The Australasian Lawyers Group Pty Ltd t/as Butlers Barristers & Solicitors v Morgan
[2018] WASC 69
•7 MARCH 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: THE AUSTRALASIAN LAWYERS GROUP PTY LTD T/AS BUTLERS BARRISTERS & SOLICITORS -v- MORGAN [2018] WASC 69
CORAM: ALLANSON J
HEARD: 31 AUGUST 2017
DELIVERED : 7 MARCH 2018
FILE NO/S: LPA 21 of 2013
MATTER :Section 297 of the Legal Profession Act 2008 (WA)
BETWEEN: THE AUSTRALASIAN LAWYERS GROUP PTY LTD T/AS BUTLERS BARRISTERS & SOLICITORS
Applicant
AND
BRUCE MORGAN
Respondent
Catchwords:
Costs - Assessment of costs - Assessment or taxation
Costs - Review by taxing officer - Sufficiency of reasons
Legislation:
Family Law Act 1975 (Cth), s 117
Federal Court Rules 2011 (Cth), O 62 r 43, O 62 r 44
Legal Profession Act 2008 (WA), s 3, s 251, s 252, s 260(1), s 271, s 280, s 288, s 289, s 290, s 292, s 295, s 299, s 300, s 301(1), s 301(2), s 303, s 304, s 305, s 308
Legal Practice Act 2003 (WA), pt 13, div 3
Legal Practitioners Act 1893 (WA), s 66
Rules of the Supreme Court 1971 (WA), O 66 r 42, O 66 r 53, O 66 r 54, O 66 r 55(2)
Result:
Application for review of assessment allowed
Certificates of the taxing officer set aside
Bill of costs referred to a different taxation officer for reassessment
Category: B
Representation:
Counsel:
Applicant: Ms M L Coulson
Respondent: Mr B W Ashdown
Solicitors:
Applicant: Coulson Legal
Respondent: Stewart Forbes
Case(s) referred to in judgment(s):
BGM v Australasian Lawyers Group Pty Ltd [2014] WASC 290
BGM v Australasian Lawyers Group Pty Ltd [2014] WASC 290 (S)
LM v K Lawyers [No 2] [2015] WASC 245
Re Gibson's Settlement Trusts; Mellors v Gibson [1981] Ch 179
Titan v Babic [1995] FCA 813
Woolf v Snipe [1933] HCA 5; (1933) 48 CLR 677
ALLANSON J: The Australasian Lawyers Group Pty Ltd is a legal practice, trading as Butlers, Barristers and Solicitors. Mr Morgan engaged Butlers in 2010 to act for him in proceedings under the Family Law Act 1975 (Cth).
Mr Morgan objected to the bills presented for costs. His objection has been heard and reviewed by a taxing officer. Mr Morgan now applies for a judge to review that decision. By O 66 r 55(2) of the Rules of the Supreme Court 1971 (WA), the review is confined to an error in principle.
I have before me two applications for review, in respect of two certificates dated 1 February 2017 (First Certificate) and 24 May 2017 (Final Certificate/Costs Certificate).
The background to the application
Mr Morgan engaged Butlers in 2010. They made a costs agreement.
On 5 July 2013, Butlers filed an application for assessment of the various accounts it had rendered to Mr Morgan, and which remained unpaid. The total was $159,346.63, which included senior counsel's fee of $77,440 and disbursements of $9,524.04.
Another bill of costs dated 6 December 2013 differed slightly, the total being $158,196.70. Those costs were incurred in the period 8 March 2013 and 10 May 2013, and included senior counsel's fees and an amount for an assessment of costs hearing.
Mr Morgan applied to set aside his costs agreement with Butlers. In BGM v Australasian Lawyers Group Pty Ltd [2014] WASC 290, the master held that there had been a failure on the part of Butlers to comply with the disclosure obligations in s 260(1)(f) and (i) of the Legal Profession Act 2008 (WA) (at [82]), and that the costs agreement was not fair or reasonable (at [97]). In supplementary reasons, BGM v Australasian Lawyers Group Pty Ltd [2014] WASC 290 (S), the master made orders under s 288 of the Legal Profession Act setting aside the agreement, and ordering that Butlers' costs be taxed in accordance with the applicable Legal Practitioners' (Family Court of Western Australia) Determinations.
Butlers then lodged two bills for taxation, one for paid costs and one for unpaid costs. The bill for unpaid costs, filed 11 March 2015, was unchanged despite the costs agreement having been set aside.
Mr Morgan filed written objections to the bills and Butlers filed written submissions.
On 20 and 21 April 2015, the taxing officer conducted hearings on the two bills. He did not publish reasons but on 10 September 2015, he published a letter regarding the outcome of the taxation and explaining his approach to the assessment of costs.
The letter of 10 September 2015
The letter said that it contained observations, which the taxing officer would otherwise have delivered as oral remarks before indicating the amount that should be allowed on the paid bill. The taxing officer expressly disclaimed that they were formal reasons, as 'my cumulative experience is now that doing so [delivering formal reasons] only tends to encourage what might be called parasitic litigation'. He invited the parties to agree whether the unpaid bill should follow the result on the paid bill.
In discussing the process followed, the taxing officer said:
The client correctly points out that the assessment is to be conducted by reference to s 301 and 303 of the Legal Profession Act. That requires an assessment of (a) whether or not it was reasonable to carry out the work to which the legal costs relate; (b) whether the work was carried out in a reasonable manner and (c) the fairness and reasonableness of the amount of legal costs. The first two requirements use the word 'reasonable' and the third speaks of 'fairness and reasonableness'. Those are words of judgment and relativity. They are not words of simple addition and subtraction.
While s 301(1) obliges the taxing officer to consider the factors there set out, s 301(2) empowers regard to other matters. Some of those are relevant.
Paragraph (a) [of s 301(2)] can be taken as having been satisfied for the purposes of this assessment. The failures of compliance that led to the costs agreement being set aside are not relevant to the assessment now that the bill has been redrawn by reference to the determinations.
Paragraph (b) does not arise in a negative way (see the proceeding as to where it did arise) that there is a link to paragraph (j) so that I do take into account the numerous cost disclosures made by the Family Law Rules. That is, so far as is relevant to this assessment, there is no ground to take into account in a way that would reduce costs any failure of disclosure made by the practice. On the contrary, the practitioners made repeated disclosures of costs at higher rates in accordance with the costs agreement and the client did not at the time object to them.
Paragraph(c) is irrelevant. Paragraphs (d) (e) (f) and (g) have all been taken into account in my assessment.
Paragraphs (h) and (i) do not offer anything that is of significant relevance.
As the client points out, the amount of the disputed costs the subject of a costs determination must be assessed by reference to the determination: s 303. As the client correctly points out, the determinations provide for maximum rates.
It follows that, in particular instances, on an assessment it is possible to take the view that the amount claimed on the bill is not reasonable but a lower amount might be. This particularly applies to some of the work of Mr Majoe. The objections of the client are noted in relation to this. To the extent that Mr Majoe charged the maximum rates for work that was less than fully engaging for a senior practitioner this objection has merit and the answer is to tailor the hourly rates. Again that is not an exercise in mathematics alone but one of holistic judgment.
The taxing officer then dealt with some general matters. First, he dismissed the objection that some of the work was performed in the Magistrates Court and not in the Family Court of Western Australia. He did so on the basis that matters are moved between the Magistrates Court and the Family Court by administrative action, and the work practitioners do is the same wherever the file happens to be at the time. Second, he dealt with the use of six minute units, noting that the evidence of the practitioner was that he rounded time off to the nearest 6 minute unit. The taxing officer simply commented that no reasonable objection could be taken to that procedure.
In a section headed 'detailed objections', the taxing officer said that Mr Morgan had put forward a 'minutely detailed series of objections', with almost no item in the bill conceded. Against total professional costs claimed of $293,152.20, Mr Morgan had offered $60,753.31 or 20.7% of the amount claimed. The taxing officer said:
The concessions by the client are a ludicrous response to the claims for remuneration. For reasons already given, the entire approach taken by the client to the process of assessment did not assist me to address the statutory requirements. The responses by the practitioner did. I have examined representative parts of the voluminous files provided. This was work of a very difficult kind that required a family lawyer with expertise and resources. The client was demanding and difficult and showed a distinct reluctance to accept the good advice he was getting. It is worth noting that the advice necessarily changed during the course of the matter, as a significant decision by the Full Court of the Family Court of Australia shed new light on the proper approach to be taken to alteration of property interests in cases just such as these.
…
I do accept that there is a slight hint, when the history and the charges are considered as a whole, that there was just a little too much intra-office conferral, and sometimes work was done by someone who was more expensive than necessary. However, this is a very marginal call.
I reject each of the objections to the paid bill. I accept the answers provided in the responses, subject to the point just made.
The result was that total professional costs were reduced by 5%, with disbursements allowed in full.
The objections
On 29 September 2015, Mr Morgan lodged objections and sought review in relation to all items in the two bills, pursuant to O 66 r 53. The objection was originally quite short, objecting to all items in the two bills and stating that more precise identification of items in question was not possible 'due to the manner in which the taxation/assessment of the applicant's/practitioner's costs had been carried out'. Mr Morgan set out, quite briefly, the following objections alleging that the taxing officer erred in principle:
(1)in failing to give adequate reasons, including by failing to inform the parties which items or parts of items had been allowed or disallowed so as to limit objections to specific items;
(2) by finding that the scale justified minimum charges of one unit and that rounding off time in units was justified;
(3)in allowing disbursements without making a separate ruling for each disbursement;
(4)in not finding that 'even if the client was demanding and difficult this did not give the solicitor carte blanche to charge fees';
(5)in finding there was 'just a little too much intra-office conferral and sometimes work was done by someone who was more expensive than necessary' without identifying the items or classes of items to which those findings related;
(6)in allowing the entire costs of the trial affidavit, in the light of the trial judge's comments;
(7)in allowing costs in relation to the practitioner's dealing with the Legal Profession Complaints Committee;
(8) in finding that assessment is different from taxation and failing to deal with any particular items; and
(9)in conducting an overall assessment, having previously ordered the respondent to file a notice of objections in the form of a schedule specifying the sums offered for each item and the details of the grounds of any objections.
Mr Morgan also alleged that the quantum allowed established an error in principle as no taxing officer, acting reasonably, could ever have allow the bills in those amounts.
Butlers filed a written response to the objection on 16 October 2015. Butlers addressed each of the objections in turn, supporting the approach taken by the taxing officer. In particular, they supported the distinction drawn between assessment and taxation and the decision not to undertake a line by line assessment of the bills.
The decision on review
On 20 January 2017, the taxing officer provided written reasons on his review. The reasons incorporated, by reference, the reasoning set out in the letter of 10 September 2015.
First, the learned taxing officer rejected the proposition that he considered implicit in Mr Morgan's complaint that he had not given reasons and that he was under an obligation to give 'minutely detailed reasons for the allowance made on each 'item' in the bill'. He said that the statutory requirement is to assess the reasonable costs that are to be allowed and that 'may or may not require detailed consideration of any particular entry [in the bill to be taxed]'. The taxing officer also referred to the difficulty in assessing a specific allowance for each item in a bill where the charges are on a time basis, and not by reference to items such as discovery or getting up. He described Mr Morgan's objections, in asserting an obligation to make a specific allowance for each item in the bill, as 'particularly irksome'.
In effect, the taxing officer said that his reasons were that he had formed a view on the reasonableness of the charges, bringing to bear his experience as a taxing officer and the knowledge he had acquired over years in practice.
Second, he rejected as a misconception that it is inappropriate or unfair, even in the absence of a costs agreement, for practitioners to charge in six minute units. On this issue, the taxing officer referred to views he had expressed in an article written in 1997.
Third, he referred to the disbursements, and found any shortcoming in vouchers had been remedied by those now provided.
Fourth, the taxing officer dealt with matters under the heading 'demanding and difficult client'. He noted the volume of the practitioner's files (17 boxes), and said that he had not looked at every piece of paper but had familiarised himself with 'what the client had instructed and what the practitioner did in response'. On that basis, and his experience, he had formed the view that Mr Morgan was demanding and difficult.
Fifth, he dealt with intra‑office conferral and rates, describing this as an objection to quantum, not an objection in principle.
Sixth, he considered the objection based on comments by the trial judge regarding the unnecessary length of the trial affidavit. The taxing officer dealt with this by reference to whether the length of the affidavit, if excessive, demonstrates that the time of its preparation was unreasonable. He did not address it by reference to whether the work done was carried out in a reasonable manner.
Seventh, the objection to the inclusion of costs for work relating to a response to the Legal Profession Complaints Committee had been resolved.
Eighth, the taxing officer dealt with the difference between assessment and taxation, referring to what he had earlier written in LM v K Lawyers [No 2] [2015] WASC 245 [17] ‑ [19]:
There is a further preliminary matter that I need at least to touch on here, even if this is not the occasion for a full exploration of it. The Legal Practitioners Act 1893 and the Legal Practice Act 2003 both referred to 'taxing' as the method for determining the remuneration properly to be allowed to lawyers as against their clients. The process of taxation of costs is one with a long history, and the use of the word 'taxing' or 'taxation' in professional regulatory statutes thus imported a known body of law. Apart from requiring taxing officers to advert to some obvious matters such as whether there was a costs agreement (and tax in accordance with it if there was one) neither of the earlier acts contained any such directions as s 301 of the Legal Profession Act.
The Legal Profession Act 2008, as part of a national scheme, conspicuously departs from that traditional language of taxation. It is trite as a principle of statutory interpretation that when parliaments change their language, particularly if they abandon a long-established form of words known to import a body of law, that they intend to change their meaning. In my view the change of language in the Legal Profession Act was such a considered departure. An assessment of a lawyer's costs is the discharge of a statutory function to be conducted in compliance with the statute. It is s 300 to s 304 of the Act that are paramount. As their headings indicate, s 300 to s 304 are respectively to do with procedure on assessment, criteria for assessment, assessment by reference to a costs agreement, assessment by reference to a costs determination, and costs of the assessment.
The court does not have a set of rules dealing specifically with assessments under the Legal Profession Act. The general assumption has been that O 66 applies to assessments. For want of anything better, that must be accepted as a starting point, but with one important qualification. That is that because O 66 is subordinate legislation, nothing in it can avail to override or contradict the principal legislation, which is the Legal Profession Act. A registrar conducting an assessment under the Legal Profession Act is assessing, not taxing. The process is not taxation. While as a matter of convenience one might apply O 66 as the only available analogue, and the Rules are necessary to provide procedures not set out in the Act, that qualification must always be borne in mind.
The taxing officer issued the first certificate. Mr Morgan paid the first certificate on 2 February 2017.
The application and grounds
Mr Morgan contends that the first certificate should be set aside by reason of these errors of principle:
(a) the taxing officer failed to give reasons with respect to:
(i)the rejection of objections to the two bills of costs;
(ii)the manner in which the taxing officer considered the criteria in s 301(1) and (2) of the Legal Profession Act;
(iii)the rejection of the ground of review as to failure to give reasons;
(b)the taxing officer 'failed to engage in a proper process of assessment (taxation) of the bills of costs';
(c)the taxing officer allowed costs by reference to '6 minute units' which are not provided for within any applicable costs determination;
(d)the taxing officer failed to consider and exercise any discretion with respect to:
(i)whether it was reasonable to carry out the work;
(ii)whether the work was carried out in a reasonable manner;
(iii) the fairness and reasonableness of the amount of costs, including those matters applicable pursuant to s 301(2) Legal Profession Act;
(e)the taxing officer allowed costs incurred in the Magistrates Court at the rates applicable to the Family Court of Western Australia in accordance with the Legal Practitioners (Family Court of Western Australia) Determination 2010 and 2012 when these costs should have been assessed by reference to the relevant Magistrates Court (Civil) Determination in accordance with s 303; and
(f)the taxing officer allowed rates higher than those set out in the costs agreement that was set aside.
The statutory scheme
(1) Legal Profession Act 2008 - Part 10
Legal costs are defined in s 3, as the amounts that a person has been or may be charged by, or is or may become liable to pay to, a law practice for the provision of legal services including disbursements but not including interest.
Part 10 of the Act provides for costs disclosure and assessment. Earlier legislation referred to the taxing of a bill by a taxing officer of the Supreme Court: see Legal Practitioners Act 1893 (WA) s 66; Legal Practice Act 2003 (WA) pt 13 div 3.
The purposes of pt 10 are set out in s 251:
(a)to provide for law practices to make disclosures to clients regarding legal costs;
(b)to regulate the making of costs agreements in respect of legal services, including conditional costs agreements;
(c)to regulate the billing of costs for legal services;
(d)to provide a mechanism for the assessment of legal costs and the setting aside of certain costs agreements.
By s 271, legal costs are recoverable -
(a)under a costs agreement made in accordance with Division 6 or the corresponding provision of a corresponding law; or
(b)if paragraph (a) does not apply, in accordance with an applicable costs determination; or
(c)if neither paragraph (a) nor paragraph (b) applies, according to the fair and reasonable value of the legal services provided.
Costs determinations are dealt with in div 5, and costs agreements in div 6. By s 280(1), subject to any costs agreement or any order under s 280(2) or a determination under s 280(3):
(a)the taxation of bills of law practices; and
(b)any other aspect of the costs charged by law practices,
is regulated by an applicable costs determination.
A law practice must not commence proceedings to recover legal costs until after it has given a bill: s 289. A bill may be in the form of a lump sum or an itemised bill: s 290. An itemised bill is 'a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed under Division 8': s 252. Lump sum bill is also defined in s 252, and means a bill that describes the legal services to which it relates and specifies the total amount of the legal costs.
A bill must include or be accompanied by a written statement setting out the client's rights, including the avenue of a costs assessment under div 8.
If a lump sum bill is given, any person who is entitled to apply for an assessment of the legal costs to which the bill relates may request the law practice to give the person an itemised bill: s 292.
The detailed provisions for costs assessment are found in div 8.
A client or third party payer may, within the time prescribed, apply to a taxing officer for an assessment of the whole or any part of a bill for legal costs: s 295. Section 299 provides for persons to be notified of the application. A person notified is entitled to participate in the costs assessment procedure, is taken to be a party to the costs assessment, and, if the taxing officer so determines, is bound by the costs assessment: s 299(2).
The procedure on an assessment and matters to be considered by the taxing officer are set out in s 300, s 301, s 302 and s 303:
300Procedure on assessment
If, after proper notice that a costs assessment will take place, a party to the assessment does not attend, the taxing officer may proceed with the assessment in the absence of that party.
301Criteria for assessment
(1)In conducting an assessment of legal costs, a taxing officer must consider ‑
(a)whether or not it was reasonable to carry out the work to which the legal costs relate; and
(b)whether or not the work was carried out in a reasonable manner; and
(c)the fairness and reasonableness of the amount of legal costs in relation to the work, except to the extent that section 302 or 303 applies to any disputed costs.
(2)In considering what is a fair and reasonable amount of legal costs, the taxing officer may have regard to any or all of the following matters ‑
(a)whether the law practice and any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf complied with this Act;
(b)any disclosure made by the law practice under Division 3;
(c)any relevant advertisement as to ‑
(i)the law practice's costs; or
(ii)the skills of the law practice or of any Australian legal practitioner or Australian registered foreign lawyer acting on its behalf;
(d)the skill, labour and responsibility displayed on the part of the Australian legal practitioner or Australian registered foreign lawyer responsible for the matter;
(e)the retainer and whether the work was done was within the scope of the retainer;
(f)the complexity, novelty or difficulty of the matter;
(g)the quality of the work done;
(h)the place where, and circumstances in which, the legal services were provided;
(i)the time within which the work was required to be done;
(j)any other relevant matter.
302Assessment of costs by reference to costs agreement
(1)A taxing officer must assess the amount of any disputed costs that are subject to a costs agreement by reference to the provisions of the costs agreement if ‑
(a)a relevant provision of the costs agreement specifies the amount, or a rate or other means for calculating the amount, of the costs; and
(b)the agreement has not been set aside under section 288,
unless the taxing officer is satisfied that ‑
(c)the agreement does not comply in a material respect with any applicable disclosure requirements of Division 3; or
(d)Division 6 precludes the law practice concerned from recovering the amount of the costs; or
(e)the parties otherwise agree.
(2)The taxing officer is not required to initiate an examination of the matters referred to in subsection (1)(c) and (d).
303Assessment of costs by reference to costs determination
A taxing officer must assess the amount of any disputed costs that are subject to a costs determination by reference to the determination.
Division 8 also provides for the costs of assessment, including when those costs must be paid by the law practice to which the costs are payable or were paid: s 304.
The taxing office must certify in writing the amount of disputed costs allowed and the costs of the assessment: s 305. A costs assessment may be reviewed by the Supreme Court in accordance with the Rules of the Supreme Court: s 308.
The Rules of Court
The Consolidated Practice Directions set out procedures including provisional assessment and confidential settlement conferences. Parties are encouraged to consider whether there may be more efficient means of conducting the taxation than consideration in turn of each and every item: see Practice Direction 4.7.2, 4.7.3.
For matters which proceed by the usual practice, O 66 r 42 prescribes the content of a bill for taxation.
(1)A bill of costs for taxation shall be prepared so as to show clearly ‑
(a)items consecutively numbered, together with a reference to the item in the scale to which the item in the bill relates; and
(b)dates of items (specifying years, months and days); and
(c)where necessary, particulars of the services charged for; and
(d)disbursements; and
(e)professional charges.
(2)Professional charges and disbursements shall be entered in separate columns and each column shall be added before the bill is filed.
Rule 42 has not been amended since 1975, when remuneration of the profession in litigious work was based on the value of the subject matter of the action.
The provisions relating to review of taxation are in div 3.
A party who contends that the taxing officer has made an error in principle in allowing or disallowing any item or part of an item in a bill must first apply for review by the taxing officer under O 66 r 53. The applicant for review must deliver to the other party interested in the allowance or disallowance, and carry in before the taxing officer, an objection in writing to the allowance or disallowance specifying in the objection by a list, in a short and concise form, the items or parts of items objected to, and the grounds and reasons for the objections. The taxing officer shall reconsider and review the taxation in relation to the objections, may receive further evidence and, if required, shall state their reason on the objection and special facts or circumstances relating to the decision: O 66 r 54.
A party dissatisfied with the certificate of the taxing officer as to any item or part of an item objected to under r 53 may apply to a judge in chambers for an order to review the taxation as to that item or part of an item. By r 55(2):
(2)The judge, if of the opinion that the taxing officer has made an error in principle, may thereupon make such order to rectify the error as the judge thinks just.
An application to a judge to review the taxation shall be heard and determined upon the evidence brought in before the taxing officer, and further evidence shall not be received upon the hearing of the application unless the judge otherwise directs.
The requirement to give reasons
The client contends that the reasons of the taxing officer, both on the taxation and on review, are inadequate. Counsel for Mr Morgan cites the reasons of Sir Robert Megarry VC in Re Gibson's Settlement Trusts; Mellors v Gibson [1981] Ch 179, 191 ‑ 192, in relation to a rule relevantly indistinguishable from O 66 r 54:
Before I turn to my conclusions on this review, however, duty compels me to deal with one further matter. RSC Ord 62, r 34(4) requires a taxing officer who has reviewed a taxation to state, on request, 'the reasons for his decision on the review, and any special facts or circumstances relevant to it'. The duty to give reasons is plainly most important. The reasons are needed initially to enable the unsuccessful party to decide whether to carry matters further. If he does bring the taxation before a judge for review, the reasons are needed to enable the parties to know the propositions they have to attack or defend, and also to enable the judge to understand why the taxing officer did what he did. All this, of course, is obvious. As Sachs J once emphasised, the duty of the taxing officer is to make a full statement of all his reasons, and this duty may well entail stating specifically whether or not a matter complained of was taken into account. Sachs J also pointed out that 'a taxing officer is not entitled to take cover, so to speak, under an omnibus statement that he has taken "all relevant circumstances" into account'; see Eaves v Eaves [1955] 3 All ER 849 at 851, [1956] P I54 at 156 ‑ 157. The same applies to a mere statement that the taxing officer considers something to be 'reasonable' or 'fair and reasonable'. To say 'My reasons for holding that the costs were "reasonably incurred" within r 28(4) are that I thought them to be fair and reasonable' is to give no reason at all. A bare assertion in terms of the proposition itself is no more a reason than the once familiar 'Because I tell you to'.
I appreciate that the task of taxing officers is burdensome, and that the press of detailed work may sometimes make it difficult for them to do more than express their reasons somewhat concisely. I am certainly not saying that there is any duty for them to write lengthy and detailed expositions of their thoughts, or that such expositions would be desirable. The question is whether their answers will fairly reveal to those who are reasonably skilled in these matters the process of reasoning whereby the objection in question was allowed or disallowed, together, where appropriate, with a statement of the matters in question that were taken into account or disregarded in the process; and in most cases it should be possible to do this with reasonable brevity, without descending into prolixity.
In Titan v Babic [1995] FCA 813, Finn J considered the requirements of O 62 r 43 of the Federal Court Rules2011 (Cth) under which a taxing officer requested to reconsider their decision was required, if requested by any party, to state 'by reference to the objections to his previous decision, his reasons for his decision on reconsideration'. Any party interested could seek the court's review of the taxing officer's decision on reconsideration: O 62 r 44. Immediately before citing the passage quoted above from Re Gibson's Settlement Trusts, Finn J said:
The obligation to give adequate reasons is an important one to uphold if public confidence - but more importantly the confidence of litigants - is to be maintained in our courts and their processes. The decisions of appellate courts in this country leave no room for doubt on this score in relation to the decisions of judges …
The general criteria now being applied to judicial reasons are, in my view, appropriate for the Court to apply to its own officers where reasons are required to be given as a prelude to the exercise of a review of the decision of such an officer … The effectiveness of the review process itself depends on the sufficiency of the reasons given.
I express no view on whether the court should apply the same criteria as for judicial reasons. But I would adopt two important aspects of Finn J's comments: first, the importance of reasons in maintaining confidence in the court's processes; and, second, the relationship between the effectiveness of a review process and the sufficiency of the reasons given.
The practitioner submits that the reasons of the taxing officer are sufficient to disclose the intellectual process that has given rise to the decision.
It is not necessary to consider whether the reasons given on the initial assessment were sufficient, or whether reasons were then required. On a review, the rules require the taxing officer to state their reason on the objection and any special facts or circumstances.
On some issues, the reasons clearly, if summarily, disclose why objections were dismissed - for example, the taxing officer explained why he did not allow the objection to costing in six minute units, why he allowed disbursements and why he did not allow any objection based on the trial judge's comments about the trial affidavit.
When it comes to why objections were rejected (or why the bills were reduced by 5% and only by 5%) the reasons disclose that the taxing officer thought the bills were all fair and reasonable, so that he dismissed all objections, subject to the 'slight hint' that there was just a little too much intra-office conferral and work done by someone more expensive than necessary. In effect, the costs were reasonably incurred because he thought they were fair and reasonable. That, as Megarry VC said in Re Gibson's Settlement Trusts, is to give no reason.
The deficiency in the reasons leaves the court in a difficult position on review. There are, however, specific matters which were argued and on which the court can rule.
The determinations
The master had ordered that the costs be taxed in accordance with the applicable Legal Practitioners' (Family Court of Western Australia) Determinations.
Costs determinations for work in the Family Court of Western Australia were made in 2009, 2010 and 2012. The work done was within the period covered by the 2010 and 2012 determinations. Each expressly recognises that:
(1)the general rule pursuant to s 117 of the Family Law Act 1975 (Cth) is that each party to proceedings under that Act bears their own costs;
(2)most legal practitioners and their clients in the Family Court's jurisdiction, enter into costs agreements;
(3)the Act contains substantial cost disclosure obligations; and
(4)party/party costs are provided for under the Family Court's federal jurisdiction and therefore the Legal Costs Committee is concerned only with legal practitioner/client costs.
The determinations simply prescribe the maximum hourly rates and daily rates (for counsel), inclusive of GST, which shall be used to calculate the dollar amounts chargeable by a legal practitioner, clerk or paralegal in providing advice and services to their own clients. The determinations are not confined to work done in the Family Court. In the 2010 determination:
(1) The Committee determines that it is appropriate to determine a scale of fees applicable to the work of legal practitioners, clerks and paralegals 'in and in connection with the Family Court on a legal practitioner/client basis': reg 4;
(2)Clause 3 of the Schedule provides:
This Determination applies to the remuneration of legal practitioners, clerks and paralegals in respect of advice given by legal practitioners in or for the purposes of proceedings or potential proceedings before the Family Court of Western Australia (Family Court).
(3)Clause 4 prescribes rates to be used to calculate the amounts chargeable by a legal practitioner, clerk or paralegal in providing advice and services to their own clients in respect of proceedings and potential proceedings in the Family Court.
Each of the words of connection which I have emphasised goes beyond work in the court. The work was undoubtedly connected with proceedings in the Family Court. There was no error of principle in assessing costs by reference to the Family Court determinations, rather than the determinations for work in the Magistrates Court.
The subsequent introduction of a determination specifically for family law work in the Magistrates Court does not alter the proper construction of the earlier instruments.
Accordingly, the taxing officer correctly held that the costs are to be assessed by reference to the Legal Practitioners' (Family Court of Western Australia) Determinations that operated at the time the work was done.
Taxation or assessment
In Woolf v Snipe [1933] HCA 5; (1933) 48 CLR 677, 678, Dixon J said:
The superior Courts of law and equity possess a jurisdiction to ascertain, by taxation, moderation, or fixation, the costs, charges, and disbursements claimed by an attorney or solicitor from his client, and that jurisdiction is derived from three sources and falls under three corresponding heads.
Dixon J referred to three sources of jurisdiction: the jurisdiction founded on the relation to the court of its officers; the jurisdiction to determine a contested claim for costs before the court by taxation or analogous proceedings; and the statutory jurisdiction (678 - 679).
In assessing costs, the taxing officer exercises a statutory power. The starting point must, accordingly, be the terms of the statute.
The Legal Profession Act incorporated parts of a National Model Bill on the Legal Profession. Some of the provisions of the National Model Bill were categorised as core uniform provisions, requiring textual uniformity to ensure consistency across jurisdictions: see Explanatory Memorandum for the Legal Profession Bill 2007 (WA). New South Wales and Victoria have since adopted a Legal Profession Uniform Law which departs in important respects from the earlier model, and that limited uniformity has largely gone.
One aspect of textual uniformity was the use in pt 10 of the Act of the term 'assessment'. Earlier legislation referred to the taxing of a bill by a taxing officer of the Supreme Court: see Legal Practitioners Act 1893, s 66; Legal Practice Act 2003, pt 13 div 3. The practitioner in this review, and the taxing officer in his reasons, relied on the change of terminology from 'taxation' to 'assessment', together with the statement of considerations in s 301, as evincing an intention to effect a change in the process. But there are other matters which bear on the construction of pt 10 div 8, and how those provisions should operate.
First, the words 'assessment' and 'taxation' share a core meaning of fixing or determining an amount to be paid.
Second, the function is performed by taxing officers.
Third, the term 'taxation' is still used, apparently interchangeably with 'assessment', in s 280(3).
Fourth a law practice must, if requested, give an itemised bill, defined as a bill that specifies in detail how the legal costs are made up in a way that would allow them to be assessed.
The process remains one of fixing or determining the amount of the costs, or any costs that are disputed, by reference to a bill that specifies in detail how they are made up, not just a gross amount.
The bill presented, which was set out in units of time, made both objecting and assessing burdensome. For example, the drafting of the trial affidavit is recorded in many entries over a period greater than a year. No one tallied up how much time is recorded against the preparation of the affidavit, and the total cost. Quite apart from the fact that the trial judge criticised the affidavit, the taxing officer must consider whether it was reasonable to carry out all of the work in that drafting and whether it was carried out in a reasonable manner.
Similarly, each intra-office conferral is recorded: many being one unit. The taxing officer found that there had been just a little too much intra-office conferral, but the extent of that conferral was not quantified, either in time or cost. It may not be necessary to consider each conferral individually, to consider whether each was reasonable, if a judgment can be formed about the reasonableness of the conferral overall. But I am satisfied that it was wrong in principle to apply an overall percentage reduction to the bill without doing either because there is no assessment of the costs reasonably to be allowed for that work.
Despite the insufficiency of his reasons, I am satisfied that the procedure followed by the taxing officer was not consistent with the requirements of s 301. It is not necessary to decide whether the absence of reasons is itself sufficient reason to set aside the review decision.
Considering the nature of the reasons, and the approach to assessment, I am satisfied that there has been an error in principle which affects the whole of the assessment. The certificate of the taxing officer should be set aside and the bill of costs referred for assessment by another taxing officer. While I make no direction to that effect, it being a matter for the taxing officer, I believe the bill could be redrawn to a form which would better allow it to be assessed.
The assessment of the costs of the assessment must also be set aside, because it is not possible to apply s 304 without determining the extent to which legal costs are reduced.
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