Palermo v Palermo [No 2]
[2014] WASC 6 (S)
•9 APRIL 2014
PALERMO -v- PALERMO [No 2] [2014] WASC 6 (S)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 6 (S) | |
| Case No: | CIV:2544/2013 | 14 MARCH 2014 | |
| Coram: | McKECHNIE J | 9/04/14 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Special costs order made | ||
| B | |||
| PDF Version |
| Parties: | JOHN PALERMO ANTHONY PALERMO |
Catchwords: | Costs Whether a special costs order should be made Whether determination inadequate Whether matter of importance |
Legislation: | Legal Profession Act 2008 (WA), 280 Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) |
Case References: | Heartlink Ltd v Jones As Liquidator of H L Diagnostics Pty Ltd (in liq) [2007] WASC 254(S) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Plaintiff
AND
ANTHONY PALERMO
Defendant
Catchwords:
Costs - Whether a special costs order should be made - Whether determination inadequate - Whether matter of importance
Legislation:
Legal Profession Act 2008 (WA), 280
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA)
Result:
Special costs order made
Category: B
Representation:
Counsel:
Plaintiff : Mr H H Jackson
Defendant : Mr B H Taylor
Solicitors:
Plaintiff : Gadens Lawyers
Defendant : Rockwell Olivier
Case(s) referred to in judgment(s):
Heartlink Ltd v Jones As Liquidator of H L Diagnostics Pty Ltd (in liq) [2007] WASC 254(S)
1 McKECHNIE J: John sought a declaration as to the non-existence of an alleged partnership by notice of originating motion dated 11 October 2013. The action proceeded to trial.
2 The action would have been far better commenced by writ and follow the normal course of pleadings. However, for reasons to do with John's terminal illness, the course adopted was appropriate.
3 Unlike many motions for a declaration however this involved a contested hearing over five days including the examination and cross-examination of witnesses.
4 On 23 December 2013 I gave judgment for John and ordered that Tony pay John's costs to be taxed if not agreed including a certificate for second counsel if necessary.
5 By letter dated 29 January 2014, the solicitors for John applied for a special costs order pursuant to the Legal Profession Act 2008 (WA) s 280(2).
6 The Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 provides a rate for Motions and originating process:
2 days preparation; 1 day hearing and preparation of case - 50 hours 33,110.
For 2nd and each successive day of hearing 3,630.
The issue
7 Should the taxing officer be directed to tax the costs without regard to the upper limit of the determination?
8 Before making a special costs order:
• the court must be of opinion that the amount of costs allowable is inadequate;
• because of unusual difficulty, complexity or importance.
The amount is inadequate
9 The affidavit of Lee Christianson dated 24 February 2014 deposes:
10. The total amount of time spent by a senior practitioner to prepare for trial is 124.4 hours, which exceeds the 50 hours allowed for under item 11 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) (Item 11) by 74.7 hours. Item 11 makes no allowance for a junior practitioner's time to prepare for trial.
11. Subject to my supervision, approximately 40.3 and 22.4 hours were spent by a senior and junior practitioner respectively to attend the trial. Item 11 does not make an allowance for the attendance of a junior practitioner to attend the trial.
12. The total amount spent by a senior practitioner to prepare and attend trial is 164.70 hours, which under the maximum allowable rate of $451.00 under clause 8 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) amounts to $74,279.70.
13. The total amount spent by a junior practitioner to prepare and attend trial is 63.70 hours, which under the maximum allowance rate of $319.00 under clause 8 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) amounts to $20,320.30.
10 The maximum hourly and daily rates are set out in cl 8 of the Determination. The fees billed to John exceed $340,000 including fees for senior and junior counsel.
11 'The question is whether the limit … which would be imposed if I do not grant the application sought, would be inadequate because it would preclude [John] from advancing to the taxing officer a fairly arguable case that their bill should tax at an amount greater than that': Heartlink Ltd v Jones As Liquidator of H L Diagnostics Pty Ltd (in liq) [2007] WASC 254(S) [22] (adapted).
Conclusion
12 In all the circumstances the total amount allowable under the Determination does not reflect the amount of work I judge necessary for each party to have performed in this action. Whether the full amount already expended is reasonable I cannot judge. But John has established a fairly arguable case that the bill should be taxed at an amount greater than that allowed in the Determination.
Unusual difficulty, complexity and importance
13 John's submissions as to importance, complexity and unusual difficulties are as follows:
18. The subject matter of the proceedings was of considerable importance to both parties.
19. At its heart, the proceedings concern whether or not Anthony Palermo has a right to share in the assets of various business undertakings as a partner in equal shares with John or whether Anthony's rights are limited to his status as a beneficiary under various trusts.
20. That is a matter of considerable importance to the parties and their families, particularly in light of John's terminal illness and the implications for distribution of funds upon his death. Further, the sums involved are very considerable.
21. The importance of the proceedings to the parties in turn informed their approach to the preparation for the proceedings, including the filing of voluminous materials which in turn contributed to the unusual difficulty and complexity of the case, particularly in light of the 'fast tracking' of the hearing of the matter.
22. The affidavit of Anthony Palermo sworn 11 December 2013 comprised 8,883 pages (including annexures). The affidavit of John Palermo sworn 10 October 2013 was more than 1,000 pages (including annexures). Several other affidavits were also filed or otherwise relied upon.
23. The very considerable volume of that material, particularly in light of the expedited nature of the proceeding, warrants a finding that the matter was of unusual difficulty or complexity, when assessed against the usual run of cases.
24. For these reasons, the case was important, complex and unusually difficult and it is for those reasons that there is an arguable case that the Plaintiff's bill will tax at an amount greater than the ceiling imposed by Item 11 of the Scale.
14 Tony's submissions are:
[T]hat] the scale limits actually anticipate a one day hearing in the first instance and then if it proceeds beyond that there is an entitlement to recover for both counsel and instructing solicitors for subsequent days of hearing. … an entitlement under Item 11 of the Scale, so that would be dealt with in accordance with the Scale.
15 Tony also submits that the certificate for second counsel provides for an increase in the ability to recover costs.
16 Tony submits that the action started in October and had a short shelf life and was all over by 23 December 2013. There were three full hearing days and two half hearing days.
17 There were four affidavits relied upon by John together with a responsive affidavit.
18 Counsel for Tony submits that the fact that the case is said to be important between the parties is not enough because the link actually required there to be a causal connection between the significance of the matter or the importance and the inadequacy of the scale limit. The fact that it was important did not cause the matter to make the limits of the scale inadequate, it was the volume of the material:
That would have been the thing that caused it to increase so we would say there is no causal connection between importance and any problem with the limit of the scales.
19 Counsel referred to my comments at trial that this was a simple case.
20 It is submitted that if I did make an order then it should simply increase the scale in Item 11 for the preparation and the first day of trial by an amount to be decided by me.
21 In response John's counsel submitted that the causal link demonstrates that the importance and complexity are intertwined. Complexity arises because of the very short period between originating process and trial and the fact that the judge regarded the case as simple did not mean that it was not necessary to consider all possibilities rather than just assuming that the straightest way home will be adopted.
22 The court should not usurp the position of a Taxing Master and set a different scale.
Conclusion
23 I am not persuaded that the litigation was particularly complex or unusually difficult. I am satisfied that the action was important for the reasons outlined in John's submissions pars 19 - 21. The concept of importance was determined in Heartlink:
17. … Heartlink submits that the criterion of importance cannot be met having regard to the interests of the parties only, but must, in order to be satisfied, import an element of importance to the community.
18 I cannot see any reason in policy or principle why the word 'importance' should be construed in this way. If it had been the intention of the legislature to require the court to give consideration to an issue of community or public importance, then I think it would have been reasonable to expect the legislature to use words that would connote that meaning, such as the well-known phrase 'public importance' which is found in a number of other legislative provisions.
19 It seems to me that by reference to 'importance' in this context, the legislature is allowing the court to have regard to the question of whether the work done was appropriate to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally. In this case, the issues raised were of considerable significance to the liquidators in the practice of their profession, and in respect of whom serious allegations were made.
24 Counsel for Tony criticised this concept, pointing out that all litigation is important to the parties.
25 The Heartlink construction has been followed consistently by the General Division and the Court of Appeal. I am not prepared to depart from it.
26 Applying that construction, the litigation was important within the meaning of Legal Practitioners Act s 280. The issues raised are of fundamental importance to both John and Tony. Any inadequacy arising from application of the Determination is not made good by attendance on successive days or the certificate for second counsel.
Conclusion
27 A special costs order will be made directing the Taxing Officer to tax the plaintiff's costs without regard to the times and amounts specified in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 Schedule 1, Item 11, cl 9.
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