Moore v Downer EDI Engineering - Projects Pty Ltd
[2010] WADC 121
•16 AUGUST 2010
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS
LOCATION: PERTH
CITATION: MOORE -v- DOWNER EDI ENGINEERING - PROJECTS PTY LTD & ANOR [2010] WADC 121
CORAM: BOWDEN DCJ
HEARD: 13 AUGUST 2010
DELIVERED : 16 AUGUST 2010
FILE NO/S: CIV 386 of 2008
BETWEEN: JOHN ADAM MOORE
Plaintiff
AND
DOWNER EDI ENGINEERING - PROJECTS PTY LTD
First DefendantLYCOPODIUM ENGINEERING PTY LTD
Second DefendantLAMPSON (AUSTRALIA) PTY LTD
Non-Party
Catchwords:
Review of taxation of the bill of costs of a non-party - Taxation under an order for indemnity costs - Costs incurred partly interstate - No written costs agreement or special order for costs - Indemnity costs are limited by the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008
Legislation:
Legal Practice Act 2003 (WA)
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008, cl 3, cl 9, cl 9(2)
Rules of the Supreme Court (1971) (WA), O 66
Result:
Application for review of taxation dismissed with costs
Representation:
Counsel:
Plaintiff: No Appearance
First Defendant : Mr Shervyn
Second Defendant : No appearance
Non-party: Mr S Forbes
Solicitors:
Plaintiff: Not applicable
First Defendant : CCS Insurance Law
Second Defendant : Not applicable
Non-party: Talbot Olivier
Case(s) referred to in judgment(s):
Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271
Collins v Westralian Sands Ltd (1993) 9 WAR 56
EMI Records Ltd v Ian Cameron Wallace [1983] 1 Ch 59
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95
Forbes v Frigger [2009] WASC 77
Moore v Downer EDI Engineering – Projects Pty Ltd & Anor [2010] WADC 42
Moore v Downer EGI Engineering ‑ Projects Pty Ltd & Ors [2009] WADC 24
Stobbart v Mocnaj [1999] WASC 252
Unioil International Pty Ltd and Ors v Deloitte Touche Tohmatsu (a firm) and Ors, unreported; SCt of WA; Library No 970491; 19 September 1997
BOWDEN DCJ:
Introduction - the action
The plaintiff was a trades' assistant employed by the first defendant at a nickel mine occupied, managed and controlled by the second defendant. He sued the first and second defendant seeking damages for personal injury sustained at the mine site while unloading a crane cable from its drum.
The plaintiff alleged the first and second defendant caused his injuries by their negligence, breach of contract and breach of statutory duty
The non‑party proceedings
In the course of those proceedings, the first defendant's solicitors wrote to the non‑party requesting copies of certain documents.
The non‑party's solicitors requested an undertaking from the first defendant to pay their reasonable costs of locating the documents. This undertaking was given.
The first defendant subsequently wrote to the non‑party in August and October 2008 requesting the documents. No reply was received. The first defendant then filed a summons dated 31 October 2008 seeking discovery from the non‑party.
The summons came before the Court on 18 November 2008. The non‑party's counsel handed the court 10 pages of written submissions and the matter was adjourned to a special appointment of 25 November 2008. On 19 November 2008 consent order adjourning the chamber summons and vacating the special appointment were filled.
The action between the plaintiff and the first defendant was settled on 10 December 2008 and accordingly there was no need for the latter to proceed further with the summons for discovery.
An order for Indemnity costs
The non‑party applied to the Court for an order the first defendant pay its costs. Both agreed the first defendant should pay costs to the non‑party. The first defendant said those costs should be on a party to party basis, the non‑party says they should be on an indemnity basis.
On 18 February 2009 argument was heard before Deputy Registrar Hewitt. On 20 February 2009 he ruled the cost payable were to be paid on an indemnity basis save where those costs were of unreasonable amount or unreasonably incurred (Moore v Downer EGI Engineering ‑ Projects Pty Ltd & Ors [2009] WADC 24). There was no appeal from this decision.
The non‑party says as a result of the reasons for decision, no application was made for a special costs order to increase the maximum allowance provided by Item 10(a) of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2008 (herein after referred to as "the Determination"). This is a clear reference to par [9] of Deputy Registrar Hewitt reasons were he said:
"… additionally if, as appears to be the case, the Supreme Court scale does not apply to the circumstances of this application, and bearing in mind that the non‑party, its solicitor and counsel are all located in New South Wales, it is difficult to see any other basis upon which costs could be awarded."
Irrespective of these remarks it was the non‑party's decision to apply for an indemnity costs order. They could have applied for a special costs order or both. They are bound by the consequences of their decision.
The Bill of Costs, Taxation and Review by the taxation officer
The non‑party duly filed a bill of costs and the matter came before Deputy Registrar Hewitt for taxation on 15 October 2009. The first defendant applied for Deputy Registrar Hewitt to excuse himself because they wished to argue the Determination applied and that costs could not be recovered in excess of the scale provided within the Determination.
Deputy Registrar Hewitt disqualified himself on the basis that in light of his comments referred to above, it could be inferred he had already made up his mind.
Accordingly the taxation was re‑listed before Deputy Registrar Harman on 25 November 2009 and concluded on 21 December 2009. Deputy Registrar Harman decided "recovery was limited by Item 10A of [the Determination]" and allowed costs at $9,937.99 whereas the non‑party had claimed $34,709.55.
Pursuant to O 66 r 53 the non‑party objected to this taxation and applied to the taxation officer to review the taxation.
Pursuant to O 66 r 54 Deputy Registrar Harman reconsidered and reviewed the taxation on 23 March 2010 and provided written reasons for his decision on the objection (Moore v Downer EDI Engineering – Projects Pty Ltd & Anor [2010] WADC 42).
Deputy Registrar Harman confirmed his earlier ruling and found at [4]:
"… According to cl 9 [of the Determination], absent an agreement, the costs recoverable by a party to a proceeding shall not exceed the amounts set out in the table that it introduces. There was no such agreement. Item 10A of the table specifies the maximum recoverable for the relevant service."
and at [10]:
"… It [the non‑party] was entitled to recover for the cost of those services only to the extent that the item in the scale would permit."
Review by a Judge
Pursuant to O 66 r 55 the non‑party, being dissatisfied, applied to a Judge in chambers for an order to review the taxation.
O 66 r 55(2) provides that:
"The Judge, if of the opinion that the Taxing Officer has made an error in principle, may thereupon make such order to rectify the error as the Judge thinks fit."
Accordingly I am only able to allow the review if I am of the opinion the taxation officer has made "an error in principle".
The "error in principle" alleged
I was greatly assisted by the thorough and succinct written and oral submissions from both counsel.
The non‑party says the "error in principle" was to "misinterpret" the order of Deputy Registrar Hewitt and hold costs recoverable by the non‑party were limited by the scale provided in the Determination. They also submit that the non‑party was not a party to the proceedings and its costs are not limited by the Determination.
The first defendant says there is no "error in principle" because the combined effect of s3, s 210 and s 215 of the Legal Practice Act 2003 and cl 3,8 and 9, of the Determination mean the costs of or in relation to a party of the action shall not exceed the amount set out in the Determination and therefore the costs recoverable by the non-party are costs prescribed in the determination.
They argue unless there is a written costs agreement or special costs order a practitioner has no lawful entitlement to recover from the client a sum larger than the costs allowed by the determination scale. Stobbart v Mocnaj [1999] WASC 252. A non‑party by analogy, it is submitted, is in exactly the same position as the plaintiff in Stobbart v Mocnaj (supra) and therefore the non‑party's solicitors cannot recover more than the non party is legally liable to pay and that is the amount in the Determination.
Costs in general
Section 215 of the Legal Practice Act 2003 [the Act] provides, subject to written costs agreement made under s221, taxation of bill of costs of legal practitioners as between legal practitioner and client or party and party and any other aspect of the remuneration of legal practitioners the subject of the determination, is regulated by a legal costs determination in force under s 210.
Section 215(2) allows the court in certain circumstances to order costs higher than those fixed by the determination.
Order 66 r 11 provides solicitors are entitled to charge and be allowed the fees set forth in any relevant scale in respect to the matters referred to in that scale (in the absence of any written agreement).
The relevant scale referred to is within the Determination, which is a determination in force under s 210.
Clause 3(1) of the Determination, provides the Determination applies, inter alia, to the remuneration of practitioners in respect of contentious business carried out by practitioners in or for the purpose of proceedings before the District Court. It does not apply to the remuneration of practitioners with a written costs agreement cl 3(3).
There is no written agreement as to costs in this case.
Clause 3(1) is sufficiently wide to apply to the remuneration of practitioners in respect of contentious business carried out by practitioners for the purposes of proceedings before the District Court whether as a party or non‑party. A chamber summons for discovery involving a non‑party is "proceedings before the District Court". Therefore I find the Determination does apply to the legal costs of a non‑party.
Clause 8 provides references to practitioners in the Determination include all legal practitioners even if the services are rendered in another state. Pursuant to the Legal Practice Act (2003), s3, legal practitioners include interstate practitioners who practice in this State
Clause 9(1) provides, subject to a written agreement as to costs and the provisions of subclause (2), the costs of or in relation to a party to an action or other proceedings recoverable by one party from another party or payable by a party to that party's own practitioner shall not exceed the amount set out in the Table (except as otherwise provided in item 32 of the table).
As was recognised by Hasluck J in Forbes v Frigger [2009] WASC 77, [56]:
"… There is a tension between those provisions which appear to allow to the court a broad discretionary power to award costs including a power to override costs scales in special or complex cases and certain other provisions which suggest that the costs recoverable are prescribed essentially by the operative scale and in the absence of any explicit order purporting to set aside the requirements of the scale any special benefit by way of indemnity costs is to be governed by the language used in the relevant costs determination and related scale."
The effect of cl 3, 8 and 9 of the Determination and s 215 of the Act means if a legal practitioner performs work relating to proceedings before the District Court of Western Australia, the remuneration for that work is provided by the Determination unless there is a special costs order or a written costs agreement.
In Western Australia there is no distinction between party and party costs and solicitor and client costs payable by a third party Collins v Westralian Sands Ltd (1993) 9 WAR 56, Forbes v Frigger (supra) at [69].
Indemnity costs
Indemnity costs in many jurisdictions cover "all costs except insofar as they are unreasonable amounts or have been unreasonably incurred" EMI Records Ltd v Ian Cameron Wallace [1983] 1 Ch 59.
The first defendant says the costs actually incurred were mainly in New South Wales, being the location of their head office and lawyers, therefore an indemnity costs order should provide fully indemnity for those costs .
This submission overlooks the long established principle in Western Australia whereby indemnity costs have less significance due to the effect of various statutory provisions. This was recognised in Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271 at 284, Unioil International Pty Ltd and Ors v Deloitte Touche Tohmatsu (a firm) and Ors, unreported; SCt of WA; Library No 970491; 19 September 1997 and Collins v Westralian Sands Ltd (supra).
In Stobbart v Mocnaj Parker JA held:
"An order for costs to be taxed on an indemnity basis … is in my view necessarily an order that the party should indemnify the other party to the extent of that party's legal liability to pay costs. … If there is no legal liability at all, there is nothing to indemnify. If there is a statutory limit to the liability that is the extent of the indemnity … hence in my view if a party has not incurred costs in the normal sense of incurring a binding legal liability to pay costs there would be nothing to indemnify".
Parker J held that in the absence of a written costs agreement, the legal practitioners had no lawful entitlement to recover from the plaintiff any amount greater than allowed by the appropriate costs scale. The costs scale set the legal liability of the plaintiff to his solicitors.
Therefore the Determination generally sets remuneration to be paid to legal practitioners for work performed. Legal practitioners may recover amounts in excess of the determination only by entering into a written costs agreement (s 215, 221 of the Act and cl 9 of the Determination) or obtaining a special costs order (s 215 of the Act).
If an indemnity costs order is obtained then in accordance with Stobbartv Mocnaj (supra) in the absence of a written costs agreement or a special costs order the indemnity relates to the costs which the client is legally liable to pay to his solicitors and in accordance with Stobbartv Mocnaj those costs are limited to the scale set by the Determination.
Therefore the scale does limit the amount of costs recoverable by the non‑party even with an indemnity costs award and even when the legal services are performed partly in another state. The costs cannot exceed the scale amounts unless there is a written costs agreement or special costs order.
If a legal practitioner renders services in another state for the purposes of proceedings before the District Court of this state the costs recoverable by that practitioner are limited by the appropriate costs scale set for this State (cl 8 of the Determination) unless there is a written costs agreement or special costs order. To hold otherwise could result in costs for proceedings before a court of this state being determined by tribunals and or legislation of another state. This result is to be avoided.
Some of the comments of Hasluck J in Forbes v Frigger (supra) may appear to be inconsistent with my ruling. Hasluck J's comments are, in my opinion, confined to the peculiar circumstances of that case and in particular relate to item 32 of the scale and his Honour who referred to Stobbart v Mocnaj and quoted it with approval was certainly not intending to dissent from the long held principles of that case.
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122(S); (2003) 28 WAR 95 adds support for the view that if you wish to obtain cost orders which exceed the scale of costs provided by the determination it is appropriate to apply for a special costs order.
His Honour Justice Pullin noted the increasing number of indemnity cost orders [12] and stated:
"An indemnity costs order will not be made if the costs would be covered by an order for party and party costs or by a special costs order" (at 11).
It is not to be thought I am suggesting in all cases of an application for discovery involving a non‑party indemnity costs ought to be awarded.
Another course of action would have been to adopt the procedure referred to by Pullin J in Flotilla Nominees Pty Ltd (supra) and apply for a special costs order. In those circumstances an indemnity costs order may not have been required. This would have been a preferable approach, particular for discovery applications involving a non-party.
No error in principle established
No error in principle has been established.
I am of the opinion Deputy Registrar Harman was correct.
In the absence of a special costs order or written costs agreement, an order for indemnity costs does not allow the costs payable to exceed those allowed under the Determination scale irrespective of whether those costs are incurred in this state or another.
Orders made
I make the following order:
1.The application for review is dismissed.
2.The non‑party pay the first defendant's costs.
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