SDS Corporation Ltd v Pasdonnay Pty Ltd
[2004] WASC 26 (S2)
•27 FEBRUARY 2004
| JURISDICTION | : | SUPREME COURT OF WESTERN AUSTRALIA IN CIVIL |
| CITATION | : | SDS CORPORATION LTD -v- PASDONNAY PTY LTD & ANOR [2004] WASC 26 (S2) |
| CORAM | : ROBERTS-SMITH J | ||
| HEARD |
| ||
| DELIVERED | : 27 FEBRUARY 2004 | ||
| SUPPLEMENTARY | |||
| DECISION | : 23 JULY 2004 | ||
| FILE NO/S |
| ||
| BETWEEN |
|
AND
PASDONNAY PTY LTD (ABN 86 009 131 622)
First Defendant
IAN GRAEME REAR
Second Defendant
Catchwords:
Costs - Application for indemnity costs - Principles - Application for orders removing costs limits - Whether O 66 r 12 of the Rules of the Supreme Court or s 215 of the Legal Practice Act 2003 applies - Principles
Costs - Application for special costs order - Removal of costs limits - Whether costs allowable under a Legal Costs Determination are inadequate - Costs of interstate practitioners - Whether allowable
[2004] WASC 26 (S2)
Legislation:
Legal Practice Act 2003 (WA), s 215
Rules of the Supreme Court, O 66 r 12
Supreme Court Act, s 167(1)
Result:
Application granted
Order for indemnity costs made
Special costs orders made
Category: A
Representation:
Counsel:
| Plaintiff | : | Mr D M Stone |
| First Defendant | : | Mr D J Garnsworthy |
| Second Defendant | : | Mr D J Garnsworthy |
Solicitors:
| Plaintiff | : | Williams & Hughes |
| First Defendant | : | Cullen Babington Hughes |
| Second Defendant | : | Cullen Babington Hughes |
Case(s) referred to in judgment(s):
Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors
[2003] WASC 53(S2)
Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271
Anfrank Nominees Pty Ltd v Connell (No 2) (1992) 7 WAR 179
Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport
Insurance Pty Ltd (1986) 71 ALR 287
Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992)
30 NSWLR 359
Bruce Angelo Gatti as Trustee for the Bruce Gatti Family Trust v Brett Davies
[2000] WASC 190
[2004] WASC 26 (S2)
Cameron v The Queen [2004] WASCA 16
CIBC Wood Gundy Australia Ltd & Anor v ICL Australia Pty Ltd [1999]
WASC 93
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Collins v Westralian Sands Ltd (1993) 9 WAR 56
Elders Trustees & Executor Co & Anor v The Estates of Oscar and Evan
Herbert (1996) 132 FLR 24
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd
& Ors (1998) 81 ALR 397
Goodwin v Phillips (1908) 7 CLR 1
Hancock Family Memorial Foundation Ltd & Anor v Porteous & Anor [2000]
WASC 61
Harrison v Schipp [2001] NSWCA 13
In re Port Adelaide Corporation; Ex parte Groom (1922) SASR 35
Jewel Walk Pty Ltd & Anor v Kondinin Group Inc [2001] WASC 197
McCullie v Butler (1962) 2 QB 309
MGICA (1992) Ltd v Kenny & Good Pty Ltd (No 2) (1996) 140 ALR 707
Minister for Works (WA) v Australian Dredging & General Works Pty Ltd
[1986] WAR 235
NMFM Property Pty Ltd v Citibank Ltd (No 11) (2001) 109 FCR 77
Penfold v Higgins [2003] NTSC 89
Powell v May [1946] KB 330
Quancorp Pty Ltd & Anor v MacDonald & Ors [1999] WASCA 101
R v Pinkstone (2001) 24 WAR 406
R v Porter (2001) 53 NSWLR 354
Re Malley SM; Ex parte Gardner [2001] WASCA 83
Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727
Rodway v The Queen (1990) 169 CLR 515
Schmidt v Gilmour [1988] WAR 219
SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2003] WASC 147
SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2004] WASC 26
Stevens v Perrett (1935) 53 CLR 449
Stobbart v Mocnaj & Ors [1999] WASC 252
Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2)
Wayella Nominees Pty Ltd as Trustee for the D J Gordon Family Trust v
Cowden Ltd [2003] WASC 210(S)
Case(s) also cited:
Chamberlain v Boodle & King (a firm) [1982] 3 All ER 188
Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400
[2004] WASC 26 (S2)
Galvin v Forests Commission of Victoria [1939] VLR 284
Geraldton Building Co Pty Ltd v Christmas Island Resort Pty Ltd (1994) 13
WAR 242
Jackman v Dandenong Sewerage Authority (No 2) (1967) 20 LGRA 413
Re Bond Corporation Holdings Ltd (1990) 1 WAR 465
Shine Fisheries Pty Ltd v Minister for Fisheries [2002] WASCA 11
Wheatley v Bower [2001] WASCA 293
Winspear v Galdarm Pty Ltd (1997) 18 SR(WA) 115
[2004] WASC 26 (S2)
ROBERTS-SMITH J
ROBERTS-SMITH J: This is an application by the plaintiff by way of chamber summons filed 5 May 2004 for a special costs order pursuant to O 66 r 12 of the Rules of the Supreme Court ("RSC") following judgment delivered in the plaintiff's favour on 27 February 2004 (SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2004] WASC 26).
The chamber summons seeks orders that:
1. Costs reserved by the order of Hasluck J on 8 August 2003 (being the costs of the defendants' applications dated 11 June 2003 to set aside interlocutory injunctions, and 18 June and 16 July 2003 to disallow amendments to the statement of claim) and awarded to the plaintiff on 27 February 2004, be taxed and paid on an indemnity basis;
2. Pursuant to O 66 r 12(1) the plaintiff's costs be taxed and paid without regard to the limits imposed by the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2002, items 8, 9, 13 and 14.
3 The plaintiff relies on the affidavit of Alison Stacy Kingston sworn
28 November 2003 and the affidavit of Leah Lillian Maher sworn on 20 April 2004. I was also referred to an affidavit of Andrew Gilbert sworn on 12 March 2004 and one of Ian Graeme Rear sworn on 23 June 2004, both in support of an application for extension of time within which to enter an appeal. That last is not an application with which I am asked to deal. The affidavits were referred to for the purpose of supporting the plaintiff's submission as to the nature and extent of the work involved at the trial.
4 The trial was held from 4 to 11 November 2003. It was an expedited
trial. The parties were constrained by certain programming orders, most predicated on the fact the trial had been listed for six days. They included time limits for examination-in-chief and cross-examination. Closing addresses by counsel were limited by time but supplemented by written submissions not to exceed 35 pages (although in the event they did so marginally).
5 Ms Kingston's affidavit primarily concerned the costs order sought in
respect of the order made by Hasluck J on 8 August 2003. She deposes to
the following.6 On 22 November 2002 Barker J made orders in favour of SDS and
ordered a mandatory and prohibitory injunction against Pasdonnay. SDS
[2004] WASC 26 (S2)
ROBERTS-SMITH J
had pursued injunctive relief against Pasdonnay as a result of the latter's refusal to provide information to Deloittes to allow it to complete a due diligence report and because of Pasdonnay's assertions that the Business Assets Sale Agreement ("the Agreement") was frustrated, or repudiated, or terminated during the period 19 September to 8 November 2002.
7 The mandatory injunction effectively required Pasdonnay to comply
with the terms of the Agreement to allow SDS' agents Deloittes access to further information to perform a due diligence enquiry on Pasdonnay. The prohibitory injunction restrained Pasdonnay from dealing with its assets or running the business in a manner contrary to cl 5.1 of the Agreement.
8 On 22 July 2003 Hasluck J heard applications by Pasdonnay to set
aside the interlocutory injunctions and further applications to disallow
amendments to the statement of claim.9 In support of their application to dissolve the prohibitory injunction
the defendants relied upon two claimed recent Determinations of the
Agreement said to have been made on 20 and 21 May 2003.10 By notice of 20 May 2003 the defendants raised, for the first time,
the existence of an implied term of the Agreement which entitled Pasdonnay to terminate because HSBC had not consented to the transfer of assets and assumption of liabilities.
The second notice, of 21 May 2003, embodied a new demand, that SDS pay $1,000,000 purportedly pursuant to cl 11.1 of the Agreement.
In response to the assertion that SDS owed Pasdonnay $1,000,000, SDS was obliged to raise a claim for rectification and amended the statement of claim accordingly.
13 The Agreement is complicated. The arguments raised by the
defendants to dissolve or vary the injunction were extensive and complicated. The defendants' submissions in support of the application to disallow the plaintiff's amendments to the statement of claim to embody the rectification plea, required close consideration by SDS and a detailed response.
14 On the defendants' application, on 14 July 2003 McKechnie J
vacated the trial date which had then been set for 4 August 2003 and
re-listed the hearing for 4 November 2003.
[2004] WASC 26 (S2)
ROBERTS-SMITH J
15 The fact that the trial was adjourned for a further four months
rendered it more important to SDS that the prohibitory injunction be
maintained.16 According to the Kingston affidavit, as a result of the multiplicity of
issues raised by the defendants on their various applications, a considerable amount of time was spent in "getting up" for the hearing. That involved preparation of affidavits, submissions, lists of authorities, and in consideration of the facts and numerous principles of law raised by the defendants.
17 In response to the defendants' applications, the plaintiff put on the
following affidavits. There was a 268 page affidavit (including annexures) of Alison Stacy Kingston sworn 24 June 2003. This was required to establish Pasdonnay's conduct during the course of the proceedings and primarily the number of times it purported to rescind, repudiate or terminate the Agreement. The affidavit was read without objection.
18 There was a 332 page affidavit (inclusive of annexures) of Jamie
Restas sworn 25 June 2003, he being the partner at Thomson Playford responsible for the drafting of the Agreement. His evidence went to the necessity to support the plea for rectification.
There was an affidavit of Kevin Vincent Benson sworn 24 June 2003 comprising 131 pages, including annexures. He was the officer of SDS involved in the negotiations for the Agreement and who gave instructions to Mr Restas whose affidavit was provided to support the plea for rectification.
20 Ms Kingston deposes that the application to disallow or vary the
injunction raised a number of issues including the principles involved on such applications, the principles relating to the construction of agreements, rectification, principles relating to specific performance (readiness, willingness and ability to perform) and the balance of convenience. She deposes that the application to disallow the amendment to the statement of claim similarly raised complex issues of fact and law which required consideration and preparation of submissions in response.
21 SDS instructed Mr Abbott QC of the Adelaide Bar to appear on its
behalf at the hearing. He subsequently appeared for SDS on the trial. Mr Stone, who had conducted the hearing following which the injunction was granted, was retained as junior counsel (and he also appeared at the trial).
[2004] WASC 26 (S2)
ROBERTS-SMITH J
22 Ms Hermien Bouman, a paralegal at Williams & Hughes, attended
counsel on the hearing. Her attendance was said to be necessary to facilitate the management of the materials required for the hearing, comprising two volumes of authorities and the defendants' application to disallow the amendment to the statement of claim (23 authorities), two lever arch volumes on the defendants' application to dissolve the interlocutory injunction (totalling 26 authorities), two volumes of authorities in response to the chamber summons to dissolve the interlocutory injunctions (plaintiff's authorities, totalling 33) and various affidavit materials of the plaintiff and the defendants together with court documents and the orders of Barker J.
Ms Kingston deposes that considerable work was performed from May onwards in preparation for the interlocutory hearing.
24 The defendants raised the first issue in relation to the satisfaction of
the HSBC liability at settlement, by correspondence commencing on or around 14 May 2003. There was then extensive correspondence between the parties from 14 May up to and including 21 July 2003, in relation to the issues that were finally ventilated at the interlocutory hearing. There were some 70 letters, some annexing amended pleadings and/or notices of termination and other documents. Ms Kingston gives an approximate assessment of the costs associated with corresponding with Pasdonnay's solicitors prior to the interlocutory hearing on those issues, of $7,262.50 being 17.5 hours at $415.00 per hour.
25 A large volume of affidavit material was prepared and a considerable
amount of time was required to be spent on assessing the defendants' case and the authorities in support of it, researching the law and preparing arguments in response, as well as considering the factual background of the action and taking instructions from Thomson Playford in Adelaide and conferring with senior counsel. Ms Kingston estimates total cost to Williams & Hughes and counsel to be in excess of $145,000 plus almost $4,500 for Thomson Playford. She assesses approximately $5,000 for senior counsel, $4,565 for junior counsel and $1,300 for the attendances of senior counsel, junior counsel and Ms Bouman at the interlocutory hearing before Hasluck J on 22 July 2003.
26 In his judgment delivered 3 August 2003 (SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2003] WASC 147, Hasluck J dismissed the defendants' application to dissolve the injunction, dismissed the defendants' application for disallowance of the amended statement of
[2004] WASC 26 (S2)
ROBERTS-SMITH J
claim and dismissed the plaintiff's application for disallowance of the
amended defence.27 In her affidavit Ms Maher gives specific but approximate assessment
of the costs incurred by the plaintiff's solicitors leading up to and in the
trial.28 The action was instituted by writ in October 2002. Williams &
Hughes were instructed to conduct the proceedings. Thomson Playford, solicitors in Adelaide, took instructions from SDS (which is based in Adelaide) on a number of, but not all, issues and prepared drafts of documents, many, but not all, witness statements and collated and prepared documents for discovery, amongst other work. In some instances Thomson Playford transmitted instructions from SDS to Williams & Hughes.
29 Ms Maher claims the issues in the action were numerous and
complicated, as appears from the parties respective closing submissions, the pleadings and the large volume of documentation tendered (some 276 exhibits of more than 1,260 pages in total). Ten witnesses gave oral evidence.
30 Ms Maher deposes that she has examined the costs incurred item by
item according to the relevant Determination and states that as a general proposition, where the scale has been exceeded, it is because of the volume of work necessarily performed as a consequence of the number of issues the number of documents and the number of witnesses. For some items the scale has not been exceeded.
31 Referring to Mr Gilbert's affidavit sworn 15 March 2004 Ms Maher
states that the defendants estimate their costs incurred to be at least $650,000; whereas the actual costs SDS has incurred, including counsel fees, travel and accommodation costs, comes to a total in excess of $660,000.
32 The items in respect of which Ms Maher says the scale has been
exceeded are discovery and inspection, answers to further and better particulars, getting up and attendance at trial. She details the time spent by date and the costs claimed by application of various rates for senior counsel, junior counsel, senior practitioner, junior practitioner and clerk. I do not propose to provide that detail here. I shall content myself with summarising the matters deposed to by Ms Maher.
[2004] WASC 26 (S2)
ROBERTS-SMITH J
Item 9(b) of the scale provides a maximum allowance of $2,090.00 for giving discovery, calculated as 10 hours of work for a junior practitioner at $209.00 per hour. Williams & Hughes prepared five affidavits of discovery between 14 January and 26 October 2003 for which they would claim costs of approximately $2675.45. Over the same period Thomson Playford spent almost 65 hours work on discovery with total costs of approximately $10,800.00. The plaintiff's total costs for discovery are approximately $13,500.00.
34 Ms Maher deposes that discovery was expanded as the issues in the
action expanded. The defendants made successive amendments to the defence introducing new issues progressively. In addition, further discovery was given as documents were located. The plaintiff's discovery produced in total some 2,140 documents, most with multiple pages, over the five affidavits.
35 Item 8(b) of the scale provides for a maximum of $1,045 for the
giving of particulars of a pleading. The allowance is based on five hours
at a junior practitioner's rate.36 On 24 December 2002 SDS filed an answer to a request for further
and better particulars of the statement of claim. There were 11 requests and each was answered comprehensively with two answers running over a page in length. The answer to requests was nine pages long and according to Ms Maher required many hours reviewing of documentation and the taking of further instructions.
37 The time said to be spent by Williams & Hughes in preparing the
answer to the request was almost nine hours and their costs are calculated
at approximately $1,745.
Item 13 of the scale allows for getting up, a maximum of $31,300 calculated on the basis of 100 hours at a senior practitioner's rate. Williams & Hughes claim more than 40 hours with total costs of $48,510; Thomson Playford are said to have spent 148 hours with costs approximating $32,000 - the plaintiff's total costs for getting up are said to be somewhat more than $80,000.
39 Item 14 of the scale provides for counsel fees. The maximum
allowed under the scale for a six day trial for Queens Counsel included $16,240 for three days preparation and the first day of trial plus $4,060 for each day thereafter. In this case the maximum allowed for senior counsel under item 14 would be $36,540. Mr Abbott QC's costs were $82,877 including GST and disbursements.
[2004] WASC 26 (S2)
ROBERTS-SMITH J
The maximum amount under items 14(a) and (c) would total $24,012 for junior counsel. Mr Stone's total fees for attendance at trial were $28,500.
41 There is also a claim for a Mr Brennan of Thomson Playford as
instructing solicitor. The maximum allowable under item 14(e) for a
solicitor attending trial is $11,268; Mr Brennan's costs were $6,932.42 Ms Bouman also attended trial and was charged for at a rate of
$1,300 per day for six days. The amount allowable under item 14(f) of the scale will be $5,436 based on six hours per day in court. Ms Bouman's fees are claimed at $7,800.
43 The total amount charged for attendance at trial by counsel and
instructors was $126,109, as opposed to $77,256 allowable under the scale. It is said that an instructing solicitor and clerk were required to attend counsel at the trial as a consequence of the volume of documentation, the number of witnesses and the speed with which the trial was conducted.
44 Finally, Ms Maher deposes that her affidavit has been prepared
conservatively and as a guideline to those costs items in the scale which has been exceeded and to briefly describe the work which was done. She states that there is a very large amount of correspondence and telephone attendances which has not been included in the estimate of getting up but which, on closer examination, is likely to be added to the getting up, or possibly other totals.
45 For convenience, I set out below a table I have prepared from the
affidavit material setting out in short form the plaintiff's claims which are
said to above scale.
| Item | Scale Fee | Williams & | Thomson | Total |
| Hughes | Playford | Claimed | ||
| 9 – Discovery and | $2,090.00 | $2,675.45 (in | $10,814.45 | $13,489.90 |
| inspection | (10 hours junior | excess of 32 | (64.9 hours) | |
| practitioner) | hours) | |||
| 8(b) – Answer to | $1,045.00 (5 hrs | $1,745.50 | N/A | $1,745.50 |
| request for further | junior | (8.8 hours) | ||
| & better particulars | practitioner) |
[2004] WASC 26 (S2)
ROBERTS-SMITH J
| 13 – Getting up | $31,300.00 | $48,510.73 | $31,951.50 | $80,462.23 |
| (100 hrs senior | (approx | (approx | ||
| practitioner) | 40.6 hours) | 148 hrs) | ||
| 14 – Counsel fees | $36,540.00 | Abbott QC | ||
| for trial (senior | ($16,240.00 for | $82,877.00 | ||
| counsel) | prep & 1st day $4,060.00 for 2nd and subsequent days) | |||
| 14(a) and (c) – | $24,012.00 | D. Stone | ||
| Junior counsel | $28,500.00 | |||
| 14(e) – Instructing | $11,268.00 | Mr Brennan | ||
| solicitor | $6,932.00 | |||
| 14(f) – Clerk | $5,436.00 | Ms Bouman | ||
| (6 hrs/day) | $7,800.00 ($1,300.00/day) |
Note: Approximate total costs for attendance at trial were $126,109.00 as against scale allowance of $77,256.00.
Indemnity Costs
46 The plaintiff seeks an order that its costs of the three summons dealt
with by Hasluck J on 22 July 2003 and 5 August 2003 be paid on an indemnity basis or alternatively, taxed without reference to the limits imposed by item 23 of the scale, on the basis the issues raised were of unusual difficulty or unusual complexity.
47 Mr Stone accepted the test for the award of indemnity costs as stated
by Woodward J in Fountain Selected Meats (Sales) Pty Ltd v
International Produce Merchants Ltd & Ors (1998) 81 ALR 397 at 401:"I believe that it is appropriate to consider awarding 'solicitor and client' or 'indemnity' costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some a wilful disregard of the known facts or the clearly established law. Such cases are,
[2004] WASC 26 (S2)
ROBERTS-SMITH J
fortunately, rare. But when they occur, the court will need to
consider how it should exercise its unfettered discretion."
48 That formulation was articulated in a case in which his Honour had
found continuation of the action against a defendant was completed unwarranted. Woodward J was not purporting to limit the category of cases in which indemnity costs might be awarded. That is clear from his reference to what he had earlier said in Australian Transport Insurance Pty Ltd v Graeme Phillips Road Transport Insurance Pty Ltd (1986) 71 ALR 287 at 288:
"That discretion is 'absolute and unfettered', but must be exercised judicially (Trade Practices Commission v Nicholas Enterprises (1979) 28 ALR 201 at 207). Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can be properly awarded in appropriate cases where 'there is some special or unusual feature of the case to justify the court exercising its discretion in that way' (Preston v Preston [1982] 1 All ER 41 at 58)."
49 As the learned author of Seaman, Civil Procedure in Western
Australia points out at [66.1.16A,] the judicial discretion to award indemnity costs is not confined by reference to the categories of case in which such an order has been made up to the present time: NMFM Property Pty Ltd v Citibank Ltd (No 11) (2001) 109 FCR 77 at 92, but it is confined to some form of delinquency and the conduct of the proceedings (Harrison v Schipp [2001] NSWCA 13 at [1], [153]; BC2001003444).
50 The type of case referred to in Fountain is therefore only one example of cases in which indemnity costs may be awarded. It applies not only to a plaintiff but to a party who persists in the defence to a case which it knows, or ought to have known if it had competent legal advice, to be hopeless, and so causes unnecessary expense and cost to the plaintiff (Penfold v Higgins [2003] NTSC 89 at [6]; BC200304556).
51 In Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 Power J said (at 362) that a departure from the general rule that costs are payable on a party/party basis is justified:
"… only where the action taken, or the action threatened, by the defendant constituted, or would have constituted, an abuse of the process of the court, or where the actions of the defendant,
[2004] WASC 26 (S2)
ROBERTS-SMITH J
in the conduct of any defence to the proceedings, have involved an abuse of the process of the court, in the sense that the court's time, and the litigant's money, has been wasted on totally frivolous and thoroughly unjustified defences."
In MGICA (1992) Ltd v Kenny & Good Pty Ltd (No 2) (1996) 140 ALR 707 Lindgren J, in the context of an application for indemnity costs based on a "Calderbank" letter and having discussed the authorities, said (at 711) that:
"Clearly, the circumstances must take a case out of the 'ordinary' or 'usual' category if for an order for indemnity costs is to be made, since, as noted earlier, the rules evince an intention that in that category of case, an order for costs signifies an order for costs on a 'party and party' basis. Perhaps the various 'tests' which have been suggested are classifiable as 'abuse of process', 'ulterior or extraneous purpose' and 'unreasonableness' tests."
In Re Wilcox; Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727 Black CJ said (at 728 – 729):
"The circumstances under which indemnity costs will be ordered have been discussed in many cases in this court and it is well established that the starting point for any consideration of an application for indemnity costs is that in the ordinary case costs will follow the event and the court will order the unsuccessful party to pay the costs of the successful party, on a party and party basis, a basis which will fall short of complete indemnity. Nevertheless the court has an absolute and unfettered jurisdiction in awarding costs, although that discretion must be exercised judicially. So, indemnity costs may properly be awarded where there is some special or unusual feature in the case justifying the court exercising its discretion in that way: see John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 at 203 per Hill J, referring to the judgment of Sheppard J in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225; 118 ALR 248. but as Hill J pointed out in John S Hayes (at 203):
… care must be taken not to circumscribe the discretion by reference to closed categories. It is not a necessary condition of the power to award costs that a collateral
[2004] WASC 26 (S2)
ROBERTS-SMITH J
purpose be shown. The categories warranting the exercise of the discretion are not closed: Colgate Palmolive at 233; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Fed C of A, 3 May 1991, unreported) per French J at 8; Ragata Developments Pty Ltd v Westpac Banking Corp (Fed C of A, 5 March 1993, unreported) per Davies J at 6. In each case it will be necessary to look at the particular facts and circumstances to see whether an exercise of discretion to order costs on an indemnity basis is warranted."
54 Wheeler J made some remarks in Quancorp Pty Ltd & Anor v MacDonald & Ors [1999] WASCA 101 at [6] – [7] which are apposite here:
"In J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers (WA Branch) (No 2) (1993) 46 IR 301, French J made certain comments in relation to Fountain Selected Meats, which may be of relevance. His Honour said (at 303):
'Although there is said to be a presumption in such cases that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reasons, a party persists in what should on proper consideration be seen to be a hopeless case.'
There appear to me to be two competing principles. On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as 'hopeless' so as to justify an award of indemnity costs to the successful party. However, where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost. Persisting in a case which can only be characterised as 'hopeless' is an example of the type of conduct which may lead
[2004] WASC 26 (S2)
ROBERTS-SMITH J
the court to a view that the party whose conduct gave rise to the
costs should bear them in full."
I respectfully agree.
56 Mr Garnsworthy emphasised that the starting point is always that a
party and party order will usually be made and that the court will only award indemnity costs where there are exceptional reasons for doing so. I accept that submission. In Re Malley SM; Ex parte Gardner [2001] WASCA 83 a bench of five Judges of this Court held that a special costs order of this nature will only be made in exceptional circumstances, referring to Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
57 In the present case I think it comes to the question whether the
plaintiff has been put to additional costs by reason of the unreasonableness or some form of delinquency in the conduct of the litigation, by the defendants.
58 The next point raised by Mr Garnsworthy was that there is no
evidence before me of a costs agreement between the plaintiff and its solicitors, and in the absence of such an agreement the plaintiff could not recover costs greater than those allowed by a relevant determination of the Legal Costs Committee. In support of that proposition he referred to Stobbart v Mocnaj & Ors [1999] WASC 252. That was a review of the taxation of costs. The learned Master had ordered solicitors for the first defendants to pay certain costs of the action on an indemnity basis. At [6] Parker J said:
"In this case the order was for the costs of the action between the stipulated dates to be taxed on an indemnity basis. That has been long established to be a basis for taxation different from ordinary party and party costs, even though party and party costs are also correctly viewed as providing at least a limited indemnity to the other party to litigation. A number of relevant authorities were considered by Nicholson J in Ballato and Ors v Cooperative Bulk Handling Limited, unreported; SCt of WA (Nicholson J); Library No 8036; 30 January 1990. In particular, drawing on the decision in EMI Records Ltd v Ian Cameron Wallace [1983] 1 Ch 59 his Honour was persuaded (at 6) that the ordinary and accepted meaning of an order for costs to be taxed on an indemnity basis is that 'all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred'. In my respectful view that is a
[2004] WASC 26 (S2)
ROBERTS-SMITH J
conclusion well supported by authorities in England and in this country. Those authorities, however, have been decided in legal situations which are to be distinguished from that which now prevails in this State. As was observed by Ipp J in Unioil International Pty Ltd and Ors v Deloitte Touche Tohmatsu (A Firm) and Ors, unreported; SCt of WA (Ipp J); Library No 970491; 25 September 1997 at 3-4:
'Indemnity costs, as Megarry VC observed in EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59 at 65, have often been "more or less equated with orders for costs as between solicitor and own client". In this State, as Malcolm CJ (with whom Nicholson and Wallwork JJ agreed) said in Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271 at 284:
"… by O 66 r 11(2), the position is that unless there is an agreement in writing between a solicitor and his client pursuant to s 59 of the Legal Practitioners Act the fees allowed under the scale in the Fourth Schedule apply both as between party and party and solicitor and client."
As I observed in Collins v Westralian Sands Ltd (1993) 9 WAR
56 at 64:'There may be items which, by their nature, are not "matters referred to in that scale". An example of this kind might possibly be counsel's opinion on the merits of a particular cause of action. Save for items of this kind, and where no costs agreement under s59 of the Legal Practitioners Act has been entered into, in this State there should be no difference between the items and amounts allowed under a party and party bill of costs and those under a solicitor and client bill of costs.'
Accordingly, in the light of the costs regime in force in this State, an order for indemnity costs has less significance than in those jurisdictions where the amounts allowed for party and party costs are materially lower than those allowed for solicitor and client costs."
I would respectfully agree with this.
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60 Parker went on to observe (at [8]) that an order for costs to be taxed
on an indemnity basis is necessarily an order that the paying party should indemnify the other party to the extent of that other party's legal liability to pay costs. If there is a statutory limit to the liability, that is the extent of the indemnity. Hence in his Honour's view, if a party had not incurred costs, in the normal sense of incurring the binding legal liability to pay costs, there would be nothing to indemnify. His Honour pointed out that in the case before him it was common ground there was no written agreement as to costs between the plaintiff and the plaintiff's solicitors. In the absence of such an agreement, the practitioners had no lawful entitlement to recover from the plaintiff any sum greater than a proper allowance for practitioner and client costs pursuant to the scale.
However I note that later in his judgment Parker J said (at [14]):
"I would add that even though statutory provisions, together with O 66 r 11(2) and the reasoning canvassed in the Unioil decision cited earlier, have modified and moderated its application, it remains the underlying principle for the taxation of costs on an indemnity basis that 'all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred'. In this jurisdiction, however, at least in the absence of a written agreement as to costs, a consequence may well be that, generally speaking, costs in excess of a proper scale allowance may well be unreasonably incurred or of an unreasonable amount within the meaning of that principle. I say 'generally speaking' because, as was observed in Collins v Westralian Sands Ltd at 64, there may be costs properly allowed which are outside the scale."
62 This must, with respect, be right but to advance that in the present
case seems to me to beg the question. I would not read Parker J's remarks about there being no entitlement to recover costs in excess of those prescribed in the scale, as saying anything about the power to raise or remove costs limits. More importantly, Parker J acknowledged that the maximum which an unsuccessful party could be ordered to pay would be the maximum cost the other party was liable to pay his own solicitor. That is a reference to solicitor/client costs, not party/party costs. The indemnity to the client may therefore properly cover the solicitor/client costs the client was or is obliged to pay. If a relevant costs limit is increased and costs taxed accordingly, those costs are payable by the client and may be recovered from another party against whom a costs order is made.
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63 Mr Garnsworthy submitted however that in the absence of evidence
of a costs agreement which takes the indemnity out of the range otherwise available under the determination (because the plaintiff would have a legal liability to pay in accordance with the agreement) the liability of the defendants could only be to the maximum prescribed in the determination – not what it might be if a special costs order were made. He referred to Bruce Angelo Gatti as Trustee for the Bruce Gatti Family Trust v Brett Davies [2000] WASC 190 in which Wheeler J doubted whether there was power to make a special costs order as between solicitor and client. However in that case, her Honour accepted that there was room for argument about the scope of the intended application of O 66 r 12(1), her comments were obiter and she did not find it necessary to deal with the jurisdictional argument.
64 As Mr Garnsworthy quite properly acknowledged, Anderson J saw
no difficulty in the Court making a special costs order in relation to costs payable by a plaintiff to defendants, notwithstanding the lack of proof of any costs agreement between the defendants and their solicitors, in the Hancock Family Memorial Foundation Ltd & Anor v Porteous & Anor [2000] WASC 61.
65 There, counsel for the plaintiffs had taken the preliminary point that
the defendants were not entitled to a special costs order unless they were prepared to state whether there was a costs agreement between them and the defendants and to produce the agreement. Reliance was placed upon s 59(3) of the Legal Practitioners Act 1893, which reads:
"(3) A client who enters into an agreement made under subsection (1) shall not be entitled to recover from any other person, under any order, judgment, or agreement for the payment of costs, any costs which are the subject of that agreement beyond the amount payable by the client to the practitioner under that agreement."
66 The submission was said to be supported by two decisions, Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271 and Anfrank Nominees Pty Ltd v Connell (No 2) (1992) 7 WAR 179.
Anderson J said (at [5]):
"I do not think that either case stands for the proposition that the Court cannot make a special costs order or should not do so unless the party seeking the order produces the costs agreement to demonstrate that recovery of costs in the amount taxed
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pursuant to the special order will not infringe s 59(3). As I understand the cases, they go no further than to say that a solicitor ought not to actually recover costs in excess of those which he is entitled to charge his client pursuant to any agreement he may have with his client; and that to do so may amount to unprofessional conduct. In other words, the question whether there is a costs agreement, and, if so, what is its effect, are questions which become relevant after the bill has been taxed. This is in accordance with the terms of the subsection itself. According to the subsection, what is prohibited is the 'recovery' of costs beyond the amount payable by the client."
68 His Honour rejected the submission that he should not proceed to
consider making a special costs order unless and until the defendants produced any costs agreement that may have been made between them and their solicitors. I respectfully accept his Honour's reasoning and conclusion.
69 Another of Mr Garnsworthy's submissions is based on s 215 of the
Legal Practice Act 2003. Prior to 1987 the power to make special orders as to costs was derived from O 66 r 12(1). The position became unclear in 1987 because amendments to the Legal Practitioners Act 1893 (WA) removed the power to fix and regulate costs from the Judges of the Supreme Court and vested it into the Legal Costs Committee ("the Costs Committee"). The new section 58ZB of that Act provided that where a determination of the Costs Committee is in force any other subsidiary legislation regulating the remuneration of practitioners in respect of business covered by the determination is of no force or effect. Once the Costs Committee made their first Determination in July 1988, O 66 r 12(1) ceased to have any force or effect. It was not until the fifth Determination of the Costs Committee made in July 1999 that it purported (by cl 4 of that determination) to provide that the court has power to make orders of the kind referred to, inter alia, in O 66 r 12. The submission is, that was too late.
70 The submission is that the Costs Committee "does not have the
power to revive the dead. If O 66 r 12(1) was ultra vires following the 1987 amendment then the Committee could not breathe life into the corpse. Regard must be had to s 43(1) of the Interpretation Act: Shine Fisheries Pty Ltd v Minister for Fisheries [2002] WASCA 11". It was submitted that it follows that no power to make special orders as to costs existed at the time the relevant services were performed on behalf of the plaintiff.
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It is further submitted that s 215 of the Legal Practice Act 2003 (WA) does not assist the plaintiff because that did not come into operation until 1 January 2004 and does not have retrospective effect.
72 Mr Stone agrees with the submission that s 215 has only prospective,
not retrospective, effect, but says that enables me to make orders in accordance with its terms, where a case is of unusual difficulty, or complexity or importance.
73 It is as well to commence the examination of these issues with the
brief historical outline given by Malcolm CJ in Anfrank Nominees Pty
Ltd v Connell (supra) at 277- 278:"Until the establishment in 1988 of the Legal Costs Committee by s 58M of the Legal Practitioners Act 1893 as amended by the Legal Practitioners Amendment Act 1987, the scales of costs, including those applicable to proceedings in the Supreme Court, were fixed by the judges of the Supreme Court pursuant to ss 37 and 167(1)(d) of the Supreme Court Act 1935. The powers of the Legal Costs Committee under s 58W(1) of the Act include the power to make determinations regulating the remuneration of practitioners in respect of contentious business in or for the purposes of proceedings before the Supreme Court. As at July 1988 the relevant scale was that contained in the Fourth Schedule as provided in O 66, r 11(1). By virtue of s 58ZB of the Act the determinations of the Committee which were gazetted on 15 July 1988 and 6 October 1989 deprived the Fourth Schedule of the rules of any force and effect. Those determinations, however, apply percentage increases to the scale by reference to the scale as set out in the Fourth Schedule and those determinations each took effect and came into force in accordance with the provisions of s 58ZA of the Act.
Section 58ZB(1) of the Act provides that, subject to certain other provisions not presently relevant, the taxation of bills of costs of practitioners shall be regulated by a determination in force under s 58W. Section 58ZB(2) provides that:
'Where a determination is in force under section 58W in respect of any business referred to in sub-section (1) of that section any other subsidiary legislation fixing or purporting to regulate the remuneration of practitioners in respect of that kind of business shall be of no force or effect.'
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The result is that, while the Fourth Schedule ceased to have force and effect as subsidiary legislation by way of a rule of the court, it was given force and effect to the extent that it was incorporated and amended by reference to the Fourth Schedule as it stood prior to the gazettal in July 1988, a process which was repeated in the gazettal in October 1989.
Counsel for the plaintiffs indicated that, although the Fourth Schedule had been deprived of force and effect, the taxation of the first defendant's bill had proceeded 'as if the Fourth Schedule had force and effect'. In my opinion, the Fourth Schedule was given continuing force and effect by virtue of the determination of the Committee in respect of the period after 15 July 1988 and also in respect of the period after 6 October 1989."
74 Order LXV, r 18(1), introduced on 1 January 1954, allowed a court
or Judge to increase any of the allowances in the scale, order direct taxation on a special scale with or without limits, if of the opinion that "… by reason of the unusual complexity or importance of the case", any of the allowances were inadequate.
With effect from 1 February 1967 that order was rescinded and replaced by a provision which commenced:
"Where the court or judge is of opinion that a special order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason the court or judge may order that any particular allowances in the scale be increased …"
At all relevant times for present purposes O 66 r 12(1) was in terms similar to the 1967 amendment to r 18(1)(a).
In Schmidt v Gilmour [1988] WAR 219 Burt CJ (with whom Kennedy J agreed) said (at 220) with respect to O 66 r 12(1):
"The rule clearly contemplates the possibility of there being 'good and sufficient' reason for making an order increasing the scale in (the Fourth Schedule) notwithstanding the fact that the case is not one of unusual complexity or of importance. For myself I can see no reason for saying that the amount of work which of course must fairly fall within the scale item of getting up case for trial, and whether it does or not will be for the
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Taxing Master to determine, cannot of itself constitute a good and sufficient reason for doing so."
78 The learned Chief Justice went on to say that the inadequacy must be
such as to constitute a good and sufficient reason and that will be a
question for judgment in each case.
As Ipp J observed in Collins v Westralian Sands Ltd (1993) 9 WAR
56 at 66:
"By these remarks Burt CJ made plain that the amount of work done may alone constitute 'good or sufficient reason' for the court to order that particular allowances in the scale be raised or a limit removed. Nevertheless even if it is established that a taxation based on the scale would be inadequate compensation, the discretion conferred upon the court remains and falls to be exercised by it."
The Legal Practitioners Act 1893 was repealed by s 4 of the Legal Practice Act 2003, which came into operation on 1 January 2004.
81 The Legal Practice Act established a Legal Costs Committee and authorised it to make determinations regulating the remuneration of legal practitioners in respect of certain business or proceedings. The Committee is to review each determination at least once in the period of two years after it was made (s 211).
82 Section 9 of the Legal Practice Act provides that any legal costs determination made and in force under the 1893 Act immediately before the Legal Practice Act came into operation is to be reviewed within two years after it was made or last reviewed under the 1893 Act, as the case requires.
| 83 | Section 215 of the Legal Practice Act provides that: "215. Effect of determination |
(1)
Subject to sections 221 and 241 of this Act and section 14 of the Legal Aid Commission Act 1976 –
(a)
the taxation of bills of costs of legal practitioners, as between legal practitioner and client or party and party; and
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(b)
any other aspect of the remuneration of legal practitioners the subject of a determination,
is regulated by a legal costs determination in
force under section 210.
(2)
Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following •
(a)
order the payment of costs above those fixed by the determination;
(b)
fix higher limits of costs than those fixed in the determination;
(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 taxed.
(3)
Nothing in subsection (1) is to be construed as limiting the power of a court, a judicial officer or a taxing officer of a court to determine in any particular case before that court or judicial officer the amount of costs allowed.
(4)
If a legal costs determination is in force under section 210 in respect of any business referred to in section 210(2), any other subsidiary legislation fixing or purporting to regulate the remuneration of legal practitioners in respect of that kind of business is of no force or effect."
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84 The first question is whether s 58ZB(3) operated on O 66 r 12(1) in
the manner contended for by counsel for the defendants. That turns on the
proper characterisation of the rules.85 In CIBC Wood Gundy Australia Ltd & Anor v ICL Australia Pty Ltd [1999] WASC 93 Murray J held the repeal of O 66 r 16 imposing the limit on taxed costs was a procedural amendment not affecting substantive rights in respect of costs incurred prior to its repeal. His Honour was of the view that O 66 r 16 had been repealed by amendments to the Rules published in the Government Gazette of 7 February 1992. He adverted to decisions of the District Court which had concluded that r 16 was effectively repealed on the publication of the first Determination of the Costs Committee on 15 July 1998 - although those decisions then went on to conclude that r 16 continued in effect by reason of its adoption by the Costs Committee's first Determination until its final repeal by the Gazette of 7 February 1992. His Honour disagreed, being of the view that the rules within O 66 were unaffected by s 58ZB(3) and so continued in effect of their own force.
86 Murray J noted the rule making power of the Judges of the Supreme
Court to regulate the costs of proceedings where those costs are or are not the subject of a determination by the Costs Committee, had been preserved by s 167(1)(d) and (da) of the Supreme Court Act 1935.
His Honour said (at [11] – [13]):
"In my opinion the rules within O 66, to the extent that they regulate 'matters relating to the costs of proceedings' as provided in the Supreme Court Act s 167(1), as opposed to such rules (if any they may be) which themselves directly fix or purport to regulate the remuneration of legal practitioners, would remain in force and effect. Specifically O 66 r 16 did not in my opinion directly fix or purport to regulate the remuneration of practitioners. It did no more than impose a limit on the process of taxation or allowance of costs. As such it was no more, in my view, than a rule regulating a matter relating to costs, being the total sum which might be fixed or allowed on taxation or otherwise as the recoverable professional costs.
In Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271 at 277-8 Malcolm CJ, with whom Nicholson and Wallwork JJ agreed, commented that the first and second Determinations of
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the Legal Costs Committee gazetted on 15 July 1988 and 6 October 1989, because of the provisions of the Legal Practitioners Act s 58ZB(2), deprived the Fourth Schedule to the Rules of the Supreme Court, by reference to which formerly costs were fixed, of legal force and effect, except to the extent that those Determinations incorporated the Fourth Schedule by reference and amended it. But that is quite a different matter from the proposition that the Rules of the Supreme Court within O 66 dealing with costs were repealed by such Determinations. In the result therefore, I would take the view that after the process of costs determination commenced, those rules continued in their effect and it was not necessary to conclude that they did so because they were adopted or given effect by reference in the various costs determinations."
I note however that the Committee itself, at least at one time, appears to have taken a different view. When it reported its third Determination dated 27 March 1991 it included the statement:
'The Committee also considers and hereby determines that the limits formerly contained in O 66 r 16 and adopted in the 15 July 1988 Determination should not apply to proceedings commenced on or after 1 April 1991.'
It is entirely unnecessary for present purposes to consider the legal effect of that 'Determination'."
88 These remarks were obiter, but I do, with respect, agree with them.
That conclusion is reinforced by the fact that when the Legal Practice Act was introduced, s 167 of the Supreme Court Act was correspondingly amended to read:
"167 (1) Rules of Court may be made under this Act, by the
Judges of the Supreme Court, for the following purposes:…
(d)
For regulating any matters relating to the costs of proceedings fixed by legal costs determination (as defined in the Legal Practice Act 2003).
(da)
For prescribing or regulating any matters relating to the costs of proceedings, where those costs are
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not fixed by legal costs determination (as defined
in the Legal Practice Act 2003)."
89 But if it be assumed that s 58ZB(3) did operate upon O 66 r 12(1) to
render it of no force or effect, there is an alternative basis upon which the submission of the effect of that section was to "repeal" or legislate O 66 r 12(1) out of existence and that it could not be revived by the Costs Committee, must be rejected.
90 That alternative basis is that there is no reason the Costs Committee
could not make a determination by reference to an existing provision (or even some other document) which itself otherwise had no force or effect. That is what the Costs Committee did in its Determinations of 15 July 1998 and 6 October 1989 with respect to the scales of costs in the Fourth Schedule, as explained by Malcolm CJ in Anfrank (supra) at 277.
91 It is also what the Costs Committee did in the text of its fourth
Determination of 1 February 1997 (referred to by Murray J in CIBC Wood Gundy) and more specifically in cl 4 of its fifth and sixth Determinations of 1 July 1999 and 1 June 2002 respectively.
In its fourth Determination the Committee said:
"7 (1) Another matter also had to be addressed by the Committee. This relates to the circumstances in which a special costs order should be made under O 66, R 12 of the Rules of the Supreme Court. The Committee's determinations have never prevented the Court from making special costs orders and such orders are often made. However, the lack of information about how the maximum amounts in former determinations were calculated has made the task of the Court a difficult one. The result is that there is an uncertainty about the likely outcome in relation to special costs order applications."
Clause 4 of the fifth and sixth Determinations read:
"Application of O 66, r 11(3), r 12, r 13, r 18, r 19, r 20(3), r 21
and r 23 of the Rules of the Supreme Court4 In the circumstances set out in Order 66, rules 11(3), 12, 13, 18, 19, 20(3), 21 and 23 of the Rules of the Supreme Court, the Committee determines that the Court or the Taxing Officer, as
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the case may be, has the power to make the orders and
allowances referred to in those rules."
94 As I have said, in my view O 66 r 12(1) continued to operate
notwithstanding the Determinations made by the Costs Committee and not by virtue of its "adoption" by the Committee. However if that be wrong, then the rule has been operative by virtue of its incorporation by reference, certainly in the fourth and subsequent Determinations, in the same way as the Committee gave effect to the scales of the Fourth Schedule (and then increased them by a percentage) in its first and second Determinations.
95 Legislation by reference is not a novel concept. The incorporated
provisions take legal effect, not from their original source, but from the source of the power of the authority which incorporates them. That legislative method has been used in the criminal law (State legislation incorporated as Commonwealth law by the Commonwealth Places (Applications of Laws) Act 1970: see R v Pinkstone (2001) 24 WAR 406, [12]; R v Porter (2001) 53 NSWLR 354, [41] and Cameron v The Queen [2004] WASCA 16) and the Corporations Law (the National Co-operative Scheme Acts of the Commonwealth which were subsequently applied by State legislation, in the early 1980s).
96 On this reasoning, the flaw in the submission that the Costs
Committee could not "revive" rules which had been "repealed" or made void, is apparent. The rule did not need to be revived. It took effect as part of a Determination of the Committee from the date the Determination came into operation. I do not need to consider what the position may have been between July 1988 and July 1999, because the Determination contained cl 4 since 1 April 1991 and the work here was done between October 2002 and November 2003.
97 The situation changed on 1 January 2004 when the Legal Practice Act came into operation. The power to remove the cost limit set in determinations of the Costs Committee was embodied in s 215 of the Act itself. It was not possible thereafter for the Committee by determination to give a wider power (which O 66 r 12(1) was) as that would necessarily have been inconsistent with the Act and so ultra vires. Nor was it possible for the Judges of the Supreme Court to do so by the use of the rule making power in s 167(1) of the Supreme Court Act.
98 The general rule making power in the Supreme Court Act has now to be read subject to the provisions of s 215 of the later Legal Practice Act
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which specifically deals with the power to remove or vary costs limits (Goodwin v Phillips (1908) 7 CLR 1, 14). Order 66 r 12(1) is itself in conflict with s 215 of the Legal Practice Act because it covers exactly the same matter and is wider - it is therefore invalid to that extent (Powell v May [1946] KB 330; Stevens v Perrett (1935) 53 CLR 449; In re Port Adelaide Corporation; Ex parte Groom (1922) SASR 35).
99 In CIBC Wood Gundy, supra, Murray J held (at [16]) the defendant's right to costs and the plaintiff's liability to pay them, did not vest or accrue until judgment at the earliest. The repeal of r 16 therefore did not affect any right or interest within the meaning of s 37(1)(c) of the Interpretation Act 1984 (WA). More significantly, after setting out a passage from the judgment in Rodway v The Queen (1990) 169 CLR 515 at 518 – 519, Murray J concluded (at [20]):
"For my part, with respect, I prefer the view expressed by the High Court in Rodway. One may speak of retrospectivity in relation to procedural matters and costs, but in truth, enactments effecting changes in such areas operate prospectively and in doing so they adversely affect no accrued right or liability. The former O 66 r 16 operated at the point when liability to pay costs was fixed in respect of a sum of money, or at the earliest when the liability to pay costs to be taxed was fixed by judgment. It then imposed a limit upon the award which could be made. By the time that point in this litigation had arrived, r 16 had been repealed. It follows that that repeal, operating entirely prospectively, removed the limit in relation to this costs order and the process of taxation." (My emphasis)
100 With respect, I consider that view to be correct and apposite to the
application of s 215 of the Legal Practice Act. So far as this case is concerned then, the plaintiff's application falls to be determined under s 215 because the plaintiff's right to costs accrued on 27 February 2004, as did the obligation of the defendants to pay them. From that date the only issue was quantification. Section 215 had by then come into operation.
101 Turning then to s 215, it may be seen that in substance it reflects the
wording of the relevant rule prior to the 1967 amendment, namely that an order to increase or remove a costs limit may be made if the court is of the opinion the costs allowable are inadequate because of the "unusual difficulty, complexity or importance of the matter". Given that the words "or any other good or sufficient reason" were part of the rules since 1967, their omission from s 215 must be taken to be deliberate.
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Counsel for the defendants submitted the word "unusual" in s 215 must be read as qualifying "difficulty", "complexity" and "importance" and referred to my decision in Wayella Nominees Pty Ltd as Trustee for the D J Gordon Family Trust v Cowden Ltd [2003] WASC 210(S) in support of that submission.
103 The application in Wayella was made under O 66 r 12(1). It was put on two bases – first that the case was unusually complex and secondly, that the amount of time reasonably spent by counsel and solicitor in getting the case up for trial was so substantial as to constitute in itself a good and proper reason for removal of the costs limit. I was not satisfied "unusual complexity" had been demonstrated, but I did grant the application on the alternative basis upon which it was advanced. In relation to the issue of "unusual complexity" I said (at [29]):
"In my view, the words 'unusual complexity' signify that the allowances in the Determination are fixed in the expectation that cases to which they apply may be cases of complexity. In other words, for a case to be complex, whether as to fact or law, will not, of itself, justify a departure from the scale unless the degree or nature of the complexity is unusual in a respect which would be seen as reasonably justifying such departure."
104 In Wayella the defendant had accepted that it was necessary for it to show "unusual complexity". That was not a view I had taken previously. In Jewel Walk Pty Ltd & Anor v Kondinin Group Inc [2001] WASC 197, referring to O 66 r 12(1) I had pointed out (at [15]):
"There are therefore three separate bases upon which a special
costs order may be made. They are by reason of:
(a) the unusual complexity of the case; or (b) the importance of the case; or (c) any other good or sufficient reason."
105 That was a view to which I adhered in Alpine Holdings Pty Ltd & Ors v Warwick Entertainment Centre Pty Ltd & Ors [2003] WASC 53(S2), [23]. On reflection I consider the approach I took to that aspect in Wayella was not correct. I adhere to my view as expressed in Jewel Walk and Alpine Holdings. It also has the advantage of being supported by authority – it was, for example, the view taken by Burt CJ in Schmidt v Gilmour, supra.
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I see no reason why s 215 should be read differently. In my view then, what must be shown for a special costs order under s 215 is that:
(a) the amount of costs allowable under a Determination is inadequate; (b) because of: (i) the unusual difficulty, or
(ii) the complexity, or
(iii) the importance
of the matter.
107 Before turning to the question whether the plaintiff has shown the
costs allowable under the Determination are inadequate, it is necessary for me to deal with a further submission by Mr Garnsworthy. That was as to the costs claimed in respect of Mr Brennan and his firm, Thomson Playford, as set out in the affidavit of Ms Maher.
108 The submission is that there is no evidence that Mr Brennan is a
certificated practitioner within the meaning of the Legal Practitioners Act and so it follows that neither his costs nor those of Thomson Playford can be taken into account for the purpose of this application.
109 The submission relies upon an affidavit of Fiona Catriona Macleod
sworn 29 June 2004. In that affidavit she deposes to her enquiries conducted since 27 May 2004 as to whether Mr Brennan was admitted to practice in Western Australia and held a valid practice certificate in this State. As a result of her enquiries she has ascertained that he was not admitted to practice in this State when he appeared at the trial in November, that he did not hold a current Western Australian practising certificate at that time and there was no other method by which he could have practised in this State without so doing.
Counsel for the plaintiff has made no challenge to those facts.
Mr Garnsworthy relies upon Minister for Works (WA) v Australian Dredging & General Works Pty Ltd [1986] WAR 235.
112 Mr Stone argues the point has no substance and relies upon Elders
Trustees & Executor Co & Anor v The Estates of Oscar and Evan Herbert (1996) 132 FLR 24 for his submission that the costs of the interstate practitioners are allowable. In additional submissions filed
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19 July 2004 he further submits that whatever the situation previously, it
has now changed under the Legal Practice Act.113 Mr Garnsworthy says that the point is important on this application
and it is not merely a matter which would fall to be determined on taxation, because whether or not Thomson Playford and Mr Brennan's costs can be included goes to the issue whether costs under the Determination would be inadequate.
114 In Minister for Works (WA) v Australian Dredging there had been an arbitration in Western Australia of a dispute arising under a contract for work done in Western Australia, between the Minister and the company.
115 The company retained a firm of Victorian solicitors to act for it.
They instructed senior and junior counsel of the Victoria Bar. Most, if not all, of the getting up work was done in Victoria. The hearing took place over nine days in Western Australia. The Victorian counsel who appeared for the company were briefed by the Victorian solicitors and a solicitor from the firm also attended on the hearing. None of the legal practitioners was a "certificated practitioner" within the meaning of the Legal Practitioners Act.
An order for costs was made by the arbitrator in favour of the
company.
117 The Minister contended the company could not recover fees paid by
it to the Victorian counsel or solicitors. This contention was based on ss 76 and 77 of the Legal Practitioners Act. If it was found the legal practitioners had acted in breach of those sections they would have been liable to punishment for contempt of court under s 81 of the Legal Practitioners Act. The Court (Burt CJ, Wallace and Kennedy JJ) declined to express a view about that, particularly as the legal practitioners had not been heard.
118 All members of the Court held the item "counsel fees" was confined
to fees paid to counsel who would have a right of appearance before the Court and the fees paid to principal solicitors for getting up case for trial are confined to such fees paid to practitioners who are certificated practitioners as defined in the Legal Practitioners Act.
As Kennedy J explained (at 242):
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"The clear assumption in O 66 and in the Fourth Schedule is that, where solicitors and counsel are referred to, they will be persons who are permitted to act in legal proceedings in the Supreme Court. Only certificated practitioners may so act – see s 76 of the Legal Practitioners Act – unless, of course, the court is, in the particular matter, exercising federal jurisdiction, in which event, any person entitled to practise as a barrister or solicitor in any federal court has a right of audience – s 55B(4) of the Judiciary Act 1903 (Cth) – and in consequence, it may be accepted, his fees or costs, as allowed, may be recovered. Similarly, where, in the Fourth Schedule, Queens' counsel are referred to, it is implicit that they will be Queen's counsel for the State of Western Australia, subject once again to the position when federal jurisdiction is involved."
120 His Honour added furthermore, that he did not consider the
respondent could rely upon O 66 r 19 and seek to have agency charges especially allowed, because it was abundantly clear that the Victorian solicitors were acting throughout as principals and not as agents.
A quite different result was arrived at (albeit in different circumstances) by the Court of Appeal of the Northern Territory in Elders Trustee & Executor Co.
122 The trial Judge (Martin CJ) made a number of findings of fact which
included the following. The appellants had engaged Morgans, South Australian solicitors to conduct litigation in the Northern Territory. Morgans engaged Cridlands, their Darwin agents. The bulk of the direction regarding the gathering of evidence came from Morgans and it was the solicitors of that firm who took most of the statements of witnesses, many of them in Darwin. Morgans drafted many of the court documents, including affidavits. Counsel were chosen by Morgans and they played a primary and major role in briefing counsel, attending at conferences and at trial. The terminology employed by the solicitors and by others in reference to them indicated Morgans were the ones acting for the relatives and Cridlands were the agents. Morgans were not simply the agents of the relatives for the purposes of instructing Cridlands. They were heavily involved in the conduct of the litigation and had control of the relatives' side of it.
Gallop J (with whom Kearney and Thomas JJ agreed) said (at 30):
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"For the purpose of deciding whether Morgans' fees were recoverable on the taxation, it is not strictly necessary, in my opinion, to categorise them as the principals or as Cridlands' agents. In so far as it is necessary to do so, however, it is perfectly plain on the whole of the evidence that they were in fact the principals and that Cridlands were their agents. Morgans took instructions from the clients pursuant to their retainer. Because they were not admitted to practice in the Northern Territory they engaged Cridlands as their Darwin agents. Whatever Cridlands did in the conduct of the litigation was as the Darwin agents of Morgans. Such an arrangement is absolutely commonplace, not only in the Northern Territory but in other parts of the Australian judicial system where it is necessary to engage local practitioners having the right to practise in the particular jurisdiction and an address for service which will be within the geographical limits prescribed by the particular rules of court. Contrary to the conclusion of Martin CJ, I am firmly of the opinion that this was such a case."
And in similar vein (at 35):
"In my opinion the commonplace situation of Darwin solicitors conducting litigation as solicitors on the record for solicitors throughout Australia or elsewhere who have not been admitted to practice in the Territory is not to be impeded in any way by the spectre of substantial litigation being conducted in the Territory pursuant to such an arrangement, and the un-admitted solicitor being at risk about proper recovery on behalf of the client of that solicitor's fees. Provided the fees are properly incurred and reasonable, they are always recoverable on taxation pursuant to an order for costs in the proceedings."
125 Gallop J's reasons turned in part on his conclusion that because
Cridlands were the solicitors on the record they were the solicitors in the action so far as the Court was concerned, and Morgans' fees therefore fell within those provisions of the rules allowing professional fees out of the jurisdiction as a disbursement.
On that point Kearney J added (at 38):
"Cridlands are to be treated as the appellant's solicitors in the litigation; moneys payable to them for their proper professional costs are recoverable on taxation. Only fees payable to the
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certificated legal practitioners, Cridlands, can be recovered as costs for getting up the Territory case for trial: see Minister for Works v Australian Dredging & General Works Pty Ltd [1986] WAR 235. The proper charges and disbursements in that process of the interstate solicitors, Morgans, are taxable and recoverable under r 63.42(1) as disbursements in the litigation. This approach is similar to that taken by Diplock J on a review of taxation of costs in McCullie v Butler [1962] 2 QB 309 at 313, a similar case; it is sufficient to dispose of this appeal and cross-appeal."
127 Mr Garnsworthy makes the further submission that if Thomson
Playford's fees are allowable at all (which he says they are not) they could not necessarily be allowed in full as agents' fees. The submission is that if service is performed by them in South Australia comprised work contemplated by the Determination to be performed by a certificated legal practitioner in Western Australia, that would "lose the status of agency fees" because it would transgress the rule established by Minister for Works (WA) v Australian Dredging. That, I think, is a question of what would be proper charges to be allowed as a disbursement for work done by an interstate practitioner and would require a more detailed examination than I am able to undertake here – and nor would it be appropriate for me to do so on this application.
128 Minister for Works (WA) v Australian Dredging is a decision of the Full Court of this State and is binding upon me. On the application of the law as enunciated in that case, the costs sought in respect of Mr Brennan's attendance at court could not be allowed. Whether or not, and if so to what extent, Thomson Playford's costs could be allowed would depend upon whether they were acting as principals or as agents of Williams & Hughes. Agents' fees for work necessarily or reasonably done are allowable as a disbursement (McCullie v Butler (1962) 2 QB 309, 313-314) although a special order is required (O 66 r 19(e)).
129 But that brings me to Mr Stone's submission that the situation is now
different because of the provisions of the Legal Practice Act. The argument is that that Act now specifically covers the costs of interstate practitioners who practice in this State.
130 Section 215(1) provides that the taxation of bills of costs of legal
practitioners and any other aspect of the remuneration of legal practitioners which is the subject of a determination, is regulated by a legal costs determination in force under s 210.
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"Legal practitioner" is defined in s 3 as meaning a person:
"(a) who is admitted as a legal practitioner, whose name is on the Roll of Practitioners and who is not a disqualified person; or (b) who is an interstate practitioner who practises in this State."
"Interstate practitioner" is defined in s 3 as meaning a person:
"(a) who has been admitted to legal practice in another State; (b) who is not a local practitioner; (c) who holds a current interstate practice certificate; and (d) whose principal place of practice is in that State."
133 In the same section, "local practitioner" is defined to mean a person
who holds a current practice certificate (in Western Australia) and whose
principal place of business is in this State.134 Thus, relevantly to the issue here, the combined effect of these
provisions is that the remuneration of a practitioner who has been admitted to legal practice in another State, who holds a current interstate practice certificate, whose principal place of practice is in that state, who is not a local practitioner but who practises in Western Australia, is regulated by a determination in force under s 210.
Section 4 of the Legal Practice Act deals with the meaning of "engage in legal practice":
"A person engages in legal practice if the person directly or
indirectly –
(a)
whether in the name of that person or that of any other person –
(i) sues out any writ or process; (ii)
commences, carries on, solicits, defends, or appears, in any action, suit, or other proceedings in any court of civil or criminal jurisdiction in this State; or
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(iii) acts as a barrister or solicitor of the Supreme Court in any cause, matter or suit, information or complaint, civil or criminal, or under any commission for the examination in this State of witnesses, or others, issued by any court in or out of this State;
(b) performs or carries out or is engaged in any work in connection with the administration of law; or (c) draws or prepares any deed, instrument, or writing relating to or in any manner dealing with or affecting –
(i) real or personal estate or any interest in real or personal estate; or (ii) any proceedings at law, civil or criminal, or in equity."
136 By s 210 the Costs Committee may make legal costs determinations
regulating the remuneration of legal practitioners in respect of non-contentious business carried out by legal practitioners or contentious carried out by practitioners in, or for the purpose of proceedings before the Supreme Court, the District Court, a Local Court, a Court of Petty Sessions, a Compensation Magistrate's Court or any other prescribed court.
137 It is apparent from the foregoing provisions that the Legal Practice Act contemplates legal costs determinations applying to work done by an interstate legal practitioner who engages in legal practice in Western Australia, in respect of (inter alia) contentious business carried out before a Western Australian court. Such work includes performing any work in connection with the administration of law or drawing or preparing any writing relating to any legal proceedings, civil, criminal or in equity.
138 These provisions are very widely drafted and it seems to me the
legislature intended to give them the broadest possible ambit so as to cover all work done by legal practitioners, whether in Western Australia or another State or Territory, in respect of proceedings in the courts of this State. The statutory restrictions upon which the reasoning of the Full Court in Minister for Works (WA) v Australia Dredging was based, not only no longer apply, but have been replaced by a legislative scheme which recognises and allows for the conduct of legal work in or in relation
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to legal proceedings in this State, by legal practitioners in another State or
Territory and registered there.139 That being so, Thomson Playford's costs for work done in relation to
these proceedings are regulated by the sixth Determination and are taxable
accordingly.140 I am now able to return to the plaintiff's claim for indemnity costs or
alternatively a special costs order in respect of the applications dealt with by Hasluck J on 8 August 2003. I shall deal first with the defendants' application for dissolution of the injunction.
141 As Hasluck J pointed out (supra) at [26] and [27], an application for a dissolution of an injunction is not an occasion to revisit the original grant of interlocutory relief. It must be something relevantly new or changed. Such an application is not an opportunity to re-litigate the merits of the order granting the injunction.
142 The two matters relied upon by the defendants were the HSBC
consent provision and the alleged failure of SDS to pay $1,000,000 on 30 October 2002. It was argued the Agreement had come to an end and there was accordingly no real prospect SDS could obtain specific performance. That being so, it was said it would be unjust to allow the injunction to remain in force.
143 His Honour found the defendants had failed to identify any new fact
or changed circumstance. The HSBC issue had been before Barker J and
the position in respect of that had not changed.144 As to the $1,000,000 point, Hasluck J considered there was a serious
issue to be tried in relation to it ([44]). He was also conscious that the matter had not been raised before Barker J even though it had been open to the defendants to do so. (The hearing before Barker J was in November 2002; this issue was not raised in the pleadings until June 2003). His Honour said it could not be said any new fact had been discovered or altered circumstance identified which brought the case within the principles concerning dissolution of an injunction. The inference is clear, I think, that his Honour regarded the defendants as simply attempting to re-litigate the matters previously in issue.
145 The defendants' application to disallow an amendment to the
statement of claim was directed to an amendment pleading rectification of the agreement. That was made in response to the defendants having raised the plea with respect to the $1,000,000 payment under cl 11.1 –
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which, as I have mentioned, was not pleaded until June 2003. Hasluck J considered the plaintiff's position was tenable and the rectification issue should be before the court at trial so that all matters in controversy between the parties could be resolved.
The plaintiff's application for disallowance was directed to an amendment to the defence principally concerned with the $1,000,000 issue. Although that reflected a new line of argument the plea was tenable and his Honour allowed it for the same reason as he allowed the plaintiff's plea of rectification.
Had there been no more to it than this, I would not have been minded to consider an indemnity costs order appropriate.
148 However, on my own knowledge of the issues and evidence in the
case as the trial Judge, and having regard to the reasons of Hasluck J, I think the defendants' applications were, in the circumstances, applications which the defendants, properly advised, should have known had no chance of success. In that sense, they were frivolous and unjustified. The applications had to be properly met by the plaintiff because their resolution was critical to the final outcome of the trial. By their conduct in pursuing those applications – and doing so with prolix reference to authority and legal principle – the defendants unnecessarily and substantially increased the cost of this litigation.
I would make the order for indemnity costs in respect of those
applications.
Costs of the Trial
150 The first question under s 215 is whether the amount of costs
allowable under the sixth Determination of the Costs Committee was
inadequate in respect of the items specified.151 Williams & Hughes' costs for discovery and inspection are said to be
approximately $2,675 against scale costs of $2,090. I do not regard that as demonstrating the scale is inadequate, given there is still some element (albeit not as compelling as it was before the 1967 Amendments) of "swings and roundabouts" in it (Collins v Westralian Sands supra, per Ipp J at 66). I would not make a special costs order in relation to this item on the basis of their costs alone, but when Thomson Playford's estimated costs of approximately $10,814 are included the scale amount is significantly inadequate.
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152 I am satisfied that the plaintiff's costs were incurred because of the
unusual difficulty of this matter and its complexity, on the same basis as I
have reached that conclusion in respect of getting up.153 I am not satisfied inadequacy in the scale has been demonstrated in
relation to item 8(b), answer to request for further and better particulars, for which Williams & Hughes' costs are said to be approximately $1,746 against scale costs of $1,045.
154 On the other hand, Williams & Hughes' claim for getting up
(item 13) is said to be approximately $48,511. That is $17,211 more than the scale costs of $31,300. Although there is some merit to Mr Garnsworthy's submission that the plaintiff's affidavit material does not adequately reveal why particular work was done, that is more important (as will be the provision of more detailed information) where the Judge dealing with the application was not the trial Judge or the work claimed for was something in which the trial Judge would not necessarily have been aware (see Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58(S2), per Wheeler J at [9] – [15]. In this case I was the trial Judge and it is apparent to me from that experience why the work detailed in the plaintiff's affidavits was necessary.
155 That brings me to the next requirement under s 215(2). I am satisfied
the plaintiff's costs in excess of scale were incurred because of the unusual difficulty of the matter and its complexity. The scale is therefore inadequate for those reasons. I take Mr Garnsworthy's point that most significant commercial cases will be difficult and/or complex. That may be so, but the legal issues here were complex and the case was of unusual difficulty, not least because of the multiplicity of points raised by the defendants, the amount of documentation involved and the very extensive reference to authorities.
I would order the costs limit in respect of item 13 be removed.
Senior counsel's fees for trial are $82,877. That is an amount $46,337 greater than the scale costs of $36,540.
158 There is no explanation nor indication in the plaintiff's affidavit
evidence of the rate at which senior counsel charged, the time spent in preparation for trial, nor how much of the total claim was disbursements (although the amount is said to include GST and disbursements) nor what they are. I assume they include airfares and accommodation. If so, I would not have thought they would come under the item "counsel fees".
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Be that as it may, it seems to me the component which would fall properly within that item would still be substantially in excess of the scale.
159 Again, on my experience of the trial I am prepared to accept that
considerably more work was required by senior counsel in the preparation and conduct of this case than is contemplated by the scale, because of the unusual difficulty and the complexity of it. I am therefore satisfied the scale is inadequate for that reason and I would order the costs limit in respect of item 14(b) be removed.
160 As to item 14(a) and (c) the difference between the fee for junior
counsel at trial and the scale fee is $4,488. I regard that as a substantial difference reflecting inadequacy in the scale for the reasons I have given in respect of item 14(b). I would order the costs limit in respect of items 14(a) and (c) be removed.
161 I am of a similar view in respect to the claim for a law clerk
attending at trial (item 14(f)) where the cost differential is $2,364 above
the scale of $5,436. I would make a similar order in relation to that.162 No doubt the point would be appreciated, but I should make it clear
that nothing I have said above is to be taken as indicating in what amount any particular item should be taxed. As I said in Jewel Walk supra, at [31] the effect of a special costs order does not impede the discretion of the taxing officer. Where made, the order merely allows the officer to consider the charges made beyond the scale limit. It remains entirely for the exercise of the taxing officer's discretion to determine whether or not they should be allowed as being reasonable charges for work necessarily or reasonably done.
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