Soia v Bennett [No 2]
[2013] WASCA 85
•3 APRIL 2013
SOIA -v- BENNETT [No 2] [2013] WASCA 85
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2013] WASCA 85 | |
| THE COURT OF APPEAL (WA) | |||
| Case No: | CACV:108/2012 | 14 MARCH 2013 | |
| Coram: | NEWNES JA | 3/04/13 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application dismissed | ||
| B | |||
| PDF Version |
| Parties: | KIM PETER SOIA PERSONALIZED TUITION SERVICES PTY LTD MARTIN LAWRENCE BENNETT |
Catchwords: | Practice and procedure Security for costs of appeal Whether appellants likely to be unable to meet an order for costs Turns on own facts |
Legislation: | Nil |
Case References: | Soia v Bennett [2012] WASCA 231 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA TITLE OF COURT : THE COURT OF APPEAL (WA) CITATION : SOIA -v- BENNETT [No 2] [2013] WASCA 85 CORAM : NEWNES JA HEARD : 14 MARCH 2013 DELIVERED : 3 APRIL 2013 FILE NO/S : CACV 108 of 2012 BETWEEN : KIM PETER SOIA
- First Appellant
PERSONALIZED TUITION SERVICES PTY LTD
Second Appellant
AND
MARTIN LAWRENCE BENNETT
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram : COMMISSIONER SLEIGHT
Citation : SOIA -v- BENNETT [No 5] [2012] WASC 289
File No : CIV 1130 of 2003
Catchwords:
Practice and procedure - Security for costs of appeal - Whether appellants likely to be unable to meet an order for costs - Turns on own facts
(Page 2)
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Counsel:
First Appellant : Dr E M Heenan
Second Appellant : Dr E M Heenan
Respondent : Mr N C Ebbs
Solicitors:
First Appellant : Galic & Co
Second Appellant : Galic & Co
Respondent : Bennett & Co
Case(s) referred to in judgment(s):
Soia v Bennett [2012] WASCA 231
(Page 3)
1 NEWNES JA: This is an application by the respondent for security for costs. It is the second application by the respondent, the first having been dismissed: Soia v Bennett [2012] WASCA 231. In dismissing the first application, I noted that it was open to the respondent to bring a fresh application if the appellants' financial circumstances changed. The respondent says that the appellants' financial circumstances have since changed so that it is now evident that the appellants would be unlikely to be able to meet the respondent's costs if the appeal failed. That was the substantive issue on the application.
2 Before turning to the specific issues raised on the application, I should note that the relevant legal principles are discussed in my earlier decision. It is unnecessary to repeat them.
3 On the hearing of the first application, I was not satisfied that the appellants were likely to be unable to meet an order for costs if the appeal was unsuccessful. Based on the evidence as to the appellants' financial circumstances at that time, I found that the appellants had a surplus of assets over liabilities in the order of $350,000. I noted, however, that there were two notable contingencies which could substantially alter the position.
4 One involved proceedings in the County Court of Victoria in which the appellants' solicitor has been sued for the sum of $150,000 by the barristers who appeared for the appellants at trial. The barristers claim that amount by way of outstanding fees for the trial. The respondent says that if the barristers are successful, the solicitor will be entitled to recover that sum from the appellants. There has been no material change in relation to those proceedings. They are still to be resolved, although I was informed that they are set down for hearing on 27 May 2013.
5 The other contingency was liability for the costs of the trial, which at the time of the first application remained unresolved. That has since changed. On 21 December 2012, orders were made by the primary judge in respect of the costs. His Honour ordered that:
1. The [appellants] jointly and severally pay 50% of the [respondent's] costs of the action, to be taxed if not agreed, from 21 February 2011, and for the purpose of such taxation:
1.1 no allowance be made for time spent for legal services of Mr Bennett and Mr Colin Edward Chenu of Bennett & Co;
- 1.2 pursuant to s 280(2)(c) of the Legal Practice Act 2008 (WA), any limits fixed by any relevant costs determination be removed with respect to:
(i) Item 7(b) - Giving Discovery;
(ii) Item 17 - Getting-up; and
(iii) Item 20 - Trial (including the costs in respect of a running transcript)
(where the limits fixed by the relevant costs determination are based on a formula by the number of hours multiplied by the rate of charge for a senior or junior practitioner, the limits are removed only as to the number of hours);
1.3 the costs of the action include the respondent's costs of the application for special costs orders.
6 The respondent has since appealed against the costs orders, contending that he was entitled to the whole of his costs rather than 50%, and the appellants have cross-appealed contending, in substance, that the respondent was not entitled to an order for costs at all.
7 While (subject to the outcome of those appeals) the appellants' liability for half of the respondent's costs of the trial has now been established, the costs have not been taxed. Indeed, the respondent has not yet produced a bill of costs in taxable form, although, in an affidavit dated 30 January 2013, a solicitor involved in the conduct of the action on behalf of the respondent, Ms Onofaro, said that a bill of costs was then in the course of being prepared.
8 Whilst there is not yet a bill of costs in taxable form in existence, in a further affidavit, dated 1 March 2013, in support of this application Ms Onofaro estimated the respondent's taxed costs of the action to be in the sum of $587,698.31. That estimate was arrived at as follows.
9 Ms Onofaro says that counsel's fees for the trial, based on a rate of $500 per hour, totalled $425,162.55. Under the relevant costs determination, the maximum hourly rate is $341. Ms Onofaro therefore discounted the amount charged by counsel to reflect that difference, arriving at a figure of $263,600.78. She then discounted that figure by a further 50% to reflect the costs order, to reach a figure of $131,800.39 for counsel's fees on taxation.
10 Ms Onofaro took the same approach in respect of professional fees charged by Bennett & Co. The amount of the firm's work in progress was
(Page 5)
- $981,485.45 (excluding time charged for Messrs Bennett and Chenu). Of that, Ms Onofaro says:
(a) approximately $616,998 was incurred in relation to items 7(b), 17 and 20 of the costs determination, and of that sum she considers that approximately $276,436.60 would be recoverable on taxation;
(b) the balance of $364,487.45 was discounted by 40% to allow for the amount Ms Onofaro considered would not be recoverable on taxation and then discounted by a further 50% to reflect the costs order, leading to a sum of $109,346.24.
11 In relation to charges for document production fees by the respondent's solicitors, Ms Onofaro again discounted the charges of $111,927.42 recorded in the firm's records by an initial 40%, being the amount she considered would not be recoverable on taxation, and by a further 50% to reflect the costs order, leaving an amount of $33,578.23 which she considered would be recoverable on taxation. The same approach was taken with disbursements, leading to an estimated sum of $36,536.85 being recoverable on taxation. As I have said, the total estimate of the taxed costs was $587,698.31.
12 On the hearing of this application, counsel for the respondent acknowledged that the reduction of 40% used by Ms Onofaro owed nothing to science but was based on a rule of thumb commonly used to assess the amount of costs that might be recoverable on taxation.
13 The respondent's (amended) assessment of his existing and future costs of the appeal in the sum of some $75,000 seems to me to be too high. On the basis of the material before me, I accept the appellants' submission that an appropriate figure is in the order of $50,000.
14 While counsel raised the merits of the fresh appeal and cross-appeal on costs respectively, I do not regard the merits to be a factor one way or the other. I am not in a position to reach any conclusion as to the merits on what is before me. Suffice it to say that neither the appeal nor the cross-appeal is obviously devoid of any merit. I must approach this application on the basis that the respondent is entitled to 50% of his costs of the trial, albeit the monetary amount to which he is entitled is still to be determined by taxation or agreement. I should add that, as on the first application and for the same reasons, I do not consider the merits of the substantive appeal to be a significant factor.
(Page 6)
15 The appellants took issue with the contention that they are unlikely to be able to meet an order for costs if the appeal were to be unsuccessful. In an affidavit sworn on 22 February 2013, the first appellant deposed to the total assets and liabilities of the appellants. According to the first appellant, the most substantial assets are two units in Morley, two motor vehicles and 474 Halibrand wheels. Those assets are each the subject of independent valuations, copies of which were attached to the affidavit. There is also said to be $8,000 owing by trade debtors and $25,455 owing by the Australian Taxation Office by way of a refund of GST. The total value of the appellants' assets are said to be $1,425,655 and their liabilities to be $831,600, leaving a surplus of $594,055.
16 Some criticism was made by counsel for the respondent of the values attributed to the motor vehicles and the wheels. There is, however, nothing to suggest that the values are unreasonable. I accept for the purposes of this application that the appellants have a surplus of assets over liabilities in the order of $600,000.
17 It was also submitted that the appellants had still not paid some $280,000 in costs incurred in relation to the trial, including the $150,000 claimed in the County Court of Victoria. No explanation had been offered as to why those costs had not been paid and it was submitted, in effect, that it should be inferred that the appellants were not in a position to pay them.
18 In assessing the capacity of the appellants to meet a costs order I would not take into account the litigation in the County Court of Victoria. There has been no material change in relation to that and I am not in a position to make any assessment as to the likely outcome of that litigation or whether, or to what extent, it might ultimately affect the appellants' financial position. As to the other costs, it is the case that the appellants also owe a total of some $135,000 to their solicitors and for expert witness fees at trial and that there is no explanation as to why that amount remains unpaid. However, the liability has been brought to account in the calculation of the appellants' financial position. The outstanding amount does not alter the fact that the appellants have net assets in the order of $600,000.
19 I would approach the estimate of $587,698.31 for the respondent's taxed costs of the trial below with considerable caution. In the course of argument, counsel for the respondent explained that the respondent was unable to put a draft bill of costs before the court on this application because of the amount of work involved in preparing a bill of costs. I
(Page 7)
- have no difficulty accepting that it is a substantial task, no doubt involving careful scrutiny of numerous items of costs. It was a very long trial. But in the meantime broad brush assessments and rule of thumb measures are not a sound basis for assessing those costs for the purpose of this application. The respondent's estimate seems to me to be much too rudimentary to be treated with any confidence in circumstances where even a relatively small overestimate of the taxed costs may be the difference between the appellants having sufficient net assets to meet the respondent's costs of the appeal and not having them. I am, however, inclined to think that the estimate may somewhat overstate the costs recoverable on taxation.
20 Taking that into account and having regard to the appellants' financial position as it appears in the evidence, I am not persuaded that the appellants are unlikely to be able to meet the respondent's costs if the appeal is unsuccessful. I would dismiss the application.
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