Players Pty Ltd (in Liq) v Clone Pty Ltd - [2019] SASC 186

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
PLAYERS PTY LTD (IN LIQ) & ORS v CLONE PTY LTD
[2019] SASC 186
Reasons for Decision of Auxiliary Judge Norman a Master of the Supreme Court
24 October 2019
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PRINCIPLES OF TAXATION OR ASSESSMENT - FAIR, JUST, REASONABLE, NECESSARY, PROPER ETC
Interim allocatur for costs - rules 271(1) and 274(2)(b)(ii) - expression “impressionistic terms” - fair degree of rigour required on an interim allocator - court required to err on side of conservatism - interim allocatur not appropriate mechanism for resolving contested questions of law - interim allocator appropriate where taxation complex - Solicitors’ charges discussed - communications with counsel on a piecemeal basis - excessive communications re drafting - research of law - excessive perusals - multiple briefs - conferences with in-house counsel - reading judgments and transcripts on a perusal basis - duplication when multiple solicitors involved - Counsel fees - generally inappropriate to consider higher rates than indicator on interim assessment - Interstate counsel - costs of taxation and potential for need to pay refund - caution re interest on costs on interim allocatur - regard to other taxations - Set off between interim allocaturs - costs indemnity principle discussed - Clone’s claim for interim allocaturs in respect of trial allowed at $225,000 and for of appeal allowed at $150,000 - decline to award interim allocator in favour of Players as it could not be said that it must in any event recover an amount on taxation.
Russo v Buck & Ors (No 5) [2010] SASC 27; Johnson Winter and Slattery v MP Investments Nominees Pty Ltd [2013] SASC 157; Rodda v Ian Rodda Pty Ltd [2016] SASC 90; Edwards v Legalese Pty Ltd DC (SA) (unreported) No 5, 14 February 2014 Master Blumberg; Perpetual Executors and Trustees v Colonial Mutual Fire Insurance Co Ltd (1903) 29 VLR 427; Re James McEwan Ltd (1903) 29 VLR 114; Dalgety Australia Operations Ltd v FF Seeley Nominees Pty Ltd (No 2) (1988) 49 SASR 75; Walker v Law Society of Tasmania [1991] Tas R 121; Mainieri v Cirillo (2014) 47 VR 127; Mourik v Marburg [2016] VSC 601; Wentworth v Rogers (2006) 66 NSWLR 474; Baker v Legal Services Commissioner [2006] QCA 145; Trevorrow v State of South Australia (No 7) [2008] SASC 5, referred to.

PLAYERS PTY LTD (IN LIQ) & ORS v CLONE PTY LTD
[2019] SASC 186

These are applications for interim allocaturs. They are consequent upon the decisions made by the High Court in Clone v Players [2018] HCA 12 and by the Full Court in Players v Clone [2013] SASCFC 25.
In these reasons I will refer to the plaintiffs as “Players” and the defendant as “Clone”. I will likewise abbreviate the citations for the reported judgments in this matter to use only those names.
Clone’s claims
On…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] SASC 186
Decision Date: 24 October 2019

CaseChat Overview and Summary

In the matter of Players Pty Ltd (in Liq) versus Clone Pty Ltd, the Federal Court was tasked with determining the appropriate interim allocatur for costs in the context of civil proceedings. The dispute primarily revolved around the taxation of costs incurred during a trial and a subsequent appeal to the Full Court. Clone Pty Ltd had claimed significant costs for both the trial and the appeal, while Players Pty Ltd argued for a reduction in these claims.

The central legal issue was the determination of the appropriate interim allocatur for costs, taking into account the complexity of the case, the necessity of certain communications and research, and the reasonableness of the fees claimed. The court was required to balance the need for a cautious approach in setting interim allocaturs against the potential for protracted adjudication and the complexity of the litigation process.

In reaching its decision, the court emphasised the importance of a fair and just approach in assessing interim allocaturs. It noted that interim allocaturs were not meant to resolve contested questions of law but rather to provide an immediate payment on account of costs in complex cases. The court acknowledged the complexity of the litigation and the significant costs claimed by Clone Pty Ltd, but also highlighted potential issues such as excessive communications, research claims, and the need for careful scrutiny of counsel fees and disbursements. The court ultimately allowed Clone Pty Ltd's claim for an interim allocatur for the trial at $225,000 and for the appeal at $150,000, while declining to award an interim allocatur in favour of Players Pty Ltd due to the uncertainty of their recovery on taxation.

The court’s reasoning underscored the need for a conservative and rigorous approach in assessing interim allocaturs, particularly in cases of significant complexity. It cautioned against the inappropriate use of higher rates for counsel fees and highlighted the importance of considering the potential need for refunds and interest on interim allocaturs. The court also addressed the principle of set-off between interim allocaturs, noting that Clone Pty Ltd's claims for set-off were not supported by Players Pty Ltd. The final orders reflected the court’s cautious approach, providing an immediate payment on account of costs while reserving further detailed assessment for the taxation process.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Players submits that overall it is essential for the Court to adopt an extremely cautious approach in fixing an interim allocatur. Conclusion as to trial costs I have formed the view that for the purposes of an interim allocatur, a sizeable reduction should be made to the face value of Clone’s claims for the costs for trial. Especially having regard to the matters raised in the Dart affidavit, and in Mr Cogan’s submissions, which will be argued on taxation, my view is that an interim allocator in the sum of $225,000 is appropriate. Appeal costs Similar issues also arise in respect of the Full Court appeal. The costs claim is $903,584 which on face value looks high for only a two day appeal, notwithstanding the complex issues. The counsel fee component alone is $546,897. If there are found to be excessive communications claimed in respect of the drafting, and the repeated redrafting of outlines and other documents, these might not be allowed. There appear to be substantial claims for research of the law including procedural rules by solicitors – these likewise might not be allowed. Any excessive perusal claims may be disallowed. If there are claims for briefs which are in effect nothing more than copies of documents and/or authorities – these may not be allowed. The same will apply in respect to any excessive claims made for interactions between solicitors and their client. It must be borne in mind that this aspect of the claim relates to an appeal, and solicitor/client communications are likely to be less necessary than for the trial. Claims appear to have been made for numerous amendments to Clone’s notice of appeal but these might not be recoverable on a party/party basis. As with the trial, no attempt had been made by Clone to apply an appropriate rate for counsel fees by reference to the indicator. Claims have also been made for numerous internal conferences with Mr Bill Ericson, an in-house counsel, and these will have to be justified on adjudication bearing in mind there are external counsel as well. A substantial matter requiring attention on taxation will be any claims for costs by Clone after the delivery of the Full Court’s decision on 8 December 2016. There appear to be a considerable number of such claims. They might not be covered by the Full Court’s order. Clone have not been awarded costs in respect of the applications or hearings before Blue J and Judge Roder. Mr Dart’s affidavit evidence is of importance. As with the trial, he has extracted from Clone’s Full Court claim for costs all of the fees incurred for senior counsel, namely Mr Sullivan, Mr Karkar and Mr Roberts. He had also extracted disbursements for flights and accommodation arising from the briefing of interstate counsel. He has also prepared a schedule of counsel fees and solicitors’ charges claimed by Clone after 8 December 2016. The amount claimed for this work was $71,181. After extracting all the counsel fee items claimed in the Full Court claim, the daily rate of $4,500 provided in the indicator was applied to each counsel fee, resulting in a sizeable reduction in the face value of the claim for counsel fees, namely a reduction of $400,030.

Ratio Decidendi

Legal Principle Established

As shown above, the issue is a complex one and the detailed argument to determine the position needs to be considered. In my view, it is not appropriate that such arguments be addressed at the interim allocatur stage.Consideration and findingsOverview Clone’s two costs claims comprise those in relation to the trial before Hargrave AJ where $1,345,253.57 is sought, and the other for the Full Court appeal, where $903,584.21 is sought. Players’ responses allow $196,906.63 for the trial and $57,805.48 for the appeal. Players also claims a set-off of $38,034.04 for the hearing before Kourakis J and of $724,067.22 for the Full Court appeal from that decision. Clone offers nil dollars for those set-off claims. Clone seeks interim allocaturs in the amounts of $600,000, $37,080.86, $600,000, and $20,969.41. Players seek an interim allocatur in the sum of $500,000.An interim allocatur is appropriate On any view, the trial before Hargrave JA was a matter of significant complexity - this is evident from the decision of the High Court. So was the appeal to the Full Court. It appears obvious that Players intend to embark on a protracted adjudication. Mr Whitington has identified 12 issues which Players seek to have determined as preliminary points. There will inevitably be a substantial delay in adjudicating the costs. Even if all of the claims are set down for taxation, the Court would not have the facilities to tax these concurrently. The taxation of Clone’s costs for the Vanstone J trial has been proceeding for several months already. This makes it an appropriate case in which to make an order for the immediate payment of an amount on account of costs.General observations The amount sought by Clone for an interim allocatur for the trial, namely $600,000, represents 44.6% of its claim for costs, not including interest, which is calculated as $366,203.82. Interest has been calculated only from the judgment date and not from the date of payment of the relevant expenses. Taking interest into account, Clone’s claim exceeds $1.7 million. In relation to counsel fees, Clone submits that a slavish adherence to the indicator to counsel fees is unwarranted and fails to reflect the accepted principle that complex cases warrant special consideration. It argues that that the use of interstate counsel was necessary, as explained in its submissions. It refers to the illness of Mr Karkar and his replacement by Mr Sullivan. It submits that where it is reasonable or proper to brief interstate counsel, regard is then to be had to the level of fees usually charged by such counsel. It submits that while some conservatism might be warranted given the need for resolution of the issues upon an adjudication, a claim for an interim allocatur in the order of a 35% allowance once interest was brought into account was appropriate, and that the figure of $600,000 was conservative. In relation to the costs of the appeal, Clone refers to the complexity of that hearing, the representation of both sets of parties by two senior counsel, and its representation by one interstate senior counsel. Once interest on costs was brought into account, the claim for costs was approaching $1.1 million, so the amount of $600,000 was appropriate.