Smith v Kay - [2000] WADC 257

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION: PERTH

CITATION: SMITH -v- KAY [2000] WADC 257

CORAM: DEPUTY REGISTRAR HARMAN

HEARD: 28 JULY 2000

DELIVERED : 13 OCTOBER 2000

FILE NO/S: CIV 3600 of 1998

BETWEEN: DAVID LAWRENCE SMITH
Plaintiff
AND
MICHELLE KAY
Defendant

Catchwords:

Practice - Western Australia - Rules of the Supreme Court of Western Australia - Order 66 - Review of taxation of costs for "informal" conference, "non-disbursement" photocopies and for post judgment services

Legislation:

Nil

Result:

Determinations confirmed

Representation:

Counsel:

Plaintiff: Mr C Phillips
Defendant: Ms M Saraceni

Solicitors:

Plaintiff: Chris Phillips
Defendant: Peter Momber

Case(s) referred to in judgment(s):

Clybucca Holdings Pty Ltd v Gray & Ors, unreported; SCt of WA; BC9701576; 30 April 1997
Gardiner v Classic Laboratories Pty Ltd, unreported; DCt of WA; Library No 3541; 12 November 1992
Smith v Buller (1875) LR 19 Eq 473
Tenbohmer v Eden (1992) 6 WAR 366

Case(s) also cited:

DEPUTY REGISTRAR HARMAN: The plaintiff has sought review of the taxation of three items in his bill of costs.
The first item the subject of review is a claim made for a pre-trial or mediation conference held on 11 February 2000. At taxation it transpired that the claim related to a conference convened by the parties themselves. The claim was made under items 24 and 13A; alternatively the plaintiff sought the benefit of an exercise of discretion under O 66 r 18. The item was disallowed.
It is evident from the terms of the objection that the plaintiff no longer relies on item 13A. It is at least implicit that he does not rely on item 24. Item 24 is expressed to relate to a pre-trial, mediation or other conference required by order, rule or practice direction. The conference was not convened in any manner contemplated by the item. Accordingly there was no claim under the item. If the determination had been otherwise it would reveal an error in principle.
The remaining basis for recovery proposed by the plaintiff was the prospect that the taxing officer would exercise discretion under O 66 r 18.
Rule 18 is as follows:
"(1)In any matter not specifically provided for in any relevant scale, the Court or the Taxing Officer may allow 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 or the Taxing Officer, there is no such item, the costs shall be fixed at such sum as in the opinion of the Court or the Taxing Officer is adequate in the circumstances.
(2)Without limiting the generality of paragraph (1), the Taxing Officer may allow such fees as he considers reasonable –
(a)in connection with the compromise of a claim by or against a person under a disability; or
(b)for a conference or consultation where and to the extent that the conference or consultation was necessary."
The discretion provided by the rule is expressed in broad terms indeed. On one reading if a party can demonstrate that a service provided is beyond the scope of the scale, he could recover both above and beyond scale costs. To use a simple illustration, part of the objection states that the plaintiff objects to the disallowance of the claim for preparing for the conference. There is no item in the scale for preparing for a conference. On that broad reading of r 18, the taxing officer could allow for recovery beyond the scale simply because there was no scale item.
I would make three observations. The first is that costs are taxed in accordance with O 66 r 11(3). That rule recognises that on a party and party basis there may properly be less than full recovery. The second is that although the discretion expressed at r 18 is expressed in broad terms the onus is upon the taxing party and the taxing officer is properly constrained by the principle upon which r 11(3) is founded. The enduring formulation of that principle was expressed in Smith v Buller (1875) LR 19 Eq 473 to the effect that a party is entitled to recover no more than the costs necessarily incurred in the conduct of the litigation. The third is that when considering an exercise of discretion the starting point is to recognise that the parties bring different interests to the taxation. By that process the taxing officer seeks to balance the interests of the parties and not promote the interests of one. Any exercise of discretion under O 66 r 18 ought to be founded upon principle. Simply because discretion is provided by the rule does not mean that it is appropriately exercised upon the recognition that costs may have been incurred.
Before dealing with other aspects of the notice, par 1 refers to the disallowance of the costs incurred in preparing for and attending the conference. The scope for review is limited to alleged errors of principle in the disallowance of the item. There was no reference in the bill to preparation for the conference. There was no relevant disallowance.
I accept that the parties did engage in a conference, that the conference was attended by the interested parties and their solicitors with the intention of attempting to resolve their differences and that in all probability the plaintiff’s solicitor would be entitled to recover a fee for the conference from his client. The only issue to be determined on the objection is whether the failure to exercise discretion in favour of the plaintiff discloses an error of principle.
The plaintiff does not clearly articulate any alleged error of principle but rather makes a series of submissions. In my opinion the plaintiff’s submissions could be reduced to three allegations of error. The first is the failure of the taxing officer to either draw the analogy or otherwise make allowance under r 18. The second revolves around some consequences of the failure to so exercise discretion. The third relates to the extent to which a party is entitled to recovery under the usual order for costs. If there is more to the notice and I have overlooked it, that is the fault of the plaintiff in failing to clearly articulate his objection.
Before dealing with my understanding of the terms of the notice there are some broader considerations which ought to be canvassed.
The relevant terms of the consent judgment are for "costs to be taxed". It is appropriate to consider that by that choice of words the parties contemplated the usual order for the costs of the action on the basis of party and party indemnity.
In Gardiner v Classic Laboratories Pty Ltd, unreported; DCt of WA; Library No 3541; 12 November 1992 it was held that the taxing party was entitled to the costs of a "formal" pre-trial conference without an order of the Court to that effect because the conference was a step in the proceedings. It was so constituted by practice direction of June 1985 and more recently by the Rules of the District Court. Since 1985 it has been appropriate to allow for recovery of the costs of the conference. Prior to the introduction of an item for the conference in the scale, allowance for the conference was made by analogy, as I recall to an application in chambers. By way of contrast, there is no requirement that the parties engage in any "informal" process of conferring for the purpose of achieving settlement. Whilst an "informal" conference may be significant for any number of reasons, for the purpose of drawing an analogy with item 24 such a conference is significantly different as it is not constituted as a step in the action. It is significant that there is no order for the costs of the relevant conference. The taxing officer has no jurisdiction to make an order for costs.
At various points in his objection the plaintiff articulates what appears to be to a growing perception that a party ought to recover the whole of the costs associated with litigation so as to allow for the prospect that a litigant may exit the process carrying no costs burden. I perceive that some would seek to elevate that proposition to the status of principle. Unfortunately we all live in the real world. It is inevitable that the death, bankruptcy, intransigence or impecuniosity of the adverse party would leave a successful litigant with a cost burden. I have already noted that established principle is to the contrary and recognises the prospect of partial recovery.
At par 2 of the notice the plaintiff submits that the costs of the conference are recoverable as they were reasonably and necessarily incurred to bring the action to a conclusion.
Thereby the plaintiff seeks to distort the expression of principle in Smith v Buller (supra) which is "all that is necessary to enable a party to conduct the litigation and no more". A similar test is expressed in some rules of court so as to allow for recovery of costs necessarily or properly incurred. That formulation would allow for recovery beyond what is necessary. There is no such formulation expressed in any rule in this jurisdiction.
In this jurisdiction it is appropriate to consider what services are necessary to enable a party to conduct the litigation. Those services ought to be determined on an analysis of the case including the context in which the services were actually rendered. I must confess that even focussing upon the time that the relevant service was provided I have some difficulty in recognising that engagement in settlement negotiations was necessary to the conduct of the litigation.
It is also worthy of note that the recognised formulation provides the datum as the litigation. The plaintiff in his objection has focussed upon the fact that the services rendered brought the action to a conclusion. The services associated with the process of settlement are of a different character to those associated with the conduct of litigation.
It is implicit in par 2 that it is by the fact of the action having been brought to conclusion that the services rendered are constituted as "reasonably and necessarily" incurred. In circumstances where success or failure is determined by the attitude of each of the parties it is difficult to understand why success in achieving settlement ought to determine whether costs are recoverable. In my opinion it would be easier to discern an error in principle if the determination rested upon something other than the result. Let me draw an analogy, under the scale the recovery of costs for a pre-trial conference is not dependent upon the success of the process.
In my opinion a taxing officer would err if he were to allow the costs of a conference on the basis that the conference brought the action to a conclusion.
Paragraph 3 of the notice refers to the fact that the conference was called to attempt to negotiate a settlement and that it was attended by the interested parties and their solicitors. Obviously a conference which attracts an allowance under item 24 would be similarly constituted. It is a matter of considering whether in light of those considerations the failure to exercise discretion reveals an error of principle.
It is appropriate to commence the analysis by looking beyond item 24 and considering the scale. But for discrete items dealing with the settlement processes formalised by the rules there is no provision at all for the costs associated with settlement.
Over the years the scales have been drawn by either members of the Supreme Court or by a statutory body largely comprised by members of the profession. It is unlikely that either would have been unaware of either professional standards or the likelihood that parties will consider and enter into settlement negotiations. Given that context it is relatively easy to discern that the omission of any reference in the scale to the costs of settlement has been intentional rather than an oversight.
It is also appropriate to consider the broader historical context. Similar costs have been generated in every case where there has either been settlement or discussions in an attempt to settle. Given professional standards it is likely that it is only where a party is intransigent that such costs would not have arisen. It is not as if the plaintiff has happened upon something novel. In all probability the issue has been considered in the process of costing the majority of files concerned with litigation. Other parties have probably simply recognised the principle which limits the scope of recovery expressed O 66 r 11(3). It has never been the case that the costs of litigation recoverable against the adverse party have included the costs associated with settlement or compromise. In my opinion there is no significance which attaches to either or both the constitution of the conference or the intention of the participants.
At par 11 the plaintiff refers to the prospect that "the usual cost incentives" should apply to successful early negotiations. I am not aware of the incentives to which the plaintiff refers. In my opinion whatever it is that is intended to be conveyed carries the unfortunate impression that it is wanting in principle.
The plaintiff also proposes that the conference crystallised the issues and the positions of the parties and that the conference was a cost effective and efficient means of resolving the litigation. The Court has an interest in facilitating settlement of actions. That facilitation does not extend to the abrogation of the proper constraints that apply to the recovery of costs. There may be many benefits that flow from the achievement of settlement or even a consideration of settlement, however, unless the rules provide, the parties agree or the Court otherwise orders, those benefits do not include the recovery of the costs of settlement. Whilst the actions of the parties ought to be commended, there is nothing in the form of the prospect of enhanced recovery of costs which turns on that commendation.
Ultimately the plaintiff submits that the disallowance is capable of being characterised as out of step with the "modern rules of court". I do not know whether I ought to be embarrassed when I state that I was not aware of any relevant "modern rules".
I was referred to and have read the relevant obiter comments of Wheeler J in Clybucca Holdings Pty Ltd v Gray & Ors, unreported; SCt of WA; BC9701576; 30 April 1997. They would appear to canvass the prospect that the costs associated with a consideration of settlement may be part of the costs of getting up the case for trial. It would be a fair assessment that those comments do not accord with my understanding of either the process of getting up the case for trial or the principle that bears upon recovery. Any number of factors extraneous to the action may influence both the prosect and terms of settlement. The plaintiff does not contend that the costs sought to be recovered in this instance were recoverable under that item.
At par 9 and par 10 the plaintiff makes reference to the interests of justice being served by settlement of actions. Particularly so at par 10, to the prospect of settlement at an earlier stage than pre-trial conference. That may be the case. Taxation is simply a process that provides for recovery in accordance with a process regulated by the scale. There is nothing either just or particularly modern about the prospect of settlement of an action. The only innovation has been to foster consideration of settlement at an earlier stage in the litigation process than the morning of the trial. Otherwise principle, being principle and not mere practice, prevails.
In my opinion there is no proper basis for an analogy to be drawn. It is also my opinion that there is no proper basis to otherwise make allowance.
The next item the subject of objection relates to the disallowance of a claim with respect to the generation of copies of medical reports by the practitioner which were forwarded to the plaintiff.
On my calculations, of the amount of $145 claimed for the item, the fee for that part of the item disallowed is $11.25. The objection nonetheless goes to the disallowance of part of an item.
The first ground of objection is that the costs were reasonably and necessarily incurred. I do not know under which scale the services were provided. As I understand the scales there was no scope for allowance under the 1996 scale other than as a disbursement. The bill does not seek to recover a disbursement. Under the all versions of scale of which I am aware the test is expressed in the item "where necessary".
I would observe that even if the plaintiff had expressed the correct test, there is nothing in the information before me, which would indicate that the solicitor did any more than simply engage in a particular process of conveying information to the plaintiff. In my opinion it may have been convenient and indeed efficient but those considerations do not assist me in discerning the existence of an error in principle.
The second ground is that the taxing officer should allow a just and reasonable amount in respect of each item in the bill incurred in respect of the litigation which was either necessary for the attainment of justice or would reasonably have been incurred without extravagance. The authority cited is Seaman. As I have already indicated, the test is the necessity of engagement in the process of the creation of a photocopy. Otherwise if the citation is correct it is mere commentary.
The third ground is simply expressed in the form of a quotation from Tenbohmer v Eden (1992) 6 WAR 366 that similarly is wide of the mark.
Although there is further material expressed in the objection it is difficult to discern that it conveys any error in principle.
The last objection relates to item 7 of the bill which is a claim for the costs of services provided to the plaintiff subsequent to the date of judgment. That claim was disallowed. The plaintiff supports its objection on the ground that the relevant services were necessary in finalising the claim subsequent to the judgment.
The plaintiff has obtained a judgement for the costs of the action. The scale provides the scope for the recovery of costs pursuant to that order. There is no item in the scale for the costs associated with finalising a claim after judgment. The only items that relate to post judgment services are for extraction for any judgment, the taxation of costs and execution. There is simply no basis to allow any other post judgment costs other than under the second limb of r 18. For the reasons I have already given in relation to the first item the subject of review in my opinion it would be inappropriate to exercise discretion. If the taxing officer allowed for such costs then in my opinion the taxing officer would err in principle.
The objections not being sustained, the review is concluded and the plaintiff is unsuccessful. It is appropriate to sign a certificate for the costs the subject of review. The defendant ought to have the costs of the review.