McPhee v Pebble Beach Holdings Pty Ltd
[2013] WASC 314
•14 AUGUST 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: McPHEE -v- PEBBLE BEACH HOLDINGS PTY LTD [2013] WASC 314
CORAM: McKECHNIE J
HEARD: 10 MAY 2013 AND DETERMINED ON THE PAPERS
DELIVERED : 14 AUGUST 2013
FILE NO/S: LPA 38 of 2012
MATTER :IN THE MATTER of an Application under s 297 of the Legal Profession Act 2008 (WA) for assessment for a Bill of Costs by a law practice
BETWEEN: MICHAEL JOHN McPHEE
Applicant
AND
PEBBLE BEACH HOLDINGS PTY LTD
Respondent
Catchwords:
Costs - Noncontentious business - Reasonable costs
Legislation:
Legal Profession Act 2008 (WA), s 303
Solicitors Costs Determination 2011
Result:
Review allowed
Matter remitted for reassessment
Category: B
Representation:
Counsel:
Applicant: Mr M J McPhee
Respondent: In person
Solicitors:
Applicant: M J McPhee Barrister and Solicitor
Respondent: In person
Case(s) referred to in judgment(s):
Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621
Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178
McKECHNIE J:
A bill of costs is lodged
The applicant is a solicitor engaged by the respondent to draw a commercial lease and car parking licence for premises in Ventnor Avenue, West Perth.
The lease and licence were for terms of five years for a total rent or consideration of more than $1.2 million with provisions to the same effect as an earlier lease and licence drawn by a different solicitor.
The documents were completed to engrossment stage but instructions were withdrawn on 25 May 2012. The correspondence suggests some acrimony but does not affect any entitlement for the solicitor to be paid a proper sum.
The solicitor rendered bills for $8,308.88 including GST and the respondent paid only $1,365.32.
The solicitor submitted a bill of costs for taxation amounting to $13,852.
After a hearing on 22 November 2012 the solicitor left the bill with the taxing officer for assessment. The bill was taxed at $3,036. The registrar allowed no amount for instruction fee and disallowed many specific claims for work that had been done. The solicitor filed a notice of objection but was unsuccessful on review. The registrar did not alter the bill.
The registrar's reasons were:
(a)in taxing the Bill, I reviewed the Practitioner's files and allowed an amount which I considered reasonable in total for the preparation of the lease and the car parking licence;
(b)this was a standard commercial lease and car parking licence, the terms of which had already been the subject of a prior lease. I accept that it was not simply a matter of reproducing the earlier lease and car park licence and this is reflected in the amount allowed upon taxation;
(c)I had reference to the Solicitors Costs Determination 2011 (Determination). The amounts allowed in clause 15 Item 4 are maximum amounts allowable. A taxing officer has a discretion to allow a lesser amount or no amount for this Item;
(d)in the list of objections the Practitioner cites clause 9 of the Determination as authority for the proposition that 'the Practitioner is entitled to charge for instructions on the instruction fee set out in Item 4.' I do not accept this proposition. Item 9 allows the Practitioner, where it is acting for both Lessor and Lessee, to only charge for instructions in relation to the Lessor. It is not authority for the proposition that the taxing officer does not have a discretion to allow a lesser (or in fact no) amount for taking instructions;
(e)I remain satisfied that a reasonable amount in total for the drafting of the lease and car parking licence, taking instructions and correspondence in relation thereto is $3,036.00.
The allocuteur was signed on 8 April 2013.
The application for review
On 22 April 2013, the plaintiff lodged an application for review on grounds:
1.A reasonable instruction fee be allowed for the preparation of the lease within the item allowed in the scale, and for the car parking licence associated with such lease;
2.A reasonable allowance be allowed for work done relating to the preparation of the lease, in addition to work done in the actual preparation of it;
3.The filing fee be amended to take in the amendments to the bill pursuant to such review;
4.The Defendant pay the Plaintiff's costs of the Application for Review.
The matter was listed for a directions hearing on 10 May 2013. The solicitor appeared for himself and Mr Sandro Monaco wished to appear for the respondent as he had done before the registrar. In view of the correspondence, which indicated his role in giving instructions, I raised no issue to his appearance, despite the normal rule that corporations must be represented by a lawyer. I made orders for the filing of submissions and authorities, anticipating a hearing. The respondent failed to comply with the orders and has filed no response to the solicitor's submissions which were filed in time.
The solicitor asked for the matter to be determined on the papers.
The taxing officer's discretion
In Australian Coal and Shale Employees' Federation v The Commonwealth (1953) 94 CLR 621, Kitto J (at 628 – 629) adopted the summary of the law made by Jordan CJ (Harvey CJ in Eq & Street J concurring) in Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178:
In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances: Western Australian Bank v Royal Insurance Co (1908) 7 CLR, at p 388; Clark, Tait & Co v Federal Commissioner of Taxation (1931) 47 CLR 142, at pp 145 ‑ 146, but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case.
The issues
1.Was the registrar obliged to allow an instruction fee, or some portion of it? Yes.
2.Was the registrar in error in disallowing items when there was no issue the work was done? Yes.
The costs determination
The Legal Profession Act 2008 (WA) s 303 provides:
A taxing officer must assess the amount of any disputed costs that are subject to a costs determination by reference to the determination.
The costs determination applicable is the Solicitors Costs Determination 2011.
'Instructions' are defined in the Schedule as follows:
In relation to items 1 to 5 includes the initial attendance when instructions are taken; and all subsequent attendances at which instructions are taken which ought properly to have been taken at the initial attendance [4].
Paragraphs 5, 6, 7 and 9 of the determination relevantly provide that:
5.(1) This determination applies to the maximum remuneration of practitioners in respect of any work carried out by a practitioner not being of a contentious nature and which is not governed by any other determination of the Legal Costs Committee under section 275 of the Legal Profession Act 2008.
…
6.Unless a practitioner has made a written agreement as to costs with a client under the provisions of the Legal Profession Act 2008, the costs payable by the client to the client's practitioner shall not exceed an amount that is reasonable in the circumstances, that amount to be calculated on the basis of -
(a)the instruction fees and other fees for specific items set out in items 1 to 6 of the Table; and
(b)the time reasonably taken to perform the work referred to in item 7, charged at an hourly rate that does not exceed the hourly rates set out in that item; or
...
7.Subject to cluses 8 and 9, where a practitioner lawfully acts for both parties to a transaction, the practitioner may charge either the instruction fee fixed in relation to the sale or the instruction fee fixed in relation to the security, but not both.
...
9.(1) Where a practitioner lawfully acts for both the lessor and the lessee in respect of a lease or an extension of lease, the practitioner is entitled to charge for instructions only the instruction fee set out in item 4 in relation to a lessor.
(2)For the purposes of calculating the instructions fees set out in item 4 -
(a)where a term of a lease exceeds 12 years but does not exceed 26 years - the instruction fee shall be calculated on the basis of the rent payable during the first 12 years of the lease;
(b)where the term of the lease exceeds 26 years - the instruction fee shall be calculated on the basis of the rent payable during the first 15 years of the lease;
and for this purpose the term 'rent' -
(c)includes any moneys payable as a premium for the granting of the lease;
(d)does not include any moneys payable or reserved under or by the least in respect of -
(i)rates and taxes whether by way of reimbursement of the lessor or otherwise; or
(ii)expenditure incurred by the lessor in the conduct or management of the lease and premises or of any other property of which the leased premises forms part.
Item 4 referred to in paragraph 9 is as follows:
ITEM 4 - INSTRUCTIONS TO ACT ON A LEASE, SUB-LEASE, ASSIGNMENT OF LEASE OR EXTENSION OF LEASE OF PROPERTY (REAL OR PERSONAL OR BOTH)
Ref
Party
Consideration ($)
Maximum Amount (as a %)
401
Lessor/Sub-Lessor
1-20,000
20,001 or more
0.80%
0.40%
402
Lessee/Sub-Lessee
1-20,000
20,001 or more
0.40%
0.20%
403
Assignor/Assignee
1-20,000
20,001 or more
0.40%
0.20%
What is to be payable is an amount that is reasonable in the circumstances. It follows that a registrar may make a decision that allows less than the maximum amount in the determination. In that respect I agree with the registrar.
However, the reasonable amount is to be calculated on the basis of the instruction fee and time reasonably taken.
By disallowing the entire instruction fee, the registrar has erred in principle because the overall assessment of reasonableness is not 'based on' the instruction fee. Consequently, the deduction of the whole amount in Item 1 is wrong.
Where the registrar has made deductions for Items 2 ‑ 6, I am not prepared to interfere. There is no error of principle. The registrar with greater experience in assessing bills has made a judgment.
Items 7 ‑ 32 are claims for work that had been done. They have been completely disallowed.
If some items had been allowed or reduced, I would have concluded that the registrar had made an assessment of the reasonableness of the amount having regard to the work actually done or the work reasonably necessary. A taxing officer must bear in mind the overall reasonableness of the bill in relation to work done. A bill may be 'padded' by extra or unnecessary work. But the excision of all the amounts claimed when it does not appear in issue that the work was actually performed indicates that the registrar did not assess reasonableness on the basis of time reasonably taken to perform the work but on the overall conclusion that the sum of $3,036 in total was a reasonable amount.
This is an aspect of the same error of approach which overlooks the assessment of the reasonableness of the bill calculated as to time reasonably taken.
The registrar's conclusion in effect is that no time was reasonably taken. That is not right.
I uphold the review, set aside the allocuteur and remit the bill to a different registrar to be taxed in accordance with these reasons.
Although the respondent attended at the directions hearing to oppose the bill, it took no further part in proceedings. I will not make a costs order against it but will direct the taxing officer to allow a reasonable fee for the costs of preparing and taxing the bill, taking account of all the circumstances.
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