Viscariello v Macks (No 4)

[2022] SASC 30

Supreme Court of South Australia

(Civil: Application)

VISCARIELLO v MACKS (NO 4)

[2022] SASC 30

Judgment of Auxiliary Judge Norman a Master of the Supreme Court  

31 March 2022

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - GENERAL MATTERS

Applications by both parties to proceedings against the other for costs awarded in their favour.  Application by the party in one claim seeking before the commencement of the taxation particulars of the costs claimed by the other party.  Application by the party in the other claim for the costs of both parties to be taxed on a lump sum basis and for the assessment to be consolidated.  Generally inappropriate for an order for particulars of a costs claim to be made before inspection and production and the pre-taxation conference between the parties.  Application deferred until after those events have occurred.  Lump sum costs assessment declined where there are large numbers of "big ticket" and controversial objections to the claim and such items intermingled with other parts of the claim, but deferred until after those items had been taxed.  Application that party be required to elect prior to taxation as to proceeding with an application relating to the costs indemnity rule refused.  The concept of proportionality pursuant to UCRs 1.3, 3.1(1)(h), 12.2(c) and (e) and 61(b) and (d) is relevant on a taxation of costs.  Observations on the requirements as to the form of interlocutory applications pursuant to UCR 102.1 and Form 77.

Paciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403, applied.
Hall v City of Burnside (No 10) [2013] SASC 140, discussed.

Macks v Viscariello (2007) 130 SASR 1; Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119; Leary v Leary [1987] 1 WLR 72; Seven Network Ltd v News Ltd [2007] FCA 2059; Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523; McDonald v State of South Australia [2020] SASC 112; Viscariello v Legal Profession Conduct Commissioner (No 2) [2021] SASCFC 35; Harrison v Schipp (2002) 54 NSWLR 738; Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1; Smoothpool Nominees Pty Ltd v Pickering & Ors [2001] SASC 131; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629; Seven Network Ltd v News Ltd [2007] FCA 2059; Hudson v Sigalla (No 2) [2017] FCA 339; Piciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403; Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111; Moyes & Anor v J & L Developments & Anor [2004] SASC 319; Harris Scarfe (in liq) v Harris Scarfe Wholesale Pty Ltd (in liq) [2006] SASC 277; Ricciardi v Philmac Pty Ltd [1987] 45 SASR 290; Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2012] SASC 228; Canvas Graphics Pty Ltd v Kodak (Australiasia) Pty Ltd [1998] FCA 23 ; Bitek Pty Ltd v IConnect Pty Ltd [2012] FCA 506; (2012) 290 ALR 288; Hislop v Paltar Petroleum Ltd (No 4) [2017] FCA 1632, considered.

VISCARIELLO v MACKS (NO 4)
[2022] SASC 30

Supreme Court: Civil Application

1. NORMAN AJ:  These are applications of the parties which came on for argument before me on 18 November 2021.

2. As there are multiple applications, and for the sake of brevity and without disrespect, I will refer to the applicant to the proceedings as Viscariello and the respondent to the proceedings as Macks.

3. As the term “taxation” is referred to in the UCR, that expression will be used rather than the previous term ‘adjudication” (except in the case of references to that term in earlier judgments)

   Viscariello’s applications for particulars and other material

4. Viscariello’s first application, dated 17 September 2020 (FDN 342) sought orders for the production by Macks of documents held by him which could generally be described as those evidencing his entitlements to costs, for the preparation, filing and service of an amended claim for costs which responded to complaints made by Viscariello of 1 July 2020, and for the filing and service by Macks of a response to Viscariello’s claim for costs served on 1 July 2020.

5. This application was supported by an affidavit of Viscariello sworn on 16 September 2020 (FDN 343) incorporating a large number of exhibits comprising 126 pages.

6. A second application filed by Viscariello on 19 May 2021 (FDN 371) sought as an alternative to the orders sought in his first application, that in Macks’ claim for costs, and in his further response, he was to comply with requests and complaints set out in letters dated 23 April 2021 and 29 April 2021 or alternatively, to file and serve separate documents providing further and better details of his claim for costs and a response to Viscariellos’s claim, and finally, orders for inspection and copies of documents relating to legal services provided to Macks by Lipman Karas and/or counsel for the period between 1 January 2015 and 17 October 2018 in relation to claims by ASIC against Macks the subject of Action SCCIV-15-309.  This application was supported by an affidavit of Viscariello sworn on 19 May 2021 (FDN 370).

7. In support of those applications, Viscariello filed written submissions dated 21 September 2021 (FDN 390) and a further affidavit dated 28 October 2021 (FDN 391).  In opposition to Viscariello’s aforesaid applications, Macks filed written submissions dated 28 October 2021 (FDN 392) and Viscariello has filed written submissions in reply dated 11 November 2021 (FDN 394).

   The form of interlocutory applications

8. UCR 102.1 relating to the issue of interlocutory applications provides inter alia that a person who seeks an order must file a written interlocutory application in the prescribed form.  This is Form 77 which specifically provides that an application is to set out the orders sought in the application, in separately numbered paragraphs.  Accordingly, orders sought in an application are to be clear and specific on the face of the application itself.  The orders sought by Viscariello in para 2 of his first application, and para 1 of his second application, can only be ascertained by cross reference to external documents being a response dated 1 July 2020 and letters dated 23 April 2021 and 29 April 2021.  Such a practice of identifying the specific orders sought by cross referring to other documents in an interlocutory application creates inefficiency by requiring a search to locate and read the associated documents.  At the very least, the filing of Minutes of the Orders sought would be appropriate.

   Macks’ application for lump sums costs assessment

9. Macks filed an application dated 24 August 2021 (FDN 385) seeking orders that the claims for costs of the parties be assessed on a lump sum basis and that the assessments be consolidated.  This application was supported by a second affidavit of Macks sworn on 24 August 2021 (FDN 388) and minutes of order were filed. Macks filed written submissions in support of that application dated 21 September 2021 (FDN 389) and Viscariello filed responding submissions dated 29 October 2021 (FDN 393).  Macks filed responding written submissions to these dated 11 November 2021 (FDN 395).

   Background to the proceedings

10. The proceedings were commenced by Viscariello in 2006 and have had a long and complex history.  He had sued Macks in his capacity as an administrator and liquidator of certain companies, seeking declarations and damages, and alleging, inter alia, that he had been in breach of various statutory duties in these roles.  It was alleged that Macks had been motivated by personal motives, wishes and intentions that had caused him not to act in the best interest of the creditors, members and contributories of the companies, and to act unprofessionally, and that he had acted with an improper purpose.  Kourakis CJ at first instance found that in conducting the liquidation Macks had breached provisions of the CorporationsAct 2001 (Cth) and he issued declarations to that affect.

11. An appeal and cross-appeal followed and in Macks v Viscariello (2017) 130 SASR 1 (Lovell J, Corboy and Slattery AJJ) dated 22 December 2017 the Full Court held that that the trial Judge had the power to make declarations pursuant to s 31 of the Supreme Court Act 1935 (SA), but varied a declaration made concerning a breach of s 180 of the Corporations Act, and set aside findings first that Macks had acted with four substantial and actuating collateral purposes from June 2005, secondly that he had breached ss 181 and 182 of the Corporations Act from June 2005; and thirdly that what were described as the Bernsteen proceedings and the George proceedings were an abuse of process. The Full Court further found that that the trial judge had not erred in allowing the amendments to the pleadings after the delivery of reasons; and finally that issues of allegations of a breach of ss 181 and 182 on the exercise of the Court’s discretion should not be remitted for trial. Viscariello’s cross-appeal was dismissed.

    Costs orders in the proceedings

12. In a further judgment of the Full Court dated 17 October 2018, extant costs orders made in the proceedings on all pre-trial and post-trial attendances, all interlocutory applications before and after the commencement of the trial of the action, and the appeal were confirmed.  Further, subject to those orders, it ordered that Macks was to pay to Viscariello 25 per cent of the costs and disbursements of the trial, and 25 per cent of the costs of applications before the Court for which the costs order of the Court was or is by virtue of the Full Court’s reasons costs in the cause.  Further, subject to the extant costs orders dealt with in Paragraph 1 of the orders, Viscariello was to pay to Macks 70 per cent of the costs of the appeal, which would include the costs of all chamber attendances preparatory to the hearing of the appeal for which the costs order of the Court was or is by virtue of the reasons, costs in the cause, such costs to be adjudicated if not agreed.

13. At a subsequent hearing on 26 July 2019, Auxiliary Judge Roder directed inter alia that Viscariello was to make a genuine offer for costs to Macks pursuant to r 271(1A) of the Supreme Court Civil Rules 2006 and that thereafter the subsequent provisions of r 271 applied to the process of taxation.

14. On 13 February 2020, Macks served a claim for costs (part redacted).

15. On 18 March 2020, Viscariello emailed Macks regarding the latter’s costs claim in an Excel spreadsheet and raised deficiencies therein, suggesting that it was invalid and setting out a proposal for its further progress.

16. On 19 March 2020, Macks’ solicitor Ms Umoff responded to Viscariello’s emails.

17. On 30 June 2020, Viscariello filed and served a claim for his costs.  This was subsequently exhibited to the sixth affidavit of Ms Umoff filed on 10 August 2020 (FDN 337). Macks has to date been excused from filing a response to this claim.

    Viscariello’s first application FDN 342

18. In his affidavit in support of this application dated 16 September 2020 (FDN 343) Viscariello referred to and exhibited two letters sent by him to Macks’ solicitors on 17 July 2020.  The first (exhibit JV1) complained about the form and content of Macks’ claim for costs, referring to earlier correspondence between the parties and complaining that Macks had failed or refused to serve an amended claim for costs complying with the Rules in form and substance, and free of defects of which complaint had been made.  Written confirmation was sought that Macks was to address these complaints and Viscariello reserved the right to bring an application. The second letter requested the production to Viscariello of various materials held by Macks including costs and fee agreements, retainer letters, engagement letters, solicitor fee invoices, bills or similar documentation recording legal costs and receipts, and records of payment or similar documentation evidencing payment by Macks of legal costs.  Viscariello testified that Macks in responding correspondence had refused to address these complaints or to produce the documents requested, and that as at the time of swearing of his affidavit Macks had neither disclosed or produced any documents within the classes of documents referred to in his application.  He had also refused a request for the preparation, filing and service of a statement of issues although Viscariello’s counsel, Mr Heinrich, had on 28 August 2020 a copy of Macks’ statement of issues in Word format.  Viscariello further testified as to various matters referred to in his submissions and exhibited certain documents.

19. In his Affidavit dated 19 May 2021 (FDN 370) Viscariello referred to an email forwarding two letters to Macks’ solicitor dated 23 April 2021.  The first raised issues concerning Macks’ claim for costs, and the second issues concerning Macks’ response to Viscariello’s claim for costs.  He exhibited at JV1 a letter to Macks raising issues concerning Macks’ revised claim for costs filed on 15 March 2021, contending that it still suffered from a defect complained of earlier, seeking the filing and service of a further revised claim for costs in proper form, and setting out complaints as to lack of particularity which were the subject of the present application.  He also testified that despite requests he had not been provided copies of any of the types of documents referred to in his application (FDN 342).

20. In his written submissions (FDN 390) Viscariello said he was seeking various further and better details of the claims for costs of Macks.  He sought details of attendances claimed as coming within item of 7 of Schedule 2 to the 2006 Rules but which did not appear to relate to any attendances in person or by electronic communication but rather in substance related to the consideration of documents, issues or legal research; details of attendances between two or more of Macks’ solicitors, in which instance he sought further details about the nature of such attendances, so as to show why such internal conferences should be allowable party/party costs items;  in instances where items included the word “research”, he sought further grounds for the basis of the entitlement to claim such items; in instances where an item appeared to be based on items 4, 7 or 8 of the Schedule and the word “considering” appeared in the item description, he sought further details as the nature of the attendance and the grounds upon which the item was properly claimable; and finally he raised an issue specifically with item 308, described as “considering correspondence”.  He submitted that apart from the final issue above, the description of the items the subject of the application indicated that there was no prima facie basis for an entitlement to claim these as party/party costs.

21. He also addressed the specific orders sought in both his applications, which related to the provision of further and better details of Macks’ claim for costs, as follows:

    For each item which included the words “attending upon”, “attending on” or “attending to” for which it was not indicated that the attendance involved the attendance of two or more people together, particulars were sought as to the nature of the attendance; if the attendance involved the attendance of two or more people together, identifying each person involved; if the nature of the attendance was the perusal or consideration of documents, identifying the documents either specifically or generally in relation to the class or classes of documents involved; amending the number [7] in the Fee Earner part with either number [4] or [5] so that the claim related to either item 4 or 5 in Schedule 2 and not item 7 in Schedule 2; and alternatively, stating brief grounds why item 7 in Schedule 2 was applicable rather than either items 4 or 5.

    If all or part of the attendance involved considering and or researching legal principles (case law, legislation, rules of court), to state expressly that the attendance related to considering and or researching legal principles; to state the topics and or issues that was considered and/or researched; and to state the substance of the grounds for claiming such consideration and or research as a party/party cost item.

    With item 487 (“attending to various requests from counsel for preparation of submissions for appeal”) to state the substance of the nature of the work during the 6.4-hour period claimed.

    Where an item included the word “attending’ related to an attendance between two or more solicitors at Lipman Karas (eg item 380, 387, 393, 403, 408, 409, 463 and so on) to state the topics and or issues considered; to state the grounds of why the internal conference was a party/party cost item.

    Where the description of an item included the word “research” and any of the details referred to were not already stated, further or better details to state the topics and or issues considered and/or researched, and the substance of the grounds for claiming such consideration and or research as a party/party cost item.

    Where an item included either [4], [7], [8] in the fee owner description, and the details of item including the word “considering” and any of the details referred to followed or were not already stated; in the case that if  all or part of the attendance involved considering and or research in legal principles, case law, legislation or rules of court; stating expressly that the attendance related to considering and or researching legal principles; stating the topics and or issues that were considered and or researched; stating the substance of the grounds for claiming such consideration and or research as a party/party cost item.

    With item 308 ("considering correspondence”), identifying the correspondence to the number of pages and the grounds why item 7 in Schedule 2 rather than items 4 or 5 were claimed.

22. The balance of Viscariello’s submissions are summarised in the consideration of his applications later in these reasons.

23. In Macks’ submissions in response dated 28 October 2021 (FDN 392) he opposed the orders sought by Viscariello in his applications.  I refer to the summary of his contentions later in these reasons.

24. Viscariello filed responding written submissions dated 11 November 2021 (FDN 394) and I refer to the summary of his contentions later in these reasons.

    Viscariello’s application FDN 371

25. Viscariello’s second application (FDN 371) largely overlaps the orders sought in his first application (FDN 342), seeking essentially the same relief, namely further particulars of Mack’s claim as has been sought in correspondence, and the provision of documents.  It also sought inspection and copies of documents sought in para 1 of the first application, but as I understand this aspect is not pursued at present.

    Macks’ application FDN 385

26. Macks application dated 24 August 2021 sought orders that his further revised claim for costs and Viscariello’s claim for costs both be assessed on a lump sum basis, and that following such assessments the Court consolidate the lump sum orders.  The application was supported by the second affidavit of Ms Elizabeth Carroll-Shaw, sworn on 24 August 2021 (FDN 388).  She is a solicitor for Macks in these proceedings and she referred to the procedural history of the proceedings, as summarised above.

27. Macks filed written submissions dated 21 September 2021 (FDN 389) in support of his application and these are summarised in the consideration of his application and Viscariello’s applications later in these reasons.

28. In response, Viscariello filed written submissions dated 29 October 2021 (FDN 393). These comprised 51 pages, together with a 14-page Schedule A, by far exceeding the page limit provided by UCR 101.8, which is 10 pages, and which requires that written submissions are to set out a party’s submissions succinctly. Schedule A in particular described in detail the “big ticket” and controversial items claimed by Macks, as is summarised later in these reasons.

1. Macks filed responding submissions dates 11 November 2021 (FDN 395) and these are likewise summarised in the consideration of the applications later in these reasons.

   Oral submissions of the parties

2. At a hearing on 18 November 2021 the Court heard oral submissions from Mr Heinrich of Counsel for Viscariello and Mr Cogan of Counsel for Macks.  These submissions are summarised later in these reasons.  Various references to rules and caselaw were provided, and copies of some of the cases were supplied by counsel. In addition, Mr Heinrich supplied a book of documents incorporating correspondence between the parties and a copy of the redacted Work in Progress records of Macks, which had been supplied to Viscariello.

   Voluminous items in dispute relating to Macks’ claim

3. Detailed and voluminous challenges have been made by Viscariello both as to very large numbers of the items claimed by Macks, and their content.

4. In approaching both Viscariello’s application for further particulars and documentation, and Macks’ claim for lump sum costs orders, it is necessary to have a clear appreciation and understanding as to what is in dispute.

5. Viscariello’s position is set out in his written submissions FDN 393, including Schedule A, which grouped the disputed items into batches, and in Mr Heinrich’s oral submissions, which are discussed below.  Mr Heinrich itemized what he contended were numerous valid grounds of objections to items in Macks’ claim, which he said would, if upheld, result in a very substantial reduction in the amount to which Macks was entitled.  He submitted that the principles of natural justice and procedural fairness required that in these circumstances Viscariello should be given a fair and proper opportunity to substantiate his grounds for disputing a large part of Macks’ claim, and for the Court to determine them.

6. In Viscariello’s submission the Court ought to conclude that all of these grounds for dispute were reasonably arguable, and Mr Heinrich went so far as to say that the prima facie position was that the items appeared clearly not to be claimable.  On this basis, he said, Viscariello should be given a proper opportunity to put full submissions in relation to those matters, so the Court could then determine them, rather than to embark on an alternative process by which he would be deprived of a proper opportunity of persuading the Court why a substantial proportion of Macks’ claim should be disallowed because the items were not properly party/party items.

7. Viscariello noted Macks’ acknowledgment to the effect that controversial or “big ticket” items should be subject to individual taxation but contended that the items listed in Schedule A were so interspersed throughout Macks’ claim for costs that it would not be possible to formulate a process of lump sum assessment for any remaining items.

8. He acknowledged that he had not purported to identify in full detail all of the objections that he could validly make in relation to Macks’ claim, and he expressly reserved his position as to all of the grounds he would put to the Court in due course, submitting that he would wish to amend his response to Macks’ claim once the Court had determined his applications for particulars and inspection, and he had completed the inspection of Macks’ relevant documents.  There were grounds for objection contained in his submissions which had not been stated expressly in the response dated 30 June 2020 (FDN 335).  As there were reasonably arguable grounds for disputing a substantial part of Macks’ claim, he submitted, it would be impracticable to formulate a process for a lump sum assessment for the remaining items.

9. The “big ticket” and contentious items contained in Macks’ claim which are challenged by Viscariello, and the basis of his challenges, are set out as follows.

   The ASIC v Macks litigation

10. A substantial objection by Viscariello to Macks’ claim related to the legal proceedings issued on 12 March 2015 by the Australian Securities and Investment Commission (ASIC) in consequence of findings made against Macks at the trial contained in the reasons of Kourakis CJ.  ASIC issued that originating process (Corporations List Action Number 309 of 2015) and it had also, in the present proceedings, appeared at several hearings and had filed a notice of intervention.

11. It was noted by Viscarillo that Macks’ law firm Lipman Karas was also on the record as the solicitors on record for Macks in ASIC v Macks.  Given that there have been numerous items contained in the invoices from counsel provided in the present proceedings that had been fully or partially redacted, it was reasonable to believe that these had been redacted because they related to matters concerning ASIC v Macks and were in fact unrelated to the present proceedings.

12. One of the reasons why Viscariello was seeking copies of tax invoices from Lipman Karas relating to the present claim was to enable a proper cross checking and reconciliation to be made between those costs and costs incurred in ASIC v Macks.  It was noted that Mr Hoffmann QC had appeared for Macks both in the present action and also in ASIC v Macks, the latter which remained on foot, and had been the subject of a number of published judgments including [2018] SASC 132 delivered on 10 September 2018 and [2019] SASC 17 delivered on 22 February 2019.

13. Viscariello noted that this action had commenced in 2006 and that sometime during about 2009 ASIC had commenced an investigation into Macks’ conduct concerning matters regarding his role as liquidator of two companies. Such conduct had already been the subject of the claims against Macks in this action, which was clear by reference to, amongst other things, the pleadings and submissions to the Court. The existence of ASIC investigations was also apparent from submissions from counsel for ASIC and for Macks. On 8 March 2012 Viscariello filed an interlocutory application (FDN 153) in this action seeking, amongst other things, an enquiry in relation to Macks pursuant to s 536 of the Corporations Act.  On 23 April 2012, Macks commenced Action 543 of 2012 as the plaintiff in his capacity as liquidator of Bernsteen Pty Ltd (in liquidation), seeking orders relating to minutes of a particular meeting, and the funding of proceedings involving Heidi George.  Lipman Karas had been his solicitors.  Those matters had been the subject of evidence and substantial debate and submissions in this action, including the trial. Viscariello referred to the decision of Kourakis CJ delivered in December 2014.

14. On 24 April 2012, Lipman Karas filed an interlocutory application (FDN 160) supported by an affidavit of Mr T McFarlane (FDN 161) relating amongst other things to Macks’ representation in relation to FDN 153 (an application of Viscariello in this action), at a time when he was also represented by his existing lawyers and counsel.  On or about 27 April 2012, counsel for ASIC made submissions to the Court in this action which amongst other things stated that ASIC had been investigating Macks for some time, possibly as early as 2009, and that Macks had given undertakings to it.

15. On or about 30 April 2012, written submissions were filed in the present action on behalf of Macks by Lipman Karas and settled by Mr Hoffmann QC in relation to Viscariello’s application (FDN 153). These stated that the issue of an enquiry pursuant to s 536 relating to Macks was being addressed by ASIC. On 12 March 2015, three months after delivery of Kourakis CJ’s reasons for decision in this action, ASIC commenced ASIC v Macks claiming an inquiry pursuant to s 536 of the Corporations Act in consequence of the findings made by Kourakis CJ in this action regarding Macks’ conduct.  Lipman Karas had also acted for Macks in ASIC v Macks.  Accordingly, Viscariello submitted, the ASIC v Macks action clearly involved a consideration of the evidence, findings and conclusions which were the subject of this action. The decisions published by this Court in ASIC v Macks on 10 September 2018 and on 27 February 2019 were dated well after the appeal hearing in February 2017 the subject of Macks’ present claim for costs.  The timing of these decisions of the Court in ASIC v Macks and their content established that for a period prior to the institution of the appeal in this action, until the time after it was completed with the Full Court’s costs decision, both proceedings were concurrent to each other and involved and related to the same evidence, facts and legal issues.  From at least 23 April 2012 through to at least February 2019, Lipman Karas acted for Macks in relation to issues concerning his conduct, which conduct was the subject of extensive consideration at the trial and the appeal in this action, and which was also the subject of ASIC v Macks. It was highly likely, accordingly, that Lipman Karas had commenced acting for Macks in relation to the ASIC investigation (possibly as early as 2009) for at least some years prior to the commencement of the trial in this action.  Viscariello submitted that he would be relying for the purposes of the taxation on the Macks’ WIP Guide which had at least 2640 separate items in it. More than 50 per cent of these items were redacted (this had been explained on the grounds of privilege). Macks’ claim for costs contained 724 items, less than one third of the number of items in the WIP Guide.  It was not apparent whether the WIP Guide was a chronological record of all work recorded in one electronic accounting or financial type filed created and maintained by Lipman Karas relating solely to their work for Macks in the appeal in this action, or alternatively whether it was a record of all work that Lipman Karas had done for Macks in all matters during the period from 5 January 2015 to 17 October 2018.

16. Viscariello noted that it was likely that in preparing Macks’ claim for costs, he and his solicitors would have been required to assess whether a specific item of work related solely to this action, or solely to issues in the ASIC v Macks action, or partly related to each.  Accordingly, one of the reasons why further details concerning certain of the categories of items in Macks’ claim should be provided was that these were necessary in order for Viscariello to properly consider all relevant matters in determining whether items in Macks’ claim should be allowed.  In the light of other matters which showed that this claim clearly included items that could not be claimed as party/party items pursuant to the Full Court’s costs orders, there was good reason to doubt that many items in Macks’ claim related to this action, and not to work done in ASIC v Macks. As the descriptions by themselves did not provide a proper basis to determine whether items of work had related to the ASIC action against Macks, Viscariello should have the opportunity to have this issue properly considered and determined by the Court.

    Change in Macks’ legal team

17. One of Viscariello’s objections to Macks’ claim related to the change of the solicitors and counsel representing him. Lipman Karas had been on record as acting for Macks throughout the trial (in addition to HWL Ebsworth), and he had been represented by primarily the same principal solicitor, Ms Candida D’Arcy, however, only Lipman Karas were solicitors on the appeal.  Viscariello submitted that this change had resulted in substantial solicitor/client costs being incurred in finalising the trial proceedings, and in the appeal proceedings.  Significantly, the solicitors and counsel who had represented Macks in the appeal and whose work was the subject of Macks’ claim, had only become themselves involved in the proceedings shortly after the decision from the trial had been published by Kourakis CJ on 9 December 2014.  In light of the complexity of the issues in the proceedings, and the decision of the Full Court delivered on 22 December 2017, it was likely that these new legal representatives (both solicitors and counsel) would have had to spend much time familiarising themselves with the proceedings, and generally getting up to speed on all of the issues, including, for example, all of the oral and documentary evidence from the trial.  It was asserted in the course of the appeal that errors had been made at trial in relation to certain findings of fact, and certain findings or conclusions that were mixed fact and /or law.  Extensive oral and documentary evidence over a period of over 40 days adduced at the trial had been the subject of substantial consideration prior to the delivery of the trial judgment.  The familiarisation of this trial material by the new legal team would not have been necessarily had the legal team at the time the trial concluded continued to be the legal team acting for Macks in the appeal, and the reason why the costs claim was so extraordinarily large was the direct result of the new legal team taking over the matter.  The fees charged by the new legal team in doing so were generally solicitor/client costs so these were not claimable against Viscariello.

    The trial effectively continued until 15 April 2015 so work before then premature

18. Notwithstanding that Kourakis CJ published his reasons on 9 December 2014, it was submitted that the trial did not effectively conclude until 15 April 2015.  A hearing had been convened for 18 December 2014 and submissions presented on several issues including Macks’ removal as liquidator of two companies and declarations being made against him in relation to various findings made.  The first item in Macks’ claim for costs was dated 5 January 2015, however the trial was still effectively in progress at that time.  A hearing on 25 February 2015 involved Macks in his uninsured capacity, with ASIC attending. On 9 April 2015, Kourakis CJ made orders regarding Viscariello’s application to amend his statement of claim, various declarations against Macks, and he dismissed other applications made by Viscariello.  On 14 April 2015, ASIC formally intervened. On 15 April 2015, Kourakis CJ made orders removing Macks as liquidator of two companies, appointed a new liquidator, and specified a date for Macks to file any appeal.  He otherwise dismissed the remainder of Viscariello’s claim not already dealt with.  It was not until 27 April 2015 that Macks filed his first notice of appeal, and on 12 May 2015 Viscariello filed his first notice of cross appeal.  Viscariello would contend that much, or all of the work claimed for this period will be disputed.

    Excessive claim for preparing notice of appeal

19. Viscariello submitted that Macks’ claim for preparing and filing the first notice of appeal on 27 April 2015 was excessive. It comprised 11.5 substantive pages, although Viscariello accepted that item 67 in the claim was a correct amount for a drawing fee for that document pursuant to the scale, namely $1,288.00.    However Macks’ total claim for solicitors’ charges and counsel fees up to the end of April 2015 was for approximately $100,000, which seemed an extraordinarily large amount bearing in mind the length of the notice of appeal and the fact that the final orders from which the appeal had arisen had been made only 12 days before the notice of appeal was filed.

    Claims notwithstanding effects of rules and no costs orders made

20. Viscariello noted that Macks had filed and served three notices of appeal and a notice of contention on the cross-appeal. Pursuant to UCR 33.3 or the equivalent 2006 rule Macks was required to pay Viscariello’s costs thrown away in relation to the second notice of appeal filed on 24 September 2015 (FDN 271), and further he was not entitled to claim costs of and incidental to the second notice of appeal.

21. Further, items 410, 432 and 433 were not payable by reason of “no costs” orders having been made on 26 February 2016.  Viscariello referred to various items relating to the preparation of the first notice of appeal filed on 27 April 2015 (FDN 261), including item 67 ($1,288) for counsel Mr T McFarlane preparing a document of 27 April 2015 of 11.5 pages, and other significant counsel fees relating to the preparation of this document namely an invoice of Mr Ian Thomas dated 24 March 2015 for an attendance on 22 February 2015 of seven hours ($1,750), an attendance on 23 February 2015 of nine hours to settle and circulate the draft notice of appeal ($2,250), an invoice of Mr Thomas of 6 May 2015 including work undertaken on 24 and 27 April 2015 in drafting and finalising of the notice of appeal, and a claim in relation to item 188 – preparing second notice of appeal ($1,540.)  Macks was required to pay Viscariello’s costs thrown away in relation to the second notice of appeal, rather than the contrary.

    Notice of Constitutional issue not claimable

22. Macks’ claim included items relating to a notice of constitutional matter he filed on 24 September 2015 (FDN 270) raising an issue as to the constitutional validity of part of the Supreme Court Act 1935 (SA) and of the authority of the Supreme Court to make declarations or orders in relation to breach of certain provisions of the Corporations Act.  This issue had resulted in the intervention of the Crown Solicitor for South Australia, who had opposed Macks’ claim that the Supreme Court did not have power to make orders in relation to specific provisions of the Corporations Act. The Crown Solicitor had participated in the appeal proceedings, had filed submissions, and had attended at the hearing of the appeal. However, the Full Court decided against Macks in relation to this issue.  Viscariello contended that this was a separate and distinct matter from the issues raised in the appeal and the cross-appeal, and that the costs order made by the Full Court did not entitle Macks to claim his costs on that including the communications between his solicitors and the Crown Solicitor’s Office.  These items were identified in Schedule A at paras 187 to 191.

    Attendances by two solicitors unnecessary

23. Viscariello submitted that there were numerous items within Macks’ claim where two solicitors from the office had attended together.  The claimed total was $596 and this included attendances of both Mr McFarlane and Ms Umoff at the hearing, which had been covered elsewhere.  Viscariello submitted that such items should be regarded as solicitor/client items and disallowed.

    Internal conferences

24. There were numerous items in Macks’ claim relating to attendances between two solicitors - these included items 2, 3, 30, 131, 194, 380, 387, 393, 403, 408, 409 and 463.  Viscariello submitted that the prima facie position was that conferences between two or more solicitors representing the same party would not be allowable between party and party unless some justification was provided. The total claimed was $5,484. Viscariello sought that Macks provide the substance of the grounds or reasons why such items were allowable as party and party items.

    Personal attendances on Macks

25. Viscariello noted that there were numerous items (listed in Schedule A) for attendances on Macks by his solicitors. The total claimed was $7,258.  Some of these attendances involved one or more counsel.  Initially, Macks’ claim described many of the items as simply attendances.  The words “for instructions” or similar had been added subsequently.  It was noted that Macks’ costs related entirely to an appeal, and furthermore there had been no application to produce further evidence from him or on his behalf at the hearing.  Accordingly, there ought generally to have been no need for the solicitors to obtain any specific instructions from Macks about any facts or circumstances, indeed the starting point was that there was no need to attend upon Mr Macks to obtain any instructions about anything.  Attendances upon and communications with Macks to update him about steps in relation to the appeal, and to seek his specific authorisation for any specific matters, should all be regarded as solicitor/client items and not allowed in the claim.

    Attendances on Supreme Court Registry

1. Viscariello noted that Macks’ claim included numerous attendances on the Supreme Court Registry (referring to item 7 in Schedule 2). Viscariello submitted that the correct item number was Scale item 14, and that the fee for such an attendance should be $20 in cases where it could be allowed as a party/party item.  However numerous items in this category did not relate to filing documents, but rather to solicitors sorting out various procedural steps in relation to the appeal.  Having regard to the number of documents actually filed by Macks in the appeal, the total claim of $1,070 in this category was manifestly excessive.

   Attendances otherwise irrelevant

2. Viscariello submitted that there were several items for attendances upon people who had no relevance to the proceedings. Items 9 and 325 related to communication with Macks’ former solicitors, presumably in order to obtain information about something that had happened during the course of proceedings, and these were clearly solicitor/client.  Item 543 related to an attendance upon Mr Iles, the solicitor acting in proceedings in the District Court between Viscariello and the estate of his counsel who had died in March 2016, this could have nothing to do with any issues in the appeal.  Viscariello exhibited as (JV4) to his affidavit (FDN 343) copies of tax invoices produced to him of counsel fees included in Macks’ claim, however he asserted that large portions of these tax invoices had been redacted without explanation.  While the total amount for such items was relatively small ($228) the inclusion of these claims highlighted that there had been no proper attempt to limit Macks’ claim to party/party items.  Viscariello also noted that item 368 of Macks’ claim sought the sum of $883.20 for “considering K Macks’ Will and Testamentary Trust Deed”, which was clearly irrelevant to the appeal.

   “Considering” and “consideration” claims

3. Viscariello referred to numerous items in the claim using the words “considering” or “consideration” in the descriptions – these include Items 10, 11, 12, 22, 27 and 31 and 17 and 20.  Numerous of these had involved one solicitor considering a document prepared by another.  It was contended that the prima facie position on a taxation was that such items were not allowable on a party/party basis. Item 308 was described as “considering correspondence”, under item 7 in Schedule 2, one hour of solicitor’s time was claimed.  However, the “consideration” of correspondence was not an attendance coming within item 7, nor had the specific correspondence referred to been identified.  There were no facts, circumstances, grounds or reasons in the claim justifying the items or explaining why they were properly claimable.  The items were listed in Schedule A and the total amount was $33,382, representing approximately 9 per cent of the claim for solicitor fees.  These items should be determined on an item-by-item basis as there were reasonable grounds for establishing that each ought to be disallowed.  Since the items were dispersed randomly throughout the claim for costs, this was another reason why it would be difficult, if not totally impracticable, to attempt some form of lump sum assessment process on any part of Macks’ claim for costs.

   “Considering” irrelevant matters

4. Viscariello likewise submitted that numerous items in the claim were for solicitors considering or reviewing irrelevant matters, which did not relate to the issues in the appeal.  Item 312 claimed $528 for considering a District Court decision in relation to a disciplinary matter involving Viscariello, this had no relevance, and it was not referred to in the appeal.  Item 568 claimed $432 for considering a statement of claim in the District Court action referred to above.  Further items in this category related to attendances to search court registries in relation to other proceedings not directly relevant to the appeal and not raised or dealt with at any stage during the appeal.  It was submitted that these matters should be dealt with on an item-by-item basis, and they should all be taxed off.  The total was $5,504.

   Claims for “attending on” or “attending to”

5. Viscariello referred to the words or phrases “attending upon”, “attending on” or “attending to” which had been used in instances where it had not been indicated that the attendance involved the attendance of two or more people together or in oral or electronic communications.  Items 6, 15, 16, 45, 47, 55, 60, 111, 140, 141, 142 and 143 covered such descriptions and appeared to relate to matters such as factual enquiries regarding creditor listings, research, attending to document requests, or attending to locating missing trial exhibits.  All of these items appeared to be based on items 7 or 8 in Schedule 2.  However, such items in Schedule 2 related to attendances and oral communications with a person or by electronic communication.  Item 4 in the Notes to the prescribed Form 49 Claim for Costs under the 2006 Rules provided that the nature of such attendances should be described.  Viscariello submitted that the words “attending upon”, “attending on” or “attending to” did not contain an adequate description of the nature of attendances and further, if the work the subject of the items was, for example, the pursual or consideration of documents, or for legal research, then better details as set out in the orders sought ought to be provided by Macks in order to justify the items as party/party claims, so as to give proper notice of the case.  It was inevitable that before the taxation process concluded Macks would need to make submissions to the Court justifying these types of items, so Viscariello was entitled to know the basis for the justification of the items well before the taxation commenced so that he could properly prepare his case.

   “Attendances” not involving two or more people

6. Viscariello submitted that Macks’ claim included numerous items in which the description was for a solicitor attending, but it was apparent from the attendance that it was not one between two people, whether in person or by telephone.  Examples were items 15, 16, 45 and 47 which all claimed attending to research.  All of these items were listed in one group in Schedule A.  Viscariello submitted that the descriptions of the items indicated on their face that they were solicitor/client items, so they should be disallowed. The amount totalled $8,080.

   Preparation

7. Macks’ claim for costs included numerous items described as “preparation” which Viscariello submitted, were clearly solicitor/client items.  They were listed in Schedule A and totalled $24,146, representing about 6.3 per cent of the total of Macks’ claim.  Merely reading the description of the items should lead to the conclusion that the prima facie position was that they were solicitor/client items and should be disallowed.  (Viscariello acknowledged however that he did not object to claims for preparation of documents filed in the proceedings, apart from the multiple notices of appeal, the notice of contention and the notice in relation to the constitutional issue).

   Research

8. Viscariello referred to numerous items including the word “research”, these included items 15, 16, 17, 20, 26, 34, 35 and 45 to 47 as identified in para 54 of [FDN 390] in paras 263 to 274 of [FDN 393] and in para 15 of Schedule A, and he contended that the prima facie position was that these were not allowable as between party and party unless some justification were given. The items totalled $33,360 and they were to be found randomly throughout the claim.  For this reason, the Court should disallow these claims, and also for the further reason that the claims for counsel fees had already included fees charged by counsel for research.  It would be necessary to cross-reference between the items relating to research for solicitor fees in the claim and items within the invoices of counsel also relating to research.

   Preparing Briefs and appeal books

9. Macks’ claim included a total for preparing appeal books and briefs of $79,880.88. Viscariello submitted that this was manifestly excessive.  Such items comprised approximately 21 per cent of Macks’ total claim for solicitors’ fees.  These should be considered on an individual basis and not by lump sum assessment, because it was clear that to a large extent they ought to be regarded as solicitor/client items and should be taxed off.  Items 23 and 24, totalling $27,359, were for preparing a brief for counsel comprising 15,907 pages.  There could not possibly have been any reason for a brief of this size to be prepared two and a half months before the final orders were made in the proceedings when the appeal had not even been instituted. The appeal index, in electronic format, comprised 13,644 pages or thereabouts. Items 39 and 40 were for preparing a further brief comprising 699 pages on 24 February 2015, again well before the final orders in the proceedings were made.  Items 132 and 133 were for preparing a brief to counsel on 16 July 2015.  This brief comprised 4,739 pages. The amount claimed was in the order of $8,150.   Item 279 was a claim for preparing the appeal books, said to comprise 18,112 pages.  The index for the electronic appeal book showed that the appeal books comprised about 13,644 pages.  Accordingly, the claim had incorrectly stated the size of the appeal books by approximately 4,500 pages.  Further, the appeal had proceeded on the basis that the appeal books were to be in electronic format, so there was no proper or necessary requirement to photocopy them.  Items 473 and 474 were for preparing what was said to be a brief of court materials for counsel comprising 347 pages.  Given that the appeal books were in electronic format, there was no necessity on a party/party basis to prepare this, and these items should be disallowed.  Items 513 and 514 were for preparing a supplementary appeal book comprising 393 pages.  Viscariello disputed this, as the appeal books were in electronic format. Items 654 and 655 were for preparing a brief of hard copy case authorities comprising $5,197.  Viscariello submitted that this item was obviously solicitor/client and there could be no possible reasonable basis for it to have been included in the claim. It should be disallowed entirely.

   Excessive claim for preparation of written submissions

10. Viscariello noted that Macks’ claim included solicitor charges of $25,990 in relation to the preparation of submissions.  These items were listed in Schedule A para 14.  The amount claimed was many multiples of a reasonable drawing or preparation fee for such submissions, and further, the claim already included substantial counsel fees relating to the preparation of submissions.  The summary of argument dated 22 March 2016 comprised 40 substantive pages which had been settled by Mr Hoffmann QC and had been lodged in the names of Mr Hoffmann QC, Mr Doyle and Mr Thomas.  Secondly, Macks’ reply submissions dated 6 February 2017 of 14 substantive pages had also been settled by Mr Hoffmann QC and was likewise lodged in the names of the same three counsel.  The reality of the situation was that Macks’ claim was for tens of thousands of dollars for the preparation of two documents filed in the proceedings comprising a total of about 54 substantive pages.  Excluding any percentage increase applicable to the scale amount, the drawing fee pursuant to item 1 in Schedule 2 for 54 pages would be limited to $6,048, but Macks had claimed tens of thousands of dollars more than this.  It was submitted that an individual taxation process for all of these items was appropriate in the circumstances.

    Excessive attendances at appeal hearing

11. Viscariello submitted that there had been an unnecessary and excessive use of counsel and solicitors.  A substantial part of the claim for costs related to this issue.  The appeal hearing had occurred over five consecutive days, from 13 to 17 February 2017.  Three counsel had appeared for Macks’ throughout the hearing: Mr Hoffmann QC, Mr B Doyle and Mr I Thomas, together with two solicitors, Mr T McFarlane and Ms Umoff who had also attended.  Viscariello submitted that there should be a substantial reduction in the total amount claimed, by disallowing the fees of one junior counsel and one of the solicitors.  The claim should be assessed on the usual basis allowed by the Court on a party/party taxation for attendances at appeal hearings.  Preparation or time spent outside the appeal hearing time should also be disallowed.

    Claims where further details sought

12. Viscariello referred to specific items in Macks’ claim where further details were sought. Examples included item 3 “attending on T. McFarlane”, item 15 “Attendance to various research requested by I Thomas” and item 308 “considering correspondence”.  Further details were sought of such and similar items, sufficient to enable Viscariello to form a view about whether or not the items should be opposed and to argue against their allowance if appropriate.

    Proportionality

13. Viscariello addressed the issue of proportionality, referring to UCRs 1.5 and 3.1(1)(h), and the proportionality provisions in rules 9(b), 12, 20(3) and Schedules 1 and 2 of the Supreme Court Civil Supplementary Rules 2004.  The effect of these was that work undertaken in legal proceedings should be proportionate to the issues in the proceedings.  He said that Macks’ claim for costs was based on an amount of about $817,000 in aggregate for solicitors’ costs and counsel fees.  Pursuant to the costs order of the Full Court the amount was to be reduced to 75 per cent of the total, so Macks’ claim against Viscariello was accordingly for about $613,000.  He submitted that it was extraordinary that there could be a party/party costs assessment of in the order of $817,000 for an appeal which involved a hearing of only five days.  For example, the necessary or proper representation of Macks at the appeal should have been one senior counsel, one junior counsel, and one instructing solicitor. The total amount of party/party costs, including counsel and solicitor, for each day of the hearing should have been in the range of $10,500 to $12,000, whereas the claim for costs for each day of the appeal hearing was an aggregate amount of substantially more than that.  Mr Hoffmann QC’s claim was for $6,250 per day and Mr Thomas’ for $2,500 per day. Although Mr Doyle’s invoice of 20 February 2017 did not state the amount charged for the 19 separate items of work which included preparing for and attending each of the five appeal hearing days and was a lump sum invoice of all of the items, there was no indication of the costs in relation to his attendance at each of the appeal hearing days, nor how the total amount of that invoice was calculated.  In relation to the solicitor Mr McFarlane, who attended each appeal hearing day, the items in the claim relating to his attendances (661, 664, 668, 672, 674) were based on an hourly rate of $300.  In each instance, those items were for substantially more hours than the appeal hearing time took: they included preparation, and the daily amounts ranged from $3,180 on 15 February 2017 (item 668) to $3,870 for 16 February 2017 (item 672), whereas a total of five hours (the Court hearing time) at $300 per hour would be $1,650.  In relation to the solicitor Ms Umoff, who also attended each appeal hearing day, the items relating to her attendances (662, 665, 669, 673 and 675) were based on an hourly rate of $180.  In each instance, likewise, those items included more hours than the Court hearing time.  It was noted that preparation was also included, and the amounts claimed ranged from 8.6 hours for $1,548 on 17 February 2017, to $2,484 for 13.8 hours on 13 February 2017, whereas five hours at $180 per hour would be $900. 

14. Viscariello submitted that as best he could work out, Macks’ claim for each day of the appeal was for an amount somewhere between about $16,000 and $18,000. 

    Summary of Viscariello’s submissions in relation to the quantum of costs

15. Viscariello said that his claim was for solicitors’s fees excluding GST of $1,676,692 and disbursements of $741,614, totalling $2,418,306, with 25 per cent being $604,576.50.  Macks’ claim was $378,334.71 for solicitors’ fees, $439,930.55 for counsel fees, $8,198.40 for other disbursements, totalling $817,463.66, with 75 per cent totalling $613,097.74. 

16. However, as has been summarised above, Viscariello submitted that Macks’ claim for costs included a very substantial amount for items that were clearly solicitor/client. He submitted that over $300,000 was likely to be disallowed in relation to solicitors’ fees if these were the subject of an individual taxation process.  Further, substantially more than 50 per cent of the counsel fees should be disallowed.  It had been agreed by the parties that Macks’ claim in relation to counsel fees should be the subject of an individual taxation process.

17. If over $300,000 was disallowed from the claim for solicitors’ fees, and over $200,000 was disallowed for counsel fees, then this would reduce the total of Macks’ claim to $317,463.66, of which 75 per cent would be $238,097.74.  This was about 36 per cent of the total claimed.

18. If Viscariello is correct in his submissions, the taxation will have a real impact on what the parties might have to pay, or not pay, each other.

19. All of the matters referred to in the preceding paragraphs are submissions only, and I have not heard responses, if at all, concerning them from Macks.  They are not matters for decision now, but rather for the taxation. However, I will consider them, as submissions only, for the more limited purpose of having regard to them in the more limited context of Viscariello’s applications for particulars and Macks’ application for lump sum costs.

    Principles

    The process of taxation and the powers of a taxing officer

20. Although the claims for costs are based on the scales set out under the 2006 Rules and Supplementary Rules, the principles for taxations of costs are governed by the UCR.

21. UCR 1.5 provides that the object of the Rules is to facilitate the just, efficient, timely, cost-effective and proportionate resolution or determination of the issues in proceedings governed by them. UCR 195.8(1) expressly states that the same UCR 3.1(1)(g) requires parties to “use reasonable endeavours to resolve, alternatively narrow the scope of a dispute in all the subject of the proceeding by agreement”.

22. UCR 12.1 gives the Court a broad power to make a wide variety of orders and subr 12.1(1) provides a general power to make any order that it considers appropriate in the interest of justice.  UCR 12.1(2)(k) specifically provides power to make an order about the form of a document, including imposing additional requirements. UCR 12.1(3) is a general catch all rule making it clear that the Court has power to give directions where the Rules do not specifically address any procedural matter arising and in any event in any other case whenever the Court thinks fit. 

23. UCR 67.2(2) which has been referred to by the parties, requires that a pleading is required to set out affirmative facts relied upon by a party to identify any statutory provision relied upon and to generally “give fair notice of the parties case … so as to avoid the opposing party being taken by surprise”.  Although this Rule specifically relates to pleadings, and not to a taxation of costs, it nevertheless incorporates the common law principles relating to procedural fairness.

24. Neither the previous rules nor the UCR relating to taxation/ adjudication stipulate with any specificity the nature and extent of detail to be included in relation to a claim for costs.  However, item 4 of the Notes to Form 49 of the 2006 Rules, which has been replaced by item 4 of the Notes to Form 136 of the UCR’ provides that the nature of attendances should be described. 

25. UCR 195.4(3) provides that the parties involved in a disputed taxation of costs must confer before the taxation hearing with a view to resolving, limiting or clarifying the items in dispute and report to the Court on the result at the commencement of the taxation.

1. UCR 195.2 (3) provides that a claimant for costs must, if the claim proceeds to taxation at the request of the liable party, produce for inspection any documents on which the claimant proposes to rely, if ordered by the Court, identify any documents relevant to the claim that are not produced because of a claim of privilege which is not waived.

2. The Court has broad powers to tailor a taxation process to best achieve the objects of the Rules and to achieve justice. 

3. UCR 195.8 sets out the powers available to a taxing officer:

   195.8—Powers

   (1)A taxing officer has on and in respect of a taxation, the same powers as the Court in relation to a proceeding in the Court.

   Example—

   A taxing officer may order or take evidence (on affidavit or orally), require the production of documents, require the attendance of witnesses or make orders about the participation of persons interested in the taxation.

   (2) A taxing officer, in undertaking a taxation, is not bound by the rules of evidence and may decide questions by estimation or by any other expedient means.

   (3) Without affecting the generality of subrule (1), a taxing officer may—

   (a)     require a party to produce its record of costs and disbursements and any other material relevant to the taxation (subject to any claim for privilege);

   (b)     require a party to provide further details of any item the subject of a claim for costs;

   (c)     make interim orders;

   (d)     order repayment of any overpayment of costs; or

   (e)     make any orders that might be made on a directions hearing in a proceeding.

4. UCR 195.9 refers to the powers of a taxing officer at hearings:

   (1)A taxing officer may use any one or more of the following methods to undertake a taxation—

   (a)     a lump sum assessment, or otherwise determination of the amount of costs to be awarded in a wholesale manner, rather than undertaking an item by item assessment;

   (b)     an item by item assessment;

   (c)     assessments in successive stages;

   (d)     separate assessments of different components of the costs claimed; or

   (e)     any other method.

   (2)A taxing officer may—

   (a)     accept an undisputed item without inquiry;

   (b)     determine an issue in dispute;

   (c)     refer an issue in dispute to mediation or arbitration;

   (d)     refer an issue in dispute to an expert for inquiry and report;

   (e)     order that an item by item taxation be undertaken on a future occasion and that the parties take steps in preparation for the taxation; or

   (f)     make any other or further order the taxing officer thinks fit. (3) If an order is made that an item by item taxation be undertaken on a future occasion, the claimant must file and serve an updated version of the response to claim for costs (filed by the liable party) in the prescribed form.

   Lump sum costs orders

5. The principles are set out in detail in Macks’ written submissions of 21 September 2021 (FDN 389 at [4]-[21]) and the analysis of the principles is not generally disputed by Viscariello.

6. The Court has a general statutory discretion to order costs: Supreme Court Act 1935 (SA) s 40(1). A corollary of this discretion is the Court’s power to control the quantum of those costs and the means by which the Court assesses the costs to be awarded: Uniform Civil Rules 2020 r 194.5(1)(d), r 194.6, r 195.8 and r 195.9(1).

7. The Uniform Civil Rules provide that there is a presumptive costs rule that the quantum of costs is to be taxed if not agreed – UCR 194.4(7).  If this presumptive rule is to be displaced, there needs to be proper reasons and circumstances for doing so.

8. The Court may undertake an assessment of a claim for costs by, inter alia, (UCR 195.9(1), Supreme Court Civil Rules r 271(6)):

   (a)a lump sum assessment, or otherwise determination of the amount of costs to be awarded in a wholesale manner, rather than undertaking an item by item assessment;

   (b)an item by item assessment;

   (c)assessments in successive stages;

   (d)separate assessments of different components of the costs claimed.

9. The court may make a lump sum assessment at any stage of the resolution of a party’s claim for costs: UCR 195.8(1) and UCR 195.9(1); Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2012] SASC 228 at [21].

10. The UCR apply to any step taken in a proceeding on or after the commencement date, being 18 May 2020: see South Australian Government Gazette, 18 May 2020, p 1392.

11. The purpose of lump sum assessments is to avoid the expense delay and aggravation involved in protracted litigation arising out of taxation: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 120F to G per von Doussa J applying Leary v Leary [1987] 1 WLR 72. Beach Petroleum was followed in Paciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 Allsop CJ, Besanko and Middleton JJ; Seven Network Ltd v News Ltd [2007] FCA 2059 Sackville J; and Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523 Gleeson J at [60](1).

12. In Seven Network Ltd v News Ltd Sackville J (in the context of the Federal Court Rules) said at [25]:

    The authorities establish a number of principles applicable to a claim for a gross sum costs order to be made pursuant to FCR, O 62 r 4(2)(c) …

    (iv)Although the power to assess a gross sum for costs involves the exercise of a discretion, it is necessary to bear in mind fundamental principles applicable to an assessment of costs on a party and party basis.  These include the principles contained in O 62 r 19 (embodying the ‘necessary or proper’ test) and those stated in Stanley v Phillips (1966) 115 CLR 470, at 478, per Barwick CJ (on a party and party taxation the emphasis is upon obtaining adequate representation to enable justice to be done, not upon the propriety of steps taken to ensure maximum success in the cause): Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1, at 4-5 [12]-[15], per O’Loughlin J; Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629, at [6]-[8], per Mansfield J.

13. A lump sum taxation is also appropriate when the litigation between the parties has “already consumed excessive and disproportionate resources”: Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523 Gleeson J at [62], see also Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 von Doussa J. at 123C.

14. It is also appropriate where a lump sum assessment has better prospects than an item-by-item taxation and in avoiding an ongoing counterproductive dispute as to costs in the interests of achieving finality: Paciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146; (2017) 253 FCR 403 at [20] per Allsop CJ, Besanko and Middleton JJ. In that decision, notwithstanding that a lump sum costs order was made, the court wrote at [18] that it was not precluded from undertaking a close enquiry of costs on a particular issue or category of costs where appropriate:

    We emphasise that in making a lump sum award of costs, the Court in undertaking the task of assessing costs is not precluded from undertaking a close inquiry of costs relating to a particular issue or category of costs, should the Court consider it appropriate to do so: see eg Hudson v Sigalla (No 2) [2017] FCA 339 at [30] (Sigalla). The Court is able to adopt its own procedures in inquiring into costs, is able to be flexible in how it conducts that inquiry, including by the obtaining of suitable assistance whether by referee’s report or other reporting, and is able to acquire the level of detail needed to make a determination that is fair, logical and reasonable.

15. In para 19, the Court observed that notwithstanding the Federal Court Costs Practice Note, a lump sum costs order was not mandated in all instances and it was a matter for the Court to exercise the discretion given to it by the Act and Rules as appropriate, referring to Hudson v Sigalla.

16. Hudson v Sigalla (No 2), a single instance decision of Katzmann J dated 3 April 2017 which was referred to in Paciocco, the Court found that the discretion on a lump sum taxation was extremely wide, that the approach required to be taken was to be logical, fair and reasonable, and that the Court should be astute to avoid over‑estimating the recoverable costs and under‑estimating the appropriate amount such as by applying an arbitrary discount. Katzmann J went into some detail in the assessment, noting at [30] that a number of costs charged in that case were considered to be unreasonable and/or necessary, such as $2,160 for preparing for an interlocutory hearing, and $425 for receiving and forwarding a list of authorities and a chronology. It was observed that many of the tasks described in the lawyers’ invoice did not require the service of an experienced solicitor and that the lawyer had charged at the rate of $500 per hour for preparing a notice of acting and for scanning, assembling, paginating and printing documents, even when some of these tasks were capable of being performed by a clerk or paralegal. At [48] the Court considered the level of work reflected in the solicitor’s invoice, where in one instance more than $10,000 was charged for the drafting of submissions. It was noteworthy that in assessing the costs, the Court did not simply look at selected items and extrapolate these across the whole amount claimed, but rather that the exercise was a detailed scrutiny of the various aspects: see [24] to [57] of the reasons.

17. In South Australia, the authorities indicate that a lump sum assessment is only appropriate in one or more of the following circumstances: namely in long and complex cases where the question may more conveniently be dealt with by way of lump sum rather than on a taxation; where full recovery of taxed costs is not anticipated or is questionable;  or in matters where the taxation process is likely to be costly and protracted - this may be because of the length and complexity of the case or because of the behaviour of one of the parties:  Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111, Bleby, Besanko and Sulan JJ at [12] , cited with approval in McDonald v State of South Australia [2020] SASC 112, Lovell J at [8]. In Cornwall &Ors v Rowan an application for a lump sum costs order was made shortly after the Full Court had made a costs order in the appeal. A taxation had not commenced.  At [14], the Full Court observed that that case was an appropriate one to exercise the discretion for a lump sum order “subject to there being sufficient information available upon which this Court can fix a lump sum”.  It is noted that in contrast to Cornwall & Ors v Rowan, in the present case, the taxation process has not only commenced, but has proceeded for some years.

18. Before exercising its discretion to tax costs claim on a lump sum basis, the Court should be confident that such an approach would be “logical, fair and reasonable”:  Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 von Doussa J at [123]C to D; Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 Bleby, Besanko and Sulan JJ at [15]-[16].

19. The power to tax costs claim on a lump sum basis should be exercised judicially and the Court should first give the parties an adequate opportunity to make submissions on the matter, and be satisfied that such an approach would not cause an injustice to either party:  Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 von Doussa J at [123] C to D and at [120] G. The authorities establish that the Court should be astute to prevent prejudice to costs payers by overestimating the costs, and on the other hand must be astute not to cause an injustice to the claiming party by an arbitrary “failsafe” discount on the cost estimates submitted to the Court: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 von Doussa J at [123]C to D. The party seeking a lump sum assessment bears the onus of satisfying the Court that there is sufficient information before the Court to enable it to make a “logical, fair and reasonable” estimate of the costs claim: Seven Network Ltd v News Ltd [2007] FCA 2059 Sackville J at [29]; Viscariello v Legal Profession Conduct Commissioner (No 2) [2021] SASCFC 35; Harrison v Schipp (2002) 54 NSWLR 738 Giles JA at [22]. This does not require the applicant to establish that the parties have produced or are in a position to produce the same evidence as would be required in an item-by-item taxation (such a position would be completely pointless): Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523 Gleeson J at [60]. Nevertheless, the courts have generally been satisfied that the taxation of a costs claim by way of lump sum assessment would be “logical, fair and reasonable” in cases where the claimant has prepared a bill of costs including in cases where the bill of costs was only partially prepared: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 von Doussa J at [121] A to C and [123] G; Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 at [18]. Further circumstances are where the claimant has provided copies of all accounts for costs rendered by the solicitors: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at [123] E to F; Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 at [17]; McDonald v State of South Australia [2020] SASC 112 Lovell J at [14] , or has produced invoices for counsel fees incurred and for other disbursements: Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 at [17]; and/or has prepared a work in progress or billing guide: see for example, Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1.

20. The existence of a bill of costs prepared with reference to the applicable scale of costs will be a factor in favour of lump sum assessment.  There is commentary on the benefit of at least a partial scale itemisation for the purpose of comparison with invoices rendered on a time basis: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at [123] G; Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 at [18]; McDonald v State of South Australia [2020] SASC 112 at [14]-[15]. In reaching a reasonable lump sum assessment of a costs claim, the Court will be assisted by random sample checks of the accuracy of the amounts claimed for solicitor fees: Cornwall & Ors v Rowan (No 4) (2006) 244 LSJS 183; [2006] SASC 111 at [21], cited in Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2012] SASC 228 at [9] and McDonald v State of South Australia [2020] SASC 112 at [14].

21. The lump sum which might be awarded after the parties have been heard will not be a figure which would have been payable on a taxation of costs, that follows because the hearing before the Court on an application of this kind is not a taxation.  The parties could only know the figure which will be arrived at on a taxation of costs after taxation: Smoothpool Nominees Pty Ltd v Pickering & Ors [2001] SASC 131 Lander J at [11]. Descending to the level of detail required for a taxation defeats the purpose of lump sum assessment: Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR 1 O’Loughlin J at [16]. The task is one of estimation or assessment rather than an arithmetic: Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523 at [64] citing Bayley and Associates Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17](e).

22. A lump sum assessment of costs does not envisage any process similar to that involved in an item-by-item taxation.  The Court applies a much broader brush than would be used on a detailed taxation: Seven Network Ltd v News Ltd [2007] FCA 2059 at [25](ii) and see also Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at [120] G and Harrison v Schipp (2002) 54 NSWLR 738 at [22].The methodology for a lump sum assessment necessarily involves a broader approach than on a normal taxation but the various scales provide assistance in assessing an appropriate lump sum: Charlick Trading Pty Ltd v Australian National Railways Commission [2001] FCA 629 Mansfield J at [10]

23. In Viscarello v Legal Profession Conduct Commissioner (No 2) [2021) SASCFC 35 (Lovell, Hughes JJ and Tilmouth AJ) an order was sought that the parties bear their own costs of the appeal whereas the respondent sought an order for his costs of the appeal to be fixed in a lump sum amount. The decision of Tilmouth AJ, with whom Lovell and Hughes JJ agreed, was that the appellant was to pay the respondent’s costs of the appeal to be agreed or taxed on a party/party basis and that the respondent’s application for costs to be assessed as a lump sum award was dismissed. Tilmouth AJ wrote at [24] that Mr Viscarello had objected to the making of a lump sum order award on the basis that the Commissioner had made no reference to the legal principles or the relevant facts governing the exercise of the discretion to make such award, that it would be unfair to uncritically accept the Commissioner’s estimate that his entitlement to party/party costs was substantially greater than the amount of the lump sum offer, and that there were valid reasons why it was likely that on a taxation a substantial part of the counsel fees would be disallowed or reduced.

24. In [25] of his reasons, Tilmouth AJ wrote as follows:

    As to the former, put bluntly, it is not open to the Court to make an unprincipled and unsubstantiated lump sum order for costs in the circumstances.  Before exercising the power to fix a lump sum fee the Court must be confident that the “approach taken to estimate costs is logical, fair and reasonable”.  On the material before it this Court is in no position to duly consider or assess the quantum of costs, irrespective of how reasonable it might otherwise appear to be.  Mr Viscarello is therefore entitled to take his chances on taxation, no doubt in the expectation that he might better his position and yet at the same time, with full awareness that he may not.

    Procedural fairness

25. A general principle of procedural fairness in litigation is that a party is entitled to have reasonable and fair notice of the case against it and to be given a reasonable and proper opportunity to respond to it.  These principles are well known to the point of being trite but instances where they have been described have been referred to by counsel. In Moyes & Anor v J & L Developments & Anor [2004] SASC 319, Debelle J said at [76]:

    The rules of procedural fairness require, among other things, that a party has due notice of an issue and a proper opportunity of being heard before a decision is made:  R v Milk Board; ex parte Tomkins [1944] VLR 187 at 198; Babalis v City of Adelaide (1985) 38 SASR 450 at 462 – 464.

26. In Harris Scarfe Ltd (in liq) v Harris Scarfe Wholesale Pty Ltd (in liq) [2006] SASC 277, Debelle J said at [43]:

    The rules of procedural fairness require that, generally speaking, when an order is made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case against him and to be given an opportunity of replying to it:  Kioa v West (1985) 159 CLR 550 at 582 per Mason J. That is a fundamental principle of law.

    Apportionment of Costs

27. The issue of apportionment of costs has been raised in argument, Viscariello contending that because Macks was involved in litigation by ASIC concurrently with the appeal in the present action, regard should be had to this circumstance in assessing his costs.  The issue of apportionment has been considered in two cases in this Court. In Ricciardi v Philmac Pty Ltd [1987] 45 SASR 290 Jacobs, Millhouse & Johnston JJ, the appellant had brought proceedings against the respondent in the Industrial Court claiming workers’ compensation, but had also commenced proceedings in the Supreme Court for common law damages. Eventually the parties had settled both sets of proceedings. One of the orders made in the Industrial Court was that the respondent pay the appellant’s costs in the Supreme Court proceedings, and accordingly she sought to tax her costs in the Supreme Court first. The scale applicable to the Supreme Court costs was greater than the scale allowed in the Industrial Court. On the taxation the parties agreed that there were costs referrable to work which was necessary for both the Industrial Court and Supreme Court proceedings, such as obtaining medical reports and the proofing of witnesses. The taxing master disallowed all of the items which were referrable to both the Supreme Court and Industrial Court proceedings. On appeal, the Full Court held that the order of the Industrial Court was capable of being interpreted to mean only one thing, namely that the employer was to indemnify the worker in respect of all items that were reasonably necessary to be done for the purpose of and incidental to those proceedings in terms of the order to which the parties consented. It was on no consequence that some of the work might have been used in the Supreme Court proceedings, if the work was necessary to the compensation proceedings it would be covered by the consent order. It held therefore that the items had to be taxed in the Industrial Court and on its scale. Hall v City of Burnside (No 10) [2013] SASC 140 also related to the issue of apportionment where a particular item of work had a dual purpose. In that case the plaintiffs had agitated, inter alia, issues arising in relation to the building rules consent granted with respect to the construction of a wall. However, separately and apart from that litigation, they had complained to the Council about the design of the wall and had continued to agitate that issue. After the commencement of the proceeding the Council had made a variation to its building rules consent to permit a wall with a revised design. The issue for determination on the taxation was whether a particular item of work of a solicitor was necessary both to the conduct of proceedings in the Court and also for dealing with the retaining wall issues raised by the Council and whether it should be allowed in full or should be discontinued. The costs order of the Court provided for costs on a party/party basis. After setting out the relevant then 2006 Rule 264, Judge Dart observed that it was reasonably necessary for the conduct of the litigation to undertake the work with respect to drafting a statement of a witness and that the costs claimed was an appropriate amount based on the relevant scale. However, the paying party contended that by reason of the dual purpose for obtaining the statement the Court should only allow 50 per cent of the amount claimed. The Court was referred to the. Dart J, however, held that Ricciardi v Philmac Pty Ltd was not the same as the present case as it was a consent order in the Industrial Court and was of limited relevance to the current situation so the Court was left to make a judgment in the circumstances of the matter.  He had regard to the fact that the plaintiffs had issued the proceedings before Bleby J, their institution had obliged City Apartments to undertake work to protect its position, the plaintiffs had complained to Council which had caused it to re‑visit the design of the wall, and as a result City Apartments was obliged to undertake discussion with the Council.  Accordingly, the justice of the situation was best served by permitting the second defendant to fully recover for the item.  It was necessary for the litigation, and would in any event have to be undertaken for it.  The fact that the work was able to be, and was, utilised for another purpose was not a sufficient reason to disallow part of the claim for costs. 

1. Viscariello disputed that his applications were premature, he said that the fact was that he had already attended on Macks’ solicitors Lipman Karas and had undertaken some inspection of Macks’ documents. It was incorrect that the factual particulars would be evident from the records inspected, he said. For example, Macks had disputed having to produce the documents regarding the ASIC Action 309 of 2015. Viscariello said that he should be provided with those documents because they were part of the factual particulars. He noted that the WIP Guide produced by Macks was substantially redacted, but if it were not so redacted then there would likely be a better disclosure of the factual circumstances relevant for the proper assessment of his claim. It was apparent that at the present stage of the taxation process he did not have fair and proper notice about aspects of Macks’ claim for costs. He sought to address that issue now, rather than waiting until later. If the Court made the orders that he sought in his current applications, he would be afforded proper procedural fairness, and there would likely be less delay and a more efficient process moving forward. He also said that Macks had claimed 724 items, but the total number disputed was less than 100, so it was not a major or oppressive request. Nor were submissions being sought. It would be more efficient for the information to be supplied at this stage, as opposed to the solicitors attending a conference and then having a dispute later during the course of a taxation and there was a need for the Court to take a flexible approach to facilitate the provision of further information to him. There had been a comprehensive identification in his submissions of what was sought and a whole variety of categories of items requiring particular scrutiny had been identified and listed in the Schedule. He was also entitled to have basic information about the accounting system for the present action and the other matters, because that would provide him with information of assistance. He sought as few further hearings as possible, and that was why the four categories referred to in the written submissions were being sought at the present time, as this would enable fair notice to be given and an avoidance of multiple hearings.

   Consideration of Viscariello’s requests for particulars

2. As indicated above, the Uniform Civil Rules give wide powers to the Court. UCR 12.1(1) gives a broad power to make any order that it considers appropriate in the interests of justice and examples are given in subr (2). UCR 195.8 and 195.9 relating to taxations provide very broad powers to tailor a taxation process to best achieve the objects of the Rules and to achieve justice.  These include UCR 195.8(1) which expressly states that the same powers which apply to a proceeding apply to taxation proceedings, and UCR 195.8(3)(a) and (b) providing that a taxing officer may require a party to produce its record of costs and disbursements and any other material relevant to the taxation (subject to any claim for privilege), and/or require a party to provide further details of any item the subject of a claim for costs.  The breadth of such available orders the rules order is so extensive that they would enable the court to make the orders sought by Viscariello, and particularly in circumstances such that they are needed to afford proper procedural fairness and enable him to know the case he has to meet in relation to Macks’ claim.

3. One matter raised by Viscariello in support of his application is that it would assist in arriving at a lump sum assessment.  However, in one sense this would depend on the nature of the lump sum assessment.  The “traditional” lump sum assessment involves a process of estimation on a “broad axe” basis, rather than arithmetic (see UCR 195.8(2) and Koonara Management Pty Ltd v Rockliff (No 3) [2020] FCA 523) but this is but one method which is available. Macks, who has sought orders for a lump sum assessment, has already conceded that the “broad axe” approach would not be appropriate here, as there will be a need to examine individual items such as counsel fees, “big ticket” items and so on. In respect of such items the usual processes on the taxation would need to be utilised.

4. It is important in the context of Viscariello’s application to examine the evolution of the taxation process, and how the present UCR procedure has come to be adopted.  This history was addressed by Mr Cogan in his submissions.

5. The Rules of Court concerning the taxation processes have been amended several times over the years.  Originally all bills of costs comprised what has been described as the traditional “long form” basis, summarising the work undertaken for each item in some, but not unduly extensive, detail.

6. Later the “short form” bill procedure was introduced, designed to avoid the delay and expense involved in the preparation of a full bill in taxable form.  Under this regime the taxation process was commenced by the service of the claim for costs in an approved form, namely a form 27 “short form” claim, followed by an entitlement to inspect, and then by service of an itemised schedule of costs if a settlement was not achieved.  The requirement was that the short form claim was to include a general description of how the claim was made up. However it had shortcomings. First, in order to draw a short form bill, it was often necessary for the claiming party to virtually draw a traditional “long form” bill first, even though that might not be needed, and secondly the costs were claimed as aggregate quantities separated into various categories over specified time periods rather than as individual items.  This process made it difficult to reach agreement within a category because it was necessary to distinguish between, and therefore list, agreed and disputed items for the purpose of drawing an itemised schedule.  It was of a different character to a bill in taxable form and it was not a bill lodged for taxation as required by a previous Rule 101.9.  Accordingly, new rules relating to the taxation of costs in the Supreme and District courts came into force on 1 September 2016 (Supreme Court Civil Rule 2006 (Amendment No 32), Supreme Court Civil Supplementary Rules 2014 (Amendment No 6), District Court Civil Rules 2006 (Amendment No 33), District Court Civil Supplementary Rules 2014 (Amendment No 5) which abolished the “short form”  process and replaced it with a claim for costs in Form 49 to  include “a general description of how the claim is made up”.  This process was intended to further streamline the taxation procedure by identifying each item of costs claimed, but without increasing costs by going back to the level of particularity required for an itemised schedule of costs as was the case in the old “long form” bills.  This process was retained in the UCR, although whereas the approved form was initially Form 49, from the date of introduction of the UCR on 18 May 2020 it has become Form 136.  The only significant differences between 2006 Form 49 and UCR Form 136 is that the latter has provided for inclusion of a succinct reason for not agreeing liability and/ or the quantum of an item.  Note 4 to both forms have required that the description of each item “should be as brief as possible but include enough detail to enable the respondent to make appropriate offers and abbreviated reasons for dispute”.  The note went on to give examples of the description of attendances that would provide sufficient detail.  It is important to observe that Note 4 referred, and refers, to brevity. The examples to Note 4 under para (13) refer to attendances “on client”, “to witness” etc, and this level of particularity is entirely consistent with the entitlement of a paying party to inspect, UCR 195.2(3).  Once a claim for costs has been served, together with the requirement for a conference prior to embarking on a detailed taxation under UCR 195.4(3), there is also the requirement under UCR 3.1(1)(g) which requires parties to use reasonable endeavours to resolve or narrow the scope of a dispute by agreement.  This Note 4 requirement is entirely consistent with the evolution of the taxation process within the several iterations of the Rules of Court, from traditional long form bills, then to short form claims and itemised schedules of costs, and then to the current claim for costs proceeded by a genuine offer.   The claim for costs process under the UCR is intended to further streamline the taxation procedure by identifying each item of costs claimed without increasing costs by going back to the level of particularity required for an itemised traditional long form bill of costs. The present process is first for the making of an initial offer pursuant to UCR 195(1), followed secondly by the service of a Form 136 claim for costs which is, in effect, an abbreviated claim for costs.  Under this process there is no need to describe the content of any item: it can be, say, for attending on a client, or a witness, or counsel, or if for a letter the recipient needs to be identified, but nothing about what the personal attendance is for or what the letter is about.  The norm has been to include only the level of particularity required by Note 4, adhering to the requirement that the description of items be as brief as possible. 

7. There are simple reasons for this:  first, it saves costs and expense in the drawing of the claim and is a faster and cheaper exercise, secondly, the rules provide for the parties to inspect documents well prior to the taxation, and thirdly there is also a requirement for the parties to confer.  The documents inspected might include a file note, a letter or another document, and the costs payer is entitled to see these in advance of the taxation hearing so that he or she can form a view about whether or not the item is claimable.  The whole process involves having a cut-down version of documentation, inspection and conferences, so that at the taxation it is unlikely that there will be any surprises.  The UCR require that once a Form 136 Claim is made then the paying party is required within 28 days of service to file a response: UCR 195.3 - and then the claimant and the paying party have to confer prior to a detailed taxation hearing. 

8. At the taxation the paying party will know the content of the claim, and if they then want grounds for why such is allowable, then this will have to be identified by the claiming party, clarifying why it is reasonable for the cost to be claimed.  Extraneous evidence can be bought in relating to contested items if ordered by the court, for example by affidavit or sworn evidence.  If a legal issue arises during the taxation, then it is often the case that the item will be reserved for the next occasion, when it might be considered in more detail.

9. As can be seen by the above analysis, the regime pursuant to which costs claimed are now taxed in the Court has been clearly and comprehensively stated in the UCR and this had been evidenced by the practice of the courts.

10. I note that the Court has been informed that in relation to the inspection of Macks’ files, Viscarello had undertaken some inspection, although not a full inspection.  This can and should be completed before the taxation resumes. Concurrently the parties are required to use reasonable endeavours to resolve or narrow the scope of a dispute by agreement.  Full cooperation is expected.  Viscariello has testified that he has asked for particulars and information from Macks, which he asserts Macks has refused to supply.  If it later transpires that Macks has been unreasonable in any such refusal, and costs have unnecessarily been incurred by reason of having to have arguments at a later time, compensatory costs orders can be made if appropriate.

11. I do not accept that if a Court orders a lump sum taxation an application for particulars of a claim for costs will be inappropriate. As the Federal Court emphasised in Paciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146, notwithstanding that a lump sum costs order is made the court is not precluded from undertaking a close enquiry of costs on a particular issue or category of costs where appropriate.

12. It is abundantly clear that the Court can order particulars, however, as the practice outlined above shows, such orders should be made sparingly and only in exceptional cases.  If an order for particulars/information is made prior to the commencement of the taxation, and particularly before conferring and production as provided in the UCR has occurred, this will mean reverting to the former practice of requiring a fully itemised schedule, as occurred in the days of the traditional long form bill process.  A taxation of costs should by its very nature be a relatively summary process, and the making of orders for particulars of a claim for costs in a similar manner to those sought in respect to a pleading in a substantive action should not be undertaken without very good reason.  Orders for particulars in advance of a taxation should however be made sparingly as such orders would revert, even if only in a specific instance, to the former practice of requiring an itemised schedule of costs with the all the additional associated costs. This is even more the case when as is the case being sought here the proposed orders are more extensive than orders for particulars of facts: he is seeking facts, circumstances, grounds or reasons justifying items, or explaining why they were properly claimable, even before conferring and then inspecting the relevant records.

13. Viscariello’s submission that there is no set fixed procedure that must always be invariably adopted by the Court in taxation proceedings is correct only in stating that the Court’s procedure in respect of the taxation process is not invariable.  It has wide powers and a flexible approach is available, however the nature of Viscariello’s application is such that he is attempting a departure from that practice.

14. The attempt to draw an analogy between pleadings and costs claims by reference to UCR 67.2(2), is inappropriate, as a pleading is defined in UCR 2.1 as meaning a statement of claim, statement of cross claim, defence, reply, statement of facts issues and contentions, and the like, whereas the present proceeding is in contrast, is a taxation of costs which is conceptually different from an action, it is a quasi-administrative process of quantifying costs that have already been ordered: GE Dal Pont, Law of Costs, (LexisNexis, 1^st ed, 2003) at 15.28. The provisions of UCR 67.2(2) are not apposite to a taxation of costs, as the taxation regime itself provides for inspection of all supporting documents: such an inspection, other than in the most exceptional case, should provide all the particularity that a paying party will require. First, costs items are established by a reference to a record - this might be common, for example a court record of pleading or correspondence between the parties, or it might be in the unique possession of the claimant. Secondly, the records inspected will, in accordance with the normal practice, be capable of identification by being kept as separate files. Thirdly, determining whether or not costs are reasonably incurred is a relatively straightforward exercise as is evidenced by the small amount of time usually required to deal with individual items on a taxation. The record relied upon should reveal the facts, the taxing officer will then determine whether the costs item is covered by the scale and whether it has been reasonably incurred, and if will allow the appropriate quantum. Fourthly, if the claimant wishes to supplement the record with other evidence, an affidavit will be required on which the deponent might be cross-examined. This can and does occur, however, the filing of affidavit evidence on a taxation is a rarity. If the record is insufficient to establish an item it will either not be allowed, or may not be allowed in full. However, I note Viscariello’s explanation that he only referred to UCR 67.2(2) in order to demonstrate the need to afford proper process and fairness.

15. Having regard to all of these matters, I have come to the conclusion that Viscariello’s applications are premature.  The factual particulars should be evident from the records inspected, and in the course of the conference between the parties who are to use their best endeavours to resolve any disputes as to justifying Macks’ claims.  The taxation can hopefully then proceed in the normal matter without any order for particulars and without the further unnecessary delay and expense which would arise from the making of the orders sought by Viscariello.  If, however, at any stage during the taxation it is apparent that Viscariello has been taken by surprise as to factual matters, or needs time to consider a point of law, or seeks an order or orders under the wide powers given to the taxing officer under UCRs 195.8 or 195.9, it will be quite appropriate for the taxing officer so deal with such matters by hearing detailed submissions, if necessary receiving affidavits and/or evidence (including cross examination), determining questions of privilege, or dealt with in the usual way by reserving the affected items until a further hearing.

16. I will not, however, dismiss Viscariello’s applications at the present time.  If it transpires that proper particulars and information are not provided to him during inspection and production and at the conference, he will have the opportunity at that time to reagitate his applications for determination.

    Macks’ application for lump sum costs

17. Macks has sought orders that the parties’ claims for costs be assessed on a lump sum basis and that these assessments be consolidated.  He outlined the principles and caselaw and a proposed methodology in his submissions, which also set out the factual background to the taxations and the chronological history of the matter to date, detailing the claims’ size and content, components, and the responses.

18. Macks contended that this was plainly a case in which a lump sum assessment would be logical, fair and reasonable, and there could be no question that the circumstances were such that the Court should exercise its discretion to undertake this process.  It had been over two years since the commencement of the taxation and despite 10 hearings, the taxation proceedings were still at an interlocutory stage.  Both claims covered nearly 19 years of litigation and involved over 4,000 individual items.  An item-by-item taxation of both claims would be lengthy, prolonged and expensive, consuming disproportionate and unnecessary resources of the parties and of the Court.  Further, in the light of the history between the parties it was highly likely that an item-by-item taxation would give rise to an ongoing counterproductive dispute as to costs.  He submitted that there was sufficient material before the Court to give confidence that an appropriate estimate could be reached on the fair quantum of their costs, as both parties had now prepared formal claims for costs, referencing to the scales in the Schedules, and they had collated and made available for inspection supporting documents including accounts for solicitors’ fees, invoices for counsel fees and receipts of disbursements.  In the case of Macks this had included a WIP Guide.  The proposed methodology differed from the more usual case of a lump sum assessment because both parties had already set the outer limits of the quantum of their solicitors’ fees on scale by serving detailed itemised claims.

19. Macks proposed that there be a partial detailed taxation of about 20 per cent of the items in both claims to enable an “impressionistic discount” as referred to in the caselaw.  In the case of claims for run of the mill items such as letters, perusal and the like, where the categories were repetitive, simple rulings for these various categories could be given by taking samples of items, chosen at random as part of the process of giving directions and selected by reference to time periods, and then taxed.  Then, a percentage reduction could be extrapolated and applied to the balance of those parts of the claim.  With a smaller number of claims, which could best be described as “big ticket” items where the amounts claimed were significantly higher than the average, and some of the claims were likely to be highly controversial, specific rulings would be needed. Accordingly, it was proposed that such items would be subject to individual taxation.  These matters could be identified by the parties as part of the directions process.  The result of the extrapolation could be added to the outcome of these “big ticket” and controversial items, and counsel fees and other disbursements would be taxed individual in the normal way.  Further inspection of documents could be undertaken of the records relied upon by each party for the purpose of identifying the items were to be the subject of partial taxation.

1. In his responding submissions Mr Henirich submitted that his client had never said to the court, or in any correspondence, that there must be an item‑by‑item taxation of all matters.  That position was the same now.  What Viscariello had submitted was that it was premature to formulate what should happen to cover every aspect of the matter, instead he had submissions to put as to what would be a practical way to move forward with the matter.  He said that it was also apparent that Macks’ proposed methodology was likewise the case that the entire claims for the cost of each party, or even a substantial part, should not be taxed item by item.  However, Macks’ reference to “partial taxation” did not explain what this phase meant. It was presumably something different from either an item-by-item or a lump sum taxation.  Viscariello reserved his position to make submissions about this aspect once Macks explained with sufficient precision what orders or directions were being sought in relation to the partial taxation process.

2. He commented that the practical effect of Macks’ proposed methodology would be that over 90 per cent of the value of Macks’ claim would be the subject of individual taxation anyway, rather than a lump sum assessment process.  This was because he had reasonable grounds for disputing a very substantial part of Macks’ claim for solicitors’ costs, and Macks himself had proposed that his entire claim for counsel fees should be taxed on an individual basis – with which Viscariello agreed.  Accordingly, there was no practical utility in attempting to identify the other items in Macks’ claim, which represented less than 10 per cent of the overall claim, and then applying a lump sum to these. Macks’ lump sum application should accordingly be refused.

3. Viscariello reiterated that there were good reasons why large parts of Macks’ claim for costs ought to be disallowed, so the Court should first consider and determine all of those items individually or in groups, and not according to a lump sum assessment process.  He referred to his application for further and better details of Macks’ claim and submitted that once the position in relation to Mack’s entitlement to claim such items was identified then his lump sum application would be clarified to a greater extent. Such an order should only be made where the Court was satisfied the costs claimed were for necessary and proper steps in the litigation; Indigo Financial Money Pty Ltd & Anor v Bolivar Road Pty Ltd & Ors [2012] SASC 228 [11](4) and [12]. He outlined the very many objections he would be taking to numerous items within the Macks claim (as has been summarised earlier in these reasons) and he submitted that the practical reality of properly testing the issues raised in Viscariello’s submissions meant that there should be an individual taxation process for all of Macks’ claim for costs. In his submission Macks’ claim was not a genuine party/party claim and he referred to Schedule A in support of this contention.

   Consideration of the lump sum costs application

4. As the parties have referred, the lump sum taxation process was raised by the Court in a letter to the parties dated 25 June 2021 when reference was made to Koonara Management Pty Ltd v Rockcliffe (No 3) [2020] FCA 523. Noting that each of the parties had costs entitlements against the other, and the claims were large and ordinary item-by-item taxations would be prolonged and expensive, the court was interested in the views of the parties as to the use of the lump sum process in this case. This would particularly be of great benefit and costs saving if each of the parties’ costs awards came to about the same amount.

5. Since then, Macks applied for a lump sum costs order, albeit not wholly on a “broad axe” basis, whereas Viscariello, while accepting that he had never sought and did not seek a wholly an item-by-item taxation of all matters, contended that a lump sum process would not be suitable, at least at this stage.

6. The court has now had the benefit of detailed submissions from the parties as to a lump sum process applying to the matter.It has become abundantly clear that a “broad axe” approach to the whole of each of the parties’ claims, which it was hoped at first might be utilised, would not be appropriate. Both parties accept that various items and groups of items will need to be taxed individually. These have been described as “big ticket” and controversial items, and include all counsel fees and external disbursements.  Viscariello has identified these in his submissions (FDN 393) including Schedule A, which specifies the groupings, item numbers, and monetary amounts.  There are large numbers of these items, he said in the order of over 90 per cent.  The amount that he said should be taxed off, before the reduction by reason of the Full Court’s order, amounted to over $300,000 for solicitors’ charges and more than $215,000 for counsel fees (see FDN 393 at para s 65 –68).  Viscariello had also acknowledged that he had not purported to identify in full detail all of the objections that he could validly make in relation to Macks’ claim for costs, and he expressly reserved his position as to all of the grounds he would wish to put to the Court in due course.

7. What is particularly difficult is that the disputed and controversial items are interspersed throughout the claim, which is, quite properly, drawn in a chronological order.  If the “random sampling” for specified periods as proposed in Macks’ submission is utilised, the intermingling within these periods will inevitably skew this sampling process.

8. It seems to me that to undertake a random sampling before concluding an item-by-item taxation of the “big ticket” and controversial items were all dealt with would not produce a reliable result that would be logical, fair and reasonable.  In some instances, even individual uncontested items would need to remain outside the sampling process where they were linked by cross referencing to contested items the subject of allegations of overlap, duplication and/or repetition of work between solicitors and counsel.  Untangling such instances would render the sampling processes to be very difficult and indeed unworkable.  The court can of course be flexible in how it conducts a taxation and how it will proceed and there is no reason why the taxing officer cannot give directions as to any issues that arise including taxing additional items individually: Paciocco & Anor v Australia and New Zealand Banking Group Ltd (No 2) [2017] FCAFC 146.

9. In my view the Court should instead first clarify and identify which items and groups are significant for initial individual assessment issues, and then to tax these in the normal manner.  This might well involve dealing with them in some instances by groups as a whole, rather than item-by-item, which would make that process more efficient.  A decision can then be made as to whether to use a lump sum process for the remainder of the items, possibly involving a sampling process of some sort.  However, that decision should be deferred until after that time.

   The lump sum assessment of Viscariello’s claim for costs

10. In relation to Viscariello’s claim for his costs of trial, which was filed and served on 30 June 2020 the court has heard very few submissions. Macks has to date been excluded from the requirement to file a response.  There has been little discussion in either the documentation or oral submissions as to this claim. As noted earlier in these reasons, Macks had on 10 August 2020 filed an application that Viscariello not be entitled to any costs based on the costs indemnity rule, although when that application came on for argument on 17 December 2020 it was withdrawn. Macks’ counsel has not indicated that it will not be reactivated in the future, and this is still an issue in dispute between the parties.

11. In Viscariello’s affidavit of 28 October 2021 (FDN 391) he testified as to his own claim for costs which was dated 30 June 2020.  He had personally prepared this and it covered his solicitors’ work for the period from December 2004 until October 2015.  He did not have a work in progress (WIP) Guide or another similar documents to refer to or to rely upon when he prepared his claim.  Rather, he had prepared it based on the content of over 400 lever arch folders containing file notes, copies of correspondence and other documents, as well as a large number of bound and loose-leaf documents and other books and records comprising files created and maintained by the solicitors representing him during the period December 2004 to October 2015.  He had prepared this claim on a party/party basis and had only included items which he believed could properly and reasonably be claimed on that basis.  He had not included every separate item of work performed by his solicitors during the 2004 to 2015 period, and in particular no items of work undertaken by his solicitors which in his opinion could properly and reasonably be regarded as solicitor/client items.  There were many items of work performed by his solicitors during the above period which he believed were solicitor/client, and which he had not included in his claim.  He had not made a separate list of these items, and was unable to say how many there were, or what the aggregate monetary value was.  To the best of his recollection, he had not included any items of work for his solicitors involving research, consideration of the case or statute law, and/or consideration of legal principles, although during the proceedings his solicitors had performed substantial work of that type.  In his submission, this approach was to be contrasted with Macks’ claim, which had included numerous items of work for research, consideration of case or statute law and/or the consideration of legal principles.  He submitted that his costs, which comprised $167,692 for solicitors charges including GST and $741,614 for disbursement’s (including counsel fees) totalled $2,418,306 (before the Full Court reduction) and that it was highly unlikely that his party/party claim for costs would be reduced by 60 per cent, so  the most likely outcome if the claims for costs of both parties were subject to detailed scrutiny by the Court, would be that Macks would be required to pay money to him.  He submitted that insofar as Macks’ lump sum application related to his own claim for costs, its consideration should be deferred until Macks had identified with sufficient specificity the items or parts of Viscariello’s claim for costs that would be the subject of individual taxation pursuant to Macks’ proposed methodology.  It was only then could the Court properly exercise its discretion how to proceed further in the taxation proceedings.

12. Other than brief submissions, the argument in relation to lump sum assessment of the parties’ costs has concentrated almost entirely on Macks’ claim. I have accordingly determined to postpone any final decision of the lump sum assessment of Viscariello’s claim to a later stage, although it will obviously have great utility by saving time and costs, and will be very carefully considered at that time.  I will, however, hear from the parties at the next directions hearing on further proceeding with the taxation of Viscariello’s claim, including whether a Response by Macks should now be filed.

13. As indicated, Macks had applied on 10 August 2020 (FDN 336) for an order that Viscariello be precluded from recovering any costs against him by reason of the costs indemnity rule, however this application had been wholly withdrawn on 17 December 2021.

14. Viscariello has testified that in light of the orders sought in Macks’ interlocutory application of 24 August 2021 (FDN 385) seeking that each party’s claim for costs be assessed on a lump sum basis, he had written to Macks’ solicitors on 19 August 2021 seeking confirmation of Macks’ position in relation to the orders sought in the withdrawn application (FDN 336).  However, he had received a response dated 19 August 2021, in which Macks stated that did not agree that any such confirmation was required in order for him to prepare his responding submissions to the orders sought in Macks’ lump sum cost application.  Macks was still reserving his position as to whether he could make this application in the future, and the fact that he had not pursued it at the 17 December 2020 hearing did not mean that it was not competent for him to renew it at some stage in the future (notwithstanding that it might be the subject of an abuse of process argument). Accordingly, he submitted, there was no point in the Court proceeding to assess his costs on a lumps sum basis if Macks were to pursue this application at a later stage.  It was still a live issue and the potential arose for the parties to incur substantial costs and court time in dealing with his claim if the application was subsequently to be pursued.  He accordingly submitted that the Court should order that if Macks wished to review any of the applications the subject of FDN 336, these should be filed and served by a date nominated by the Court, with a notation that if such application was not made then Macks would be precluded from making any such applications subsequently. Until this occurred the Court should not make any order on Macks’ application for a lump sum assessment.  It should determine the indemnity costs issue before proceeding further with any process determining and /or assessing specific items or groups of items in the parties’ claims.  It would be pointless and would unnecessarily waste time and expense for the parties, and the Court, for all or some of Viscariello’s claim to be determined, only to be then faced with an application by Macks seeking orders and declarations that Viscariello was not entitled to claim all or any of the items based on the costs indemnity rule.  He submitted that the Court should order that if Macks wished to review any of the applications the subject of FDN 336, that application should be filed and served by a date nominated by the Court with a notation that if such application was not made then Macks would be precluded from making any such applications subsequently.

15. In response, Macks submitted that he should not be forced to elect whether or not to proceed with that matter, as to do so would put him in a different position from any other costs claimant.  If it transpired during the course of the taxation that material became available raising an indemnity issue, then it could be raised, for example during a taxation a file note might raise an argument about fees.  Were Macks to now attempt to renew the application based solely on the information available when it had been issued, and withdrawn, he could expect large costs consequences against him.  It was inappropriate to require him to make an election at this point.

    Consideration

16. One of the bases for Viscariello’s opposition to the lump sum costs process is because it would be premature to embark upon a taxation in the absence of any waiver by Macks of his entitlement to put Viscariello to proof on the indemnification principle.  However, a taxation of costs on a standard costs basis is compensatory and not punitive, and Viscariello is only entitled to recover from Macks the costs which he has paid for or for which he is liable.  If evidence arises during a taxation casting doubt on such liability, then the Court will have to take it into account.  It follows, therefore, that the status of Macks’ withdrawn application FDN 336 is irrelevant to the lump sum applications presently before the Court.  I decline, therefore, to require Macks to now elect as to further pursuing his withdrawn application or to require him to issue a fresh application at this time.

    Orders

    1.The applications of Viscariello for further particulars of Macks’ claim and associated orders are premature and are declined at the present time.  If following inspection and production and the pre taxation conference between the parties Viscariello continues to assert prejudice, he is at liberty to apply for further submissions on those applications to be presented by the parties.

    2.In relation to Macks’ application for his costs to be taxed on a lump sum basis, by reason of the large number of “big ticket’ and controversial objections to that claim, and the intermingling of such items with other parts of the claim, the Court declines to proceed with a lump sum assessment of that claim at this time, but will proceed to tax those items in the normal manner (by grouping if possible) and will then further consider a lump sum assessment of the balance of the claim thereafter.

    3.In relation to Macks’ application for Viscariello’s costs to be taxed on a lump sum basis, the Court will hear further from the parties at the next directions hearing on that application, including as to whether a Response by Macks should now be filed.

    4.The Court declines to require Macks to now elect as to further pursuing his withdrawn application FDN 336 or to require him to issue a fresh application at this time.

    5.A further directions hearing is fixed for 5 April 2022 at 2:30pm but the parties have liberty to apply as to that date.