Re Hudson; Ex parte Citicorp Australia Ltd
[1986] FCA 189
•06 MAY 1986
Re: RAYMOND JOHN HUDSON
Ex Parte: CITICORP AUSTRALIA LIMITED
And: RAYMOND JOHN HUDSON; SABSTERN PTY. LIMITED; ERICA MAY HUDSON and CARINA
OLIVE WICKHAM; TIM MAGUIRE and MICHAEL MAGUIRE; JENNIFER ANNE SOLLY
No. QLD PET 761 of 1984
Costs
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.
CATCHWORDS
Costs - two counsel or one - costs "of" a day - whether omission of "and incidental to" makes a difference - whether only covers work done on the day mentioned.
Bankruptcy Act, 1966, s.167(8)
HEARING
BRISBANE
#DATE 6:5:1986
COUNSEL: for the appellants Mr. W.J. Roberts instructed by Thynne & Macartney
COUNSEL: for the respondent Mr. G. Martin instructed by Skinner and Smith
ORDER
The appeal be allowed.
The matter be remitted to the taxing officer for reconsideration in the light of these reasons.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is an appeal under s.167(8) of the Bankruptcy Act against a decision of a taxing officer in respect of a bill of costs. The taxation in question related to an order of Spender J. in relation to a matter which had been before his Honour on 13 and 21 May 1985 and on 14 June. Orders were made on 14 June that the costs of the appellants "of the 13 and 21 May 1985 be paid by the applicant Citicorp Australia Limited" and that the costs "of today be paid by the fifth respondent ...".
No question arises with respect to the costs of the 13th and 21st days of May but the appellants make two complaints about the taxation in respect of the costs of 14 June 1985.
Firstly, they say that they were not allowed the costs of two counsel. The amount involved, so far as they were concerned, was a sum of about $15,000 and, except in one respect, it could not be suggested that the appellants' case involved any complexity. The possible exception was that during the course of proceedings before Spender J. it was suggested by the present respondent that some invalidity, of an unspecified kind, might have attached to a transaction in which the appellants engaged.
Counsel for the appellants before me urged that, because the nature of the invalidity was unspecified, it might have been of any degree of complexity and therefore the attendance of senior counsel was reasonably required. That argument seems to me to have only a theoretical weight. Counsel relied upon the criterion set out in Kroehn v. Kroehn 15 CLR 137 at 141: "Would a prudent person not compelled by poverty come into Court in such a case without two counsel?"
After setting out that test, Griffith C.J. said: "In answering that question regard must be had, inter alia, to the importance of the case, the probable duration of the trial, the probability of conflict of evidence entailing the necessity of careful cross-examination, and the general practice as to employing two counsel."
Each of the specific criteria mentioned, in my view, tells against the appellants. The case was, so far as their involvement was concerned, not particularly important; their position was that of holders of a fund to which they made no claim except for costs and commission. With respect to the last point mentioned, the general practice as to employing two counsel, it would seem to me quite unusual to brief a Queen's Counsel in a matter of the kind under consideration.
The decision of the taxing officer in question was one of a discretionary character, but it is not necessary to rely upon that factor to uphold the taxing officer's decision. In my view, it was correct.
The second aspect of the appeal poses a question of a more difficult kind.
The respondent argued that the costs "of" a particular date can only include amounts paid for work done on that date. By acceptance of this submission, the taxing officer excluded most of the items in the bill; for example, the costs of drawing the brief were not allowed.
Counsel for the respondent, Mr. G. Martin, relied on Burgoine v. Taylor (1878) 9 Ch D 1 as to the meaning of costs of the day. There, a party was not represented at a hearing because of a mistake on the part of a solicitor. Judgment was entered in default of appearance but, on appeal, the Court of Appeal set the judgment aside "on the terms of the party in default paying the costs of the day which include all costs thrown away by reason of the trial becoming abortive".
There, the expression just quoted is plainly capable of including costs incurred other than during the day in question. What is not so clear, however, is whether the Court of Appeal meant that the expression "costs of the day" without any addition includes costs associated with the hearing on the day in question. Did the Court add the words "which include all costs thrown away by reason of the trial becoming abortive" out of an abundance of caution?
Mr. Martin also referred me to Mackellar v. Mackeller (1898) 24 VLR 456. There, an order was made for "the costs of the day", on an adjournment being granted. Hodges J. was asked to determine whether the costs included counsels' fees on brief. He said he did not think those fees were paid to counsel "in respect of that day, and cannot be regarded as part of the costs of the day" (p.459). He was also asked to consider whether costs for resealing a subpoena should be allowed and said they should not, remarking:
"The costs of the day do not include every useless expenditure that a party may choose to indulge in. The costs occasioned by the case being postponed are the costs a person will necessarily incur by reason of the postponement, not any sum that such person pleases out of his munificence to pay away ..."
The costs of the subpoena were disallowed because they were not necessarily incurred, but the remarks of Hodges J. do not support the view that he thought an order for "costs of the day" was confined to costs in respect of activities actually engaged in on the day in question. Costs incurred before or after that day might have been "in respect of" that day or "by reason of" the adjournment.
It does not appear, then, that these cases are decisive of the point in issue. The latter of them tends rather in favour of the appellants.
Had Spender J. used the expression "of and incidental to", there could hardly have been any room for argument. The question whether "and incidental to" makes a difference was discussed by Megarry V.C., sitting with assessors, in In re Gibson's Settlement (1981) 1 Ch 179. There, an order was made for the taxation of costs "of and incidental to" certain applications. At p.184 the judge said:
"If the order for costs is not for costs simpliciter, but for the costs 'of and incidental to' the proceedings (and this is the language of the order in the present case), the words 'incidental to' extend rather than reduce the ambit of the order. It is true that in In re Fahy's Will Trusts (1962) 1 WLR 17 it was held at first instance that in an order for the taxation on a common fund basis of the costs 'of and incidental to the negotiations leading up to this order,' the words 'and incidental to' confined the costs to those which were consequent upon the negotiations, and excluded those incurred before negotiations commenced. In that case, however, no cases were cited in argument, and the judge was told that there was no authority on the meaning of the words 'and incidental to,' and what they added to 'costs' in an order for costs.
I find great difficulty in seeing on what basis it can be said that the addition of these words drives out the right to antecedent costs which the Pecheries and Frankenburg cases established. The words seem to me to be words of extension rather than words of restriction. The litigant is to have the costs 'of' the proceedings and also the costs 'incidental to' the proceedings. This phrase cannot mean that the costs 'of' the proceedings are to be included only if they are also 'incidental to' them."
In the case which Megarry V.C. criticised, In re Fahy's Will Trusts, Plowman J. said there was no authority as to what the words "and incidental to" add to the words "costs of". That seems still to be so with the exceptions that Megarry V.C. suggests that "incidental to" adds something, and that the point was briefly considered by Cussen A.C.J. in Myer v. Myer (1932) VLR 322 at 327.
No doubt it is difficult for those to whom the practical task of taxing costs is entrusted to have to apply refined tests as to the degree of connection necessary between the work done and the hearing to which the costs order relates. I do not disagree with the view of Megarry V.C. that, if anything, "and incidental to" is additive but I doubt whether the addition of those words often makes much difference. If costs "of" a proceeding or hearing are allowed, the taxing officer must consider, with respect to each item in the bill, whether it is reasonably connected with that proceeding or hearing; he should disallow it if no sufficient connection appears. Preparations for the proceeding or hearing are likely to be sufficiently connected, as is taking out the order resulting from the hearing.
Reading the order of Spender J. as a whole, in my view what his Honour intended was that the costs of the hearing, so far as they concerned the appellants, should be paid by Citicorp Australia Limited as to the first two days and by the respondent as to the third day. In some circumstances costs "of" a day may have a more limited scope. His Honour did not intend, here, that work not actually done on the three days nominated (e.g. delivering a brief to counsel) should necessarily be disallowed. He left to the taxing officer the task of dissecting the work claimed for in the bills to see if it related to the first two days or the third day or to neither. I accept the submission of Mr. Roberts, for the appellants, that the taxing officer fell into error insofar as he acted on the principle that only work actually performed on 14 June 1985 could be included in the bill.
In summary:
1. I reject the contention of the appellant that the taxing
officer was obliged to allow two counsel; the case was a fairly small one and there was no reason to expect it to be unduly complex.
The taxing officer should, however, have allowed the costs
of work done on behalf of the appellant reasonably related to the hearing on 14 June 1985.
The appeal will therefore be allowed and the matter remitted to the taxing officer for reconsideration with respect to the second point just mentioned.
As each side has succeeded on one substantial issue, there will be no costs to the appeal.
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