failed, and accordingly the court would generally order a party in the position of the first defendant should recover their costs: Rules of the Supreme Court 1971 (WA) O 66 r 1. However, the plaintiff submitted that there should be an allowance for the plaintiff's success on the issue of enforceability of the MOU as varied, the issues of incapacity and unconscionability aside. The allowance is that the first defendant recover only 90% of her costs, including reserved costs. For the purpose of an allowance of the kind the plaintiff seeks, I note O 66 r 2; and see Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 574 (Anderson J) and Phillips Fox (a firm) v
(Page 6)
- Westgold Resources NL [2000] WASCA 85 [28] (Owen J). This allowance might be arrived at by approaching this action as if it had been brought by the first defendant, claiming that the MOU could not found an enforceable agreement to purchase. The issues of whether or not the MOU was unenforceable as an agreement to agree; whether or not the option under it could not be exercised as no written option agreement was prepared by the due date; whether or not the counterparty to the MOU lacked capacity and the plaintiff knew or ought to have known that; and whether or not the MOU was an unconscionable dealing were separate issues, even although there was an interlocking between them: see Godden v Alford [1960] WAR 235, 237 (Jackson SPJ, Virtue & Hale JJ).
9 In my view such an approach is appropriate. Further, the abatement of the first defendant's costs that the plaintiff submitted should apply is also appropriate. While the issues on which the plaintiff succeeded were, as counsel for the first defendant contended, legal and not factual ones, and the subject of relatively short written and oral submissions, they were ones of not insignificant difficulty. That difficulty is indicated by the space treatment of them occupied in Lampropoulos. That difficult is in my view properly reflected in a level of abatement of 10%.
10 Finally, I note that there were no submissions made to me that any of the reserved costs should be dealt with differently from any other costs for the purposes of proposed order 1.
Proposed order 2(a): allowance for counsel and a solicitor attending the mediation
11 Order 2(a) of the first defendant's minute is:
That the taxation be performed on the basis that:
(a) allowance be made for counsel and a solicitor attending the mediation, with reasonable allowance made for counsel and solicitor preparing for the mediation under item 23(a) of the Scale …
12 Proposed order 2(a) is sought under Legal Profession Act 2008 (WA) s 280(2)(c). Legal Profession Act 2008 s 280(2) needs to be read with s 280(1), and those two subsections provide as follows:
(1) Subject to any costs agreement made in accordance with Division 6 or the corresponding provision of a corresponding law, section 306 and the Legal Aid Commission Act 1976 section 14 -
(a) the taxation of bills of law practices; and
- (b) any other aspect of the costs charged by law practices,
is regulated by an applicable costs determination.
- (2) 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 all or any 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.
14 The proper approach to the application of Legal Practice Act 2003 (WA) s 215(2), which is identical to Legal Profession Act 2008 s 280(2), is set out in Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11] (Martin CJ). The task that the court must perform under the provision is there described as follows:
Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is
(Page 8)
- inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
15 As to the approach to addressing the formation of that opinion, and the matter of inadequacy, Heartlink(S) says this, [13] - [16]:
The policy considerations that should guide a court when addressing an issue under s 215(2) are, firstly, that the court should not usurp the role of the taxing officer and, secondly, that at least where party and party costs are concerned, the court should make an order that would give effect to the general principle of allowing the successful party to be compensated for their costs by the unsuccessful party, where appropriate.
There are two alternative ways in which one might approach the question of inadequacy posed by s 215(2). The first would be to require an applicant for an order under that subsection to satisfy the court that the bill to be taxed will, on the balance of probabilities, tax at an amount that is greater than the limit that would be imposed by the item in the relevant costs determination, which is therefore inadequate. The alternative approach would simply be to require an applicant for an order under the section to satisfy the court that there is a fairly arguable case to be put before a taxing officer to the effect that the bill to be taxed should tax out at more than the limit that would be imposed by the costs determination.
On this alternative view of the section, the court could arrive at the conclusion that the limit was inadequate because the maintenance of the limit would preclude the applicant from presenting a fairly arguable case to the taxing officer. The considerations to which I have referred, and in particular the view that the court should not, under this section, usurp or anticipate the role of the taxing officer, lead me to conclude that the latter of those two alternatives is the preferred approach to an application under s 215(2).
It therefore seems to me that the requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination.
16 There is an affidavit in support of the application of the first defendant, that of Shane Robin Sirett sworn 19 August 2010. However, there is no reference in the Sirett affidavit or its annexures to the mediation. At the same time, the porosity and inadequacy of the evidence proffered in support of an application for a special costs order is not necessarily fatal to the application. That is because the determination of the questions the application involves is to be approached as a matter of 'impression' rather than detailed evaluation, which is a matter for the taxing officer: see EDWF Holding 1 Pty Ltd v EDWF Holdings 2 Pty
(Page 9)
- Ltd [2008] WASC 275 (S) [6] - [7] (Martin CJ). I explain below why I am in a position to form such an impression in this case.
17 Further, I note what was said with respect to item 23(a) in the 2006 Determination in Tranchita v Danehill Nominees Pty Ltd (No 3) [2009] WASC 49 [5] - [7] (Martin CJ). In Tranchita [5] - [7] Martin CJ said this:
Because of the view which I take of the structure of the scale, it seems to me that in this case the rate prescribed by item 23 would be inadequate. That is because it was entirely appropriate for counsel representing Mr Erigo Fazio to have attended the mediation. Indeed, it seems to me that item 23 as presently structured, is inadequate generally to allow for the attendance of counsel at mediation, a practice which, in my opinion, is to be strongly encouraged.
Mediation is a most desirable process that has now become a primary focus of the activity of the court. The success of mediations conducted by officers of the court has substantially reduced the proportion of cases going to trial. That success is likely to be enhanced if parties are encouraged to bring all necessary legal advisers, including their counsel, to a mediation to give them advice at that mediation, with a view to achieving resolution of the action.
It seems to me to be regrettable that item 23 of the current scale discourages that desirable practice by not making an appropriate allowance for counsel to attend mediations. That seems to me to be an inadequacy in the scale which should perhaps be addressed by the Legal Costs Committee, the next time the scale is reviewed, but it is sufficient in the present case for me to say that because of the view which I take of the current structure of the scale, it is not adequate to make appropriate allowance for the portion of the time of both the senior practitioner and senior counsel properly spent on behalf of Mr Erigo Fazio in the mediation of this action.
18 I note that the matter to which those remarks were addressed, the lack of provision for more than one fee earner in item 23(a) of the 2006 Determination (which is also true of the 2008 Determination), is addressed in the corresponding item, item 24(a) of the Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2010 (the 2010 Determination). However, I do not consider that those remarks indicate the view of the Chief Justice that a fairly arguable case to be put before a taxing officer, to the effect that the bill to be taxed should tax out at more than the limits under item 23(a) of the 2006 and 2008 Determinations by reason of the involvement of other fee earners, should always or even usually be found. Rather, in my view those remarks
(Page 10)
- indicate such a case could more readily be found than might otherwise be the case.
19 Counsel for the plaintiff put to me that there was no evidence that, at the time of the mediation, other fee earners than the one item 23(a) provided for attended that mediation, and so no order could or should be made. However, I note that a judge may proceed in the absence of detailed evidence, at least where he or she as the trial judge is able to draw on their own experience of the case as a matter of 'impression' (see EDWF Holdings 2 Pty Ltd [7]; Leighton Contractors Pty Ltd v Construction, Forestry, Mining and Energy Union [No 4] [2006] WASC 317 (S) [13] (Le Miere J)). It is less clear whether the judge may proceed in the absence of any evidence that (in a case like this one) other fee earners attended the mediation, the position in which I find myself. However, in my view in a case where a judge can readily identify the need for such attendance because of the unusual difficulty, complexity or importance of the matter, the judge would be able to make a special costs order of the kind sought here. In my view I am able to make such an identification, for the reasons I reach below.
20 Counsel for the plaintiff put to me that it would indeed be an unusual case where there was a need for fee earners, other than as provided for by item 23(a), to attend the mediation. As counsel put it, mediation is not the trial but more in the nature of a negotiation enterprise, which I took to indicate that no conclusion as to the need for fee earners to attend a mediation could be drawn from the likely need for them at trial. However, in my view Tranchita properly understood recognises that such a conclusion may well be drawn. I accept that in that case, as counsel for the plaintiff put to me, there were multiple plaintiffs and defendants and complex claims, which made mediation unusually complex. However, an inadequacy resulting from unusual complexity is not the only reason why a special costs order might be made. Indeed it is clear on the authorities that 'unusual' in Legal Practice Act 2008 s 280(2) qualifies 'difficulty', but not 'complexity' or 'importance': see Heartlink(S) [17]; and SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [106] (Roberts-Smith J). In view of the significance of mediation to the court as explained in Tranchita, and its role not only in resolving disputes but also in narrowing issues, there is no reason not to apply to it the same approach as to costs matters in relation to the trial. Whether, in the particular circumstances of the mediation in question, involvement of fee earners, other than as provided for by item 23(a), was in fact appropriately and reasonably required would of course be for the taxing officer, not for me.
(Page 11)
- I consider that, for the reasons elaborated on below and as a matter of impression, inadequacy has been shown.
21 As to whether there was inadequacy as the result of unusual difficulty, complexity or importance of the mediation, see Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] - [15] (Wheeler J) on the former O 66 r 12. On this authority, it seems to me I can draw on my experience as the trial judge to understand the issues likely to have been involved in approaching the mediation which may have made necessary the involvement of fee earners other than as provided for in item 23(a), being issues which may have made that mediation one of unusual difficulty, complexity or importance. On the continued relevance of Verdell see my decision in Computer Accounting and Taxation Pty Ltd v Professional Services of Australia Pty Ltd [2008] WASC 133 (S) [118] - [120]. With respect to a mediation, however, it seems to me that my appreciation of the issues in the case (substantive and forensic) should be approached by reference to those issues as they likely were at the date of the mediation, not at the later date of the trial. At the same time the issues as at the trial may indicate what were likely to have been the issues as at the date of the mediation. The former issues so indicating were particularly the substantive ones of unusual difficulty and complexity represented by the question whether or not the MOU was merely an agreement to agree to which I have previously referred. The forensic issues so indicating were the ones of unusual difficulty and complexity represented by whether or not at the relevant times it could be shown Mr Foley lacked capacity and the plaintiff knew or ought to have known this, in circumstances where Mr Foley, by the time of the mediation, was suffering from severely impaired cognition, but it was likely the evidence as to his condition at the earlier time of the execution of the MOU was not clear. Further, the matter of any resolution of the dispute at the mediation was of importance not only to the parties to the litigation, but also to the third parties who were the beneficiaries under Mr Foley's will other than the first defendant.
22 I have concluded that a case of inadequacy because of the unusual difficulty, complexity and importance of the subject matter of the mediation has been made out such that the special costs order sought by proposed order 2(a) should be made.
Proposed order 2(b): removal of the limits on getting up for the trial and on the trial
23 Order 2(b) of the defendant's minute is as follows:
(Page 12)
- That the taxation be performed on the basis that:
…
(b) the limit on items 16 and 19 of the Scale be removed …
24 I took this proposed order to be sought under Legal Profession Act 2008 s 280(2)(c). The reference to 'Scale' I took to be to whichever of the 2006, 2008 or 2010 Determinations was relevant to the work in question.
25 Item 16 relates to getting up and is identical in both the 2006 Determination and the 2008 Determination. The 2010 Determination would appear to have no application to work of that nature in this case. The identity is save for the maximum amount shown. The written submissions for the plaintiff state that the order sought as to this item is 'conceded', but also state that the court should set such upper limit 'as appropriate having regard to the scale allowance of $39,650', which is the (higher) maximum in the 2008 Determination.
26 At the hearing before me counsel for the plaintiff clarified the concession. Counsel said that the special costs order was not opposed. However the court should, if it were able to do so, set a limit on the amount claimable (see Legal Profession Act 2008 s 280(2)(b)). As I indicated at the hearing, I do not consider I am able to set such or any particular limit. I now explain why I reached that conclusion.
27 The Sirett affidavit annexes a spreadsheet containing entries the deponent identifies as work covered by item 16. The total of the amounts concerned is substantially larger than that provided in item 16 in the 2008 Determination. Whether, if the item 16 limit were removed, the first defendant's costs would tax out at anything like that amount would be a matter for the taxing officer, not for me. However, I consider I may take account of the affidavit of a legal practitioner, like the Sirett affidavit, in arriving at an opinion as to inadequacy and that makes it difficult for me to conclude that a limit of the sort counsel for the plaintiff contended for should be set: see Green v Wilden Pty Ltd [2005] WASC 83 (S) [182] (Hasluck J).
28 As to the removal of the limit in item 16, I have formed the opinion with the two components described in Heartlink (S) [11], having regard to the Sirett affidavit and the nature of the substantive and the forensic issues in this case as I have characterised them in relation to proposed order 2(a).
(Page 13)
29 I note that the special costs order sought does not make clear whether the limit as to hours spent or the hourly rates of the fee earner concerned or both is to be removed. Special costs orders to uplift all or any limits in relevant Determinations may be sought: see CAT (S) [123] and authorities there cited. Counsel for the first defendant confirmed it was the prescribed limit on hours, not those on hourly rates, that was to be removed. In my view of the materials before me and my knowledge of the matter in the proceedings a special costs order to remove such limits would be appropriate.
30 Item 19 relates to the trial, and it is only item 19 in the 2008 Determination that would appear to be relevant. However, I note that by reason of the date of delivery of the judgment in the action, 30 July 2010, that it is the counterpart to item 19(g) (attending on reserved judgment) in the 2010 Determination, item 20(g), which appear to be relevant to that work. From this point, my references to item 19 should also be taken to include item 20(g).
31 The Sirett affidavit supplies invoices of senior counsel for the trial which in sum show an amount substantially in excess of the total of the amounts for senior counsel in item 19 of the 2008 Determination. Again, whether if the limit for senior counsel were removed the first defendant's costs would tax out at anything like that amount would be for the taxing officer, not for me.
32 Counsel for the plaintiff submitted that a special costs order with respect to item 19 should not be made as it was in substance an application for indemnity costs without an evidentiary foundation. That foundation, counsel put to me, should be a costs agreement. None, and no evidence as to one, had been provided to me.
33 However, the application in respect of item 19 is not put on the basis of an indemnity cost order, and I do not consider that the application is in substance of that kind. For the bases on which indemnity costs orders are made: see Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) [10] (Pullin JA & Kenneth Martin J). None of those bases are invoked here. It seems clear that the matters of any costs agreement and its effect on the taxation of costs in this case would be for the taxing officer, not for me: see Hancock Family Memorial Foundation Ltd v Porteous [2000] WASC 61 [5] (Anderson J), considered in SDS Corporation (S2) [64] - [68].
(Page 14)
34 As to the limit in item 19, I have formed the opinion with the two components described in Heartlink(S) [11], having regard to the Sirett affidavit and to the nature of the substantive and forensic issues in this case as I have characterised them in relation to proposed order 2(a).
35 I note that the special costs order sought does not make it clear whether the limits in item 19 as to hours worked or hourly rates, of which fee earner or earners, is to be removed. Counsel for the first defendant confirmed at the hearing before me that it was the removal of limits on hours, not hourly rates, of the fee earners referred to in item 19 that was sought. In my view of the materials before me, and my awareness of the matters in the proceedings, a special costs order to remove such limits is appropriate.
Proposed order 2(c) and order 2(d): running transcript and allowance for the fees of senior counsel and counsel at trial
36 Order 2(c) and order 2(d) of the first defendant's minute are as follows:
That the taxation be performed on the basis that:
…
(c) the obtaining of a running transcript was justified;
(d) the taxing officer be directed to make allowance for the fees of senior counsel and counsel at trial …
37 I took these orders to be sought under Legal Profession Act 2008 s 280(2)(a). The plaintiff conceded both of them. I would make them.
Proposed order 2(e): additional allowances for preparation by senior counsel and other fee earners
38 Order 2(e) of the first defendant's minute is as follows:
That the taxation be performed on the basis that:
…
(e) the taxing officer be directed to make additional allowances for the preparation of senior counsel, counsel and the lawyers for the defendant, due to breaks in the trial including weekends and that such allowance[s] be additional to any allowance otherwise available …
(Page 15)
39 I took this order to be sought under Legal Profession Act 2008 s 280(2)(d). Counsel for the first defendant acknowledged that what was sought was permission for the taxing officer to determine that an allowance for refreshers should appropriately and reasonably be made beyond those implicitly allowed for in the daily hearing rates in the 2008 Determination item 19. Counsel referred me to breaks in the trial which, as I understood the submission, were such as to require greater time for refreshers than was allowed for in the 10 hours per hearing day in that item in the 2008 Determination. I noted from the Sirett affidavit invoices of senior counsel showing hours worked which included weekends and other hours exceeding the hours provided for in item 19. Again, whether, if the permission were given, the first defendant's costs would tax out at anything like the amount resulting from the additional hours shown would be for the taxing officer, not for me.
40 At the hearing counsel for the first defendant confirmed that the proposed order should be modified to make clear both that only permission to make allowance for refresher work was sought, and that only to the extent the taxing officer determined an allowance should appropriately and reasonably be made beyond 2008 Determination item 19. Counsel for the plaintiff indicated he would not oppose the order so framed, provided that the order was expressed to refer only to senior counsel and counsel. That restriction was on the basis that only those two classes of fee earners were recognised in taxations as appropriately and reasonably doing work of a refresher kind. I note the support to be gained for that proposition (by implication) from Civil Procedure in Western Australia [66.11.12] (as at 12 November 2010). In my view that is an appropriate limitation on the special costs order sought here. However, it is also my view that work that was appropriately and reasonably done in aid of counsel's refreshers by other fee earners is within items 16 and 19 in the 2008 Determination.
41 I note that the proposed order does not clearly indicate whether it relates to hours worked for senior counsel and counsel, or their hourly rates. Counsel for the first defendant confirmed at the hearing that it was hours worked, not hourly rates, for which the allowance was sought.
42 I have formed the opinion with the two components described in Heartlink(S) [11], having regard to the Sirett affidavit and the nature of the substantive and the forensic issues in this case as I have characterised them in relation to proposed order 2(a) with the modifications I have indicated. I would make that order so modified.
(Page 16)
Proposed order 2(f): additional allowance for closing submissions
43 Order 2(f) of the first defendant's minute is as follows:
That the taxation be performed on the basis that:
…
(f) That the taxing officer be directed to make additional allowances (to those otherwise available for the fees of senior counsel, counsel and the lawyers for the defendant) in preparing submissions for the closing of the trial between the parties …
44 I took the proposed order to be sought under Legal Profession Act 2008 s 280(2)(d). Counsel for the first defendant acknowledged that what was sought was permission for the taxing officer to determine that an allowance should appropriately and reasonably be made for work done on the closing submissions by those three classes of fee earners beyond that implicit in the allowance in the 2008 Determination, items 19 and 16. Counsel again referred me to the invoices of senior counsel annexed to the Sirett affidavit showing hours worked beyond those allowed for in item 19; I also took counsel to be referring me to the spreadsheet annexed to that affidavit for work done for getting up including work done after the trial commenced. I return below to the inclusion of preparing closing submissions under item 16, removal of the limit on which I have earlier considered. Again, whether, if the permission were given, the first defendant's costs would tax out to include additional costs by any or all of the three classes of fee earners would be for the taxing officer.
45 At the hearing counsel for the plaintiff indicated to me he would not oppose the order being made if it were framed in terms of a permission to make allowance for work done of that sort, to the extent the items in the 2008 Determination did not already permit this, but with reference only to the work of senior counsel and counsel, not other fee earners. In the view of counsel for the plaintiff, special reference should only be made to the work of counsel. Counsel for the first defendant submitted that if such a change were made to the proposed order, the first defendant would still be in a position to claim costs of other fee earners under item 16, getting up. In my view that is a correct understanding of the scope of item 16. Whether a claim that such work by reference to that item was appropriately and reasonably done would of course be for the taxing officer, not for me.
46 I note that the proposed order does not clearly indicate whether it relates to hours worked for senior counsel and counsel, or their hourly
(Page 17)
- rates. Counsel for the first defendant confirmed at the hearing that it was hours worked, not hourly rates for which the allowance was sought.
47 I have formed the opinion with the two components described in Heartlink(S) [11], having regard to the Sirett affidavit and the nature of the substantive and the forensic issues in this case as I have characterised them in relation to proposed order 2(a). I would make the order sought in proposed order 2(f), with the modifications I have indicated.
Proposed order 4: time from which interest on costs would run
48 Order 4 of the first defendant's minute with corrections made at the hearing is as follows:
Interest to run on costs incurred from the date of payment of those costs on the substantive issues in the action.
49 Counsel for the first defendant, as I understood him, confirmed that this proposed order was intended to apply to costs paid before judgment; for costs paid on or after judgment, the rule I reach next would apply.
50 It appears to be established for this state that, at least as a general rule, interest runs on judgment sums from the date of the judgment, and this includes interest on costs, even although the taxation of costs will occur later. This is the 'incipitur' rule. The rule that interest runs on costs from the date of the certificate of costs, which is the 'allocatur' rule, does not apply in this state. See Civil Judgments Enforcement Act 2004 (WA) s 8(1) read with s 3 'judgment sum'; and Hamdan v Widodo [No 2] [2010] WASC 6 (S) [9] and [13] (Johnson J). Judgment for this purpose is the judgment for costs, which in this case would be the judgment dated 30 July 2010 (see order 5). See Hunt v RM Douglas (Roofing) Ltd [1990] 1 AC 398, 416 (Lord Ackner).
51 It is also established in this state that pre-judgment interest on costs cannot be recovered under Supreme Court Act 1935 (WA) s 32. That provision empowering the court to award pre-judgment interest does not apply to costs: Western Australian Planning Commission v Arcus Shopfitters Pty Ltd [2003] WASCA 295 [115] (McLure J; Anderson & Steytler JJ agreeing). However, that provision would permit the award of pre-judgment interest on costs where they are recovered as damages on a cause of action, such as costs paid to a solicitor which would have been avoided if the solicitor had not breached the solicitor's duty of care and skill as pleaded: see Olympic Holdings Pty Ltd v Lochel [2004] WASC 61 for such an award. On the same basis s 32 would
(Page 18)
- appear to permit the award of pre-judgment interest on costs where indemnity costs are recovered as damages on a cause of action for the tort of abuse of process: see as to the possibility of such an award under Federal Court of Australia Act 1976 (Cth) s 51A, the counterpart of Supreme Court Act s 32, Flower & Hart v WhiteIndustries (Qld) Pty Ltd [2001] FCA 370 [33] (Full Court: Drummond, Dowsett & Hely JJ). However, there is no suggestion in this case of any cause of action for damages in the form of costs to be awarded, let alone the pleading of one.
52 At the same time, it might be argued that Supreme Court Act s 37(1) providing that the 'costs of and incidental to all proceedings' are to be 'in the discretion of the Court or judge' (emphasis supplied) gives the court a discretion to order pre-judgment interest on costs. Arcus Shopfitters, as I understood the judgment of McLure J, left open whether that provision, or indeed any other source of power, such as the court's inherent jurisdiction, gave the court such jurisdiction: see [115]. Her Honour also said this at [116]:
Even if the Court has the jurisdiction to award interest on costs incurred in conducting the action I am not persuaded that the trial Judge erred in the exercise of his discretion. It is currently the case that, absent misconduct by a party, a successful litigant is not compensated for all costs directly incurred in the conduct of the proceedings. There are sound policy reasons for this approach relating to the dynamics of securing an early settlement of proceedings. There is even less justification for compensating a litigant for indirect costs in connection with proceedings such as financing costs. There is nothing in the circumstances of this litigation that would justify the respondent receiving all of its direct costs much less its financing costs. I would also dismiss this ground of the cross-appeal.
53 Circumstances warranting the exercise of any discretion to award pre-judgment interest on costs might be that there is an award of indemnity costs: see Lai v Tiao (No 2) [2009] WASC 22 (S) [73] (Johnson J). However, in this case there is no claim for indemnity costs.
54 Finally, as to whether or not there is a power to award pre-judgment interest on costs, or at least whether or not the court should readily make such an award, I have noted the submission of counsel for the plaintiff that such a power or at least its ready exercise would give rise to difficult questions whose answers would be expected to add significantly to the costs of a taxation. Those questions would seem to be ones that arise where, as might be expected, differing proportions of the costs paid in respect of different work were allowed on the taxation. For those difficulties, and a solution, see Lahoud v Lahoud [2006] NSWSC 126 [84] - [86] (Campbell J). This solution appears to be that followed in New
(Page 19)
- South Wales for orders under Civil Procedure Act 2005 (NSW) s 101(4) and s 101(5), which state that the court 'may order' interest on any amount payable under an order for costs as from the date or dates on which the 'costs concerned were paid' or 'such later date as the court may order'. See Quick R, Quick on Costs, looseleaf, vol 2 [4.10234] (as at Update 55). Of course there is no corresponding legislative provision to Civil Procedure Act 2005 (NSW) s 101(4) and s 101(5) in this State.
55 However, I do not consider that I need to answer the question whether or not I have jurisdiction to award pre-judgment interest, as, approaching the matter on Arcus Shopfitters [116], I do not consider that there are circumstances warranting the exercise of any such jurisdiction.
56 Thus, I would not make proposed order 4, except in terms of the incipitur rule, which as I understand it was the order Johnson J made in Hamdan [No 2]: see [13].
Proposed order 3: the costs of this application
57 Order 3 of the first defendant's minute is as follows:
The Plaintiff pay the costs of this application to be taxed as part of the overall bill.
58 Of course the court has the power to make such an order under its general discretion as to costs in O 66 r 1(1). However, in my view the first defendant has not been successful in respect of all the orders she sought. Applying the approach in Wheeler (574), and having regard to the level of success the first defendant did enjoy, I would order the plaintiff pay 75% of the costs of the present application, to be taxed as part of the overall bill.
Conclusion
59 I will hear from the parties as to the final orders to be made.
0
20
6