Perkins and Anor v Viney and Ors No. Scciv-99-1088

PERKINS AND ANOR v VINEY AND ORS
[2003] SASC 142

JUDGE BURLEY. By notice dated 26 March 2003 the plaintiffs have applied for an order:
“1To set aside or otherwise reconsider the Allocatur dated 13th March 2003 obtained by the fourth defendant.”
The background to this application is that the action was brought by the plaintiffs against the defendants to recover monies in respect of alleged insolvent trading. The action proceeded to trial before me in July 2001. At the commencement of the trial, it was announced that a settlement had been reached between the plaintiffs and the first, second and third defendants. The trial then proceeded between the plaintiffs and the fourth defendant. Judgment was delivered on 1 November 2001. On that occasion the following orders were made:
“1Judgment for the plaintiffs against the fourth defendant in the sum of $106,312.00 inclusive of interest.
2That the fourth defendant pay 25% of the plaintiffs’ costs of action up to but not including the first day of trial and that the fourth defendant pay the plaintiffs’ costs of the trial.”
The fourth defendant appealed against that decision to the Full Court. The appeal was successful. On 21 November 2002, the Full Court made the following orders:
“1That the appeal be allowed.
2That the judgment against the appellant be set aside, and an order substituted that the respondents’ claim be dismissed.
3That the respondents pay the appellants’ costs of and incidental to the appeal to be taxed.”
The costs of the appeal have been agreed between the parties and paid by the plaintiffs. The question of the costs of action (including the costs of trial) has not been resolved.
After the Full Court decision, the fourth defendant sought to recover the costs of action from the plaintiffs and correspondence ensued between the parties. Copies of the correspondence have been exhibited to the affidavit of Mr Taylor, the fourth defendant’s solicitor, which was sworn on 11 March 2003. Exhibit 1 is a letter from Mr Taylor to the plaintiffs’ solicitor dated 13 December 2002. Mr Taylor said:
“On a further reading of the Rules, it appears that Rule 101.02(1) applies. The appeal was successful. Therefore the whole of the trial judgment, including the costs order, have [sic] been set aside. There is no order to the contrary and therefore our client is automatically entitled to costs.
If you disagree with this, it would appear that you would have to apply to the Court for an order to the contrary. We shall assume that you will not be doing this and shall proceed with the preparation of a short form bill of costs.”
SCR 101.02(1) is as follows:
“101.02(1) Subject to these Rules, the costs of and incidental to a proceeding shall follow the event unless the Court otherwise orders.”
The argument before me proceeded on the assumption by all parties that where the Full Court allowed the appeal and set aside the judgment that had been entered by me against the fourth defendant, the Full Court thereby set aside the order for costs made by me. I am content to proceed to a determination of the application before me on the basis of such an assumption.
On 28 January 2003 the fourth defendant’s short form bill of costs was served on the plaintiffs’ solicitors. The bill referred to the costs of action including the costs of trial. A minor correction to the bill was made by letter of 14 February 2003 from the fourth defendant’s solicitor to the plaintiffs’ solicitors.
By letter dated 17 February 2003 (Exhibit WFT5), the plaintiffs’ solicitors responded as follows:
“Our client disputes your short form bill of costs in its entirety.
Judge Burley ordered the costs of the trial to be paid by your client. On appeal, your client sought to vary that order. The appeal was allowed but no variation to the order of the trial judge concerning costs was made.[[1]] On the contrary, your counsel applied for and obtained an order for costs of the appeal but no order was made in respect of the costs of the trial.
You have subsequently sought to rely upon Rule 101.02 of the Supreme Court Rules which provides, inter alia, that costs of a proceedings [sic] shall follow the event unless the court otherwise orders. Our response to your assertion is that:-
1It is not clear whether this Rule applies to appeals. There are good reasons why it would not.
2In any event, the court has made an order on costs, that is, confining the same to the costs of the appeal. The parties are entitled to proceed on the basis of the order that is actually made.”
[1] This contention was not pursued at the hearing of this application. The plaintiffs by their counsel accepted that the costs order made on 1 November 2001 was set aside by the Full Court.
There followed in a letter a number of other objections taken which include the following passage:
“Finally, the only member of the Full Court who considered the question of costs in the Reasons delivered was the Honourable Justice Perry. His Honour observed that your client had not provided the court with a ‘full and frank account of the circumstances’ which related to the irregularities contained in the annual returns, especially the amendment to the 1987 annual return that was filed by the directors. Justice Perry considered that this was an important issue to consider concerning whether your client would be entitled to be awarded the costs of the trial. The other two members of the Full Court were silent on the issue of the costs of the trial all together [sic].”
The fourth defendant’s solicitors replied by letter dated 18 February 2003. The relevant parts of the letter are as follows:
“If you dispute the short form bill of costs, we suggest that you do so in the manner required by the Rules. Alternatively, if you believe that Rule 101.02 does not apply, we suggest that you apply to the Court for an order to that effect. We do not see why Rule 101.02 should not apply when there has been an appeal.”
In relation to the plaintiffs’ solicitors’ reference to the passage from the judgment of Justice Perry, the fourth defendant’s solicitor said:
“Justice Perry was not referring to our client when he made his remarks. He was referring to the directors. As we read his remarks, he was commenting (as an aside) that possibly the appellant should not have his costs of the trial from your clients but rather from the directors. He was not suggesting that your clients should have costs of the trial.”
On 11 March 2003, Mr Taylor swore the affidavit referred to above. Nothing occurred between 18 February 2003, the date of Mr Taylor’s last letter, and the date of swearing the affidavit. In other words, the plaintiffs’ solicitors had neither filed at the Court its response to the short form bill of costs nor made an application seeking a determination of the dispute relating to the costs of action. Mr Taylor’s affidavit was filed at Court on 12 March 2003 and was accompanied by a letter to the Registrar dated 11 March 2003, the relevant parts of which are as follows:
“We act for the fourth defendant in this matter.
We enclose (2 copies) a draft Allocatur. We enclose also in support an affidavit sworn by the writer which is self explanatory.
We have given a copy of this letter, the Allocatur and the affidavit to Hunt & Hunt, the solicitors for the plaintiffs.”
The Registrar, through her delegate, then proceeded to issue an allocatur dated 13 March 2003 in the sum of $45,636.88. It is that allocatur which the plaintiffs now wish to be set aside or otherwise reconsidered.
It appears that the Registrar issued the allocatur pursuant to SCR 101A.02(4) which provides, among other things, that if the respondent to the bill does not respond within the required period, the other party may apply by letter to the Registrar for an allocatur to be issued. Mr Luckhurst-Smith, counsel for the plaintiffs, described the allocatur as having been obtained in default. I think this is a correct characterisation of the process because the plaintiffs had not filed at Court the appropriate documentation disputing the bill. It should be noted, however, that the affidavit of Mr Taylor, which accompanied the request for an allocatur, clearly set out in the correspondence annexed to that affidavit, the nature of the dispute that then existed between the parties. There was in fact no response to the bill filed by the plaintiffs but it was clear from the affidavit material that the plaintiffs disputed the fourth defendant’s entitlement to costs. In those circumstances I do not think that the Registrar should have proceeded to issue the allocatur. In my view, the Registrar should have sought a direction from a Judge or Master pursuant to SCR 107.01 given that the plaintiffs’ solicitors had clearly disputed the fourth defendant’s entitlement to costs.
Having set out the background, I turn to the matters raised in argument. It was not clear from the submissions advanced by the plaintiffs what rule was relied upon by the plaintiffs to support their contention that the allocatur should be set aside or otherwise reconsidered. After I reserved by decision at the completion of argument, I looked at the provisions of SCR 107.03, which was not referred to during the course of the hearing before me. The relevant parts of that rule are as follows:
“107.03(1)Every decision, direction, certificate or act made or done by an officer of the Court is subject to review by the Court.
(2)Unless the Court otherwise directs such a review is to be carried out by a Master.
(3)Such a review is to be initiated by an application taken out under Rule 67 within 7 days of the decision, direction, certificate or act complained of and is to be disposed of in chambers.
(4)Upon the review the Court in its discretion may receive further evidence, and in matters involving the exercise of a discretion may exercise its own discretion without regard to the manner in which the discretion has been exercised by the officer of the Court.”
Because Rule 107.03 was not referred to by counsel during the course of argument, I gave the opportunity to the parties to put short written submissions as to the applicability or otherwise of the rule. Those submissions were completed by 12 May 2003.
Having considered the rule and the written submissions forwarded to me by the parties, I have come to the conclusion that, although other rules relating to the setting aside of default judgments may be applicable and although the provisions of Rule 84.12 may also apply, the appropriate rule to invoke is Rule 107.03 because, on my interpretation of the rule, it is clearly designed to cover such eventualities as have arisen in the circumstances of this application.
The Registrar of the Supreme Court is an officer of the Court: Section 82 of the Supreme Court Act 1935. The functions of the Registrar, including the function of taxation of costs, may be exercised by other officers of the Court: SCR 107.01. In using the term “Registrar” in these reasons, I include within that expression the Court officer in the Registry who actually discharged the function of issuing the allocatur on behalf of the Registrar.
SCR 107.03(3) requires an application for review to be made within seven days of the relevant act. The allocatur was issued on 13 March 2003 and the application made by the plaintiffs was filed on 26 March 2003. The application is technically out of time but if it is otherwise appropriate to invoke the rule, the time for compliance should be extended nunc pro tunc to 26 March 2003 since the default in compliance is less than a week.
As I have said, I consider that the Registrar, on being requested to issue an allocatur, should have sought the advice of a Judge or Master given the nature of the dispute between the parties as disclosed by the correspondence exhibited to Mr Taylor’s affidavit. This is so because it is the invariable practice of the Court that where a taxation of costs is disputed, the taxation is conducted by a Master rather than the Registrar or other officer of the Court. Had the problem been referred to a Master when the request for the allocatur was made, I think it is clear that the Master would have directed that the taxation proceed before him, in chambers, with the attendance of the respective solicitors for the parties. In particular, it is likely that the Master would have directed that the taxation was not to proceed without first giving the plaintiffs the opportunity to be heard on the points raised in the relevant correspondence.
The essential point to be determined before a taxation could proceed would be whether or not there was a warrant for taxation. Usually the warrant for taxation of costs is an order of the Court but, as relied upon by the fourth defendant, Rule 101.02 also provides the necessary warrant for a taxation of costs. Unless and until that dispute between the parties was determined by the Court, the taxation of costs should not have proceeded. For this reason alone, the review of the act of the Registrar in issuing the allocatur would require the allocatur to be set aside.
In arriving at that conclusion it has not been necessary for me to determine the dispute which exists between the parties as to the applicability of Rule 101.02(1). I have merely determined that each party has raised an arguable point and that that point should have been determined prior to proceeding further with the taxation of costs. However, the question of whether or not SCR 101.02(1) applies has a bearing upon the result of any review undertaken by me pursuant to SCR 107.03. This is so because, if I were to determine that SCR 101.02(1) applies, the warrant for the taxation of costs is thereby provided and the taxation should proceed subject only to the plaintiffs having the opportunity to specify any grounds relating to the quantum of costs sought in the appropriate part of the short form bill of costs. If SCR 101.02(1) does not apply, the taxation of costs should not proceed at all because there is no warrant for the taxation. Consequently, it is necessary for me to determine the central issue debated before me at the hearing of the application on 28 April 2003.
It is convenient to refer now to a submission put by Mr Taylor at the hearing on 28 April 2003 that, because of the appeal and the orders that were made on appeal, I am functus officio. I accept that proposition as being correct, but it is confined to my previous role as the trial Judge. The fact of a successful appeal does not preclude me from sitting as a Master of the Court to deal with the present application. I do not understand Mr Taylor’s submission to be at variance with that conclusion, but in case it was his intention to advance such a submission before me at the hearing on 28 April 2003, I reject that submission. It is merely coincidence that I presided at the trial and my having so presided does not preclude me now from determining disputes which have arisen since the trial.
Turning to SCR 101.02(1), the “proceeding” referred to in sub-rule (1) includes an appeal. I do not think for these purposes that there is any difference between the word “proceedings” and the word “proceeding”. Both are words of wide ambit and that interpretation confirmed by the breadth of the meaning to be attributed to the word “proceedings” in SCR 5.
Sub-rule (1) commences with the passage “Subject of these rules”. That qualifies the otherwise broad application of the sub-rule and takes into account that more specific cost consequences are catered for in other parts of the rules, including sub-rule (2) of SCR 101.02. For the purposes of this application, I am not aware of any qualification that should be made to the wide ambit of sub-rule (1).
It is next necessary to examine what the Full Court did on the question of costs. When the Full Court handed down its decision on the appeal, no specific mention was made of the costs of action as opposed to the costs of appeal. The Court made a specific order as to the costs of appeal. I assume, on the basis referred to at the commencement of these reasons, that the order for costs made by me as the trial Judge was set aside by the Full Court. There was, thus, no specific costs of action order in force once my judgment was set aside and there was no specific order as to the costs of action made by the Full Court when it handed down judgment. The question which therefore arises is whether or not SCR 101.02(1) fills the resulting gap. I think it does.
Mr Luckhurst-Smith submitted that if SCR 101.02(1) were to apply, the plaintiffs have been deprived of the opportunity of seeking an order for costs from the Full Court more favourable to the plaintiffs than costs which would follow the event. In particular, reference was made to costs orders that may be made involving the other three defendants with whom the plaintiffs reached a settlement prior to trial. I disagree with this submission. In my view, if the plaintiffs wished to avoid the application of SCR 101.02(1), they had the opportunity when the Full Court handed judgment down to ask for an order for costs more favourable than that the fourth defendant’s costs of action follow the event. The plaintiffs did not make such an application to the Full Court and cannot now be heard to complain that the application of SCR 101.02(1) would bring about an unfair result.
During the course of argument, there was some discussion about whether or not the Full Court or counsel took into account SCR 101.02(1) when judgment was handed down. On reflection, I do not consider that such a matter has any bearing upon how SCR 101.02(1) is to be interpreted. It takes effect irrespective of whether or not the parties or the Court had it in mind at the time of judgment.
Because I have concluded that the costs of the action, including the trial costs, follow the event (the event being the decision on appeal), there was at the time of the request for an allocatur, a warrant for the taxation of costs, that warrant being contained in SCR 101.02(1). Nevertheless, at the time the request for the allocatur was made, there was a dispute about that very question and, consequently, the Registrar, through her delegate, should not have proceeded to issue an allocatur. The plaintiffs have thereby, indirectly, been deprived of the opportunity to object to the quantum of the costs sought by the fourth defendant. Had the matter been referred to a Master by the Registrar, it is likely that the Master, having held that SCR 101.02(1) applied, would have allowed the plaintiffs an extension of time within which to object to the quantum of the costs sought in the short form bill of costs. In those circumstances, I think the appropriate order on review of the actions of the Registrar is to set aside the allocatur and allow to the plaintiffs a reasonable period of time within which to include within the short form bill of costs the plaintiffs’ opposition to the quantum of the items sought.
In view of my decision that there is a warrant for the taxation of the costs, the plaintiffs are no longer able to maintain that there should be no taxation of costs. The plaintiffs’ opposition to the bill is now limited to matters of quantum. To the extent that the plaintiffs oppose the quantum of some or all of the items contained in the short form bill of costs, a long form bill of costs should be prepared in relation to those items which are in dispute and in due course there should be a taxation of costs in respect of that long form bill of costs unless the parties are otherwise able to resolve their differences.
For the above reasons I propose to make the following orders:
1That the time for making the within application be extended nunc pro tunc to 26 March 2003.
2That the allocatur dated 13 March 2003 in the sum of $45,636.88 issued in this action be set aside.
3That the time for compliance by the plaintiffs with SCR 101A.02(2) be extended for a period of 21 days from the date of this order.

I will hear the parties as to the costs of the application.

[2003] SASC 142

21 May 2003