Pourzand v Telstra Corporation Ltd
[2012] WASC 210 (S2)
•18 SEPTEMBER 2012
POURZAND -v- TELSTRA CORPORATION LTD [2012] WASC 210 (S2)
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 210 (S2) | |
| Case No: | CIV:1714/2010 | ON THE PAPERS | |
| Coram: | EDELMAN J | 18/09/12 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Orders to be made | ||
| B | |||
| PDF Version |
| Parties: | HOSSEAN POURZAND JENNY MARIA POURZAND TELSTRA CORPORATION LTD |
Catchwords: | Practice and Procedure Costs Application to remove limits on items in the Scale of costs Application for an allowance for Senior Counsel's involvement in the drawing of the defence Application for an allowance for costs of uploading discovery on to an electronic document management system. Evidence Admissibility of hearsay evidence summarising conclusions of a legal 'review' described as 'expert assistance' on legal issues of the law of the forum Evidence not admissible |
Legislation: | Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA), items 3(b), 7(b), 17, 20 Legal Practitioners Act 2008 (WA), s 280 Rules of the Supreme Court 1971 (WA), O 66 r 3, O 66 r 51 |
Case References: | Cazaly Iron Pty Ltd v Minister for Resources (No 5) [2008] WASCA 181 Como v Helmers [2011] WASC 179 (S) EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) Frigger v Lean [2012] WASCA 66 Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S) Pourzand v Telstra Corporation Ltd [2012] WASC 210 SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
- JENNY MARIA POURZAND
Plaintiffs
AND
TELSTRA CORPORATION LTD
Defendant
Catchwords:
Practice and Procedure - Costs - Application to remove limits on items in the Scale of costs - Application for an allowance for Senior Counsel's involvement in the drawing of the defence - Application for an allowance for costs of uploading discovery on to an electronic document management system.
Evidence - Admissibility of hearsay evidence summarising conclusions of a legal 'review' described as 'expert assistance' on legal issues of the law of the forum - Evidence not admissible
Legislation:
Legal Practitioners (Supreme Court) (Contentious Business) Determination 2010 (WA), items 3(b), 7(b), 17, 20
(Page 2)
Legal Practitioners Act 2008 (WA), s 280
Rules of the Supreme Court 1971 (WA), O 66 r 3, O 66 r 51
Result:
Orders to be made
Category: B
Representation:
Counsel:
Plaintiffs : No appearance
Defendant : No appearance
Solicitors:
Plaintiffs : Lewis Blyth & Hooper
Defendant : Lavan Legal
Case(s) referred to in judgment(s):
Cazaly Iron Pty Ltd v Minister for Resources (No 5) [2008] WASCA 181
Como v Helmers [2011] WASC 179 (S)
EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S)
Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S)
Frigger v Lean [2012] WASCA 66
Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S)
Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S)
Pourzand v Telstra Corporation Ltd [2012] WASC 210
SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2)
(Page 3)
- EDELMAN J:
Introduction
1 This second supplementary judgment in this litigation concerns an application by the defendant, Telstra, for special costs orders. By emails to my associate dated 31 July 2012, the defendant proposed, and the plaintiffs agreed, that the issues in this application should be dealt with on the papers. They agreed a timetable. The papers filed were submissions and affidavit evidence from Telstra filed in July; responsive submissions from the Pourzands filed in August; and reply submissions from Telstra filed in September.
2 The manner in which this application for special costs orders proceeded was not ideal. This application followed an earlier application for indemnity costs, immediately after judgment. It is desirable that costs issues be dealt with concurrently. Although (1) both parties sought to have the indemnity costs application determined immediately; (2) it was unclear whether a special costs application would be made; and (3) a number of cases in this court have considered indemnity costs issues before issues involving special costs, the better approach would have been for the costs issues to be raised simultaneously for the court's consideration.
3 Some of the evidence in this application was inadmissible. Although similar evidence has previously been received without objection, the evidence of conclusions of law, given apparently as 'expert assistance', is neither necessary nor admissible.
4 Finally, it is desirable that evidence and submissions in relation to special costs orders address briefly, although with precision, the nature of the orders sought rather than seeking a global removal of limits for the whole of various items.
5 The orders sought by Telstra are as follows:
(1) The Pourzands pay Telstra's costs of the action without reference to the limits provided for at items 3(b) (defence); 7(b) (giving discovery); 17 (getting up); and 20 (trial) of the Legal Practitioners (Supreme Court) (Contentious Business) Costs Determination 2010 (WA)(the Scale).
(Page 4)
- (2) That an allowance be made for Senior Counsel's involvement in the drawing of the defence, and the amended versions of the defence.
(3) That an allowance be made for the engagement of Law in Order to upload the discovery onto an electronic document management system.
(4) That the Pourzands pay Telstra's costs of Special Costs Application including any reserved costs, to be assessed if not agreed.
(5) There be liberty to apply with 3 days' notice.
6 My conclusion is that the only appropriate order is an order that the Pourzands pay Telstra's costs without reference to the limit of hours in item 3(b) of the Scale.
Assessment of costs without reference to limits in Items 3(b), 7(b), 17 and 20
The applicable legal rules
7 There was no dispute about the legal rules which apply to an application to uplift or remove costs items in the Scale.
8 Section 280(2) of the Legal Profession Act 2008 (WA) provides that:
[I]f a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determinationis inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -
...
(c) remove limits on costs fixed in the determination;
(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.
9 Therefore, before a discretion can be exercised to make a special costs order, the court must be of the opinion:
(1) the Scale item is inadequate, and
(2) the inadequacy arises because of the unusual difficulty, or complexity, or importance of the matter: Heartlink Ltd v Jones
- As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11] (Martin CJ).
10 These questions are to be addressed as matters of impression rather than detailed evaluation: EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7] (Martin CJ). Courts should draw from their experience and act on impressions gained during the litigation to take into account the issues which have been involved, albeit without attempting to make an estimate of the time which is thought to be appropriate when the information for that assessment is not all available: Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S) [43] (Pullin J).
11 As to (1) (inadequacy of the Scale item), the inadequacy will be demonstrated if there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination: Heartlink Ltd [16] (Martin CJ).
12 A conclusion that it is fairly arguable that the taxing officer might properly allow costs at an amount greater than the amount allowable under the Scale does not always require evidence of the costs actually incurred: Frigger v Lean [2012] WASCA 66 [81] (Allanson J; Newnes & Murphy JJA agreeing).
13 As to (2) (inadequacy arising due to the unusual difficulty, complexity, or importance of the matter), the adjective 'unusual' qualifies only the 'difficulty' of the matter, not its complexity or importance: see, in relation to the identical terms of the predecessor to s 280(2):Heartlink Ltd [17] (Martin CJ); Hodgkinson v Doepel & Associates Architects Pty Ltd [2006] WASC 237 (S) [33] (Simmonds J); SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [102] - [106] (Roberts-Smith J).
14 Finally, although replacing the amount of the Scale item with a different ceiling may be appropriate where sufficient information exists to make that assessment, it is not uncommon for an order to be made removing the limit for the Scale item without replacing that limit with a different ceiling: EDWF Holdings [8] - [9], [13] (Martin CJ). When the Scale ceiling is lifted a taxing officer is otherwise unconstrained and need not allow costs above the previous Scale ceiling.
(Page 6)
The evidence
15 The evidence from Telstra consisted of an affidavit from Mr Mengolian, who is a partner of the firm of solicitors representing Telstra. Mr Mengolian's affidavit relied in part upon a 'review' of costs conducted by Ms Coulson. Ms Coulson is a specialist in legal costs who Mr Mengolian said had been instructed to act and to advise Telstra in relation to costs.
16 Ms Coulson's 'review' was not annexed to Mr Mengolian's affidavit. The Pourzands objected to pars 10, 12, 18, 27 and 33 of Mr Mengolian's affidavit. Apart from par 10, each of those paragraphs commences with the words 'I am informed by Ms Coulson and believe that as a result of the Review'. Paragraph 10 describes the Review that Ms Coulson undertook and that paragraph commences with the words 'I am informed by Ms Coulson, and believe, that'.
17 In a valiant submission, Telstra characterised the 'evidence' of Ms Coulson, to which Mr Mengolian referred, (which, of course, was not Ms Coulson's evidence, and was not provided to the court) as 'expert assistance, as counsel for the Defendant'. Understandably, a host of objections was taken to this evidence. I put to one side the objection that the application for a final special costs order is properly characterised as a final order so that hearsay evidence is not permitted.
18 The short point is that the hearsay evidence of Ms Coulson's purported legal conclusions from her 'Review' (which was not annexed to Mr Mengolian's affidavit) is plainly inadmissible. Ms Coulson's 'expert assistance' might have been a valuable submission if the court had been provided with it from her as counsel. But even if Ms Coulson's 'Review' had been annexed to Mr Mengolian's affidavit, her legal submissions or 'expert assistance' on the law of the forum is not admissible evidence.
19 Telstra referred to two decisions of judges of this court in which such evidence had been put before the court, apparently without demur. It does not appear that the admissibility of what was described by Telstra as 'Ms Coulson's evidence' was in issue in either of these cases; there is no discussion of admissibility in either case. Neither case is authority for the proposition that this type of evidence is admissible.
20 Paragraphs 10, 12, 18, 27 and 33 of Mr Mengolian's affidavit are inadmissible.
(Page 7)
The special costs orders generally
21 On 20 June 2012, I ordered that the Pourzands pay the costs of Telstra on an indemnity basis from 29 March 2012. In this subsequent application Telstra sought special costs orders on the basis that there be 'no distinction between the party and party period and the indemnity period'. In Telstra's affidavit evidence and submissions no distinction was made between the costs prior to 29 March 2012 and those subsequent to that date.
22 As I have explained, the first requirement before a special costs order can be made is that the Scale item is inadequate, in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. The award of indemnity costs has the effect that the Scale item might not be inadequate. The failure of Telstra to provide clear evidence and submissions concerning costs before 29 March 2012 makes the assessment of special costs difficult.
23 A second issue concerns the requirement that the inadequacy of the Scale item arise because of the unusual difficulty, or complexity, or importance of the matter.
24 The approach sometimes taken to special costs orders, including the approach taken in this case, is to consider whether the whole of the litigation was of unusual difficulty, or complexity, or importance. This is not the correct approach. The question should be asked separately in relation to each item for which the lifting or removal of the Scale is sought. The words of s 280 refer to the inadequacy of the amount of costs allowable 'in respect of a matter under a costs determination' because of the unusual difficulty, complexity or importance 'of the matter'. Section 280 does not contemplate a usual course of removing all limits because of unusual difficulty, complexity or importance. It focuses attention upon particular items.
25 An application for special costs orders does not require lengthy evidence or submissions on an individual matter of costs. In some cases the same factors of unusual difficulty, or complexity, or importance will apply to all factors for which a lifting of the Scale is sought. But it is possible that an individual matter in litigation might be unusually difficult, or complex, or important, even if the litigation itself is not, or vice versa.
26 In relation to this litigation generally I accept that there were some aspects which were of unusual difficulty and that there were matters of
(Page 8)
- importance to Telstra. The total claim, as quantified at trial, was in excess of $1.5 million: Pourzand v Telstra Corporation Ltd [2012] WASC 210 [8]. Telstra submitted, relying upon evidence of Mr Mengolian, that the litigation was important because the Pourzands had 'opportunistically carried out wholesale refurbishments to the applicable tenancy, all the while claiming rent from [Telstra], notwithstanding that the tenancy was unfit for use as a commercial office space during those works. [The Pourzands] then sought to recover a portion of the cost of those works from [Telstra]'. This conduct heightened the importance of the litigation to Telstra.
Lifting item 3(b): defence
27 Item 3(b) provides for costs for a defence limited by 10 hours by a senior practitioner, at a rate of $429 an hour for a total of $4,290. The terms in which the order lifting item 3(b) is sought would require removal of both the upper limit of hours spent as well as the hourly rates for those items: Cazaly Iron Pty Ltd v Minister for Resources (No 5) [2008] WASCA 181.
28 Mr Mengolian attached invoices which included costs of senior counsel's preparation of the defence. Those costs were at least 23 hours at $650 an hour. Mr Mengolian also said that he was personally involved in preparing the defence. A number of hours were also spent in relation to a re-amended defence.
29 Even apart from the limited evidence of costs (which evidence is not always required: see above at [12]), based on my impression of the case I accept that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. I also accept Telstra's submission that there was uncertainty arising from the Pourzands' pleading.
30 As Telstra submitted, although the quantum was ultimately agreed at trial one aspect of the uncertainty arose from a lack of clarity concerning the quantum of damages. Another aspect of uncertainty was that the Pourzands never clearly pleaded how Mr Hutchings' alleged knowledge of the work that the Pourzands were carrying out should be attributed to Telstra so that, as was argued by the Pourzands, any breach by the Pourzands would somehow preclude Telstra from terminating the lease. The scope of Mr Hutchings' express agency was never clearly pleaded and the Pourzands never pleaded that Mr Hutchings had any ostensible authority so that his knowledge could be attributed to Telstra.
(Page 9)
31 The assessment of these special costs issues is very much a matter of experience and impression from the litigation. Ultimately I concluded in my primary reasons for decision that even if Mr Hutchings' knowledge could be attributed to Telstra (a matter on which no substantial submissions were made by the Pourzands) Mr Hutchings gave no authorisation, and had no knowledge or expectation that significant work would occur without authorisation from Telstra. But, despite this conclusion, my impression is that it was proper for Telstra to treat the signal lack of clarity in the Pourzands' pleading seriously and not simply as a manifestation of the apparently weak case of the Pourzands. The lack of clarity meant that the defence was unusually difficult, in the sense that it was more difficult than would ordinarily be expected in a case of this kind: Como v Helmers [2011] WASC 179 (S) [18] (Corboy J).
32 For these reasons I consider that the inadequacy of this Scale item arises because of the unusual difficulty, and also, as explained above at [26], because of the importance of the item to Telstra.
33 I consider that the maximum number of hours provided in the Scale item 3(b) of the Scale should be removed. I have considered carefully whether this amount should be replaced by a higher ceiling. In many circumstances this will be the appropriate course. In this case, I received no submissions from either party concerning the amount of hours in any new ceiling which might be imposed. In the absence of such submissions, and based upon my impression from the litigation and from the limited admissible evidence on this application, any ceiling which I might impose would be similar to the hours actually spent working on the defence. In these circumstances, the appropriate order is simply to remove that limit imposed by the Scale.
34 Although the taxation should proceed without the Scale limit of hours in this item, there was no evidence nor were there submissions concerning why the maximum hourly rate for this item should be lifted. There was no evidence or submissions concerning why it was fairly arguable that $429 an hour was an inadequate rate for work on the defence. There was properly no submission that it was fairly arguable that it would have been inadequate for the work to be performed by any counsel working at these rates. Indeed, the hourly rate for junior counsel (who, it appears from his invoices, was responsible for drafting closing submissions, which were of much assistance) is quite considerably less than the limit in the Scale. I do not consider that the maximum hourly rate of $429 is inadequate.
(Page 10)
Lifting item 7(b) (giving discovery)
35 Item 7(b) provides for costs for giving discovery of documents limited by 10 hours by a senior practitioner, at a rate of $429 an hour for a total of $4,290.
36 Mr Mengolian refers to the process of discovery involving seven lever arch folders of documents and a further six lever arch folders of documents comprising Telstra's supplementary informal list of documents. He described the preparation of a list of 162 documents, and a supplementary informal list of documents which described a further 113 documents.
37 Mr Mengolian's affidavit also annexed three invoices from Law in Order with a combined total of $1,947.28 for uploading the discovery on to an electronic document management system.
38 One difficulty with the evidence before me is that Mr Mengolian's assessment of the costs of the discovery exceeding the recoverable amount under the Scale includes the costs of the supplementary list of documents dated 10 April 2012. But most of those costs, possibly all of them, are likely to be recoverable as part of my order that the Pourzands pay Telstra's costs on an indemnity basis from 29 March 2012.
39 I do not consider that it is fairly arguable that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. In other words, with the benefit of an indemnity costs order from 29 March 2012, I do not consider that 'the amount of costs allowable in respect of a matter under a costs determination', which it was common ground would only apply before that date, 'is inadequate'.
40 A further matter is that my impression from the litigation, as well as Telstra's 24 October 2011 discovery affidavit, reveals nothing of any difficulty, complexity or importance in relation to this matter of discovery. Nor does anything in the generally important nature of the litigation to Telstra suggest that inadequacy which existed in the Scale limit for this item could arise from the importance of the litigation.
41 This item should not be uplifted in any respect.
(Page 11)
Lifting item 17 (getting up) and item 20 (trial)
42 Item 17 provides for 120 hours of getting up for trial limited by 120 hours by a senior practitioner at a rate of $429 an hour for a total of $51,480.
43 As for item 20, Telstra sought a blunt order lifting the whole of item 20 without reference to each separate part and without reference to the limit for hours spent or the hourly rate. Ideally, the order should have been confined to the relevant parts of item 20 especially since the submissions and evidence did not even seek to justify the lifting of the whole of item 20. Even the inadmissible evidence in par 33 of Mr Mengolian's affidavit concerned only items 20(a) (fee on first day of trial and preparation for counsel), 20(b) (fee on first day of trial and preparation for Senior Counsel), 20(d) (fee for Senior Counsel for second and subsequent days), and 20(e) (fee on instructing legal practitioner attending trial). Item 20(c) was mentioned but the total cost of that item was less than the Scale so no purpose could have been achieved by lifting the Scale for that part of item 20.
44 The application in respect of both items 17 and 20 suffers from the same difficulty as item 7(b), namely that no attempt was made in the evidence or submissions to separate any of the costs incurred prior to 29 March 2012 (when the indemnity costs take effect) from those subsequent to that date. I accept the submission of the Pourzands concerning the effect of the award of indemnity costs from 29 March 2012 in relation to each of these items. The effect of the award of indemnity costs is that 'the amount of costs allowable in respect of a matter under a costs determination' is not inadequate.
45 Were it not for the order for indemnity costs, I would have considered that in relation to item 17 it was fairly arguable that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination because of the unusual difficulty involved as I have discussed, and also because of the importance of the matter. I would have removed the Scale limit for the maximum hours. For reasons I have already explained, I would not have increased the practitioner rate.
46 As for item 20, were it not for the award of indemnity costs I would still have made no special costs order in relation to items 20(d) and 20(e). Those items only exceed the scale limit due to the hourly rates of the practitioners, as to which there was no evidence, nor do I consider that there was any basis to justify uplifting the hourly rates in those items.
(Page 12)
- But, were it not for the award of indemnity costs I would have made special costs orders in relation to items 20(a) and 20(b). For the same reasons of unusual difficulty and importance as described above in relation to item 3(b), I would have removed the maximum allowable hours in items 20(a) and 20(b). In addition to the usual matters of getting up referred to by Mr Mengolian at par 25 of his affidavit, and which were apparent at trial, I note also the evidence of Mr Mengolian concerning the expert reports which were commissioned by Telstra prior to agreement being reached on matters of the quantum of damages.
47 I make no orders in relation to items 17 or 20.
An allowance for Senior Counsel's involvement in drawing the defence
48 The next claim by Telstra was for an allowance for the involvement of Senior Counsel in the drawing of the defence and amendments to the defence. No separate submissions were made in respect of this matter and I have dealt with this in the context of considering the extent to which the item for preparation of the defence should be lifted. No allowance should be made in respect of hourly rates for Senior Counsel's involvement in drawing of the defence.
An allowance for the electronic document management system
49 The third order sought was for an allowance for the engagement of Law in Order to upload the discovery on to an electronic document management system. Mr Mengolian's affidavit annexed three invoices from Law in Order with a combined total of $1,947.28. I received no submissions concerning this matter. In any event, this matter is dealt with in the context of my consideration of the item concerning discovery above.
Conclusion: orders to be made
50 In the result the appropriate order is only in relation to item 3(b) as described above. As to the costs of this application, submissions can be made if these are not agreed. The parties should send to my associate a minute of agreed orders consequent upon these reasons by 3.00 pm on Friday 21 September 2012. If there is any dispute between the parties as to appropriate orders then competing minutes should be sent by that time.
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