McDonald v State of South Australia - [2020] SASC 112

SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
MCDONALD v STATE OF SOUTH AUSTRALIA
[2020] SASC 112
Judgment of The Honourable Justice Lovell
26 June 2020
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - REGULATED COSTS: GROSS OR FIXED COSTS, LUMP SUM ORDERS OR CAPPING ORDERS AND LIKE MATTERS
The plaintiff brought two interlocutory applications. The first application was dismissed as an abuse of process. The plaintiff sought to withdraw the second application, after judgment was reserved.
The defendant applied for its costs to be awarded on a lump sum basis.
Held, granting the application:
1. This is an appropriate case in which the discretion to award costs on a lump sum basis should be exercised.
Supreme Court Civil Rules 2006 (SA) s 264(5)(c), referred to.
Cornwall & Ors v Rowan (No 4) [2006] SASC 111; Harrison v Schipp (2002) 54 NSWLR 738; Beach Petroleum NL v Johnson (1995) 57 FCR 119, considered.

MCDONALD v STATE OF SOUTH AUSTRALIA
[2020] SASC 112
LOVELL J.
Background

These proceedings have a long history. The plaintiff, Mr McDonald, is an unrepresented litigant. He filed an originating summons and statement of claim in this action on 16 April 2004. The action proceeded to trial and Justice Anderson delivered judgment on 21 May 2008 in favour of the plaintiff. The judgment was successfully appealed to the Full Court. The plaintiff’s cross‑appeal was dismissed and costs were awarded against him. The plaintiff sought special leave to the High Court but was refused. The plaintiff has sought to litigate the same subject matter in other jurisdictions (including in the Federal Court and the Worker’s Compensation Tribunal).
FDN 160 – Application to set aside Justice Anderson’s judgment
On 12 February 2018, the plaintiff filed an interlocutory application seeking that the Court “re-open the Appeal … based on new, fresh, and compelling evidence which was not available to the Applicant at the time Justice Anderson gave his decision in 2008”. The defendant, the State of South Australia, applied for summary dismissal of that application on the bases that it was vexatious, oppressive and an abuse of process of the Court by re-litigation. The matter was argued before Justice Vanstone, who dismissed the plaintiff’s application as an abuse of process.[1] On 28 March 2018, Justice Vanstone ordered the plaintiff to pay the defendant’s costs in relation to the application.
[1] McDonald v State of South Australia [2018] SASC 41.
FDN 173 – Application for new trial
On 16 September 2019, the plaintiff filed an interlocutory application, dated 13 September 2019, seeking that the matter be set down for a new trial pursuant to s 48(2)(a)(i) of the Supreme Court Act 1935 (SA). The defendant notified the plaintiff of its intention to apply for the application to be summarily dismissed.
On 26 November 2019, I heard argument as to whether the application should be summarily dismissed. I reserved my decision. On 11 December 2019, the plaintiff advised that he wanted to discontinue his application. On 17 December 2019, the plaintiff made an application to discontinue his application in open court. At that hearing, I indicated that I would allow the plaintiff to withdraw his application in due course, subject to an order as to costs.
FDN 174 – Application for costs
By interlocutory application dated 6 February 2020, the defendant seeks that its entitlement to costs in respect of FDN 160 and 173 be assessed on a lump sum basis pursuant to r 264(5)(c) of the Supreme Court Civil Rules 2006 (SA). As annexures to the affidavit filed in support of the application, the defendant has set out its estimated costs in relation to each application. The defendant seeks to limit its claim for costs to the following:
·counsels’ fees for the period of 28 February 2018 to 28 March 2018 and 8 October 2019 to 26 November 2019 calculated applying the Supreme Court Indicator to Counsel Fees hourly rate of $300.00; and
·solicitor costs for the period of 15 February 2018 to 28 March 2018 and 16 September 2019 to 26 November 2019 applying the Crown Solicitor’s Office hourly rate.
The plaintiff argues that he is not liable to pay the defendant’s costs as FDN 160 and 173 were filed on “false and misleading information provided by … the Registry”. In any event, the plaintiff argues that costs should be determined at the conclusion of the proceedings (once his Notice to Appeal received on 13 September 2019 has been determined).
Discretion to award costs on a lump sum basis
The Court may, in the exercise of its discretion as to costs, award costs on any basis the Court considers necessary. In exercising its discretion, the Court may award costs by way of a lump sum.[2]
[2] Supreme Court Civil Rules 2006 (SA) r 264(5)(c).
In Cornwall & Ors v Rowan (No 4),[3] the Full Court set out the principles relevant to an award of costs by way of a lump sum:[4]
A number of authorities indicate that it is appropriate to order a lump sum payment in one or more of the following circumstances:
(1)In long and complex cases where the question may more conveniently be dealt with by way of lump sum rather than taxation;
(2)Where full recovery of taxed costs is not anticipated or is questionable;
(3)In matters where the taxation process is likely to be costly and protracted. This may be because of the length and complexity of the case as in paragraph (1) above or because of the behaviour of one of the parties.
(Footnotes omitted)
[3] [2006] SASC 111.
[4] Cornwall & Ors v Rowan (No 4) [2006] SASC 111 at 4 [12] per Bleby, Besanko and Sulan JJ.
As to how the lump sum is to be assessed, Giles JA in Harrison v Schipp said:[5]
Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson (at 124), the gross sum “can only be fixed broadly having regard to the information before the Court”; in Hadid v Lenfest Communications Inc (at [35]) it was said that the evidence enabled fixing a gross sum “only if I apply a much broader brush than would be applied on taxation, but that … is what the rule contemplates”. The approach taken to estimate costs must be logical fair and reasonable (Beach Petroleum NL v Johnson (at 123); Hadid v Lenfest Communications Inc (at [27]). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported) per Clarke JA).
[5] (2002) 54 NSWLR 738 at 743 [22].
In exercising the discretion to award costs as a lump sum, the Court must be confident that the approach taken to estimate costs is logical, fair and reasonable. As was stated by von Doussa J in Beach Petroleum NL v Johnson,[6] and cited with approval by the Full Court in Cornwall:[7]
… On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimate submitted to the Court: Leary v Leary.
(Footnotes omitted)
Consideration
[6] (1995) 57 FCR 119 at 123.
[7] Cornwall & Ors v Rowan (No 4) [2006] SASC 111 at 5 [15] per Bleby, Besanko and Sulan JJ.
Should costs be awarded against the plaintiff in respect of FDN 173?
The plaintiff sought to withdraw his application for a new trial after the defendant provided written and oral argument as to why the application should be summarily dismissed. For this reason, the plaintiff is liable to pay the costs incurred by the defendant in responding to the application for a new trial and in bringing the application for its summary dismissal.
Should costs be awarded on a lump sum basis?
These proceedings commenced in 2004. Although the defendant is seeking costs for work completed in response to two interlocutory applications, the lengthy nature of these proceedings and the substantial volume of materials likely meant that the work required by the defendant was complex. Given the history and nature of these proceedings, the taxation process will, in all likelihood, be costly and protracted. The plaintiff is unlikely to meet the amount claimed by the defendant; the costs involved in a taxation of costs are unlikely to be recovered. It is in the interests of efficiency that this matter is dealt with without a lengthy taxation process. For those reasons, this is an appropriate case in which the discretion to award costs on a lump sum basis should be exercised.
Assessment
The defendant seeks an order for costs against the plaintiff in the sum of $20,150.30, representing:
·costs of Crown Counsel for the period 28 February 2018 to 28 March 2018 to 8 October 2019 to 26 November 2019 equalling $7,800.00; and
·solicitor costs for the period 15 February 2018 to 28 March 2018 and 16 September 2019 to 26 November 2019 equalling $12,350.30.
The defendant seeks an award of costs on a party/party basis only. The amount claimed is exclusive of GST as SAicorp is registered with the Australian Taxation Office for any GST liability. In assessing the costs to be awarded on a lump sum basis, the Court need not undertake a lengthy taxation exercise. While it may be preferable to have an independent costs expert review the charges and perform some random sample checks, the absence of such evidence does not preclude an award of costs on a lump sum basis. The likelihood that an amount would be reduced on taxation may be translated into a discount. A natural starting point is the “actual detailed accounts rendered by the solicitor to the client”.[8] The defendant has provided an itemised bill of the services rendered by the solicitor in respect of the applications. The accounts for work performed by the solicitor were based on a time charging system by reference to the Crown Solicitor’s hourly rate. The difficulty in assessing a lump sum award where the Court has been provided with a bill prepared on a time charging system was explained in Cornwall:[9]
… The accounts for work performed by solicitors, while giving a general description of the nature of the work performed, were based entirely on a time charging system, the rate depending upon which solicitor at which level performed the service. However, the relevant schedules of costs prescribed in the Supreme Court Rules are principally item-based. Relatively few are time-based. Without more, that presents an immediate difficulty for a Court asked to assess a lump sum which is logical, fair and reasonable.
[8] Cornwall & Ors v Rowan (No 4) [2006] SASC 111 at 6 [19] per Bleby, Besanko and Sulan JJ.
[9] Cornwall & Ors v Rowan (No 4) [2006] SASC 111 at 5 [17] per Bleby, Besanko and Sulan JJ.
However, a comparison can be made between the rate charged by the defendant’s solicitor and the rate allowed under the relevant scale. The rates applied by the defendant in respect of solicitor fees are below the rates in the Supreme Court scale for items which may be charged on a time basis. The defendant has applied the mid-range to lower end of the Supreme Court indicator in estimating counsel fees. The counsel costs are largely confined to drafting written submissions and court attendances. I am satisfied that in general they are properly charged and recoverable. There is more uncertainty over the solicitor costs, which have been charged for a wider variety of tasks.
A reasonably broad axe must be taken to the figures to ensure that a conservative figure is fixed and the outcome is fair to the plaintiff. Given the apparent reasonableness of the rates charged and the fact that the items appear to have been reasonably necessary, it is appropriate to allow a discount in the order of 30% on the solicitor fees and 10% on the counsel fees. An appropriate figure is $15,000.
Orders
1The plaintiff’s interlocutory application dated 16 September 2019 (FDN 173) is withdrawn.
2The plaintiff is to pay the defendant’s costs in respect of FDN 160 and 173 in the amount of $15,000.