Mentha As Receiver and Manager of Westgem Investments Pty Ltd (in liq) v Hughes as Liquidator of Westgem Investments Pty Ltd (in liq)

[2014] WASC 478 (S)

MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq) -v- HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S)

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2014] WASC 478 (S)
Case No:	COR:121/2014	Heard:	ON THE PAPERS
Coram:	MARTIN CJ	Delivered:	26/02/15
No of pages:	8	Judgment Part:	1 of 1
Result:	Application for special costs order allowed in part
Category:	B
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Parties:	MARK FRANCIS XAVIER MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq) CLIFFORD STUART ROCKE as Receiver and Manager of Westgem Investments Pty Ltd (in liq) BOSI SECURITY SERVICES LTD BRYAN KEVIN HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq)
Catchwords:	Costs Special costs order Legal Profession Act 2008 (WA), s 280(2) Importance and complexity
Legislation:	Legal Profession Act 2008 (WA), s 280(2)
Case References:	Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S) Cifuentes v Fugro Spatial Solutions Pty Ltd [2009] WASC 316 (S) EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400 Frigger v Lean [2012] WASCA 66 Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq) -v- HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S) CORAM : MARTIN CJ HEARD : ON THE PAPERS DELIVERED : 26 FEBRUARY 2015 FILE NO/S : COR 121 of 2014 BETWEEN : MARK FRANCIS XAVIER MENTHA as Receiver and Manager of Westgem Investments Pty Ltd (in liq)

CLIFFORD STUART ROCKE as Receiver and Manager of Westgem Investments Pty Ltd (in liq)
First Plaintiffs

BOSI SECURITY SERVICES LTD
Second Plaintiff

AND

BRYAN KEVIN HUGHES as Liquidator of Westgem Investments Pty Ltd (in liq)
Defendant

Catchwords:

Costs - Special costs order - Legal Profession Act 2008 (WA), s 280(2) - Importance and complexity

Legislation:

Legal Profession Act 2008 (WA), s 280(2)

Result:

Application for special costs order allowed in part

Category: B

Representation:

Counsel:

First Plaintiffs : No appearance
Second Plaintiff : No appearance
Defendant : No appearance

Solicitors:

First Plaintiffs : Norton Rose Fulbright Australia
Second Plaintiff : Norton Rose Fulbright Australia
Defendant : William & Hughes

Case(s) referred to in judgment(s):

Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S)
Cifuentes v Fugro Spatial Solutions Pty Ltd [2009] WASC 316 (S)
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
Frigger v Lean [2012] WASCA 66
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2)

MARTIN CJ:

Summary

1 For reasons given orally at the conclusion of the plaintiff's application for the appointment of an additional liquidator to Westgem Investments Pty Ltd (Receivers and Managers Appointed) (in liq) (Westgem) for a specific purpose, I dismissed that application and ordered the plaintiffs to pay the defendant's costs of the application to be taxed if not agreed. I granted liberty to apply with respect to any special orders for costs. The defendant has exercised that liberty and moves for orders pursuant to s 280(2) of the Legal Profession Act 2008 (WA) (the Act) directing the taxing officer to disregard the scale and hourly limits imposed under the applicable cost determination with respect to the originating application (scale item 11(a)), attendance at the hearing by instructing legal practitioners (scale item 11(c)) and taxing including drawing bills of costs (scale items 30(a) and (b)), and further directing the taxing officer to make reasonable allowances for the preparation and attendance at the hearing of the application by both senior and junior counsel and two senior practitioners.

2 Directions were made for the exchange of written submissions and the parties agreed to the determination of the application on the papers. These are my reasons for concluding that the application for a special costs order should be allowed in part.

Section 280(2) of the Act

3 Section 280(1) of the Act provides that the taxation of legal costs is regulated by an applicable costs determination. However, s 280(2) provides:

(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.

4 The principles governing the exercise of the powers conferred upon the court by s 280(2) of the Act are well established. The discretion conferred by the section can (but need not) be exercised if the court is of the opinion first that the amount of costs allowable in respect of a matter the subject of a cost determination is inadequate, in the sense that a limit or other amount imposed by the determination would preclude the presentation of a fairly arguable case for the allowance of costs at a greater amount1 and second, that the inadequacy arises because of the unusual difficulty, complexity or importance of the matter.2

5 When a party moves for an order pursuant to s 280(2) of the Act, the questions arising under the section are addressed as matters of impression rather than science or mathematical precision.3 In some cases it will be necessary to adduce evidence to enable the formation of the requisite opinion. However, in other cases, a court might be able to form the necessary opinion from its knowledge of the case and its circumstances.4 Moreover, it must be remembered that when an order is sought removing limits on costs fixed in an applicable determination pursuant to s 280(2)(c), the order made will do no more than that. Accordingly, the court considering the application for such an order need go no further than determine whether there is a fairly arguable case for the allowance of costs at an amount greater than the amount allowable under the relevant determination - it is for the taxing officer to consider the necessity for the work that was done and the reasonableness of the remuneration claimed.5

The evidence in support of the application

6 The defendant relies on two affidavits which have been filed in support of his application. In those affidavits one of the solicitors engaged by the defendant deposes to the general nature of the work undertaken in opposition to the application and to the costs actually paid by the defendant to his legal advisers for the services and in respect of disbursements incurred by those advisers, which total $227,655.36. Pursuant to item 11 of the costs determination applicable at the time of the hearing, the maximum amount allowable for originating process of this kind heard over one day or less is $35,200, based on two days preparation for hearing and 50 hours preparation of the case, together with an hourly rate for the attendance of a senior practitioner at the hearing. The defendant submits that the costs actually incurred by him reflect the unusual difficulty and complexity of the matter and enable the court to confidently form the opinion that there is a fairly arguable case for the allowance of costs at an amount greater than those limited by item 11 of the applicable costs determination.

7 In amplification of that submission, the defendant points to the volume of the affidavit material filed and served by the plaintiffs in support of their application (which exceeded 1000 pages) and which raised various issues connected with substantive proceedings on foot in this court between these and other related parties, including a substantive claim for damages which is being prosecuted by the defendant in these proceedings against the second plaintiff in these proceedings, and against an associated bank. Because of the relationship between the issues raised in these proceedings, and the substantive issues in those other proceedings, the solicitors representing the defendant in these proceedings engaged the solicitors representing the defendant in those other proceedings to provide advice and assistance, and approximately $48,000 of the total costs incurred by the defendant was incurred in respect of the services provided by those other solicitors.

8 The plaintiffs oppose the orders sought. They assert that it was inappropriate to engage the solicitors acting in the other proceedings to provide services in this matter, and further assert that the amount claimed in respect of the work done by those other solicitors is excessive. They further assert that there was duplication of the work done in preparing the defendant's affidavit in these proceedings, and further assert that as the hearing occupied less than a day, it would not be appropriate to allow appearance fees for both senior and junior counsel for an entire day, and that the travel costs of those counsel should not be allowed. They further submit that the sheer volume of the affidavit upon which they rely in support of their application does not of itself establish that these proceedings were unusually difficult or complex.

Disposition

9 Of course there may be cases in which argument with respect to the particular components of the costs which might properly be allowed on taxation might influence the formation of an opinion as to whether the amount allowable under an applicable costs determination is inadequate, in the sense described in the authorities to which I have referred. However, in this case even if the costs incurred in respect of the services of the legal practitioners acting in the other proceedings to which I have referred are entirely excluded, along with the travel costs claimed in respect of counsel, and allowance is made for the fact that the hearing did not occupy the entire day, the costs actually incurred by the defendant in opposing these proceedings were still more than four times the limit imposed by item 11 of the relevant costs determination. I reiterate that when an application is made for an order with respect to the limit imposed by any relevant costs determination, it is not the function of the court hearing that application to determine precisely what amounts should or should not be allowed - that being the function of the taxing officer - rather the question which the court must address is whether there is a fairly arguable case for the allowance of costs at an amount greater than the limit imposed by the relevant determination. In this case I am satisfied that there is such a fairly arguable case, because of the work actually done by the solicitors and counsel involved in the preparation and presentation of the defendant's case which significantly exceeded the allowances made in item 11 of the scale (two days preparation for hearing and 50 hours preparation of the case). It is neither necessary nor appropriate for me to express any opinion with respect to the particular items of cost to which the plaintiffs refer. Those will be matters properly addressed by the taxing officer if the parties are unable to agree the amount of costs which should be paid.

10 The next question which I must address is whether the inadequacy of the costs which might be allowed under the relevant costs determination arises because of the unusual difficulty or complexity of these proceedings. I have no doubt that, having regard to the general run of matters falling within item 11 of the scale, these proceedings were unusually difficult and complex because of the variety of different and discrete issues which were raised and which are connected with other proceedings pending in this court which are of quite exceptional difficulty and complexity. I am also satisfied that there is a causal connection between the unusual difficulty and complexity of these proceedings, and the inadequacy of the amount which might be allowed under the applicable costs determination, because the amount and extent of the professional work required to properly prepare and present the defendant's response to these proceedings is directly related to their difficulty and complexity.

11 For these reasons, I have formed the opinion required by s 280(2) as a condition of the exercise of the powers conferred by that section. In the circumstances of this case, I can see no reason why I should not proceed to exercise the discretion conferred by the section, and make appropriate orders.

The orders properly made

12 The particular orders sought by the defendant are a little unusual in that they propose that costs be taxed 'without regard to the scale or hourly limits imposed under the relevant legal costs determinations'. I am not prepared to make an order in those terms, as it seems to me that the scale, and the amount formulated by reference to the allowances included within the scale is relevant to the process of taxation. However, I am prepared to make an order under s 280(2)(c) removing the limits on costs fixed in the relevant item of the applicable determination, which is item 11.

13 As I have noted, the defendant also seeks orders lifting the limits applicable with respect to drawing and taxing his bill of costs (scale items 30(a) and (b)). As far as I can see, no evidence or argument has been directed to supporting that aspect of the orders sought, and I am not prepared to make an order in those terms.

14 The defendant also seeks directions with respect to the allowances properly made by the taxing officer, including allowances for the attendance of senior and junior counsel and for two senior practitioners at hearing.

15 As I have no doubt that this was an appropriate case for the engagement of two counsel, I am prepared to make a direction to the taxing officer to that effect. However, in my view the question of whether it was appropriate for two senior practitioners to attend at hearing is a matter better left to the taxing officer than determined by me.

Conclusion

16 For these reasons there will be orders that:

(a) if the costs payable by the plaintiffs to the defendant pursuant to the orders made on 28 October 2014 are taxed, they be taxed without regard to the limit on costs fixed by item 11 of the scale in the applicable costs determination;

(b) the taxing officer is to make reasonable allowances for the preparation and attendance at the hearing by both senior and junior counsel;

(c) the amount of costs properly allowed on taxation is otherwise left to the taxing officer; and

(d) the plaintiffs are to pay the defendant's costs of this application for an order pursuant to s 280(2) of the Act to be taxed if not agreed.

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1Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [16], [22], cited with approval in Frigger v Lean [2012] WASCA 66 [81] (Allanson J, Newnes & Murphy JJA agreeing).
2Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASCA 66 (S).
3EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7].
4Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] - [15], cited with approval by Allanson J in Frigger v Lean.
5Cifuentes v Fugro Spatial Solutions Pty Ltd [2009] WASC 316 (S) [22]; Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, 404.