Re Lynch and Co Bill of Costs

[2000] QSC 3

SUPREME COURT OF QUEENSLAND

CITATION:	Re: Lynch & Co Bill of Costs [2000] QSC 003
PARTIES:	IN THE MATTER of The Legal Practitioners Act 1995
and
IN THE MATTER of MESSRS LYNCH & COMPANY’S Bill of Costs
and
IN THE MATTER OF DISTRICT COURT PLAINT NO 3649 OF 1996 BROUGHT BY SEAN COLLINS AGAINST HANDY GARDENERS AT WORK PTY LTD (ACN 060 863 694) AND PAUL GEOFFREY SEILS AND LYNDELL PATRICIA MCVEY
FILE NO:	8827 of 1998 (Misc No 11241, 11242, 11243 of 1999)
DIVISION:	Trial Division
DELIVERED ON:	19 January 2000
DELIVERED AT:	Brisbane
HEARING DATE:	6 October 1998, 16 November 1998, 18 August 1999, 2 November 1999
JUDGE:	Chesterman J
ORDER:	Respondent to pay the applicant’s costs of taxation.
CATCHWORDS:	PROCEDURE – COSTS – TAXATION – REVIEW – PRINCIPLES APPLICABLE – IN GENERAL – whether costs of taxation are determined by s 9 Legal Practitioners Act 1995 or O 91 Supreme Court Rules – effect of repeal of s 9 Legal Practitioners Act 1995 by Civil Justice Reform Act 1998 – relevance of s 20 Acts Interpretation Act 1954 on repeal – whether bills to be taxed as one bill or separate bills – whether “one-sixth rule” applies.
Acts Interpretation Act 1954, s 20(2) Civil Justice Reform Act 1998 Legal Practitioners Act 1995, s 9, s 16 Supreme Court Rules, O 91, O 91 r 89 Trade Practices Act 1974
In Re Nelson, Son & Hastings [1885] 30 Ch D 1 Re Hall and Barker [1878] 9 Ch D 538 Re Romer & Haslem [1893] 2 QB 286
COUNSEL:	Mr S Collins (solicitor) for the appellant Mr P G Lynch (solicitor) for the respondent
SOLICITORS:	Clarke & Kann for the appellant Lynch & Co for the respondent

1. CHESTERMAN J: On 16 November 1998 I ordered that the respondent’s bills of costs dated 18 September 1997, 15 October 1997 and 16 December 1997 be referred for taxation and that the party found liable to pay the costs of the taxation should pay the other’s costs of the application. An appeal brought by the respondent was unsuccessful. The applicant, with a confidence justified by the result, proceeded to have the three bills taxed notwithstanding the pendency of the appeal. The result of the taxation was made known to the Court of Appeal which thought it might create difficulty for the order I had made with respect of the costs of the application.

2. Before the Court of Appeal delivered judgment, the taxing officer sought directions from me as to which party should pay for the taxation. I deferred answering the question until the result of the appeal should be known. The Court of Appeal has thought it desirable that I should consider afresh the question of who should pay the costs of the application, as well as who should pay the costs of the taxation. The court noted that my order offered a reasonable solution to the question of who should pay the costs of the application but thought that it should be set aside so that I could vary it “if this seems necessary in the interests of justice”.

3. The three bills of costs were given separate numbers by the taxing officer upon their referral to him. They became respectively numbers 11241, 11242, and 11243 of 1998. The first, delivered in the sum of $2,118, was reduced by $737. The second, delivered in the sum of $6,269.44, was reduced by $1,021.94. The third, delivered in the sum of $1,558.57, was reduced by $352.92. These figures were given to me by the parties. They differ from the figures which appear in the judgment of the Court of Appeal. The discrepancy was not explained. The first and third bills have been reduced by more than one-sixth of the value of their original amount. The second was reduced by an amount very close to, but still less than one-sixth. If the amounts of the bills and of the reductions are aggregated the total amount taxed off is more than one-sixth of the total amount of the three bills.

   The largest bill, the reduction of which was less than one-sixth, took longer to tax and cost more to tax than either of the other bills.

4. The circumstances outlined in the preceding paragraph are what was thought to cast doubt upon the efficacy or overall fairness of the order for costs made with respect to the application. The same circumstances are what prompted the taxing officer to ask for a direction as to what order for costs should be made on the taxation.

5. The first question to be decided is whether the costs of the taxation are to be determined by reference to s 9 of the Legal Practitioners Act 1995 or by reference to O 91 of the Supreme Court Rules. Section 9(2) provided that if a bill when taxed be less by a sixth part than the bill delivered the solicitor whose bill it was should pay the cost of the taxation, but if the bill when taxed not be less by a sixth part than the bill delivered then the client should pay those costs.

6. Section 9 was repealed on 1 July 1998 by the Civil Justice Reform Act 1998. The respondent therefore submits that s 9 cannot “govern the cost of the taxation” and that “the bills of costs were not taxed … pursuant to the … entitlement under the Legal Practitioners Act … but … pursuant to the order of the … judge made on 16 November 1998”. The submission continues that the costs were taxed pursuant to an order or judgment for the purpose of O 91 r 89(2)(b)(ii) of the former Rules of the Supreme Court which were in force at the time of the order for taxation and the taxation.

7. This submission cannot be accepted. Order 91 r 89 is concerned with offers to settle disputes about costs. The time for making such an offer differs between a case of costs “not payable under a judgment or order” and costs “in any other case”. The costs in question are not payable under a judgment or order. The only order made was that the costs be referred to taxation. The costs were payable pursuant to a contract of retainer made between the applicant and the respondent. Order 91 does not appear to contain any indication of how the costs of taxation should be paid where the liability to pay costs arises in such a manner.

8. Section 9 of the Legal Practitioners Act is such an indication but its repeal on 1 July 1998 is said to prevent its application to the taxation in question. In my opinion this in not right. Section 20(2) of the Acts Interpretation Act 1954 provides:-

   “The repeal … of an Act does not –

   …

(b)	affect … anything begun under the Act; or
(c)	affect a right … acquired, accrued … under the Act; or
…
(e)	affect (a) … remedy in relation to a right … mentioned in paragraph (c) … ”

In my earlier reasons for judgment of 16 November 1998 I held that s 20(2)(c) preserved the applicant’s right to apply, under s 16 of the Legal Practitioners Act, to have the bills taxed. The taxation which was ordered would appear to be a “remedy in relation to [the] right” to apply for the order. If this were not so the right preserved by s 20 would be worthless. An important aspect of the “remedy” of taxation is the determination of who should pay the costs of it. The “one-sixth rule” was a powerful adjunct to a taxation for which ever party in whose favour it worked. It continues to apply to a taxation the right to which was preserved by s 20 of the Acts Interpretation Act after 1 July 1998.

1. The next question is how the section should be applied in the particular circumstances. The applicant submits that the bills, though three in form, are one in substance because their contents represent work done in the performance of one, entire, indivisible retainer. On that basis it is said that the respondent could submit only one bill when the retainer had been completed though, by agreement, the applicant might have accepted and paid interim bills. In fact that is what happened but the relevant question is whether, as a matter of law, the bills are several, separate bills or part of the one bill.

[10] The principle is explained by Halsbury’s Laws of England, 4th edition, volume 44,
par 97:

“The general rule is that when retained by a client a solicitor undertakes to finish the business for which he is retained. Thus, a retainer is, speaking generally, an entire contract … to do certain business, to finish that business, and to be remunerated at the completion of the business … This general rule applies to retainers to conduct or defend ordinary actions .. but it is not an absolute one and yields to special circumstances”.

It is said in par 170:

“The whole bill of costs need not be delivered at once; there is no objection to a delivery in parts … if there is an entire contract, successive bills which are intended to be separately enforceable may not be delivered unless the client consents, or the matter is completed, or a natural break has occurred … ”.

Speaking of the principle Jessel MR said, in Re Hall and Barker [1878] 9 Ch D 538 at 543:

“It has undoubtedly been decided that the retainer of a solicitor at common law to bring an action is a retainer to do one single thing, to bring the action to an end. Actions at common law did not, in former days, occupy a very long time, and were comparatively simple matters.”

1. Equity maintained its superiority over the common law by the assertion of the Chancery judges that their jurisdiction was complicated, diverse and tended to protraction, thus making it unreasonable to expect a solicitor to bring litigation to a complete finality before an entitlement to deliver a bill arose. Equity therefore developed the principle that distinctly identifiable parts of the retainer would constitute a separate retainer for the purposes of billing and if a “natural break” occurred in the conduct of the litigation a bill could be delivered up to the time of the break. In Hall and Barker the solicitor had been retained to obtain the winding up of an insolvent debtor and then to act for the creditor in the winding up. Obtaining the appointment of the trustee in bankruptcy was held to be a “break” for the purposes of allowing a bill to be delivered. The Master of the Rolls spoke of the performance of a “series of services” each one of which easily identifiable, would justify the delivery of a bill.

2. The principle was extended by In Re Nelson, Son & Hastings [1885] 30 Ch D 1 which held that the delivery of bills annually in respect of various services provided was not part of a continuous retainer but constituted separate bills which could not be reopened after the expiration of 12 months. The last word on the subject appears to have been expressed in Re Romer & Haslem [1893] 2 QB 286. According to the headnote:

   “While a solicitor is retained to conduct litigation, other than an ordinary action at common law, which may extend over a considerable period of time, and in which breaks may occur of such a kind as to be equivalent to the conclusion of a definite and distinct part of the proceedings, he may deliver to his client a bill of costs for business done up to the occurrence of any such breaks in the litigation, and demand payment. Where, however, in the course of the proceedings several bills of costs have been sent in at different times by the solicitor, it is always a question of fact whether they were sent in as final bills for work done up to the occurrence of any such break in the litigation, so as to be separate bills … or whether they were merely statements of accounts or portions of one entire bill, so as to make the whole liable to taxation … ”.

3. I have looked at the items comprising the three bills which were sent to taxation. I cannot discern in them any separate or distinct “service” for which payment is requested. Nor can I see any “natural break” in the litigation which might justify the delivery of separate bills. The action was, or should have been, a relatively straight forward one for damages for misrepresentation and/or contravention of the Trade Practices Act 1974. It did not involve a multiplicity of parties or separate claims. Despite the law’s reluctance to find that a solicitor has undertaken an entire retainer rather than one which would entitle him to deliver distinct bills, the rule continues to apply in cases where the contract is to bring or defend an uncomplicated action. This is such a case. Even in these circumstances the solicitor may make an agreement with his client for the delivery of separate periodic bills. There is no evidence of such an agreement here. The applicant merely acquiesced, no doubt from lack of adequate knowledge, in the respondent’s rendering of frequent bills on account of the final bill.

4. It follows that the three bills are in reality part of the one bill which has been reduced by more than a sixth. Strictly speaking it is the 12 bills of costs which constitute the final bill. The three in question are themselves part of the one bill and do not constitute the single bill. However they were the only bills referred to taxation. The principle I have discussed makes it appropriate to aggregate them and treat them as one for the purpose of deciding whether one-sixth or more had been taxed off.

5. The respondent submits that the result which s 9(2) appears to dictate should be varied because it made an offer to compromise the outcome of the taxation and that the savings achieved by taxation are less than the amount offered. It is submitted that the effect of O 91 r 77A and r 89 is that the applicant should pay the costs of the taxation.

6. The offer was

   “… to settle the whole of [the respondent’s] liability for costs in relation to the bills of costs dated 18 September 1997, … 15 October 1997 and … 16 December 1997 … on the following terms: -

(a)	the respondent pay the applicant … $4,000
(b)	the … amount … be paid in four equal instalments on … 1 June, 1 August, 1 October and 1 December 1999
(c)	… if the order … made on 16 November 1998 that the bills of costs be referred … for taxation is set aside by the Court of Appeal the applicant must refund to the respondent within seven days any amount paid to the applicant in accordance with paragraphs (a) and (b) …
(d)	… any amount owing to the respondent in accordance with paragraph (c) is a liquidated debt … ”

1. Order 91 r 77A provides:

   “ (3) If an offer to settle under rule 89 is made and is not accepted –

(a) if the amount allowed by the taxing officer … is equal to, or more than the amount of the offer – the party liable for the costs must pay the costs of the taxation … ”

The wording of the subrule is not really apposite to a situation where taxation of a bill occurs after it has been paid but I think the intent of the rule can be applied to such a situation. The respondent offered to reduce the aggregate amount of the bills by $4,000. The amount taxed off was less than $4,000. I think that sufficiently brings the case within the subrule. However, the applicant submits that the offer to settle was not made “under r 89”. That rule provides:

“ (2) An offer to settle –

…

(b)

may be served –

(i)	in the case of costs not payable under a judgment or order or otherwise under these rules – at any time after the liability for costs accrues (but not less than seven days before the day appointed for directions by the taxing officer); or
(ii)	in any other case – at any time after the judgment or order for costs is made.”

1. The respondent submits that the taxation falls within the category described in r 89(2)(b)(ii) on the basis that the costs were payable under a judgment or order of the court. As I have already mentioned this misstates the position. The costs were not payable pursuant to an order of the court. They were payable by reason of the applicant’s retainer of the respondent. The order of the court merely directed that the amount of the costs should be scrutinised by the taxing officer.

2. The point about this debate is that the offer to settle was delivered to the respondent on 19 May 1999. That was the first day appointed by the taxing officer for the taxation of the bills. The directions hearing for the taxation was held on 18 December 1998. Rule 89 required the offer to have been served on or before 11 December 1998. It follows that the offer was not made in accordance with r 89.

3. Notwithstanding this the applicant concedes that the making of the offer is a relevant factor to be considered when deciding who should pay the costs of the taxation. The concession is probably rightly made although at first sight O 91 r 77A and r 89 which seem to have no application to a case where the taxation of costs falls within the scope of s 9(2) of the Legal Practitioners Act. That subsection directs, in cases to which it applies, what order should be made for the costs of a taxation. The Supreme Court Rules, being subordinate legislation, cannot alter the operation of an act of parliament. This view is shared by the editors of Supreme Court Practice Queensland by Ryan, Weld and Lee: see the annotation to r 89. However, s 9(4) of the Legal Practitioners Act provides that the taxing officer “shall … be at liberty to certify specially any circumstances relating to such bill or taxation and the court of judge shall in all cases be at liberty to make thereupon such order as such court or judge may think right respecting the payment of the costs of such taxation.” The making of an offer to settle the taxation of costs to which s 9(2) applies can probably be regarded as a “special circumstance” which, if certified to the court, enables it to make an order which departs from the strict rule provided by subsection 2. This is in essence what has happened here by the taxing officer’s reference to the court. It follows the court may take the offer into account in determining who should pay the costs of the taxation, though the taxing officer himself could not have done so.

4. The applicant nevertheless submits that the terms of the offer would not have given the applicant more than he received from the taxation. The submission is based principally upon the fact that the offer was silent as to the costs of the application to the court which, it will be remembered, were made to depend upon the outcome of the taxation. Had the offer been accepted the applicant would have received $4,000 payable over six months, conditional upon the appeal failing, but he would have been left to pay his own costs of the originating summons. As a result of the taxation the applicant, having achieved an overall reduction of more than one-sixth, is entitled to the costs of the taxation and, by virtue of my order, the costs of the application. In my opinion this circumstance makes it right to ignore the offer when determining who should pay the costs of the taxation. In accordance with the views I have expressed the respondent should do so.

5. This leaves for adjudication liability to pay the costs of the application. My initial approach was expressly endorsed by the Court of Appeal. I was requested to reconsider the question in the event that the costs of the taxation were not to be paid by one party only, or that one party was ordered to pay part only of the costs of the taxation. I have concluded that the applicant succeeded on the taxation, judging success by the criterion set forth in s 9(2) of the Legal Practitioners Act. It follows that the premise on which I made the original order for costs of the application has not been shown to be inappropriate, with the result that the applicant should pay the costs of the application as well as of the taxation.

6. Even if I were to reconsider the question of the costs of the application separately from liability to pay the costs of the taxation I would come to the same conclusion. It is true that the applicant succeeded in obtaining an order for taxation of three only of the 12 bills of costs which it sought to have referred. However, I do not see that the costs of the application were increased by that fact. The respondent resisted stoutly having any of the bills referred to taxation. It was necessary for the applicant to obtain the court’s order and I do not see that costs were increased by arguing over 12 bills rather than three. It cannot be said that the affidavit material was increased in length or complexity by including all 12 bills in it. It was appropriate to have regard to the contents of all the bills when deciding whether special circumstances existed which would justify referring three bills to taxation.

1. Another factor of some relevance is that the applicant’s summons sought relief of a different kind which was conceded by the respondent only on the day the matter came before the court. The applicant’s overall success on the summons was greater than might appear from a perusal of the order made.

2. I answer the directions sought by the taxing officer in the following manner:

1.	the costs of the taxation should be determined in accordance with s 9(2) of the Legal Practitioners Act 1995;
2.	the offer to settle made by the respondent on 19 May 1999 was not an offer to settle in accordance with O 91 r 89 of the Rules of the Supreme Court;
3.	the offer to settle, though not made pursuant to O 91 r 89, should not be taken into account by the taxing officer when exercising the discretion conferred by O 91 r 77A. The offer may be taken into account by the judge to whom a taxing officer has certified that the offer is a special circumstance affecting the costs of the taxation;
4.	the appropriate order for the costs of the application for an order that the bills of costs be referred to taxation is that the respondent, Lynch & Co, should pay them, to be assessed on the standard basis;
5.	the taxation which has occurred should be regarded as taxation of part of one bill.

1. As I have indicated the respondent should pay the applicant’s costs of the taxation. Those costs should include the occasions on which the parties appeared to argue about those costs.