Mercer v Western Australian Planning Commission [No 2] - [2010] WASC 46

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: MERCER -v- WESTERN AUSTRALIAN PLANNING COMMISSION [No 2] [2010] WASC 46

CORAM: BEECH J

HEARD: ON THE PAPERS

DELIVERED : 10 MARCH 2010

FILE NO/S: CIV 2597 of 2004

BETWEEN: ROBERT WILLIAM MERCER
RICHARD TAUNTON SAUNDERS
MICHELLE JONNINE McALLISTER
CRAIG DOUGLAS McALLISTER as Executors of the Estate of MABEL JOYCE PALMER
Plaintiffs
AND
WESTERN AUSTRALIAN PLANNING COMMISSION
Defendant

Catchwords:

Practice and procedure - Costs - Questions referred by taxing officer to the court - Proper construction of costs order - Turns on own facts

Legislation:

Nil

Result:

Questions answered

Category: B

Representation:

Counsel:

Plaintiffs: No appearance
Defendant: No appearance

Solicitors:

Plaintiffs: Norton Rose Australia
Defendant: State Solicitor for Western Australia

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

Mercer v Western Australian Planning Commission [2008] WASC 124
Mercer v Western Australian Planning Commission [2008] WASC 124(S)
Weiss v Clayton Utz (1993) 114 FLR 159

BEECH J:

Introduction

Jenkins J heard and determined the plaintiffs' application for compensation for their interest in land taken under the Land Administration Act 1997 (WA): Mercer v Western Australian Planning Commission [2008] WASC 124. Her Honour heard oral applications in relation to the costs of the action. She delivered written reasons for her decision in relation to costs: Mercer v Western Australian Planning Commission [2008] WASC 124(S).
Her Honour's orders included an order (the Costs Order) in the following terms:
The defendant pay 65% of the plaintiffs' costs of the action to be taxed if not agreed having regard to the following special costs orders:
(a)the limits contained in items 7 (discovery), 16 (getting up) and 19 (trial) in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2006 (WA) and other relevant determinations be removed;
(b)costs be allowed in respect of the plaintiffs' expert opinion and advice including time spent in court, advising on the defendant's counterpart expert opinion;
(c)there be a certificate for the transcript; and
(d)all reserved costs be allowed to the plaintiffs.
In the course of the taxation of costs pursuant to the Costs Order, the Registrar conducting the taxation referred two questions to the court under the Rules of the Supreme Court 1971 (WA) O 66 r 45. That rule permits the taxing officer, of his own motion, to refer any question arising in the course of a taxation for the direction of the court.
Two questions are referred:
(1)Does the 65% of the plaintiffs' costs in [the Costs Order] extend to all special costs orders in [pars] (a) to (d) inclusive of [the Costs Order] or is the 65% limited to [par] (a) only? and
(2)If the 65% applies to [pars (a) to (d) inclusive], does the taxing officer allow 65% of fees of the plaintiffs' experts' opinions as claimed or does the taxing officer assess the reasonableness of those fees and then reduce them by 35%?
The parties have filed written submissions.

Question 1

The plaintiffs submit that the effect of her Honour's Costs Order was that the defendant pay 65% of the plaintiffs' legal costs, but 100% of the plaintiffs' costs of the expert opinion, the transcript and reserved costs (ie the items in pars (b), (c) and (d)).
The defendant submits that the 65% applies to all costs in the proceedings, including those referred to in pars (a), (b), (c) and (d).
I accept the defendant's submission, essentially for the reasons advanced in the defendant's written submissions.
In my opinion, the ordinary meaning of the Costs Order is that the special costs orders sets out in pars (a) to (d) will affect the determination of the 'plaintiffs' costs of the action' and the defendant will then pay 65% of the plaintiffs' costs of the action. The opening words of the Costs Order are entirely general: The defendant pay 65% of the plaintiffs' costs of the action.
The plaintiffs concede that the items referred to in par (a) are part of the costs and therefore governed by the opening words, but submit that pars (b) to (d) are different. In my opinion, the language and structure of the Costs Order does not support that submission.
The point is perhaps clearest when par (d) of the Costs Order is considered. Reserved costs are, beyond question, part of the 'plaintiffs' costs of the action'. Thus the reserved costs allowed to the plaintiffs under par (d) are part of the subject matter of the opening words of the Costs Order. So too, in my opinion, are the orders in each of the other paragraphs in question.
This construction is supported by other aspects of the language of the Costs Order. The orders in pars (a) to (d) are referred to in the opening words as 'the following special costs orders'. In other words, they are referred to as 'costs' orders. Moreover, par (b) is in terms that 'costs' be allowed in respect of the plaintiffs' expert opinion. Thus the fees of the expert opinion are characterised, in the order, as being 'costs'. This reinforces the construction that the fees of the expert were part of the 'plaintiffs' costs of the action'.
In my opinion, this construction of the order is sufficiently clear that there is no occasion to have regard to her Honour's reasons for the Costs Order. However, in any event, her Honour's reasons seem to me to reinforce the construction I have adopted.
Her Honour first considered the relevance of offers that had been made, concluding that in light of the offers the plaintiffs should be awarded their costs. Paragraphs [42] to [46] of her reasons are in the following terms:
For these reasons, I am of the view that the plaintiffs should be awarded their costs. However, I am also of the view that having regard to one particular issue on which the plaintiffs were unsuccessful, I should only allow them a percentage of their overall costs.
The issue to which I refer is whether the land ought to have been valued in accordance with Mr Dix's novel method of valuation by which he compared the potential lettable or leasable area of the subject land with the actual or potential lettable area of other land in the Perth CBD (Mr Dix's valuation method). From [158] - [185] of my reasons I analysed and ultimately rejected Mr Dix's method of valuation. I do not think that the plaintiffs should be deprived of their costs of pursuing the acceptance of Mr Dix's method of valuation simply because it was not accepted by me. I am of the view that the plaintiffs should be deprived of their costs in this respect because Mr Dix's method of valuation was not just unacceptable, it was unreasonable. Given the opinions of the valuers which I have already referred to, it is apparent that Mr Dix's method of valuation produced a valuation which was nearly twice that of the plaintiffs' second valuer, three times the valuation I accepted and over four times that of the defendant's valuers. That is one indication of the untenable and unreasonable nature of Mr Dix's method of valuation. Further, it was a method which had been criticised by Barker J in Clifford v Shire of Busselton [2007] WASAT 89 and a method which was not supported by any of the other three valuers presented by the parties. Mr Dix also attempted to support his valuation by reference to Reed R G, (ed) The Valuation of Real Estate (12th ed, 2007) 350 - 351. I noted that the text book suggested that Mr Dix's method of valuation was an appropriate method for valuing offices. The text did not support Mr Dix's method of valuation for land, such as the subject land, that was unlikely, in the short to medium term, to be used for offices and was not developed for use as offices. Finally, I noted that Mr Dix had valued the subject land at significantly more per square metre than any improved or unimproved property in the Perth CBD which had been relied upon by any of the four valuers, and which had sold in the four or so years proceeding the date of taking. I found that such a value was unwarranted [183].
The usual rule as to costs permits a judge to take into account an otherwise successful party's failure in respect to a particular issue in determining an appropriate costs order: Hughes v Western Australian Cricket Association Inc (1986) ATPR 40-748, 48, 136. The power of a judge to do so is put beyond doubt by O 66 r 1(3) which states that:
Where a party though generally successful in an action has, by the introduction of some issues or issues on which he has failed, increased the costs the Court may order such party to pay the costs of such issue or issues.
Having found that the plaintiffs should generally have their costs, I would not deprive them of costs in respect to a particular issue simply because they failed in respect to it. It is to be expected that even a successful party will fail in respect to some issues which it raised during the course of proceedings: Cretazzo v Lombardi (1975) 13 SASR 4, 12. However, I consider that the plaintiffs' case, so far as it related to Mr Dix's method of valuation, was unreasonable and this should have been obvious to the plaintiffs and their advisors. For this reason they should be deprived of their costs in respect to it. This is particularly so as the plaintiffs' attempt to prove the validity of Mr Dix's method of valuation and the valuation itself took up a considerable amount of time during the course of the trial and, without doubt, significantly increased the costs of the action. Not only were there costs related to Mr Dix's evidence but there were also the costs of the plaintiffs' town planner, Mr Adams, which, in part, related to proof of Mr Dix's valuation. That is, in order to utilise his method of valuation, Mr Dix relied upon substantial work that Mr Adams did in order to determine the gross lettable area of various properties Mr Dix used for comparison purposes and of a hypothetical development on the subject land. In addition to the plaintiffs' costs in respect to these matters, the defendant spent a considerable time in evidence, disputing the validity of Mr Dix's method of valuation and questioning the assessments of Mr Adams. I note that Mr Adams' evidence took approximately 2 1/2 days and Mr Dix's evidence took approximately two days. Whilst not all of their evidence related to proof of Mr Dix's method of valuation, it is pertinent to note that their combined evidence took approximately 4 1/2 days out of a total of 5 1/2 days of evidence in the plaintiffs' case.
Whilst it would be possible for me to order that the plaintiffs' costs exclude the costs of proof of Mr Dix's method of valuation and to order that the plaintiffs pay the defendant's costs of disputing Mr Dix's method of valuation, in my view the fair and efficient approach is simply to allow the plaintiffs a percentage of their overall costs of the action. Thus, I would order that the defendant pay 65% of the plaintiffs' costs of the action.
A number of features of her Honour's reasons reinforce the construction I have adopted. Her Honour says that having regard to the issue on which the plaintiffs were not successful, she allowed them a percentage of 'their overall costs': See [42] and [46]. That is plainly intended to encompass the fees of the expert. That is reinforced by the second consideration. The reason for allowing 65%, not 100%, of the costs in favour of the plaintiffs was her Honour's conclusion that the plaintiffs' pursuit of Mr Dix's unacceptable, unreasonable and untenable method of valuing was unreasonable and should have been obvious to the plaintiffs and their advisers. Given that reasoning, it would make no sense for the 35% reduction not to apply to the expert fees ‑ the very subject matter that had led to the reduction.
Further, what her Honour said in [46] appears to me to put the position beyond any doubt. In that paragraph her Honour contemplated excluding the costs of proof of Mr Dix's method of valuation from the plaintiffs' costs order but decided not to do so, preferring to allow the plaintiffs a percentage of their overall costs. That seems to me to make it quite clear that her Honour considered Mr Dix's fees to be encompassed within the overall costs that her order governed.
The plaintiffs submit that her Honour had before her a draft bill of costs, and thus information about legal costs, but no evidence in relation to expert fees. Accordingly, the submission continues, her Honour must have intended the percentage only to apply to professional legal costs. I do not accept the logic of that submission. The percentage reduction was not based upon her Honour's view of the amount of the legal fees. Rather, as I have said, it was based upon the issue on which the plaintiffs had failed and on which her Honour considered the plaintiffs' approach to have been unreasonable.
The plaintiffs' written submissions refer to Weiss v Clayton Utz (1993) 114 FLR 159. That case was concerned with a question of costs between solicitor and client. It does not seem to me to provide any assistance to the proper construction of her Honour's orders.

Question 2

The plaintiffs submit that it would be 'double dipping' for the 65% figure to be applied before or after a consideration and potential reduction of the fees by the taxing registrar. Rather, the plaintiffs' written submissions contend, the plaintiffs are entitled to 65% of the fee, without any taxation.
With respect, I am unable to discern any sensible basis for that submission. The language of the Costs Order provides no support for it. Moreover, such an approach to the allowance of costs would, in my opinion, be so extraordinary and unlikely to be intended that very clear words to that effect would be required before I would adopt such a construction. In circumstances where there was, as the plaintiffs' written submissions point out, no evidence before the court as to the quantum of the expert fees, it would seem a most unusual exercise of discretion for a court to order that the plaintiffs be awarded 65% of whatever that expert had charged, without any review of the reasonableness of the amount.
For the reasons I have already given, I read the Costs Order as contemplating that the expert fees are part of the costs of the action. Consequently, they are part of what is to be the subject of taxation if not agreement.
In my opinion, the plain meaning and effect of the Costs Order in relation to expert fees is as follows. A reasonable fee is determined by taxation (if not agreement) in respect of the plaintiffs' expert opinion and advice, including time spent in court advising on the defendant's counterpart expert opinion. When the reasonable fee is determined accordingly, the defendant must pay 65% of that fee, as part of the plaintiffs' costs of the action.

Conclusion

I would answer the questions as follows:
(1)The 65% of the plaintiffs' costs referred to in the opening words of the Costs Order applies to all of pars (a) to (d) inclusive of the Costs Order.
(2)The taxing officer assesses the reasonableness of the expert costs referred to in par (b) of the Costs Order and then, by the opening words of the Costs Order, the defendant must pay 65% of the reasonable expert costs as assessed.