Secure Parking (WA) Pty Ltd v Wilson
[2005] WASC 264 (S)
SECURE PARKING (WA) PTY LTD -v- WILSON & ANOR [2005] WASC 264 (S)
| Link to Appeal : |
[2009] WASCA 78 [2009] WASCA 78 [2008] WASCA 268 |
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2005] WASC 264 (S) | |
| Case No: | CIV:1074/2003 | 15-17 AUGUST, 5-8 SEPTEMBER, 14 OCTOBER 2005 | |
| Coram: | LE MIERE J | 7/12/05 | |
| 31/03/06 | |||
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Costs orders made | ||
| B | |||
| PDF Version |
| Parties: | SECURE PARKING (WA) PTY LTD (ACN 073 500 160) ALFRED KARL WILSON NULLAGINE INVESTMENTS PTY LTD (ACN 008 729 717) |
Catchwords: | Costs Indemnity costs Whether rejection of Calderbank offer reasonable Separate bills of costs Certificate for second counsel Whether instruction of senior counsel reasonable Special order for costs Whether scale of costs inadequate due to matter's complexity Whether agreed statement of facts and objections to witness statements form part of getting up case for trial and brief fee |
Legislation: | Legal Practice Act 2003 (WA), s 210, s 215 Legal Practitioners Act 1893 (WA), s 58M, s 58W Rules of the Supreme Court 1971 (WA), O 66 |
Case References: | Eastland Technology Australia Pty Ltd & Ors v Whisson & Ors [2002] WASC 150 Loveday v Renton (No 2) [1992] 3 All ER 184 Optus Networks Pty Ltd v Leighton Contractors Pty Ltd [2002] NSWSC 450 Stanley v Phillips (1966) 115 CLR 470 Calderbank v Calderbank [1975] 3 All ER 333 SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2004] WASC 26 (S2) Tickell v Trifleska Pty Ltd (1991) NSWLR 353 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CIVIL
DECISION : 31 MARCH 2006 FILE NO/S : CIV 1074 of 2003 BETWEEN : SECURE PARKING (WA) PTY LTD (ACN 073 500 160)
- Plaintiff
AND
ALFRED KARL WILSON
First Defendant
NULLAGINE INVESTMENTS PTY LTD (ACN 008 729 717)
Second Defendant
(Page 2)
Catchwords:
Costs - Indemnity costs - Whether rejection of Calderbank offer reasonable - Separate bills of costs - Certificate for second counsel - Whether instruction of senior counsel reasonable - Special order for costs - Whether scale of costs inadequate due to matter's complexity - Whether agreed statement of facts and objections to witness statements form part of getting up case for trial and brief fee
Legislation:
Legal Practice Act 2003 (WA), s 210, s 215
Legal Practitioners Act 1893 (WA), s 58M, s 58W
Rules of the Supreme Court 1971 (WA), O 66
Result:
Costs orders made
Category: B
Representation:
Counsel:
Plaintiff : Mr M J McPhee
First Defendant : Mr M H Zilko SC
Second Defendant : Mr M H Zilko SC
Solicitors:
Plaintiff : Michell Sillar McPhee
First Defendant : Tottle Partners
Second Defendant : Jackson McDonald
(Page 3)
Case(s) referred to in judgment(s):
Eastland Technology Australia Pty Ltd & Ors v Whisson & Ors [2002] WASC 150
Loveday v Renton (No 2) [1992] 3 All ER 184
Optus Networks Pty Ltd v Leighton Contractors Pty Ltd [2002] NSWSC 450
Stanley v Phillips (1966) 115 CLR 470
Case(s) also cited:
Calderbank v Calderbank [1975] 3 All ER 333
SDS Corporation Ltd v Pasdonnay Pty Ltd & Anor [2004] WASC 26 (S2)
Tickell v Trifleska Pty Ltd (1991) NSWLR 353
(Page 4)
1 LE MIERE J: On 7 December 2005 I delivered my reasons for judgment and ordered that the plaintiff's action be dismissed. On 7 December 2005 I heard argument in relation to costs. These are my reasons for judgment in relation to the costs of the action.
Second defendant claims indemnity costs
2 The second defendant claims that the plaintiff be ordered to pay the second defendant's costs taxed on an indemnity basis. If costs awarded are to be taxed on an indemnity basis against a party, it will pay all the costs incurred by its opponent except in so far as they are of an unreasonable amount or have been unreasonably incurred so that, subject to those exceptions, the opponent is completely indemnified for his costs.
3 The second defendant seeks indemnity costs on the basis of an offer to compromise the action made in a letter of 21 February 2003 from the second defendant's solicitors to the plaintiff's solicitors. The letter stated that the second defendant was presenting a "Calderbank" offer. The terms of the offer were:
(a) the second defendant will execute the assignment of lease upon the plaintiff satisfying cl 8 of the lease (ie the plaintiff providing the second defendant with financial statements of both the corporate and personal guarantors of the lease);
(b) the action against the second defendant be discontinued with no order as to costs.
4 The plaintiff's solicitor responded by a letter of 25 February 2003. The plaintiff's solicitor asked the second defendant's solicitor to clarify the following matters:
1. That the terms of the offer are that the second defendant will unconditionally execute the Assignment of Lease that has already been executed by the plaintiff and its current directors and the first defendant.
2. If the plaintiff accepts the offer, please clarify if the terms of the offer are such that they can be carried out simultaneously, ie: the second defendant's solicitor deliver to the plaintiff the executed Assignment of Lease in exchange for the delivery of the financial statements sought by the second defendant. The plaintiff will then
- proceed to have the Assignment Lease stamped and copies forwarded to the respective parties.
5 The second defendant's solicitor replied that it would not execute the Deed of Assignment of Lease (the Deed) for the following two reasons. Firstly, the Deed is approximately seven years old so it is inadequate. Secondly, the Deed refers to a limitation of the liability of the directors of Secure Parking, Garth and Brett Matthews, to a maximum of three months' rent of the Lease. This clause is at odds with the directors' undertaking in their letter to the second defendant on 3 September 2002 that they will provide unrestricted personal guarantees. The Deed is inadequate and a new deed of assignment of lease will have to be drawn in accordance with cl 8 of the Lease. Furthermore, the plaintiffs request that an executed assignment of lease be exchanged for delivery of the financial statements of the directors is at odds with cl 8 of the Lease. The second defendant requires the plaintiff to comply with cl 8 of the Lease, that is, the plaintiff and its directors provide adequate financial information supporting its ability to support the guarantees to the Lease. Upon satisfaction of this term of the Lease, the second defendant would then consent to the Assignment of the Lease.
6 By letter of 21 March 2003 to the second defendant's solicitors, the plaintiff's solicitors said that the matter should be resolved by the following events:
1. The second defendant executing and delivering the Assignment of Lease.
2. At the same time the plaintiff delivering unrestricted personal undertakings by the directors of the plaintiff as discussed in subsequent correspondence.
3. At the same time, the plaintiff deliver financial statements.
7 By letter of 15 April 2003 the plaintiff put forward the following further offer:
1. The plaintiff will deliver up the financial statements of the guarantors of the lease, ie Brett and Garth Matthews within seven days of acceptance of this offer.
2. The second defendant execute the Assignment of Lease dated 1996 within seven days of receiving the said financials.
(Page 6)
- 3. Upon receipt of the executed Assignment of Lease, the plaintiff's solicitors will prepare consent orders to discontinue the proceedings with no order as to costs.
8 By letter of 17 April 2003 to the plaintiff's solicitors the second defendant's solicitors rejected the plaintiff's offer and stated that the second defendant requires full and strict compliance with the lease agreement.
9 By letter of 28 April 2003 to the second defendant's solicitors, the plaintiff's solicitors stated that the plaintiff was willing to consider reimbursing the second defendant for its legal costs if the second defendant proceeded in the manner set out in the plaintiff's previous offer of settlement.
10 The essence of the second defendant's offer was that it required the plaintiff to deliver financial statements of the plaintiff and unlimited personal guarantees from Garth and Brett Matthews. Upon receiving those statements and guarantees the second defendant would consider whether or not it was satisfied that the plaintiff was a respectable, responsible and financially acceptable solvent person capable of performing the obligations of the lessee under the lease and adequately carrying on the business. If the plaintiff accepted that offer then it was at least possible that the second defendant would determine that it was not satisfied that the plaintiff was a respectable, responsible and financially acceptable solvent person capable of performing the obligations of the lessee under the lease and adequately carrying on the business and consequently decline to execute an Assignment of the Lease. The plaintiff was prepared to compromise the action on the basis that the second defendant agreed that upon the plaintiff providing its financial statements and personal guarantees from Garth and Brett Matthews the second defendant would execute the deed of assignment. The second defendant would not agree to that. In effect, the second defendant's offer was that the plaintiff discontinue its action and comply with cl 8 of the lease. Clause 8 of the lease reserves for the second defendant the right to decline the assignment if it is not satisfied by the financial information provided by the plaintiff.
11 Counsel for the second defendant agreed with the relevant principles relating to an offer of compromise advanced by the plaintiff. Those principles are as follows. The rejection of a "Calderbank" letter does not of itself create an entitlement for a special costs order, see Optus Networks Pty Ltd v Leighton Contractors Pty Ltd [2002] NSWSC 450 at [94] and Templeman J in Eastland Technology Australia Pty Ltd & Ors v
(Page 7)
- Whisson & Ors [2002] WASC 150 (supplementary decision given 30 August 2002). In Optus Networks, Hunter J said at [94]:
"The role of offers of compromise as a factor in the exercise of discretion has been the subject of numerous cases, one of which is that of Hamilton J in Cumming v Sands [2001] NSWSC 706 in which his Honour expressed the approach to offers of compromise in that context as follows:
'The parties agree (correctly) that the critical question is whether the first defendant has acted unreasonably in refusing to accept the plaintiff's offer of settlement. In determining this the court looks to all the circumstances of the case: see Nobrega v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No 2) [1999] NSWCA 133 [20], [21]; SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37], [43] and [85]. In the latter case Giles JA said at [37]:'
"The making of an offer of compromise in the form of a Calderbank letter (from Calderbank v Calderbank [1976] Fam 93) where the offeree does not accept the offer but ends up worse off than if the offer had been accepted, is a matter to which the court may have regard when deciding whether to otherwise order, but it does not automatically bring a different order as to costs. All the circumstances must be considered and while the policy informing the regard had to a Calderbank letter is promotion of settlement of disputes an offeree can reasonably fail to accept an offer without suffering in costs. In the end the question is whether the offeree's failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure: see for example John S Hayes & Associates Pty Ltd v Kimberley-Clark Australia Pty Ltd (1994) 54 FCR 201; MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FCR 235"."
(Page 8)
- assurance that the second defendant would execute an assignment of lease. The second defendant's position was that the plaintiff would have to satisfy the requirements of cl 8 of the lease and only if the second defendant was satisfied that those requirements were met would it execute an assignment of lease. In all the circumstances the plaintiff's rejection of the second defendant's offer of compromise does not warrant an award of indemnity costs.
One bill of costs or two?
13 At all times the first and second defendants were represented by separate solicitors. Both defendants were represented by the same counsel at trial. The plaintiff submits that the first and second defendants' costs of the action should be taxed as one bill with a single allowance for counsel and getting up the case for trial.
14 Order 66 r 2(d) of the Rules of the Supreme Court provides that, in the absence of any special order, where several defendants defended actions separately and it appears that the defendants or any of them might have joined in their defence, the Court may allow only one set of costs to those defendants as to whom it appears a joint defence might have been conducted. A party is entitled to be represented as it sees fit and cannot be compelled to share representation with another party. However, if there has been unnecessary separate representation, the court may allow one set of costs only to the parties who could reasonably have had common representation.
15 At the outset of the trial senior counsel for the defendants, Mr Zilko SC, submitted that there was no conflict of interest between the defendants and that they could properly be represented by one counsel. Mr Zilko SC conducted the case jointly on behalf of the defendants. In the course of cross-examination of the plaintiff’s witnesses by Mr Zilko SC, counsel for the plaintiff, Mr McPhee, questioned whether Mr Zilko was asking questions on behalf of the first defendant or the second defendant. Mr Zilko responded, in effect, that the cross-examination was on behalf of the defendants jointly.
16 On the hearing of the motion for costs counsel for the plaintiffs, Mr Garnsworthy, submitted that the plaintiffs had separate interests. That is a relevant but not determinative factor. Numerous defendants appearing by the same solicitor, even if their interests are different, may be allowed only one set of costs where they might have joined in one defence. In the end, the court must exercise its discretion so as to achieve a just result in the particular circumstances of the case.
(Page 9)
17 In all the circumstances, it was reasonable for each of the defendants to retain and be represented by separate solicitors. There were some issues in the action that were issues between the plaintiff and the second defendant but not the first defendant. For example, the plaintiff pleaded that the second defendant was estopped by its conduct from denying that it had consented to the assignment of the lease to the plaintiff. By the time the matter was entered for trial the defendants were able to form the judgment that there was no conflict of interest between them and they might properly be represented by one counsel. However, it was not clear at the outset that that would be the case. In all the circumstances, it was reasonable for them to be separately represented. I will not order that the defendant's costs be taxed as one bill.
18 The defendants are only entitled to one counsel fee. Subject to any special order, the amount allowable to the first and second defendants together for counsel fees must not exceed the maximum allowed under the Legal Practitioners (Supreme Court Contentious Business) Determination ("the Legal Costs Determination") in force from time to time. That was conceded by counsel for the defendants on the hearing of the motion for costs.
Certificate for second counsel
19 Each of the defendants asked that a certificate be granted for two counsel pursuant to Item 19(b) in the schedule to the Legal Costs Determination.
20 The Legal Practitioners Act 1893 (WA), s 58M established a Legal Costs Committee. By s 58W(1) (now s 210(2) of the Legal Practice Act 2003) the Committee may make determinations regulating practitioners' remuneration in contentious business for the purpose of proceedings before courts including the Supreme Court. The determination currently in force is the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2004. Counsel's fees are the subject of Item 19. Sub Item 19(a) specifies the maximum amount for the fee on brief. Sub Item 19(b) specifies the maximum amount for fee on brief for Senior Counsel but only where two or more counsel are certified for. The determination does not contemplate a situation where senior counsel appears alone.
21 Item 19 of the determination is based upon the corresponding item in the Rules of the Supreme Court for the schedule which applied prior to the Legal Costs Determination of 15 July 1988. The rule that the senior counsel fee applied only where two or more counsel were certified for
(Page 10)
- originated at a time when the practice of Senior Counsel was to appear only with a junior. In Western Australia the ethical rule requiring Senior Counsel to appear with a junior has been abolished.
22 Counsel for the defendants, Mr Garnsworthy, submitted that the court may grant a certificate for second counsel even though only one counsel appeared at trial. I do not think that is the correct or preferable approach to the issue. The question whether the court should certify for two or more counsel is a different question from whether or not counsel should be allowed fees at the senior counsel rate, notwithstanding that some considerations may be common to both questions. In Stanley v Phillips (1966) 115 CLR 470 Barwick CJ at 478 – 480 emphasised that in considering whether or not to allow the fees of more than one counsel it is not a question of the level of experience or competence of counsel required by the case; it is a question of whether the case reasonably requires the services of two counsel. Furthermore, it is inappropriate to certify for two counsel where only one counsel appeared at trial.
23 That is not the end of the matter. There are some cases when it is proper in the circumstances of the case that senior counsel should be briefed. It is undesirable that the allowance for senior counsel should be at the junior counsel rate unless a second counsel appears. That would encourage parties to brief junior counsel when it is unnecessary and solely for the purpose of accessing the Senior Counsel rate. It is not desirable to attempt to set out a comprehensive list of the factors most likely to affect the decision whether or not it was reasonable to instruct Senior Counsel. However, in any particular case the relevant considerations might include the nature of the case, its importance for the client, the amount of damages likely to be recovered, the general importance of the case, and any particular requirements of the case.
24 In this case, having regard to the nature of the case, its importance for both defendants and the legal issues involved, it was reasonable for the defendants to instruct Senior Counsel.
25 I am of the opinion that the amount of costs allowable in respect of the defendants' counsel fees under Item 19 of the schedule to the Determination is inadequate because of the unusual difficulty and complexity of the matter. It is appropriate to make a special costs order under s 215(2) of the Legal Practice Act 2003. The special order will be to the effect that the counsel fees of the defendants are to be taxed having regard to the amounts allowable for Senior Counsel.
(Page 11)
Special orders for costs pursuant to s 215(2) of the Legal Practice Act
26 The defendants seek orders that the limits for getting up case for trial and giving discovery of documents be removed. The effect of the order sought is that the taxing officer would fix the amount for those items without regard to the limit in the Determination. Mr Garnsworthy submitted that the order should be made because of the unusual complexity of the matter.
27 I find that the matter is one of unusual complexity. Subsection 215(2) of the Legal Practice Act requires that the matter be one of unusual complexity not that it be of special or exceptional complexity. There are a number of factors that lead me to the conclusion that this matter was one of unusual complexity. They include that there were some complex and difficult issues of law involved in the case.
28 Before the court may make a special order under subs 215(2) of the Legal Practice Act I must be of the opinion that the amount of costs allowable in respect of the matter under the relevant Determinations is inadequate because of the unusual difficulty, complexity or importance of the matter. The second defendant's claim that the amount otherwise allowable for those items is inadequate is based upon the matters put forward in an affidavit of Mr Mancini, the solicitor who has the conduct of the matter on behalf of the second defendant. Mr Mancini deposes:
"I have reviewed the files held by Jackson McDonald in respect of this matter. The majority of the work was performed by myself. My hourly rate from the commencement of the action and until 1 July 2005 was $286 per hour inclusive of GST and subsequent it was $330 per hour inclusive of GST.
I estimate from my review of the files that getting up for the trial exceeds the scale by between 80 to 100 hours and discovery by approximately 3 hours."
29 The maximum amount allowable for giving discovery under the 2002 Determination is calculated by allowing 10 hours at the hourly rate for a junior practitioner. The maximum amount allowable for giving discovery under the 2004 Determination is calculated by allowing 10 hours at the hourly rate for a senior practitioner. I am not satisfied from the evidence that the maximum amount allowable for giving discovery is inadequate. The number of documents discovered does not of itself satisfy me that the scale allowance is inadequate. There is no evidence of any particular difficulty in attending to discovery.
(Page 12)
30 I am not satisfied that the amount allowable under the 2002 and 2004 Determinations for getting up case for trial is inadequate. The maximum amount allowable is $31,300 under the 2002 Determination and $34,100 under the 2004 Determination. Those amounts are calculated on the basis of 100 hours at the hourly rate applicable to a senior practitioner.
31 Mr Mancini says that getting up for the trial exceeded the scale by between 80 to 100 hours. However, the amount allowable is not shown to be inadequate merely because the number of hours spent by the solicitors on getting up the case for trial exceeded, or even greatly exceeded, the number of hours allowed under the relevant Determinations. The first defendant called only one witness – the first defendant himself. The second defendant called only two witnesses, the second defendant's company secretary and a solicitor who gave limited evidence based primarily on documents. Even allowing for other inquiries, the multiple proofing of the witnesses and all the matters required to get the case up for trial, it has not been demonstrated that the burden of getting up the case for trial was so great that the amount allowable under the scale is inadequate.
32 There is another matter relevant to the question of a special order for costs. On the third day of the trial, 17 August 2005, the second defendant applied to amend its defence. After hearing argument I gave the second defendant leave to amend its defence and adjourned the trial to give the plaintiff an opportunity to consider the situation arising from the amendment. The defendants should not have any of the costs of that day of the trial or any of the solicitor's costs caused or occasioned by the amendment.
Reserved costs
33 Each of the defendants seek an order that any reserved costs be awarded to each of the defendants. Counsel submitted that the reserved costs are those relating to the motion for judgment. The defendants should have the costs of attending on the reserve judgment and of settling and extracting the judgment. However, the defendants should not have the additional costs occasioned by the extended argument in relation to costs. Having regard to the reasonableness of the submissions put by each party and the outcome of the costs argument no party should have the benefit or burden of an order for the costs of that argument.
(Page 13)
Certificate for transcript
34 The provision of a transcript to counsel was reasonably necessary for the conduct of the trial. There will be a special order that the first defendant is entitled to the costs of obtaining a transcript.
Agreed statement of facts and objections to the evidence
35 The first defendant seeks an order that there be an additional allowance beyond that otherwise allowable on the scale for the fees of counsel relating to the agreed statement of facts and objections to the evidence.
36 Paragraph 4 of each of the 2002 and 2004 Determinations removes any doubt about whether costs discretion remains in the court. Order 66 r 18 of the Rules of the Supreme Court provides that in any matter not specially provided for in any relevant scale, the court may allow the costs by way of analogy according to the item in the scale which is most nearly applicable thereto or if in the opinion of the court there is no such item, the costs shall be fixed at such sum as in the opinion of the court is adequate in the circumstances.
37 The preparation of a statement of agreed facts and objections to witness statements was work properly carried out. It was done pursuant to court directions. In so far as the work in or incidental to the preparation of the statements was done by the solicitors it is work falling within the getting up case for trial. However, Mr Garnsworthy submits that counsel's fee on brief does not cover counsel's work in settling an agreed statement of facts or objections to witness statements.
38 In Loveday v Renton (No 2) [1992] 3 All ER 184, Hobhouse J said at 190 that the brief covers all the work done by way of preparation for representation at the trial and attendance on the first day of the trial. At 191 Hobhouse J said:
"The preparation by counsel of his examinations-in-chief and cross-examinations and of his final submissions are an ordinary part of his conduct of a trial on behalf of his client. It is all part of the work which he accepts an obligation to perform by accepting the brief and for which he is remunerated by the brief fee and the agreed refreshers.
Written submissions are now a commonplace feature of heavy civil litigation and are no longer exceptional … Skeleton arguments, dramatis personae, chronologies etc are now
(Page 14)
- required for a wide range of proceedings in court and in chambers. To some extent it has always been an incident of advocacy that forensic documents may have to be produced. Unless some different agreement is made, the brief fee must take all this into account."
39 Written objections to witness statements are now a feature of litigation in this court. The common form of trial directions provides for the delivery of such documents. Counsel's work in settling written objections to witness statements is part of the work for which counsel is remunerated by the brief fee. Similarly, where an agreed statement of facts is prepared counsel's work in settling the statement is covered by the brief fee. I decline to make an order for additional allowances in respect of the statement of agreed facts or written objections to witness statements.
Conclusion
40 I will hear the parties in relation to the final orders that should be made to give effect to these reasons.
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