Court of Appeal (Qld)|2009-03-24|Before: McMurdo P, Fraser JA and Douglas J, Separate, reasons for judgment of each member of the Court, each concurring as to the, orders made
McMurdo P, Fraser JA and Douglas J, Separate, reasons for judgment of each member of the Court, each concurring as to the
Catchwords
APPEAL AND NEW TRIAL – GENERAL PRINCIPLES – INTERFERENCE WITH
DISCRETION OF COURT BELOW – PARTICULAR CASES –
OTHER MATTERS –
COSTS – where applicant ordered to pay costs on the indemnity basis for a
Source
Original judgment source is linked above.
Catchwords
APPEAL AND NEW TRIAL – GENERAL PRINCIPLES – INTERFERENCE WITHDISCRETION OF COURT BELOW – PARTICULAR CASES –OTHER MATTERS –COSTS – where applicant ordered to pay costs on the indemnity basis for afailed action in the DistrictCourt – where the primary judge assessedcosts at $39,784 – where the applicant sought leave to appeal costsassessment– whether the primary judge erred in failing to direct himselfthat the assessment of costs on the indemnity basis equatedto an assessment ona solicitor and client basis rather than providing for a complete indemnity forcosts – whether the applicantwas denied procedural fairness throughrefusal of his request to inspect the respondent’s solicitor’s file– whetherleave to appeal against the costs assessment should be grantedunder s 118(3) of the District Court of Queensland Act 1967 (Qld)District Court of Queensland Act 1967 (Qld), s 118(3)Supreme Court of Queensland Act 1991 (Qld), s
133
Supreme Court Rules 1970 (NSW), r 6(2)
Uniform Civil Procedure Rules 1999 (Qld), r 687(2)(c),
r 703(1), r 703(3), r 743S
Australian Coal and Shale Employees’ Federation v The Commonwealth
& Others (1953) 94 CLR 621
[1953] HCA 25, cited
Harrison
& Another v Schipp (2002) 54 NSWLR 738
[2002] NSWCA 213,
applied
In re the Will of FB Gilbert (decd) [1946] NSWStRp 24
(1946) 46 SR (NSW)
318, cited
Macedonian Orthodox Community Church St Petka
Incorporated v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox
Diocese
of Australia and New Zealand (2008) 249 ALR 250
[2008] HCA 42,
cited
Pickering v McArthur [2005] QCA
294
Schweppes’ Ltd v Archer [1934] NSWStRp 17
(1934) 34 SR (NSW) 178,
cited
Singer v Berghouse (1994) 181 CLR 201
[1994] HCA 40,
cited
Judgment (97 paragraphs)
[1]
APPEAL AND NEW TRIAL - GENERAL PRINCIPLES - INTERFERENCE WITH DISCRETION OF COURT BELOW - PARTICULAR CASES - OTHER MATTERS - COSTS - where applicant ordered to pay costs on the indemnity basis for a failed action in the District Court - where the primary judge assessed costs at $39,784 - where the applicant sought leave to appeal costs assessment - whether the primary judge erred in failing to direct himself that the assessment of costs on the indemnity basis equated to an assessment on a solicitor and client basis rather than providing for a complete indemnity for costs - whether the applicant was denied procedural fairness through refusal of his request to inspect the respondent's solicitor's file - whether leave to appeal against the costs assessment should be granted under s 118(3) of the District Court of Queensland Act1967 (Qld)
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand(2008) 249 ALR 250; [2008] HCA 42, cited
[1] McMURDO P: The application should be refused with costs. I agree with the reasons of and orders proposed by Fraser JA.
[14]
[2] FRASER JA: In July 2000 the applicant ("Amos") settled his action against a bank on terms that required him to pay the bank's costs as assessed by Monsour Legal Costs Pty Ltd (now called Monsour Pty Ltd, one of the present respondents). The Trial Division of this Court rejected his attempt to dispute the settlement and the assessment and ordered him to pay the bank's costs of that proceeding on the indemnity basis.[1]
[15]
[3] Amos then turned his sights upon Monsour Pty Ltd, claiming damages of something less than $23,000 for what Amos contended was its negligent costs assessment. He lost that claim in the Brisbane Magistrates Court and was again ordered to pay costs on an indemnity basis.[2] He later lost his appeal against that decision to the District Court, with costs.[3]
[16]
[4] The costs of the Magistrates Court proceeding were assessed at $49,996. Amos appealed against that assessment to the District Court. On 2 November 2006 Nase DCJ reduced the amount by $4,490 but otherwise dismissed Amos's appeal and ordered him to pay costs of the appeal on the standard basis.[4] Although on 24 July 2007 Amos was granted leave to appeal to this Court from Nase DCJ's decision, that was a pyrrhic victory: the appeal was dismissed with costs on the standard basis.[5]
[17]
[5] Undaunted by his conspicuous lack of success up to that point, Amos subsequently launched a claim against the present respondents (whom I will collectively describe as "Monsour") that Nase DCJ's decision of 2 November 2006 was procured by fraud. That claim was found to lack substance. On 20 June 2008 Brabazon DCJ granted summary judgment in favour of the respondents dismissing the claim, ordered Amos to pay Monsour's costs on the indemnity basis, and ordered that the amount of those costs be fixed by the court.[6]
[18]
[6] On 12 August 2008 the same judge fixed the amount of the costs.[7] Monsour's solicitor's bill, which Monsour paid in full, was $52,720.10 (including GST). At the hearing before the primary judge Monsour relied upon an assessment by a solicitor and costs consultant, Mr Ryan, of $46,020 (including GST and Mr Ryan's costs of his assessment). The primary judge ordered that the amount of the costs be fixed at $39,784 (after deductions from the costs assessment of $1,680 for junior counsel's fees for drafting some submissions, $1,500 from the solicitor's professional fees, and the GST component of $3,056).
[19]
[7] Amos now seeks leave to appeal against the order of 12 August 2008 fixing the costs at $39,784.
[20]
[8] Demonstration of a reasonable argument that the costs should have been fixed in a lower amount will not necessarily establish that there has been an error of the kind that might justify leave to appeal. Fixing the amount of costs under UCPR r 687(2)(c), like an assessment of costs under pt 3 of ch 17A, commonly involves evaluative determinations and discretionary decisions about questions to which there is not only one correct answer. That imposes significant limits upon the circumstances in which such decisions are amenable to review.[8] The nature of those limits was described in Jordan CJ's well known summary of the law on the topic in Schweppes' Ltd v Archer:[9]
[21]
"In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied, and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances : Western Australian Bank v Royal Insurance Co. (7 C.L.R. at 388) ; Clark, Tait & Co v Federal Commissioner of Taxation[1931] HCA 26; (47 CLR 142, at 145-6), but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case."
[22]
[9] Kitto J quoted that passage with approval in Australian Coal and Shale Employees' Federation v The Commonwealth & Others[10] and observed that "there is a strong presumption in favour of the correctness of the decision appealed from, and that that decision should therefore be affirmed unless the court of appeal is satisfied that it is clearly wrong".[11]
[23]
[10] The same considerations apply in any reconsideration of judicial decisions fixing the amount of costs under r 687(2)(c), but it also must be borne in mind that Schweppes' Ltd v Archer concerned an as of right review of a taxation of costs. Here we are concerned with an appeal which may be brought only by leave. In that respect, although the Court's discretion to grant leave to appeal under s 118(3) of the District Court of Queensland Act 1967 is not circumscribed, leave to appeal is usually granted only where there is both a reasonable argument that there is an error to be corrected and an appeal is necessary to correct a substantial injustice to the applicant.[12]
[24]
[11] Even where there may be arguable merit in a proposed appeal (assessed in accordance with the limiting principles I have mentioned) it does not follow that the applicant will suffer a substantial injustice if leave is not granted. And, where appeals against decisions concerning only costs are permitted at all,[13] the traditional appellate restraint upon granting leave to appeal to challenge discretionary decisions applies with particular force. As in some other categories of such challenges, too ready an inclination to grant leave in such cases would run the risk of encouraging unwarranted delay in the final resolution of litigation, the incurring of legal costs in disproportion to the value of the original subject matter of the litigation, and the unjustified generation of other public and private costs.[14]
[25]
[12] That is of more than theoretical interest in this application. Amos's litigation has been spectacularly unsuccessful but it must have been productive of great and disproportionate expense and inconvenience to those litigants concerned and significant public expense. Whilst the Court will grant leave to appeal in a proper case, the history of this litigation does highlight the importance of ensuring that leave is not too readily granted.
[26]
[13] With those matters in mind, I turn to the grounds of the application. Amos's draft notice of appeal specifies eight grounds of the proposed appeal, but his counsel appropriately confined the application to two arguments which, he submitted, raised points of principle of sufficient merit and significance to justify the grant of leave to appeal.
[27]
[14] Amos's first argument is that the primary judge erred in failing to direct himself that the assessment of costs on the indemnity basis equated to an assessment on a solicitor and client basis rather than providing for a complete indemnity for costs.
[28]
[15] UCPR provides, so far as is presently relevant:
[29]
"687 Assessed costs to be paid unless court orders otherwise
[30]
(1) If, under these rules or an order of the court, a party is entitled to costs, the costs are to be assessed costs.
[31]
(2) However, instead of assessed costs, the court may order a party to pay to another party -
[32]
(a) a specified part or percentage of assessed costs; or
[33]
(b) assessed costs to or from a specified stage of the
[34]
(d) an amount for costs to be decided in the way the court directs.
[35]
(1) Unless these rules or an order of the court provides otherwise, a costs assessor must assess costs on the standard basis.
[36]
Costs on the standard basis were previously party and party costs - see rule 743S (Old basis for taxing costs equates to new basis for assessing costs).
[37]
(2) When assessing costs on the standard basis, a costs assessor must allow all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being assessed.
[38]
(1) The court may order costs to be assessed on the indemnity basis.
[39]
Costs on the indemnity basis were previously solicitor and client costs - see rule 743S (Old basis for taxing costs equates to new basis for assessing costs).
[40]
(2) Without limiting subrule (1), the court may order that costs be assessed on the indemnity basis if the court orders the payment of costs -
[41]
(b) to a party who sues or is sued as a trustee; or
[42]
(c) of an application in a proceeding brought for noncompliance with an order of the court.
[43]
(3) When assessing costs on the indemnity basis, a costs assessor must allow all costs reasonably incurred and of a reasonable amount, having regard to -
[44]
(a) the scale of fees prescribed for the court; and
[45]
(b) any costs agreement between the party to whom the costs are payable and the party's solicitor; and
[46]
(c) charges ordinarily payable by a client to a solicitor for the work.
(a) party and party basis equates to standard basis; and
[51]
(b) solicitor and client basis equates to indemnity basis."
[52]
[16] In r 743S "the Act" refers to the Supreme Court of Queensland Act 1991. Section 133 is in pt 11 of the Act, which is headed "Transitional provisions". Section 133 provides:
[53]
"In an Act or document, in the context of a court and if otherwise appropriate -
[54]
(a) a reference to taxation of costs by the Supreme Court taxing officer or an officer of another court may be taken to be a reference to assessment of costs by a registrar of the court approved, under the Uniform Civil Procedure Rules, to assess costs; and
[55]
(b) a reference to a particular basis of taxation, for example, taxation on a party and party basis, may be taken to be a reference to the basis of taxation specified under the Uniform Civil Procedure Rules as the equivalent basis of taxation."
[56]
[17] In an assessment on an indemnity basis, r 703(3) provides that the costs assessor "must" allow "all" costs reasonably incurred and of a reasonable amount, having regard to the matters stated in paras (a)-(c). The effect of this rule was explained in this Court's decision in Amos v Monsour Legal Costs Pty Ltd,[15] which made it clear that there are also other relevant considerations, including the proportionality between the costs and any scale of fees and between the costs and the amount of the claim. The reasons of the primary judge[16] show that he applied r 703(3), as so construed.
[57]
[18] Counsel for Amos argues, however, that the effect of the note to r 703(1) is that an assessment on the indemnity basis must conform to the principles formerly applicable in a taxation of costs on the solicitor and client basis, as those principles were expounded in the authorities. The consequence of acceptance of this proposition is submitted to be that the primary judge fixed the costs on a basis which was too generous to Monsour.
[58]
[19] The expression "solicitor and client basis" in r 743S refers to the basis of taxation formerly regulated by O 91 r 82 of the repealed Rules of the Supreme Court. It is unnecessary here to set out that provision. The criteria expressed in UCPR r 703(3) for an assessment on the indemnity basis differ markedly from the criteria in the repealed rules for the allowance and disallowance of costs in a solicitor and client taxation. The question whether a particular item of costs is recoverable on the indemnity basis involves the construction and application of r 703(3) rather than an analysis of cases on repealed r 82 or other statutory provisions.[17] The note to r 703(1) does not authorise or require reference to the concept of a solicitor and client taxation for the purpose of construing r 703(3). Rather, the function of that note is simply to direct the reader's attention to the transitional provisions in r 743S and thence to s 133(b) of the Supreme Court of Queensland Act 1991 (Qld). Those transitional provisions have no potential application in this case.
[59]
[20] It follows that the primary judge did not err in principle in the manner contended for in Amos's first argument. It is therefore strictly unnecessary to consider whether there is any substance in Amos's consequential submission that an assessment on the solicitor and client basis would have produced a smaller amount than the assessment on the indemnity basis; but I am unpersuaded that the difference would likely be of sufficient significance to the applicant as to justify the grant of leave to appeal if the appeal were otherwise meritorious.
[60]
[21] Amos's second argument is that he was denied procedural fairness when the primary judge refused his request to inspect Monsour's solicitor's file. If Amos demonstrated a reasonable case that he was denied procedural fairness it might well be a proper case for the grant of leave to appeal, but in my opinion Amos failed to make out such a case.
[61]
[22] In written submissions filed on behalf of Amos before the first day of the hearing in the District Court, Amos submitted that the costs should not be fixed until he was provided with an opportunity to inspect Monsour's solicitor's file, but that proposition was not pursued after the first day of the hearing. After Amos's solicitor sought production of the file at the commencement of the hearing the primary judge suggested, as an alternative and more efficient method of proceeding, that the costs assessor (who had provided the assessment relied upon by Monsour) provide an affidavit and be available for cross-examination. The primary judge made it plain that this was merely a suggestion, but Amos's solicitor did not demur from it. The hearing was then adjourned until the following day on that footing.
[62]
[23] When the matter resumed, Monsour's counsel informed the primary judge that Amos's solicitor had been given an itemised invoice which provided further explanation of the short form cost statement previously provided and that the costs assessor was available for cross-examination. The particulars of the claimed costs were therefore then in the form of the solicitor's original (paid) tax invoice and the itemised invoice, which was akin to a bill of costs in long form. Amos's solicitor did not ask for any further particulars, for the assessor to swear any affidavit, or for access to the solicitor's file. Rather, in the course of responding to the primary judge's request to identify the topics to be investigated in cross-examination, he submitted that what was important was to examine the solicitor's bill to work out what costs had been reasonably incurred and whether they were of a reasonable amount. He added that the itemised invoice which his side had been given that morning was "actually quite good. This helps us understand who did what, when, how long it took".
[63]
[24] After Amos's solicitor had explained the aim of his proposed cross-examination in detail, the primary judge expressed the view that it was not an unreasonable exercise. Monsour's counsel indicated that she had no objection to it. That process was adopted. There followed a quite extensive cross-examination of the costs assessor: in transcript form it occupies 40 pages.
[64]
[25] At one point during the cross-examination Amos's solicitor submitted that he had a difficulty in that he had not seen the documents described in one costs item (for perusing some documents). In that context Amos's solicitor said that he could not ask the witness questions and the judge observed that he would not give Amos access to Monsour's solicitor's file. It is to be noted, however, that Amos's solicitor did not apply for an order that those particular documents be produced for Amos's inspection or otherwise seek to insist on access to them or to any other part of the file. Rather, the point seems to have been raised by Amos's solicitor to foreshadow an argument (which was made at the end of the hearing, but not pursued in this Court) that the particular costs of some items should be disallowed because of the absence of supporting evidence.
[65]
[26] After the evidence concluded there was some brief argument and the hearing was adjourned for a few days for final submissions. When it resumed, Amos's solicitor handed up a further outline of submissions. In these submissions Amos's solicitor did not pursue his earlier contention that the court should not fix costs until after Amos had been provided with an opportunity to inspect Monsour's solicitor's file. Nor was Amos's counsel in this Court able to point to any argument to that effect in the oral argument before the primary judge. Rather, Amos's solicitor argued particular points on their merits, contending that certain amounts should be disallowed or reduced for a variety of reasons, including in some respects the suggested absence of supporting evidence.
[66]
[27] It thus appears that an appeal to agitate Amos's second argument would involve a departure from the manner in which his case was conducted in the District Court. It seems clear that if there was any denial of procedural fairness of the kind now contended for it was waived by Amos; but in any event I am not persuaded that, as Amos now argues, procedural fairness in this case required that Amos be given unrestricted access to the whole of the solicitor's file.
[67]
[28] UCPR draws a clear distinction between an assessment of costs and the process of fixing costs under r 687(2)(c). Whilst both processes require that procedural fairness be afforded to the parties, the latter is intended to be relatively speedy and inexpensive. What Giles JA said in Harrison & Another v Schipp[18] about the specification of costs under the similar provision in r 6(2) of the New South Wales Supreme Court Rules 1970 applies with equal force to the fixing of costs under r 687(2)(c):
[68]
"Of its nature, specification of a gross sum is not the result of a process of taxation or assessment of costs. As was said in Beach Petroleum NL v Johnson [(1995) 57 FCR 119] (at 124), the gross sum 'can only be fixed broadly having regard to the information before the Court'; in Hadid v Lenfest Communications Inc [[2000] FCA 628] (at [35]) it was said that the evidence enabled fixing a gross sum 'only if I apply a much broader brush than would be applied on taxation, but that ... is what the rule contemplates'. The approach taken to estimate costs must be logical, fair and reasonable (Beach Petroleum NL v Johnson (at 123); Hadid v LenfestCommunications Inc (at [27])). The power should only be exercised when the Court considers that it can do so fairly between the parties, and that includes sufficient confidence in arriving at an appropriate sum on the materials available (Wentworth v Wentworth (Court of Appeal, 21 February 1996, unreported) per Clarke JA)."
[69]
[29] The primary judge properly sought to prevent the exercise of fixing costs from developing into an assessment or, worse still, something akin to a full blown taxation of costs, but the process nevertheless occupied about one and a half days overall (spread over three separate days when court time and the parties were available). Amos raised some particular points in opposition to the cost assessor's assessment, such as whether the case had justified senior and junior counsel, whether some particular items were not properly charged, and whether GST was recoverable; but Amos did not need to inspect Monsour's solicitor's file to make his argument on those points. Furthermore, in the cross-examination of the costs assessor Amos's solicitor took advantage of his liberty to explore the nature and extent of the work done by Monsour's solicitor and the reasonableness of the charges for that work.
[70]
[30] In these circumstances, and as the primary judge observed,[19] Amos's solicitor was given more latitude than procedural fairness demanded. This second basis of Amos's proposed appeal also lacks sufficient merit to justify the grant of leave to appeal.
[71]
[31] The application for leave to appeal should be refused, with costs.
[72]
[32] I do not accept Monsour's contention that the grounds upon which leave is sought are so lacking in substance as to justify an order that the costs be assessed on the indemnity basis, but I consider that it is appropriate for this Court to fix the costs. Counsel for Amos submitted that the costs should be assessed in the ordinary way, but he was unable to advance any particular reason why the Court should not exercise its power to fix costs. The long and sorry history of this litigious saga strongly suggests that it is very desirable to avoid the further delay, costs and inconvenience which might follow an order that costs be assessed.
[73]
[33] I would refuse leave to appeal, order that the applicant pay the respondents' costs of and incidental to the application for leave to appeal in an amount to be fixed by the Court, and direct that, unless the parties have earlier notified the Registrar of an agreed amount for costs:
[74]
(a) Within 10 days the respondents file and serve upon the applicant written submissions, verified by affidavit where practicable, directed to establishing that the amount of costs claimed by the respondents is a realistic estimate of the amount of costs which would be assessed on the standard basis.
[75]
(b) Within seven days thereafter, the applicant file and serve upon the respondents any submissions the applicant wishes to make concerning the amount of costs to be fixed by the Court, verified by affidavit where practicable.
[76]
(c) Except with the prior leave of the Registrar, each party's submissions are to be in double-spacing and are not to exceed three A4 pages in length rendered in type no smaller than 1.8mm (10 point) and each party's affidavits (including exhibits) are to be in double-spacing and are not to exceed 10 A4 pages in length rendered in type no smaller than 1.8mm (10 point).
[77]
(d) Except with the prior leave of the Registrar, neither party is authorised to make submissions in response or in reply.
[78]
[34] DOUGLAS J: I agree with the reasons for judgment of Fraser JA and the orders proposed by his Honour.
[13] See s 253 of the Supreme Court Act 1995: "No order made by any judge of the said court by the consent of parties or as to costs only which by law are left to the discretion of the judge shall be subject to any appeal except by leave of the judge making such order." It was not contended that this provision applied to appeals from judges of the District Court.