Pacific Dunlop Ltd v Australian Rubber Gloves
[1993] FCA 562
•17 Aug 1993
CATCHWORDS
COSTS - review of taxation by a judge - two counsel engaged at trial - fees of second counsel disallowed by taxing officer - abolition of "two counsel" rule - role of judge upon review.
Federal Court Rules, Order 15A rules 6 and 12, Order 62, rules
8, 11, 19, 22, 31(a), 43, 44.
Australian Coal and Shale EmDlovees Federation v The
Conmonwealth (1953) 94 CLR 621
Schwes~es Ltd v Archer (1934) 34 SR (NSW) 178 Bush v Condon & Barrett Ptv Ltd (1975) 1 NSWLR 260
Stanlev v Philli~s (1966) 115 CLR 470 PACIFIC DUNLOP LIMITED A.C.N. 004 085 330 v AUSTRALIAN RUBBER GLOVES A.C.N. 050 135 049 No. VG 133 of 1992 Olney J
Melbourne
17 August 1993
REGISTRY
3 0 AUG 1993
FEDERAL COURT OF
AUSTRALIA
PRINCIPAL
f-6 2 93
JUDGMENT No. ....X ........ .... I ........ ....
IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY ) GENERAL DIVISION
) No. VG 133 of 1992 B E T W E E N :
PACIFIC DUNLOP LIMITED
A.C.N. 004 085 330
Applicant
- and -
AUSTRALIAN RUBBER GLOVES
A.C.N. 050 135 049
Respondent
Coram: Olney J Place: Melbourne a:
17 ~ugust 1993 2 0 AUG 1993 FEDERAL COURT OF
MINUTE OF ORDERS
THE COURT ORDERS THAT:
1. The certificate of taxation on reconsideration dated 15 June 1993 be set aside;
2. The bill of costs the subject of the said certificate be
that it was proper for the respondent to engage two remitted to a taxing officer for taxation on the basis counsel; 3. The costs of the application be paid by the applicant.
NOTE -. Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.IN THE FEDERAL COURT OF AUSTRALIA ) VICTORIA DISTRICT REGISTRY 1 GENERAL DIVISION
1 No. VG 133 of 1992 B E T W E E N :
PACIFIC DUNLOP LIMITED
A.C.N. 004 085 330
Applicant
- and -
AUSTRALIAN RUBBER GLOVES
A.C.N. 050 135 049
Respondent
Coram: Olney J Place: Melbourne Date: 17 August 1993
REASONS FOR JUDGMENT
By application filed on 16 April 1992 the applicant sought an order for preliminary discovery under Order 15A rule 6 and also an order under Order 15A rule 12 for inspection of a machine for the manufacture of rubber gloves then used by the
respondent in premises at Braesi.de.
The matter came on for hearing before Heerey J on 14 and 15 May 1992. The applicant was represented by M r D. Shavin of counsel and the respondent by M r P.A. Liddle QC with Mr R.L. Dean of counsel. His Honour reserved his decision and on 25 May 1993 dismissed the application with costs including reserved costs.
The respondent's bill of costs was taxed on 5 and 19 March 1993 by Deputy Registrar Agnew. The bill claimed $52,874.50 comprising $27,381.50 in disbursements and $25,493 in professional charges. It was taxed and allowed at $24,196. Approximately $19,400 of the disbursements were for fees paid to senior counsel which were disallowed.
On 2 April 1993 the respondent sought reconsideration of the decision to disallow some 18 items in the bill. For the most part the items in question related to fees paid to senior counsel. Upon reconsideration the taxing officer affirmed her earlier decision in relation to all but one item which related to an attendance on senior counsel to deliver documents. As to that item the taxing officer allowed the amount claimed as if it related to an attendance on junior counsel.
On 15 June 1993 the taxing officer signed a certificate of taxation on reconsideration, allowing the respondent's bill at $24,215.
The respondent now seeks an order pursuant to Order 62 rule 44(1) to review the decision of the taxing officer on reconsideration and in particular seeks an order that the disallowed items be allowed or alternatively, an order that the items in question be remitted to a taxing officer with a direction that the briefing of two counsel was necessary and proper.
The scheme of Order 62 of the Federal Court Rules in relation to costs ordered by the Court or otherwise payable under the Rules is that, in the absence of some other order, they be taxed allowed and certified by a Registrar (who is referred to as a taxing officer) (0. 62 r. 8). Every taxation of costs and every decision of a taxing officer is subject to review by a judge (0. 6 2 r. 11). Where a taxing officer decides to allow or disallow the whole or part of an item in a bill, unless the parties consent, the taxing officer shall not give a certificate until the expiration of 14 days after the decision. A party who objects to the decision may apply by notice of motion to the taxing officer within the 14 day period to reconsider the decision, in which case the applicant is required to file a statement of objections specifying by a list the items objected to and the nature and grounds of each objection (0. 62 r. 42), and upon such motion the taxing officer is required to reconsider the decision to which objection is made and to give a certificate in accordance with the decision on reconsideration. If requested by a party the taxing officer is required to give reasons for the decision on
reconsideration (0. 62 r. 43).
The taxing officer has given
reasons as required by rule 43. Order 62 rule 44 provides for the procedure to be observed where review of the taxing officer's certificate is sought. The rule provides:
44(1) Where a taxing officer gives a certificate Ln accordance with his decision on reconsideration under rule 43 and pursuant to that rule a party requests the taxing officer to state his reason for the decisron, the Court shall, on motion by any party interested, review the decrsion of the taxing officer on reconsideratron.
(2)
Where, during the time within which a request may be made under rule 43, it becomes impractrcable to make the request by reason of the death or rncapacrty of, or other matter personal to, the taxing offrcer. sub-rule (1) shall apply notwithstanding that a request under rule 43 has not been made.
(3)
Notice of the motion shall be filed within 28 days after the certificate is given, but the Court, or the taxing officer when giving his certificate, may extend the time.
(4) On the review, unless the Court by order otherwrse
directs -
(a) further evidence shall not be received; and (b)
a party shall not raise any ground of objection not either stated rn a statement of objection or rarsed before the taxing officer.
(5) Subject to sub-rule (4), on the review, the Court may -
(a)
exercise all the powers and discretions of the taxing officer in relation to the subject matter of the review;
(b) make orders for the alteration of the certrficate; (C) make orders for the remission of any item to the same or any other taxing officer for taxatron; and
(d)
make such other orders as the nature of the case requires.
Two rules which are presently relevant to the taxation of a
bill of costs are Order 62 rule 19 and Order 62 rule 22 which
provide : 19 On every taxation the taxing officer shall allow all such costs charges and expenses as appear to him to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of a party, but, except as against the party who incurred them, costs shall not be allowed which appear to the taxing officer
to have been incurred or ~ncreased - (a) through over-caution, negligence or mrsconduct;
(b)
by payment of special fees to counsel or special charges or expenses to witnesses or other persons; or
(C) by other unusual expenses.
22 (1) In the case of a fee or allowance which is
discretionary it shall, unless otherwise provided,
be allowed at the discretion of the taxing officer.(2) The taxing officer in the exercise of his discretion shall take into consideratzon -
(a)
the other fees and allowances to the solicitor and counsel, if any, in respect of the work to which such a fee or allowance applies;
(b) the nature and importance of the proceeding; (c) the amount involved;
(d) the principle involved;
(e) the znterest of the parties; (f) the fund, estate or person to bear the costs; (g)
the general conduct and cost of the proceeding; and
(h) all other relevant circumstances.
In her reasons for decision on reconsideration the taxing officer first (in paras 3 to 10) summarised the general nature of the proceeding and the trial judge's reasons for decision. She then made reference (in para. 11) to the substance of the relevant rules and set out in detail (in paras 13 to 48) her responses to each of the particular considerations that
subrule 22(2) calls for. In one respect I think that the taxing officer misconstrued one of the considerations referred to in rule 22(2) in that under the heading of paragraph (a) - the principle involved - she dealt in detail with the principles that have evolved concerning the allowing of fees for two counsel rather than the principle involved in the litigation in respect of which the costs were being taxed. Be that as it may, her
consideration of the other items, particularly those dealing with the nature and importance of the proceeding and the interest of the parties adequately encompasses any considerations that may have been specifically called for under paragraph (d).
The role of a judge upon the review of a taxation of costs has been referred to in numerous authorities. The general
principles applicable were considered by Kitto J in the High
Court in Australian Coal and Shale EmDloveeS Federation v The
Commonwealth (1953) 94 CLR 621 when the Court adopted (at p.
628) the summary of the law made by Jordan CJ in S c h w e u ~ e s Ltd
v Archer (1934) 34 SR (NSW) 178 at pp. 183, 184:
-. -- 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 whrch should be applied; and an error in principle may occur both in determining whether an ~ t e m 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 w h ~ c h he possesses and is purporting to exercise, the Court is reluctant to interfere.
decision even where an exercise of discretion only is involved, It has undoubted jurisdiction to review the Taxing Offrcer's and will do so freelv on a Drover case. usina its own knowledae
of the circumstanc;~: iesEern ~ustralian Bank v. oval 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 aeneral interfere onlv 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.
In the instant case the dispute is not as to the quantum of
the costs allowed in respect of the disputed items but rather as to whether it had been "necessary or proper for the attainment of justice or for maintaining or defending the
rights" of the respondent for 2 counsel to have been engaged. The judge dealing with the review application is in no better or worse position than the taxing officer to make that judgment. This is not one of those aspects of the taxation of costs which is peculiarly within the special knowledge and experience of the taxing officer. Indeed, the trial judge is the most appropriate person to determine the issue and in some jurisdictions in Australia the question of whether allowance should be made for two counsel is dealt with by the trial judge at the time the order for costs is made. But that is not the system that applies in this Court.
In earlier times the question of whether fees for a second counsel should be allowed depended in some cases on whether or not it was appropriate for senior counsel to be engaged but since the abandonment of the "two counsel rule" by some of the major bar organisations. The fact that the taxing officer may consider that the engagement of senior counsel was appropriate
counsel should be allowed on taxation. should not necessarily mean that the cost of having a second Order 62 rule 31(a) provides that on a taxation on a party and party basis the costs of briefing more than one counsel may be allowed notwithstanding that none is one of Her Majesty's counsel. The commentary to this rule in the Butterworths publication Hiah Court and Federal Court Procedure asserts (at para. 50,435.1):
The test to be applied by taxing officers in decxding whether or not to allow two junior counsel is not the same as that applied when deciding whether or not to allow senior (and, in consequence, junior counsel).
This statement is followed by an extract from the judgment of Sheppard J in Bush v Condon & Barrett Ptv Ltd (1975) 1 NSWLR 260 at p. 263 where his Honour said:
... there wall arise in litigation two quite distinct classes of case. In one will be xnvolved the question whether or not it is appropriate to braef two counsel, whether one be a senior or not. In the other, the question will be whether or not it is appropriate to brief senxor counsel, the case not bexng one which otherwise justifies two counsel. If the case xs of the latter kind it will follow, even if the case is not one otherwise appropriate for two counsel, that it will be appropriate to brief two counsel, provided one of them is senior counsel, because of the rules which prevent senior counsel appearing alone. I wish, therefore, to record my disagreement with the conclusion drawn by the taxxng officer that the same considerations apply m both types of case.
. . . Sheppard J had earlier referred to passages from the joint judgment of Taylor and Owen JJ in Stanlev v Philli~s (1966) 115 CLR 470 at pp. 485, 486 and Menzies J in the same case at p. 489, 490 which support his conclusion.
Without in any way attempting to dissent from the views expressed, it does seem that the considerations which gave rise to their Honours' conclusions no longer apply. With the abolition of the two counsel rule there seems to be no longer a basis upon which to assert that there should be any distinction between the principles applicable upon taxation of costs between a case where senior and junior counsel have appeared and a case in which two junior counsel have appeared. In my opinion, the question to be asked is now the same in
both set of circumstances, namely, whether the costs charges and expenses incurred in employing two counsel have been necessary or proper for the attainment of justice and for maintaining or defending the rights of the party in question.
It is not possible to discern from the taxing officer's reasons on reconsideration the precise basis upon which she approached the question of whether or not to allow costs for two counsel. The statement in paragraph 28:
The rmportance of this proceeding is less obvious when viewed in the light of all other proceedings commenced in this court.
I accept that the jurisdrction in intellectual property matters
is specialised. I accept also that there are practitioners and counsel who specialise in Federal Court practice and procedure.I consider there is no shortage of experienced able solicitors
and junior counsel to handle such matters. The applicant did . - - not corner the market in experienced senior juniors by
retaining Mr Shavin of counsel.
suggests that she had in mind the question of whether the case was one appropriate for the engagement of senior counsel whereas her statement at paragraph 28, where she said:
applicant only abandoned some allegations or at least decided It appears from pages 8 and 10 of the judgment that the not to rely on some evidence at the hearing. This does not mean that the respondent drd not have to be prepared to meet them, either by attacking the applicant's evidence or by adducing its own evidence in opposition. However, I consider when these features are combined they still do not make it reasonably necessary or proper that the services of two counsel be engaged in order that the court may do justice between the parties.
suggests that she was considering only whether or not two counsel were reasonably necessary, although in the context of
the earlier statement this is probably not the case.
The rules of court entitle a dissatisfied party to have a taxation of costs and every decision of a taxing officer reviewed by a judge. A review is not an appeal and in the absence of any guidance from the rules it is appropriate that the review be conducted as if the judge were the original decision-maker. This is particularly so in the case of the exercise of power pursuant to Federal legislation in view of the constitutional limitations on the exercise of Federal judicial power. The numerous judicial determinations made in respect of reviews conducted under similar rules are of course helpful but ultimately, it is for the reviewing judge to come
- - to a conclusion as to what is necessary and proper in a particular case. Accordingly, I have approached the question of whether or not the costs should have been made allowance for the engagement of two counsel upon the material available and in accordance with the obligations of the taxing officer
prescribed in Order 62 rule 22. There do not appear to have been any other fees paid to counsel in respect of the work to which the claimed fees or allowances applies. The material does show that both senior and junior counsel were in fact paid considerably more than the maximum fee allowable on taxation but I do not think that this has any bearing upon the necessity or proprietary of engaging two counsel.
The nature of the proceeding has already been referred to. To the applicant it was clearly a matter of considerable importance. It wanted to inspect its commercial rival's machinery and to have discovery of documents relating to the construction of the machine before instituting proceedings for breach of copyright. The importance to the respondent of resisting the applicant's action must be judged as being at least as great and probably, in the circumstances, even greater than the importance of the proceedings to the applicant.
There was no identifiable amount of money involved in the proceedings. The machine in question was obviously something of considerable substance and although its value is of little importance the fact that the respondent was about to carry out $500,000 worth of improvements to it is indicative of the order of magnitude involved. The real value of the machine lay in the fact that without it the respondent's business
would come to a standstill. There was indeed a question of principle involved in the proceeding namely the principle that the ordinary right of an individual (or corporation) to maintain prior to the commencement of proceedings, the confidentiality of its property should not be infringed except in the exceptional circumstances provided for in the rules of Court. As it happened the respondent successfully resisted the applicant's attempted intrusion.
There is no question that the parties had a vital interest in the proceedings. They are commercial rivals and so far as the respondent was concerned it had a substantial interest in attempting to prevent the applicant's attempt to gain knowledge of its manufacturing process and equipment.
The two parties were both acting in their own respective interests and paragraph (f) of rule 22(2) has no relevance.
The general conduct of the proceedings on the applicant's part suggests that the respondent was, from the outset, placed at a considerable disadvantage. Initially the applicant had indicated that it was contemplating that the applicant wished to take proceedings for misuse of confidential information but when it came to take proceedings the applicant only referred to the possibility of a claim for infringement of copyright, and no explanation was ever given for this change of course. The case involved substantial affidavit evidence of a
witnesses, a mechanical engineer, produced a list of the technical nature. One of the applicant's scientific alleged copying features of the respondent's machine, but the applicant abandoned the list. As to the cost of the proceeding, it must be borne in mind that the applicant instituted the application and supported it with substantial evidence. Clearly it considered the cost involved to be worthwhile. Given the circumstances, I do not think that the cost of the proceeding, large though they be, was a matter for serious consideration of either side. Much more important issues were at stake.
In my view it is a relevant circumstance that the proceedings involved a highly technical area of law. The ordinary lay client when faced with the prospect of first having to allow its machinery and related documents to be inspected, and then possibly to be faced with an action for misuse of confidential information and breach of copyright would want the best available legal and technical advice. This was not an everyday type of procedure. It needed to be approached with considerable planning and attention to detail and this is particularly so as the hearing was brought on expeditiously.
Having regard to all of the circumstances of the case it was proper that the respondent be represented by two counsel. The volume and complexity of the material put before the Court in support of and in response to the application justified the engagement of two counsel.
The appropriate order is that the certificate of the taxing officer be set aside and the bill of costs be remitted to a taxing officer for taxation on the basis that it was proper for the respondent to engage two counsel. I contemplate that it may be necessary for some items in the bill other than those specifically referred to should be reassessed. It appears from the reasons of the taxing officer that the fees to counsel which were allowed on the basis of only one counsel may not necessarily be appropriate in respect of second
counsel i f the b i l l i s taxed on the bas i s I have directed. I c e r t i f y that t h i s and the preceding 13 pages are a true copy o f the Reasons for Judgment of the Honourable Mr Just ice Olney
Dated: 17 August 1993
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Mr N. Lucarelli (instructed by Messrs Freehill Hollingdale &
Page) appeared for the applicant.
MS J.E. Richards (instructed by Davies Ryan De Boos) appeared for the respondent.
Date of Hearing: 29 July 1993 Place: Melbourne Date of Judcrment: 17 August 1993
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