William Buck (WA) Pty Ltd v Faulkner [No 8]
[2021] WASC 41
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WILLIAM BUCK (WA) PTY LTD -v- FAULKNER [No 8] [2021] WASC 41
CORAM: MASTER SANDERSON
HEARD: 28 JANUARY 2021
DELIVERED : 18 FEBRUARY 2021
PUBLISHED : 18 FEBRUARY 2021
FILE NO/S: CIV 2995 of 2011
BETWEEN: WILLIAM BUCK (WA) PTY LTD
First Plaintiff
WILLIAM BUCK HOLDINGS (WA) PTY LTD
Second Plaintiff
AND
CRAIG PETER FAULKNER
First Defendant
LEDGER FAULKNER PTY LTD
Second Defendant
CSF CORPORATE PTY LTD
Third Defendant
(BY ORIGINAL ACTION)
CRAIG PETER FAULKNER
Plaintiff by counterclaim
AND
WILLIAM BUCK (WA) PTY LTD
First Defendant by counterclaim
WILLIAM BUCK HOLDINGS (WA) PTY LTD
Second Defendant by counterclaim
MARK PETER COLLINS
Third Defendant by counterclaim
STEPHEN KENNETH BREIHL
Fourth Defendant by counterclaim
CHRISTOPHER JOHN BROWN
Fifth Defendant by counterclaim
FRANK DEL BORRELLO
Sixth Defendant by counterclaim
DAMON ALLAN HARRIS
Seventh Defendant by counterclaim
ROBIN BOYD JUDD
Eighth Defendant by counterclaim
(BY COUNTERCLAIM)
Catchwords:
Costs - Review of taxation - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
Original Action
Counsel:
| First Plaintiff | : | D H Solomon |
| Second Plaintiff | : | D H Solomon |
| First Defendant | : | M P Bruce |
| Second Defendant | : | No appearance |
| Third Defendant | : | No appearance |
Solicitors:
| First Plaintiff | : | Solomon Brothers |
| Second Plaintiff | : | Solomon Brothers |
| First Defendant | : | Bruce Legal Consultants |
| Second Defendant | : | Stewart Forbes |
| Third Defendant | : | Stewart Forbes |
Counterclaim
Counsel:
| Plaintiff by counterclaim | : | M P Bruce |
| First Defendant by counterclaim | : | D H Solomon |
| Second Defendant by counterclaim | : | D H Solomon |
| Third Defendant by counterclaim | : | D H Solomon |
| Fourth Defendant by counterclaim | : | D H Solomon |
| Fifth Defendant by counterclaim | : | D H Solomon |
| Sixth Defendant by counterclaim | : | D H Solomon |
| Seventh Defendant by counterclaim | : | D H Solomon |
| Eighth Defendant by counterclaim | : | D H Solomon |
Solicitors:
| Plaintiff by counterclaim | : | Bruce Legal Consultants |
| First Defendant by counterclaim | : | Solomon Brothers |
| Second Defendant by counterclaim | : | Solomon Brothers |
| Third Defendant by counterclaim | : | Solomon Brothers |
| Fourth Defendant by counterclaim | : | Solomon Brothers |
| Fifth Defendant by counterclaim | : | Solomon Brothers |
| Sixth Defendant by counterclaim | : | Solomon Brothers |
| Seventh Defendant by counterclaim | : | Solomon Brothers |
| Eighth Defendant by counterclaim | : | Solomon Brothers |
Case(s) referred to in decision(s):
City of Belmont v Saldanha [No 2] [2018] WASC 278
MASTER SANDERSON:
By chamber summons issued 16 September 2020 the plaintiffs applied for a review of 56 items in a bill of costs dated 6 July 2016, the subject of a taxing certificate issued by Registrar C Boyle on 2 September 2020. The plaintiffs sought to have the certificate set aside and the costs claimed in the items, the subject of the certificate, reassessed.
The relevant background facts were set out in pars 1 to 23 of the plaintiffs' submissions filed on the same date as the chamber summons. During the course of the hearing I asked counsel for the first defendant whether he accepted those paragraphs accurately summarised the history of the matter. Counsel indicated, so far as the paragraphs provide a chronology, they were not in dispute. On that basis I will include these paragraphs as a summary and by way of background:
1.On 24 September 2013, his Honour Justice K Martin made final orders after a 12 day trial of CIV 2995 of 2011 ('Civil Matter') and COR 173 of 2011 ('Corporations Matter'). The orders provided at order 5 '… WB (WA) shall pay Mr Faulkner all his costs of defending the first plaintiff's (WB (WA)) action and of prosecuting his counterclaim, including all reserved costs to be taxed (with any applicable scale limits removed for the purposes of taxation) and to include the costs of discovery, getting up, witness statements and including attendances on 10, 17 and 24 September 2013, but there shall be no order or allowances as to the costs of the hearing of the trial itself, which is assessed in its duration as occupying only one (1) day of the total 12 days of the joint trial overall of the two actions which were tried together.'
2. On 8 April 2015, there was a directions hearing for assessment of costs in the COR Matter.
3. With respect to the events of 8 April 2015, the first plaintiff relies on the affidavit of Mark Peter Collins sworn 17 August 2015 and filed on 1 September 2016. The first plaintiff also relies on the affidavit of Lachlan Carlisle Bruce Richards affirmed 17 August 2015 and filed 1 September 2016.
4. On 25 May 2015, a letter was sent by Registrar C Boyle to the parties to the Corporations Matter. A copy of that is attachment 'VHB-1' to the affidavit of Veronica Helen Burns , affirmed 15 September 2020 ('Burns Affidavit').
5. On 18 June 2015 (after completion of the assessment in the Corporations Matter), the defendants filed a bill of costs in the Civil Matter.
6. On 18 August 2015, an assessment was listed and occurred before Registrar S Boyle but adjourned without any substantive hearing. Assessment did not proceed and the bill proceeded to be provisionally assessed.
7. On 4 April 2016, Registrar C Boyle wrote to the parties and informed them of the provisional assessment of the bill in the amount of $381,650.00. The letter is annexure 'VHB-2' of the Burns Affidavit.
8. On 8 April 2016, the first plaintiff objected to the provisional assessment.
9. On 6 July 2016, an amended bill of costs was filed by the defendants.
10. On 1 September 2016, further submissions and objections to the defendant's bill were filed by the first plaintiff.
11. On 15 September 2016, a response to the objections was filed by the defendants.
12. On 31 January 2017, there was an assessment hearing at which submissions were made.
13. On 13 February 2017, orders were made on the papers for the production of documents by the receiving parties.
14. On or about 7 March 2017, the defendants provided a bundle of documents pursuant to the orders made on 13 February 2017. Those documents are annexure 'VHB-3' of the Burns Affidavit.
15. On 15 June 2017, there was a further hearing at which submissions were made on each item.
16. On 24 October 2017, Registrar C Boyle wrote to the parties providing the basis on which he was prepared to assess the first defendant's bill of costs. That letter is annexure 'VHB-4' of the Burns Affidavit.
17. On 24 January 2018, there was a further hearing at which submissions were made. The Registrar adjourned the hearing to finally assess the bill and provide reasons for the amounts allowed.
18.On 20 August 2018, the Registrar wrote to the parties providing reasons for his assessment of the bill and allowing for any objections to be made by 24 August 2018. That letter is annexure 'VHB-5' of the Burns Affidavit.
19. On 24 August 2018, the plaintiff filed a notice of objections. A copy of those objections is annexure 'VHB-6' to the Burns Affidavit.
20. On 17 September 2018, the Principal Registrar signed an interim costs certificate in the amount of 13,880.56. The first plaintiff paid that amount.
21. After a delay of more than two years, on 2 September 2020, Registrar C Boyle provided to the parties a certificate of taxation in the amount of $387,671.04.
22. On 3 September 2020, Registrar C Boyle retired.
23. On 7 September 2020, Registrar C Boyle provided to the parties his reasons for decision. Those reasons were not published and a copy is annexure 'VHB-7' of the Burns Affidavit. The learned Registrar assessed the Items (as defined in the Chamber Summons) by allowing two thirds of the total costs for the items for both the Civil Matter and the Corporations Matter to the Civil Matter
Again, by reference to counsel for the plaintiffs' written submissions, par 24 contained a concise summary of the applicable legal principles about which there was no dispute. That paragraph reads as follows:
The first plaintiff accepts that it must establish an error in principle by the learned Registrar, as required by O.66/55(2) of RSC; and that, because it challenges how the amounts allowed for the Items (as defined in the Chamber Summons) were determined, the first plaintiff must establish that no taxing officer, acting reasonably, could ever have assessed the Items in the amounts in question: see cases cited in Civil Procedure Western Australia paragraph 66.55.1.
In his written submissions, counsel for the first defendant made reference to the decision of Vaughan J (as his Honour then was) in City of Belmont v Saldanha [No 2] [2018] WASC 278. Counsel relied, in particular, on [35] to [43]. With respect these paragraphs contain a concise statement of the relevant principles and have guided my approach to this application. The paragraphs read as follows:
35If a party is dissatisfied with the certificate of the taxing officer upon review, by O 66 r 55 the party may apply to a judge in chambers for an order to review the taxation as to particular items or parts of items. On an application under O 66 r 55 only items covered by the objections carried in before the initial review by the taxing officer may be considered. In that way the making of an objection under r 53 is the foundation for the existence of a judge's power under r 55; if there is no objection to an item or part of an item under r 53 there can be no application under r 55. The certificate of the taxing officer is otherwise final and conclusive as to all matters which have not been objected to in accordance with the rules (O 66 r 55(3)).
36Under O 66 r 55(2) the judge, if of the opinion that the taxing officer has made an 'error in principle', may make any order to rectify the error that he or she thinks just.
37The applicant for review (here the defendants) bears the onus of satisfying the court that the decision reached by the taxing officer is wrong. For a decision to be 'wrong' it must be shown that there is an error in principle.
38The review of a taxing officer's decision attracts the usual principles that apply where appellate jurisdiction is exercised in respect of decisions involving a discretionary judgment. There is a strong presumption in favour of the correctness of the decision. The decision will be affirmed unless the court is satisfied that it is clearly wrong.
39Errors in principle may be made both in determining whether an item should be allowed and in determining the amount that should be allowed for an item. However, it is unusual for an error in principle to be made as to quantum. An 'error in principle' on such a basis can only be established if it is shown that no taxing officer, acting reasonably, could ever have taxed the item at that amount. The amount allowed must be so extraordinary as to be demonstrable of an error in principle. Thus, a decision of a taxing officer as to quantum is generally final except in an exceptional case.
40This is the position because a taxing officer has a wide discretion. A judge will not usually be as familiar with the taxing process as a taxing officer and therefore will not be as competent to say what is the proper amount to be allowed. As Kenneth Martin J has recognised:
… taxing officers hold expertise in taxations about costs determinations. They deal in the day-to-day nitty-gritty of assessing the costs in litigation, by reference to scales and allowances at a level of detail that judges do not. That is one reason why any further review opportunity window that is allowed under O 66 r 55 to a judge is an extremely limited one.
41There is an error in principle where a taxing officer acts on a wrong principle. The court will review the decision for the purpose of determining the principle that should be applied.
42An error in principle may be inferred from a decision of the taxing officer if it appears that the taxing officer's discretion has not been exercised at all or has been exercised in a manner that is manifestly wrong. It may be that the exact nature of the error is not discoverable; if so, it is sufficient that the result is so unreasonable or plainly unjust that the court may infer that there has been a failure to properly exercise the taxing officer's discretion.
43There may also be an error in principle in giving weight to extraneous or irrelevant matters or in failing to give weight or sufficient weight to relevant considerations. There is also an obiter suggestion in Australian Coal & Shale Employees' Federation v The Commonwealth to the effect that there might be an error in principle in making a mistake as to the facts. No such error of principle is asserted in the defendants' application for review. Accordingly, it is unnecessary to determine whether a mistake as to the facts may constitute an error in principle. It suffices to observe that there may be a difficulty in such an argument so far as O 66 r 43 provides that the taxing officer's decision on all questions of fact is final.
The chamber summons filed by the plaintiff set out the grounds upon which it was said the certificate ought be set aside. Those grounds read as follows:
3. In the following circumstances, it was an error of principle by the learned Registrar ('the Registrar') to allow costs for the Items on the basis of two thirds of the total costs for the Items in this action ('Civil Matter') and for the same work for COR 174 of 2011 ('Corporations Matter') be apportioned as to two thirds to the Civil Matter and one third as to the Corporations Matter by reason of:
3.1. Although the Civil Matter and the Corporations Matter were case managed and tried together, CSF Corporate Pty Ltd ('CSF') applied for assessment of costs in the Corporations Matter separately and prior to assessment of the costs of the Civil Matter. CSF only claimed one third of the combined costs of the Civil Matter and the Civil Matter for various items in its bill of costs for the costs of the Corporations Matter. In circumstances where the learned trial Judge, for the purposes of costs assessment, apportioned 11 of 12 days of the trial to the Corporations Matter, CSF seeking in the Corporations Matter only one third of combined costs of the Corporations Matter and the Civil Matter for various items was for the obvious purpose of seeking to recover more costs for those items in the Civil Matter than in the Corporations Matter, despite most work having been done for those items for the Corporations Matter.
3.2. CSF opposed a representative of the plaintiffs (Mark Peter Collins) being present at the directions hearing in relation to the costs assessment in the Corporations Matter on 8 April 2015 and, as a result, Mr Collins was excluded from the assessment hearing in the Corporations Matter. Mr Collins' affidavit sworn 17 August 2015 and filed in the Civil Matter on 1 September 2016 deposes to these matters and is relied on. Accordingly, that the Registrar accepted the one third apportionment sought by CSF in the Corporations Matter assessment was not binding on the first plaintiff at the subsequent assessment in the Civil Matter.
3.3. That further disallowances were made by the Registrar on review of the initial assessment in the Civil Matter for the reason that claims were made in the bill of costs in the Civil Matter for items in which no work at all was done for the Civil Matter established that what was required was separate analysis of each of the Items in the bill of costs for the Civil Matter based on the work done under that Item on the Civil Matter and not just a two thirds allocation of the total claimed for that Item for both the Civil Matter and the Corporations Matter. Hence, to assess the largest Item, getting up, required detailed analysis by the Registrar of the getting up work done for the Civil Matter and the Corporations Matter. Had that analysis been done, it would have shown that the majority of the work for all of the Items was done for the Corporations Matter and determined the assessment in the amount the subject of the Certificate.
Although counsel for the plaintiffs took the step of stating in the summons the grounds upon which it was sought to have the certificate set aside, there is, strictly speaking, no requirement this be done. To succeed on an application for review the applicant must show as the City of Belmont decision carefully articulates, an error of principle. That is a wide ranging concept which requires an overview of the taxation process. On that basis, establishing particular errors may not be necessary or indeed may not be enough to establish an error of principle. That said, the complaints in this case were actually quite specific and I could see nothing beyond the points articulated by counsel for the plaintiffs which might indicate an error of principle on the part of the taxing officer.
Dealing then with the plaintiffs' complaints, it is certainly the case that as set out in par 3.2 of the plaintiffs' grounds that Mr Collins was excluded from the costs hearing in the corporations matter. But the fact is he had no right to be present. He was not a party to that action and his interests were not directly affected by any assessment on taxation. As a necessary corollary to that position, nothing determined at the assessment of costs in the corporations matter would adversely affect the party liable for costs in the civil matter.
During the course of his submissions, counsel for the plaintiffs maintained the only fair way to tax the costs in this matter was for the bill in the corporations matter and the bill in the civil matter to be taxed at the same time. With respect, there is nothing in the judgment of Kenneth Martin J to suggest that should be the case. There were two separate awards of costs. Furthermore, there is no general principle that when two matters are heard together, even if they are somewhat intertwined, that there ought be only one taxation – or perhaps more correctly, a joint taxation. If both bills had been lodged at the same time and all parties had agreed to a joint taxation, then that may well have been an appropriate course to follow. But it is difficult to see how a taxing officer could decline to tax the bill in the corporations matter unless and until the bill was presented in the civil matter. But even if the taxing officer had the power to require both bills to be taxed at the same time, he was certainly under no positive duty to take that course. The mere fact of two separate bills does not reveal any error of principle.
The learned registrar did provide reason for his decision on the review of the taxation. A copy of those reasons (which were marked 'not for publication') appears as attachment VHB‑7 to the affidavit of Ms Burns affirmed 15 September 2020. Under the heading 'General basis for objections' the learned registrar deals with three separate matters under three sub‑headings. The first of those sub‑headings is 'How should the costs be allocated between the two actions'. The learned registrar noted that the paying party contended it should be liable for only one‑twelfth of the receiving party's costs of the action before trial. The learned registrar dealt with that matter in this way:
7.I do not accept that objection. In my view the objection does not reflect the orders the court made, as explained by his Honour's reasons. In the passage cited above, his Honour made it clear that he was dealing first with the costs of the 12 days of trial only, and not the costs of each of the two actions before trial. By the words I have emphasised in the quotation above his Honour was clear that the first defendant should have all his costs of the action up to just before the trial. That was because, by the actions of the plaintiffs, the amount in issue in this action was sharply reduced just before the trial. His Honour rules that Mr Faulkner should not be entitled to any costs for the one day of trial attributable to this action as opposed to COR 174 of 2011.
In my view, the passage quoted above indicates the learned registrar carefully considered the objection made by the plaintiffs. He did so by reference to the decision of Kenneth Martin J. Not only does the registrar's analysis not show any error of principle it is, in my view, a correct statement of the position. Moreover, it indicates the registrar was alive to the apportionment required by his Honour's determination of the proper proportion of costs attributable to each action.
The second sub-heading is 'One taxation or two?'. The learned registrar determined that there was no reason why there should only be one taxation. As I have indicated, I am satisfied the statement of principle is correct. Perhaps more importantly, the learned registrar was aware of the possibility that separate taxations could result in over compensation. He approached that matter in this way:
12.I taxed two bills separately, but bearing in mind that there would have been: (a) work that was clearly identifiable as relating to one action rather than the other; (b) work that was relating to both; and (c) work properly done for the purposes of the proceedings but in relation to which any allocation as between the two actions would have been wholly arbitrary. If two actions are heard together, that will almost inevitably be the case: the overlap in issues and evidence is the very reason they are heard together. After trial the judge will make costs orders tailored to the circumstances. A taxing officer is obliged to tax in accordance with those orders and not in deference to the view (however adamantly expressed) of one party as to how costs should be apportioned between the actions.
13.Whichever side of the line particular work fell on, the aim was to ensure that the taxed bills in the two actions, taken together, compensated the lawyers for the receiving party no more and no less than once for work properly done. Where items in this bill concerned work that may have been related to both actions, the allowances I made took into account the corresponding allowances on the other action.
With respect, it is clear the learned registrar took into account there was a cross over in the two actions. He was careful to ensure that the receiving party was not over compensated. This is borne out by reference to the way in which the learned registrar dealt with particular items. By way of example, in relation to Item 14 he said:
27.This related to proceedings in chambers in relation to categories of documents for discovery. The proceedings concern both actions. The defendant has claimed two-thirds on this action. The amount claimed was $2,797.67 and I allowed $1,996.67.
28.The plaintiffs object that the direction hearing listed for this day was adjourned prior to the hearing by consent with no appearance required. The consent orders have been separately claimed. Further, the plaintiffs assert, giving particulars, that the categories of discovery to which this application related were mostly irrelevant to this matter and only relevant to the COR matter. I have considered the affidavit of Mr L C B Richards that is referred to in the objection and concluded that it has force. There should be only a fairly nominal allowance to be made for discovery relevant to this action. I would allow $200 only, making a further reduction of $1,797.67.
The way in which the learned registrar dealt with Item 14 and other items clearly indicate he was careful to take into account the two separate actions. No error of principle is revealed.
The final sub‑heading was '"Standard" costs'. The learned registrar expressed this objection in this way:
… Although it is not expressed as a general objection, many items are objected to simply on the basis that the amount allowed was more than the 'standard' costs for items such as case management conferences as set out in Consolidated Practice Direction 4.7.1.
At paragraphs 18 through to 21 of his decision, the registrar deals with this 'general' objection. No issue was taken by counsel for the plaintiffs with this aspect of the registrar's reasons, but for the sake of completeness, I should say it seems to me what the registrar had to say was a statement of sound principle.
The strongest aspect of the plaintiffs' argument is one which can be expressed in general terms. As the judgment of Kenneth Martin J makes clear, the real issue between the parties was whether or not there was oppressive conduct – that is to say, the corporations matter was what occupied time at trial. The action began with an application by the plaintiffs for an interlocutory injunction. The plaintiffs lost that application and were ordered to pay costs. They have raised no objection to that order and to the quantum. It is their position thereafter the real issue between the parties was the oppression action. In fact at trial they made no attempt to advance the civil action. In those circumstances, they say the substantial costs awarded against them in the civil proceeding by dent of the amount of the costs, if nothing else, indicate an error of principle.
In his written submissions, counsel for the first defendant said:
13.As explained at Trial Reasons [24], as the case came closer to trial, it became increasingly evident that the catalyst for the commencement of the proceedings – injunctive relief and claims of significant loss and damage due to alleged confidentiality and restraint breaches by Mr Faulkner, was fraught. WB(WA) had included documents in the trial bundle said to show losses in excess of $1 million. But, on the eve of the commencement of trial, the work done by Mr Faulkner in exposing the deficiencies in WB(WA)'s case led to, among other things, WB(WA) abandoning the $1 million damages claim.
14. But even then WB(WA) did not abandon its civil claim, it 'doggedly' and 'irrationally' pursued it as a nominal damages claim in an act of 'commercial lunacy'. Mr Faulkner had, of course, fully got up and prepared for trial on the basis that all the pleaded issues were to be litigated. His efforts were rewarded – WB(WA)'s civil claim against him was comprehensively rejected.
That provides an answer to what might be called the plaintiffs' 'over view' objection. I need say nothing more on the issue.
In my view, there is nothing in the decision of the registrar, or elsewhere, which would justify this certificate being set aside. The application will be dismissed. Subject to hearing from the parties, the plaintiffs should pay the first defendant's costs of the application including reserved costs.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CB
Associate to Master Sanderson
18 FEBRUARY 2021
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