Smith v Walsh - [2020] WADC 60

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CHAMBERS

LOCATION:   PERTH
CITATION:   SMITH -v- WALSH [2020] WADC 60
CORAM:   DEPUTY REGISTRAR HARMAN
HEARD:   ON THE PAPERS
DELIVERED          :   8 MAY 2020
FILE NO/S:   CIV 2475 of 2019
BETWEEN:   RICHARD SMITH
Plaintiff
AND
BRENDAN WALSH
Defendant

Catchwords:

Taxation of costs - Objection to disallowance of claim for recovery of a disbursement - Item 34(b) of the Supreme Court Scale of Costs 2018 - Recovery under the usual order for costs - Observations relating to taxation under an order for indemnity costs - Order 66 r 19 of the Rules of the Supreme Court 1971 - Clause 4 of the Legal Profession (Supreme and District Courts) (Contentious Business) Determination 2018

Legislation:

Legal Profession Act 2008 (WA)
Rules of the Supreme Court 1971 (WA)

Result:

Objection insufficient to found review

Representation:

Counsel:

Plaintiff	:	No appearance
Defendant	:	No appearance

Solicitors:

Plaintiff	:	Coulson Legal
Defendant	:	Moray & Agnew Lawyers

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

EMI Records Limited v Ian Cameron Wallace [1983] 1 Ch 59
Smith v Buller [1875] LR 19 Eq 473

DEPUTY REGISTRAR HARMAN:

The action was disposed of by agreement recorded in the form of judgment under which the plaintiff is entitled to 'costs in the sum of $10,965.20 inclusive of the writ filing fee plus other disbursements to be taxed'. At taxation I was told that those terms had accommodated differing views as to whether the plaintiff ought to recover the cost of a particular medical report.
By his bill of costs the plaintiff seeks to recover disbursements for the report and for lodging the bill. He also claims fees for drawing and taxing the bill.
The claim for the report is as follows:

4

10/05/19

Medical Report - Instamed - Dr Fairhurst

$2,800.00

As it suggests, at taxation recovery for the item fell to be considered in two parts: that for the generation of the report by Dr Fairhurst and that for services provided by Instamed.
The plaintiff then provided some detail of the extent of the services provided by Instamed in the process of its commissioning of the report and the payment of its author.
The report provides information obtained from the plaintiff that is classified under the headings: history of injury; current status; current restrictions; activities; current treatment; past medical history; and background history. Dr Fairhurst then provides an assessment upon his examination of the plaintiff. Finally he responds to a series of questions put by the plaintiff. To the extent that the questions are answered, the answers draw upon the information provided by the plaintiff, alternatively they give the opinion of the author.
The plaintiff submitted that the report was obtained in order to establish that his claim was then ready for finalisation and to provide an independent assessment of features of his claim.
In putting the case for recovery the plaintiff relied on the terms of item 34(b) of the scale. It provides as follows:
As between party and party, a party may be allowed disbursements incurred by that party except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to the above exceptions that party is fully reimbursed for its disbursements.
The plaintiff went on to contend that the words of item 34(b) would operate so as to transfer the onus to the defendant.
The defendant contended that to the extent that the report conveyed information relating to the plaintiff's treatment it could have been provided by way of a further report of the plaintiff's general practitioner; and to the extent that it provides opinion that it would be necessary for the author to be qualified at trial to give evidence of his opinion.
Because the test of recovery expressed at item 34(b) is not consistent with the test provided by common law under the usual order for costs, in taxing the item the test of recovery applied was that provided by common law.
Had the action proceeded to trial I was satisfied that at trial the question of the qualification of the author to give opinion evidence would have been raised by the defendant. Being a general practitioner I was satisfied that the author would not be so qualified. The issues in the action revealed upon the close of pleadings being exclusively as to quantum, there was nothing in the context established at taxation that would establish the report as having been necessary for the purposes of determining any issue in the action. Accordingly, it was disallowed. It followed that it had not been necessary to engage Instamed. Each part of item 4 having been disallowed it followed that the balance of the items were disallowed and the defendant recovered his costs of the taxation.
The plaintiff has filed a notice of objection to the disallowance of each item of the bill. He proposes that if the result of review of the disallowance of item 4 is in his favour then he ought to recover under the balance of the items in the bill.
At par 22 of the notice the plaintiff contends that the taxing officer made an error in principle in disallowing item 4.
Paragraph 27 of the notice is as follows:
The plaintiff submits that the taxing officer made the following errors in principle, namely:
27.1that the bolded words in item 34 do not mean that disbursements are to be allowed on the basis of an indemnity test, namely where the onus of proof is reversed such that the paying party is required to demonstrate that the disbursement claimed is of an unreasonable amount or is unreasonably incurred.
27.2In that applying the usual party and party test to the disbursement claim, the claim for item 4 of the bill was unreasonable.
On the basis that in the process of taxing the item only one test of recovery could be applied, two things are immediately apparent. The first is that the plaintiff does not contend that the taxing officer erred in failing to apply the test expressed at item 34(b) of the scale. The second is that the plaintiff recognises that the common law test had been applied.
Because whatever questions are raised by par 27.1 are revealed as moot, I need only address the objection at par 27.2. Nonetheless, I will later address some observations to par 27.1, in part because I consider that I did not do so satisfactorily at taxation.
Before I move beyond those observations, I will record that it is my memory of the taxation that I was informed by the plaintiff that he had asked Instamed to choose a medical practitioner to provide a report. In the course of the process commenced by the notice it has become apparent on reading the papers that the plaintiff had requested Instamed to obtain a report from Dr Fairhurst and that in all likelihood the plaintiff had been in communication with Dr Fairhurst prior to making that request. The result of that change in the case of the plaintiff would have no impact on the result.
I have taken it to be the case that by the reference in par 27.2 to the usual party and party test, the plaintiff refers to the test of recovery that applies under the usual order for costs.
According to common law, under such an order a beneficial party is entitled to recover the reasonable cost of services necessarily provided to it for the purposes of the action. In the application of that test to any claim the beneficial party carries the onus of persuasion: firstly to establish the necessity for provision of the service and secondly that the fee claimed for that service is reasonable. Where the beneficial party fails to satisfy the onus under the first limb, the item of the bill under consideration would be disallowed. In the event that part only of a service specified in the scale had been necessarily provided, disallowance would be limited to the balance of the item. Where the beneficial party fails to justify the fee claimed under the second limb of the test, having satisfied the first, the taxing officer would assess a reasonable fee to the extent that the item had been allowed.
The plaintiff did not satisfy the first limb of the test of recovery. It follows that no test of reasonableness was applied in the course of taxation of item 4. Accordingly, I take it that by par 27.2 the plaintiff proposes that the test to be applied under the first limb was not necessity but reasonableness.
The scope of recovery under the usual order for costs ought to be regarded as having been settled long ago. I take it that it had been so considered by Malins VC in the course of his reasons for decision in Smith v Buller [1875] LR 19 Eq 473. He stated at (475):
… I adhere to the rule which has already been laid down, that the costs chargeable under a taxation as between party and party are all that are necessary to enable the adverse party to conduct the litigation and no more.
…
The Plaintiff is the attacking party, and has failed, and he must therefore pay all charges necessary to the litigation. But if the Defendants give greater facilities for the conduct of the case than are strictly necessary, they ought not to be allowed to throw them upon the Plaintiff. I have no doubt that what was done was very convenient, and this was proved by the fact that the Plaintiff took advantage of the drawings.
…though these drawings are very convenient, I cannot consider them necessary.
At (478) when dealing with the question of a daily charge for counsel under an objection that it was excessive, the Vice Chancellor stated:
… For the subsequent days, considering all the circumstances, I think [7 guineas] would be a fair charge. I do not proceed on the ground that the fee paid was excessive. I think it was reasonable in itself, but that as between party and party it was more than ought to be thrown upon the unsuccessful litigant …
It is clear that the Vice Chancellor considered that a different test applies to recovery for services to that which applies to recovery of fees for those services.
The case is regularly cited as the touchstone of recovery under the usual order for costs. In my opinion, curiously it is also cited in instances where the test is stated incorrectly such that its limbs are rendered invisible and/or by introduction of terminology from the context of taxation under the common law retainer. I am not aware of any case that reveals any reasoned departure from or rejection of what was clearly enunciated in the reasons of the Vice Chancellor. Indeed in instances where despite reference to authority, the test has been incorrectly recorded, it is open to consider that a departure from accepted common law had not been intended. Clearly the qualifications 'reasonable' and 'proper' would operate so as to displace the common law test of necessity as effectively as would their substitution for that test. That the plaintiff would express the first limb of the test as I have taken to be the case, simply illustrates the point.
In my opinion the contention of error at par 27.2 is revealed as being insufficient to establish jurisdiction to review. The correct test was applied in taxing the item. It is the plaintiff that proposes an incorrect test in the notice.
I will commence my observations in response to issues raised by par 27.1 by relating some history associated with the Supreme Court Scale. During the period that the scale resided in the Fourth Schedule to the Rules of the Supreme Court 1971 (WA), it was engaged by the Rules of the Supreme Court for the purposes of taxing costs under orders for costs. Under legislation by which the legal profession was then regulated, it was harnessed as the datum for taxing costs between solicitor and client generated in the context of litigation. Having been established and being maintained under the rules, it was not surprising that to the extent that the scale expressed any scope for recovery for services, such references were consistent with the terms of the common law test of recovery under the usual order for costs. Accordingly, the test of necessity was expressed at item 6(c), for a reply, 8 for a request for particulars and 29, for photocopies. The balance of the 30 items of the scale expressed no test at all. It is conceivable that the reason for inserting the references to the test of necessity at the discrete points had been to remind practitioners of the test that would apply at taxation under the order for costs commonly made.
Whatever the reason for those references, the test specified would only apply where the test of recovery appropriate to the circumstances of the taxation permitted. Where the scope of recovery under a particular order differed from that which applied under the usual order for costs, the test applied would accord with the order. Thus under an order for indemnity costs the scope for recovery under the particular items in the scale would accord with the common law test of recovery under the order, not that expressed in the scale.
Since the time that responsibility for regulating the costs recoverable for services provided in the course of litigation came under each of series of legislative enactments that regulate the legal profession, the scale has been expressed to apply both to recovery by one party from another and by a practitioner from a client. The latter period has seen the progressive introduction of a number of different tests of recovery into the scale such that now little more than half the items specify no test. The tests have such variation in their expression that they could not accord with any one of the three tests of recovery at common law that I have canvassed; that which applies under each of the usual order for costs, an order for indemnity costs and the common law retainer. The terminology by which they are expressed extends from 'necessary' to 'reasonable', 'necessary and reasonable', 'reasonable and necessary', 'reasonably necessary', and at item 34(b), 'except insofar as they are of an unreasonable amount or have been unreasonably incurred'.
Prior to 1997 the scale did not provide scope for regulation of the process of recovery for disbursements. Accordingly, the process of taxation of disbursements was regulated by O 66 r 19 of the Rules of the Supreme Court. In 1997 item 29(b) was added to the scale and it provided for recovery of disbursements 'necessarily or reasonably incurred'. That formulation endured until 2010 when what is now item 34(b) was introduced.
At par 26 of the notice of objection the plaintiff refers to parts of O 66 r 19 of the Rules of the Supreme Court without reference to any particular end. Those parts are as follows:
Any of the following items, disbursements, expenses, payments, or charges are allowable on taxation ‑
…
(d)witness expenses paid or to be paid under any relevant scale of allowance fixed in that regard;
(e)agency charges, if specially allowed by the Court or by the taxing officer;
…
(g)other necessary disbursements or payments made in the conduct of the litigation;
(h)any other necessary expense incurred in the conduct of the litigation, whether or not it has been paid before the taxation of that expense takes place.
Rule 19(d) and r 19(e) do not engage with any test of recovery. Rule 19(g) and r 19(h) are consistent with the scope of recovery under the first limb of the usual order for costs.
In my opinion it is of some significance that prior to 2000, no test of recovery had been expressed in r 19.
For present purposes it is not necessary that any conclusion be reached in the process of reconciling item 34(b) with the scope of recovery under the usual order for costs and the test expressed at r 19(g) and r 19(h). That is because cl 4 of the Determination of which the scale is a part provides that:
In the circumstances set out in Order 66 rules …19…of the Rules of the Supreme Court, the Legal Costs Committee determines that the Court or the Taxing Officer, as the case may be, has the power to make the orders and allowances referred to in those rules.
The particular wording of cl 4 may speak to its broad application. Be that as it may, in my opinion the significance of r 19 is established by the acknowledgment of its primacy. Rule 19(g) and r 19(h) establish that the test of recovery for a disbursement is necessity.
It is also worth recording that cl 4 may be taken to be consistent with s 280 (3) of the Legal Profession Act 2008. With reference to the conferral of jurisdiction to regulate costs charged by law practices it provides as follows:
Nothing … 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.
At par 27.1 I take it that the plaintiff contends that a process of interpretation of item 34(b) would justify the result that the onus would reside with the defendant. That it was open to so interpret item 34(b) was put as a submission at taxation.
Having heard the submissions of the parties I was satisfied that the order had provided them the opportunity to test their differing views of the scope for recovery under the usual order for costs. The proposition put by the plaintiff as to the onus was not entertained simply because the words of item 34(b) provided for a greater scope of recovery than the test under the usual order for costs would allow. Although I disagree with the proposition that that any process of interpretation of the content of item 34(b) had been undertaken in the course of taxation, I accept that the plaintiff then put the proposition that he now puts at par 27.1.
As the characterisation 'usual' suggests, indemnity orders are rarely made. Other than in cases where parties have agreed such terms, such an order would identify cases in which the court had considered that a party deserved sanction. The scope for recovery under such an order would extend to the actual cost incurred by the beneficial party. In his notice of objection the plaintiff does not contend that he had the benefit of an order for indemnity costs.
It is curious that a test of recovery that would rarely apply at taxation would be expressed in the scale.
I understand that in Western Australia it is accepted that under an order for indemnity costs it is for the beneficial party to establish the basis of a claim. The adverse party then carries the onus of persuasion that the beneficial party ought not to recover.
It is curious that the plaintiff would draw upon passages from the reasons of Megarry VC in EMI Records Limited v Ian Cameron Wallace [1983] 1 Ch 59, 74 and 71 to justify the proposition that under an order for indemnity costs the onus would rest on the adverse party. In the context presented before him: that of formulating a test of recovery that would apply under an order for indemnity costs, the Vice Chancellor stated at (71):
In a word, the difference is between including only the reasonable and including everything except the unreasonable. In any taxation there must be many items or amounts which do not fall clearly within either extreme. On a party and party taxation, or on a taxation on the common fund basis, many such items may fail to be allowed; on a taxation on an indemnity basis, they will all be included.
I do not think that it would be right to express this difference in terms of the burden of proof being shifted from the winner to the loser, though no doubt in many matters much of the argument during the taxation will proceed upon these lines.
Accordingly, the case upon which the plaintiff relies is to the contrary on the point.
Having recorded that much it is worth recording that there is a significant difference between local practice and that in operation in England at the time that may account for the result that the practice in each jurisdiction differs on such a fundamental point.
According to common law established in the Australian context the adverse party is entitled to view any document put before the taxing officer by the beneficial party. In the context presented before the Vice Chancellor, prior to any taxation the beneficial party was required to lodge his file with the taxing officer and its content would then be considered. That English practice did not generate any entitlement in the hands of the adverse party. Under English practice it is open to consider that the taxing officer may become aware of disentitling information that would not be available to the adverse party. For the English practice to operate as intended the taxing officer would not be constrained from disallowing an item absent a case put against recovery by the adverse party.

Returning to the process of taxing the item, according to the common law test of recovery, the onus lay on the plaintiff. The test was applied after I took it to be the case that each party had said all that it wanted to say on the subject of recovery. By that time the plaintiff had referred to evidence of each of his former solicitor and of Dr Farihurst, to his written submissions and to a chronology that extended to 45 entries. The time taken in hearing submissions had been in the order of one hour. I might refer back to part of the passage from which the plaintiff cites the words of the Vice Chancellor at (71):
In any taxation there must be many items or amounts that are plainly allowable, and many others which are plainly not allowable. In between, there must also be many items or amounts which do not fall clearly into either extreme. On a party and party taxation, or on a taxation on the common fund basis, many such items may fail to be allowed; on a taxation on an indemnity basis, they will all be included.
At the conclusion of the process of taxing the item, upon surveying what had been revealed during the course of submissions it was clear that the claim for the disbursement should be disallowed. The result did not follow upon a survey of the cases for and against recovery having revealed a sufficient measure of balance that it would sensibly be attributed to the locus of the onus. In my opinion nothing communicated to the parties upon disallowance would have suggested that reason for the result. This was not an instance where an item had been revealed as falling between the extremes.
I am confident that had the onus been on the defendant the result would have been the same. That confidence is established by the fact that there is no reason to consider that the substantive submissions made by each party would have been any different. It was patent that the discussions between the parties prior to making the order had been along the same lines. I am satisfied that the clarity of the case put by the defendant would have established that the item be disallowed.
Finally on the subject of onus, the plaintiff's utilisation of the term 'onus of proof' may follow from the fact that he chose to file affidavits of his former solicitor and the author of the report. The onus carried by a party would only be characterised as being 'of proof' in the event that the taxing officer had called for evidence. In this instance the evidence was volunteered. Unless evidence is required to be provided the onus confronted by a party at taxation is properly characterised as being 'of persuasion'.
Should the defendant wish to address the question of costs of the review it has the opportunity to do so.

I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
DH
Court Officer
7 MAY 2020