Staley v Pivot Group Pty Ltd [No 4] - [2010] WASC 120

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: STALEY -v- PIVOT GROUP PTY LTD [No 4] [2010] WASC 120

CORAM: KENNETH MARTIN J

HEARD: 15 APRIL 2010

DELIVERED : 15 APRIL 2010

PUBLISHED : 31 MAY 2010

FILE NO/S: CIV 1776 of 2009

BETWEEN: JOHN ROBERT STALEY
ELIZABETH FLORENCE STALEY
Plaintiffs
AND
PIVOT GROUP PTY LTD (ACN 008 459 685)
Defendant

Catchwords:

Costs - Application to increase allowances - Order for costs thrown away on amendment of statement of claim before trial - Extension of time sought - Allowances increased to indemnity potential

Legislation:

Legal Profession Act 2008 (WA), s 280(2)
Rules of the Supreme Court 1971 (WA), O 66 r 51(2)

Result:

Extension of time granted and orders in terms of defendant's chamber summons

Category: B

Representation:

Counsel:

Plaintiffs: Mr D J Garnsworthy
Defendant: Mr M L Bennett & Ms C L Donald

Solicitors:

Plaintiffs: Staffa Lawyers
Defendant: Lavan Legal

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

Geneva Finance Ltd v Resource and Industry Ltd [2002] WASC 121
Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in Liq) [2007] WASC 254 (S)
Staley v Pivot [No 3] [2009] WASC 355
West Australian Construction Industry Redundancy Fund Ltd v Ortin [2002] WASC 185

KENNETH MARTIN J:

(This judgment was delivered extemporaneously on 15 April 2010 and has been edited from the transcript)

By the defendant's chamber summons of 26 February 2010 it seeks an order for increased allowances on taxation, see paragraph 1:
Upon taxation of the defendant's costs thrown away pursuant to the Orders made on 14 September 2009, by section 280(2)(c) of the Legal Profession Act 2008, any limits fixed by any applicable costs determination be removed on the basis that the defendant shall be entitled to an indemnity in respect of its costs incurred, except to the extent that such costs were not reasonably incurred.
That application is supported by the affidavit of Ms Cinzia Lee Donald, affirmed 26 February 2010, which attaches materials including the defendant's draft bill of costs prepared for taxation pursuant to order 3 of my orders of 14 September 2009. That draft bill of costs shows various items claimed by the defendant with the subtotal (apart from disbursements) amount including GST, of $221,941.50.
When the matter first came on before me for mention, counsel for the plaintiffs indicated that the defendant's application was firmly opposed. As a consequence, I made orders directing that the parties each file brief written submissions in respect of their respective positions. The plaintiffs did so by written submissions dated 10 March 2010, essentially opposing the application on a number of grounds, including a functus officio argument to the effect that my jurisdiction to make a special costs order in the terms sought, had essentially expired.
Further arguments were raised by the plaintiffs' counsel against the appropriateness of a special costs order. Then, in the alternative, it was argued that were I still minded to make such orders, they should be made only on terms the subject of directions under par 4.10 of the plaintiffs' written submissions, including that there be inspection of the papers on which the claim for the costs was based, including the fee invoices rendered by the defendant's solicitors to their client.
It was also argued that if a taxing officer were to be given discretion by my orders increasing allowances, so as to potentially allow the charge‑out rates in the defendant's solicitor's cost agreement, then the plaintiffs' counsel ought be able to inspect the costs agreement. It was put that a costs agreement is not in itself immune from inspection on the basis of client/legal privilege.
The defendant's solicitors filed their written submissions on 18 March 2010, in support of the application. Materially, it was submitted at paragraph 6 that:
The power exists under the Rules to extend the time beyond the 30 day time limit and, once extended, to make a special order under Order 66 Rule 51(1) of the Rules where a special order is warranted.
Reference was made by the defendant's solicitors to Heenan J's reasons in Geneva Finance Ltd v Resource and Industry Ltd[2002] WASC 121, and it was submitted that the court could also exercise that power after the 30-day time limit period had expired.
As to a general power of the court to extend time as a matter of discretion exercisable in the interests of justice, see McKechnie J's reasons in West Australian Construction Industry Redundancy Fund Ltd v Ortin[2002] WASC 185 (S2).
I am of the view, given the somewhat unique circumstances of the present case (where the trial began in September 2009, but for reasons canvassed in Staley v Pivot [No 3] [2009] WASC 355 could not proceed past day two) that it is appropriate to extend time in this case, to allow me to give due consideration to the appropriateness of a special order as sought. I will extend time for this application under the general power to extend a 30‑day limit otherwise applicable under O 66 r 51(2).
The base question then is the merits of the application in respect of my costs orders awarding the defendant its costs thrown away by reason of late amendments to the plaintiffs' statement of claim, with the trial at the time about a week away from commencement. The defendant's stance at the time was not to apply for an adjournment of the looming trial - but to seek instead to do the best it could to cope and be ready for the trial by meeting the late changes to the plaintiffs' case.
As events turned out, once the trial commenced the plaintiffs' case altered yet again and regrettably it was not then possible for the trial to proceed past day two.
The test to be applied in respect of applications for special costs orders, such as those sought here, has been the subject of recent case authority. In particular I refer to the Chief Justice's reasons for decision in Heartlink Ltd v Jones as Liquidator of HL Diagnostics Pty Ltd (in Liq) [2007] WASC 254 (S).
Essentially, the reasons of the Chief Justice focus upon two main factors, by reference to a then applicable statute, the Legal Practice Act 2003 (WA) s 215(2). Of course the present application is pursued under the subsequently enacted Legal Profession Act 2008, of which s 280(2) is, for all intents and purposes, in the same terms as former s 215 of the Legal Practice Act 2003.
At [11] of the Chief Justice's reasons in Heartlink , his Honour said:
In that factual context, I return to section 215(2) of the Legal Practice Act. The first question that arises for my consideration is the nature of the task performed by the court under that section, and, in particular, the question which the court is required to address. Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
I would also note without citing the Chief Justice's subsequent elaboration upon these two fundamental considerations at [12] ‑ [15] of Heartlink.
As to the first factor, that is, the level of costs allowable, the approach identified at [14] and [15] in Heartlink, is essentially a broad one. Bearing in mind that the ultimate decision allowing or disallowing the costs claimed is for a taxing officer, the court does not attempt to pre‑empt the taxing officer's ultimate consideration of the substance of the application seeking a level of party/party costs as claimed on the draft bill that is submitted for taxation.
Materials annexed to Ms Donald's affidavit, to which I have referred, particularly the draft bill, overwhelmingly demonstrate in my view, that without a special allowances order of the kind as is now pursued, the level of costs allowable under the applicable legal costs determination could be inadequate. Therefore the first factor is clearly satisfied, in my view. In the end, a taxing officer will decide on the amount to be allowed. My decision simply opens a door to the defendant's application to the taxing officer for a higher level of costs to be considered on its merits, without any cut‑off constraining the limit of an amount ultimately allowed on the taxation.
The second limb of the test to be considered is the issue of assessing the existence of unusual difficulty, complexity or importance in the matter. That factor needs to be put in an overall context here of the forensic circumstances in respect of which my award to the defendant of costs thrown away by reason of an amendment was made. That order was made in the face of a complex trial looming in about a week, with the late and significant amendment to the statement of claim that the defendant, at the time, was attempting to cope with in the last days during intense preparations for trial - to facilitate a trial being able to proceed.
I am focusing now, in the context of this second factor, on the phrase 'importance of the matter'. In my assessment, the second limb is well satisfied here, by reference to 'importance', for two main reasons.
First, in the context of the overall pending litigation, the extent of easement carriageway rights that are enjoyed by a dominant tenement holder over servient land and the disputed reasonable use of those carriageway rights across something approximating 800 metres of the defendant's rural land, is a dispute of importance, in my view, particularly by reference to a potential derogation from a landowner's freehold rights to fully enjoy its land in the face of an encumbrance by right of carriageway. There is a fundamental importance in respect of that underlying matter concerning the extent of proprietary rights. Second, and more fundamentally, my order for costs thrown away in favour of the defendant arising out of the plaintiffs' late amendment to its pleading, was made in a context of my objective of providing an adequate compensatory remedy to the defendant, in circumstances where without fault on its part, it was forced to meet a late and significant change in the plaintiffs' pleaded case.
In those circumstances, where there must be some waste as a result of a late amendment by the other party, it would be inappropriate, not to mention unjust, if the costs allowance order for costs thrown away, in reality, proves only to be a hollow‑sounding vessel - by not carrying a proper level of monetary recompense for the true extent of waste resulting from the amendment. An innocent party with the benefit of a costs thrown away costs order ought, in my view, to at least have an opportunity of arguing before a taxing officer that it should receive a realistic level of compensation in costs for the waste it encounters as a result of a late pleading amendment in the lead‑up to a looming trial.
There is an ancillary point. It is not difficult to see in prevailing circumstances that it may take some time for the ramifications and full extent of resulting waste generated by a late pleading change to be realised, then quantified by the innocent party, who at the time of a late amendment, was otherwise consumed in the last phase of intense trial preparations. In those circumstances the extension of time is justified.
In my view, the threshold legal test in terms of establishing the importance of the matter is well satisfied here, particularly by reference to a need in the interests of justice, for a court to deliver a viable and realistic costs thrown away remedy in outcome, rather than an order that in practical application may not (always of course depending upon the ultimate analysis by the taxing officer) provide a fair measure of recompense for the degree of waste and loss that is actually sustained by reason of a late change in pleadings, just before a trial begins.
In all those circumstances it seems to me that I should accede to the defendant's application in the terms it seeks under its chamber summons.

Inspection orders

The plaintiffs, by one of their alternative submissions, asked for orders allowing the inspection of the papers upon which the claim for wasted costs was based - including fee invoices rendered by the defendant to their client and for the inspection of the solicitor/client costs agreement.
However, I am unable to detect in any materials put before me on this application, a sufficient basis to justify that inspection, as a proper or appropriate component of the orders sought by the defendant. Obviously the plaintiffs will receive all materials submitted with the defendant's draft bill on the taxation. Beyond that, the plaintiffs need to establish some basis or foundation for what is sought.
On another factual situation it could be that a sufficient evidentiary basis might be established for inspection orders in the terms of the plaintiffs' requests. But a bare articulation of a desire by the plaintiffs' counsel to 'look' at such materials, does not, I think, support this court making inspection orders as a matter of acquiescence in that bare request. I decline those orders as sought by the plaintiffs.
I grant relief essentially in terms of the defendant's application, plus the extension of time I have also granted to it.