Anglo-Italian Holdings Pty Ltd v Varallo [2005] VSCA 257

3 The respondent brought a proceeding in the County Court seeking entitlements pursuant to the Accident Compensation Act 1985 from the appellant, the employer of her late husband. The appellant and respondent compromised the County Court proceeding on terms which included an order that the appellant pay the respondent's costs of the proceeding on County Court Scale D.

4 In her itemised bill of costs, the respondent claimed an amount in excess of $8,700 for the photocopying of hospital records and court books at the scale rate of $1.70 per page. The appellant objected to those parts of the bill, on the basis that the copying charges were excessive having regard to the rates at which commercial copying firms could have copied and collated the documents[1]. The appellant argued that the respondent should recover for no more than the first copy of those documents at $1.70 per page and for all subsequent copies at a commercial rate of 7 cents per page.

5 The taxing registrar disallowed the objection and allowed the respondent's photocopying claim in full. That decision was upheld on review by a County Court judge.

6 The appellant claims that the registrar's reasons involved the mechanical adoption of the scale rate and thereby an impermissible fettering of the relevant discretion. It claims that by failing to find that the registrar had misapplied or failed

to apply his discretion, the primary judge fell into legal error.

Preliminary matters

7 A preliminary question arose as to whether the appellant requires leave to bring this appeal. The appellant initially issued a summons seeking leave to appeal from the primary judge's decision. The application for leave came on for hearing before Phillips, J.A. and Dodds-Streeton, A.J.A. on 16 April 2004. On that occasion, the court referred the leave application to the court hearing the appeal.

8 Before us, the appellant argued that it did not require leave to appeal because this is an appeal on a question of law under s.52 of the Accident Compensation Act 1985 ("ACA") and may be brought as of right. I agree, for the following reasons.

9 The orders the subject of this appeal are interlocutory. Ordinarily, leave is required to bring such an appeal to this court, by virtue of s.74(2D) of the County Court Act 1958.

10 However, s.52(9) of the ACA provides that s.74 of the County Court Act does not apply to an appeal on a question of law against a judgment or order of the County Court in proceedings under the ACA. The County Court proceeding was concerned entirely with the respondent's claim for statutory compensation under the ACA, and was within the County Court's exclusive jurisdiction conferred by s.39(1)(a) of the ACA. Accordingly, giving the words in s.52(9) their ordinary and natural meaning, leave is not required in this case.

11 We were referred to the decision of this court in CGU Workers Compensation (Vic) Ltd v Rees[2], a case also involving an appeal under s.52 of the ACA in relation to the taxation of costs. Batt JA, with whom the other members of the court agreed, noted in passing[3] that the appellant in that case had sought and obtained leave to appeal prior to the hearing of the appeal. However, CGU does not stand as authority for the proposition that leave is in fact required in such a case; it seems that the correctness of the appellant having sought leave simply was not raised in that case.

12 The appellant also sought leave to deliver an amended notice of appeal. At the hearing of the appeal, we reserved the question of leave to amend. Having considered the nature of the proposed amendments and heard argument from both sides, I would grant leave to amend in accordance with the second proposed amended notice of appeal.

Principles governing the review of a taxation of costs

13 Although a number of earlier cases[4] had suggested that a taxing officer's discretion as to quantum should never be interfered with, in Australian Coal and Shale Employees' Federation v The Commonwealth[5] Kitto J held that the proposition was not an absolute one[6]. His Honour's comments have been approved and applied in subsequent decisions[7].

"In appeals as to costs, the principles to be applied are these. The court will always review a decision of the 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 ... 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."

The registrar's decision

14 In his written reasons[8], after noting that the current scale allowance was $1.70 per page, the registrar simply relied upon and annexed his own reasons for decision in the earlier, unrelated matter of Harris v State of Victoria[9], which he noted had themselves been upheld on a review by a judge[10].

15 In Harris, the registrar allowed a claim for the multiple copying of court books at the then-applicable scale rate. In coming to the conclusion in Harris that the copying claim was "a necessary and proper cost", he noted the following:

(a) There were only five copies of the court books, with 1012 pages in each;

(b) The parties had agreed on joint court books;

(c) The scale allowance for photocopying also includes sorting and collating; it is not the practice of the County Court taxing registrars to allow for such items as an addition to copying;

(d) Had there been more than ten copies in the Harris case, he would have given consideration to the practice in the Supreme Court[11].

16 I agree with the appellant that the registrar appears to have simply applied the scale rate in a formulaic manner, without considering its appropriateness to the particular circumstances of this case. He appears to have done so in the apparent belief that he was bound to do so by the Harris decision. In doing so, he fettered his discretion or failed to exercise his discretion at all.

Review by the primary judge

17 Additional affidavit material was prepared for the review of the registrar's decision. The appellant relied upon a further affidavit which exhibited additional quotations for the cost of commercial copying. They disclosed copying rates of between 5 and 20 cents per page, which would result in total copying charges for the hospital records and court books in the vicinity of $2,700 to $3,200. The respondent relied upon an affidavit by her solicitor, in which he deposed that he had personally selected, collated and photocopied all documents for the purposes of the proceeding.

18 The application for review was brought pursuant to rule 63A.57[12]. The primary judge commenced by referring to various authorities, including Australian Coal and Shale Employees' Federation v The Commonwealth, for the proposition that, on a review of a discretionary decision, there is a strong presumption in favour of the correctness of the decision appealed from[13]. I do not accept the appellant's submission that the primary judge applied the wrong legal principles in this regard.

19 His Honour went on to consider in some detail the circumstances surrounding the preparation of the copy documents in this case. This part of his reasons will be dealt with in more detail, after I have discussed the relevant legal principles.

20 Although at one stage[14] the primary judge appeared to have referred to scale costs as "the proper amount" specified by the judges, it seems from a reading of his reasons as a whole that he understood that the taxing officer had a discretion in each case whether to allow the scale amount in full or in part.

Relevant costs principles

21 The costs were to be taxed on a party and party basis[15]. Rule 63A.29 provides that:

"On a taxation on a party and party basis all costs[16] necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed."

22 That rule reflects the general principle that "the luxuries of litigation must be paid for by those who indulge in them, the necessaries only are to be paid for by the losing side."[17] The test has been described as being: "Would it be necessary or proper for a reasonably prudent man, endeavouring to get justice, but endeavouring to get it without any undue expenditure of money, to incur the expense in question?"[18]

23 Rule 63A.29 addresses whether the cost was necessarily or properly incurred, not whether the work was necessarily performed. Unnecessary work is expressly dealt with in r.63A.70, which permits the disallowance of the cost of any work which was not necessary. Here, there is no suggestion that it was not necessary for the photocopying to be done, only that it ought to have been done in a more cost-effective manner.

24 The starting point in terms of quantum is the scale which is contained in appendix A[19]. The preamble to the relevant appendix is in the following terms:

"SCALE OF COSTS

Scale of fees and costs to be paid to counsel and practitioners between party and party and between practitioner and client.

The judge, registrar or other taxing officer shall have full discretion to allow any fee, cost or disbursement in full, or in part.

In appropriate cases should the judge, registrar or other taxing officer consider the fee, cost or disbursement provided by the scale to be inadequate to compensate for the work actually done, the judge, registrar or other taxing officer may allow an appropriate fee which in the circumstances is considered to be fair and reasonable."

25 The respondent argues that the scale can only be departed from if it is inadequate. I do not agree. The various scale rates may be regarded prima facie as being "proper" amounts for the work covered by them, but that assumption may be displaced having regard to the circumstances of a particular case. The preamble[20] says that the taxing officer has "a full discretion" to allow a fee, cost or disbursement in full "or in part." The latter words must be a reference to a discretion to allow less than the scale amount.

26 Alternatively, the respondent suggests that if there is any discretion to award less than the scale amount, that only arises in relation to what are said to be discretionary items, such as item 21 which is "instructions for brief." It is true that item 21 specifies an allowance "not exceeding" the specified amounts, whereas many other items, such as the photocopying item, do not include the words "not exceeding". However, item 21 appears to involve some doubling up with the wording in the preamble; for example, it contains a specific reference to the taxing officer's power to increase the allowance, and in that sense merely repeats the general power identified in paragraph 3 of the preamble. I would not read down the very broad discretion identified in the preamble by reference to the wording in item 21.

27 Item 26(c) is the scale item relevant to the copying of documents and at the relevant time provided a rate of $1.70 per page for "any necessary carbon, photo or machine made copy - where not otherwise provided for."

28 The judges of the County Court having fixed $1.70 per page as the scale amount, there was no real dispute that it was prima facie a proper amount. Indeed, the appellant has not challenged the application of the scale rate to many of the photocopying items in the respondent's bill of costs.

29 No doubt the high scale rate reflects at least in part the overhead costs and attendance costs involved in copying documents. However, in the case of multiple copying, at some point it will be more economical for the documents to be collated and delivered to a commercial copier.

30 The appellant relied upon a number of reported cases which have considered whether scale copying charges were necessary or proper. Not all of them concerned multiple copies or large volume copying.

31 Cayron v Russell[21], a late 19th century case, involved carbon copies which were made at the same time as the original document, but for which it was sought to recover full scale costs for manuscript copies. Hodges J disallowed the scale costs on the basis that they were not "reasonable". Relevantly for our purposes, his Honour observed that if there is a cheap way of making copies, parties must not resort to the expensive mode of making copies[22].

32 In Bennett v Seaman[23], a judge of the ACT Supreme Court held that it was not necessary or proper for a solicitor's clerk to have photocopied 2,478 pages for counsel's brief, when it could have been sent to a commercial copier at a much cheaper rate. The learned judge disallowed recovery at the scale rate, which he said resulted in an "excessive profit" element.

33 The appellant also sought to rely on the decision in Re Central Queensland Developments Pty Ltd[24]. The charging of $1.00 per page (being the relevant scale amount) for 29,646 pages of documents for counsel's brief was held to be "redolent of overcharging" and thereby gave rise to such "special circumstances" as to enable the court to reopen a solicitor's costs agreement and order the costs to be taxed. The essence of his Honour's concern seems to have been that the solicitor had not drawn his client's attention to the possibility of having documents of such "enormous magnitude" copied commercially, thereby depriving the client of the opportunity to consider what the client wanted to do. Such consultation may not be an appropriate consideration in a dispute as to party-party costs.

34 What will be reasonable or proper will obviously vary from case to case. The exercise of the discretion whether or not to allow copying at scale rate should not be approached in a formulaic manner. A non-exhaustive list of factors which may be relevant in a particular case include:

(e) For whom the copies are being made[25];

(f) Whether the documents have any particular commercial or personal sensitivity;

35 In relation to the number of copies to be made, item 24 of the Supreme Court scale draws the following distinction with respect to multiple copies:

"Where more than ten copies of the same document are required, the amount actually and properly paid to a printer (in addition to all necessary attendances on the printer), or, if reproduced by the solicitor, the equivalent amount or such lesser amount as the Taxing Master considers fair and reasonable having regard to commercial rates for similar services, shall be allowed."

36 There are several reasons why it would not be appropriate for a taxing officer in the County Court to draw an arbitrary line at ten copies, as the registrar seems to have been minded to do in Harris and this case. First, the judges of the County Court have chosen not to include an item equivalent to item 24. Secondly, what may be reasonable or proper in the context of a larger or more complex Supreme Court proceeding may not be so in the context of all County Court proceedings. Thirdly, the lack of a relevant preamble in the Supreme Court appendix may explain at least in part the inclusion of item 24. Finally, even in the Supreme Court, item 24 has not been treated as precluding the recovery at higher than commercial rates when more than ten copies are made[26].

37 I turn to consider the specific documents which were copied in this case, in the light of those general principles.

The hospital records

38 Over a period of almost two weeks, the respondent's solicitors prepared and provided various copy documents to two medical experts, to the respondent's senior and junior counsel, and to the appellant's solicitors. Each of those five persons received a copy of the same 465 pages of the records held by St Vincent's Hospital in relation to the respondent's late husband[27]. Each of them also received some additional documents which were not sent to all of the others[28].

39 There is no dispute that it was appropriate for the medical records of the respondent's late husband to be copied and provided to the medical experts, counsel and opposing solicitors. Nor is it disputed that the documents were in fact copied by the respondent's solicitor on different dates as part of the compilation of different bundles of documents for different purposes.

40 The primary judge noted that the work of a solicitor in preparing a case is an ongoing task that cannot necessarily be neatly worked out in advance.

"In my opinion the solicitor in this matter was entitled to photocopy the documents, including the hospital records to be sent to the medical experts, in his office at the time he came to carry out the next task necessary in the preparation of his client's case, and to be paid the rate provided by the scale for doing so. I would allow [the relevant] items ..."[29]

41 His Honour came to a similar conclusion in relation to the copying of documents, including medical records, for inclusion in briefs to counsel, and the subsequent copying of documents for service on the appellant's solicitors.

42 In my opinion, it has not been demonstrated that the primary judge committed any relevant error in allowing the cost of copying the medical records in the solicitors' office.

The court books

43 The position in relation to the court books is more problematic, as the learned primary judge himself noted.

44 The respondent claimed $1.70 per page for five copies of the 3-volume court book, which contained a total of 707 pages. The copies were for filing and serving, for senior and junior counsel and for the respondent's own solicitor. The appellant only disputes the claim in respect of the second to fifth copies. Unlike the hospital records, the second to fifth copies of the court books were all prepared at the same time.

45 The primary judge said that it would not be unreasonable for the respondent's solicitor to have photocopied and paginated two copies in his office, retaining one to ensure that the work which went into compilation was not wasted by mishap, and sending the other off for commercial copying. He said that the argument in favour of that approach would be stronger the greater the number of court books to be copied. He noted that in this case there were five copies to be made.

"While there are grounds to consider that the saving to be made by having three of those copies photocopied by a printing agency would be reasonable, that is not a basis for interfering with the decision of the taxing registrar. I am not satisfied that there are strong grounds to show that he was wrong in the exercise of his discretion. On the contrary, it is clear that he gave consideration to the context in which the solicitor had the photocopies prepared and the purposes for which they were prepared. He took guidance from the Supreme Court rule requiring copying by a printer when the number of copies exceeded ten ... I do not accept the [appellant's] submission that the registrar's decision involved "a mechanical application of the scale rate." Nor do I agree that he treated the scale rate as being "mandatory", and did not, in effect, exercise discretionary power at all."

46 I disagree with the primary judge's finding that the registrar had not fettered his discretion or failed to exercise it at all. In my opinion, the registrar did apply the scale rate in a formulaic manner and without regard to the individual circumstances of the case. There is simply nothing in the materials before us to suggest that the registrar gave any consideration to "the context in which the solicitor had the photocopies prepared and the purposes for which they were prepared." His Honour should also have held that it was inappropriate for the registrar to simply rely on item 24 of the Supreme Court scale for guidance as to what was reasonable.

47 It seems that bulk photocopying of court books is now a common feature of County Court litigation. We were informed that it is now standard practice for court books to be ordered in civil proceedings in that court[30]. Furthermore, a trial will not ordinarily proceed until any required court book has been filed and served[31].

48 Given those matters, taxing officers ought to turn their minds to whether, in the circumstances of each case, it is necessary or proper to have multiple copies of court books made in the solicitors' office or by a commercial copier.

49 The respondent's senior counsel submitted that a charge of $1.70 per page could be justified by reference to r.34A.29, which precludes a party, save with the leave of the court or by consent, from tendering in evidence at trial "a document a copy of which the party was required to include in the court book of the party but which the party did not include." It was suggested that this rule required court books to be copied in-house and with particular care, because otherwise parties might be shut out from relying on documents due to photocopying errors or omissions. I do not accept this submission, for several reasons. Whilst the rule uses very general language, in my opinion it is concerned with ensuring that all documents required by the rules are included in the court book index and not omitted for either accidental or forensic reasons. I would be loathe to assume that any County Court judge would prevent a party from tendering a document which had been listed in the court book index, but not reproduced in whole or in part due to a photocopying error. Furthermore, I would not be prepared to simply assume that in-house copying is necessarily more accurate than copying performed by a commercial copier.

50 In this case, the learned primary judge ought to have exercised his own discretion as to the court book costs, as the registrar had failed to do so. Having expressed the clear opinion that it would have been reasonable in this case to have had three of the copies of the court book made by a commercial copier, and having articulated no real argument to the contrary, the primary judge ought to have concluded that it was only necessary and proper to allow two copies at the scale rate and the remaining copies at a commercial rate. Accordingly, I would allow the appeal in relation to the costs of copying the third to fifth copies of the court book.

51 Although the principle raised by this case is of general importance, the amount in dispute is relatively small. In order to avoid the incurring of any further costs by remitting the matter back to the County Court, I would set the commercial rate for those three copies at the highest of the relevant commercial rates, namely 20 cents per page. In doing so, I am not suggesting that this is a rate which this court would always regard as the most appropriate rate, merely that it is an efficient and pragmatic rate to set in the present circumstances.

[1] The appellant also objected to the copying charges for the court books on the grounds that they were unnecessary, as no order for court books had been made. That objection was not pressed before us.

[2] (2003) 6 VR 277 per Winneke P, Phillips and Batt JJ.

[3] At [8].

[4] For example: Alsop v Lord Oxford [1833] EngR 606; (1833) 1 My & K 564, 39 ER 794; Re Catlin [1854] EngR 481; (1854) 18 Beav. 508, 52 ER 200; In the Estate of Ogilvie (1910) P 243; Coon v Diamond Tread Co (1938) Ltd (1950) 2 All ER 385.

[5] [1953] HCA 25; (1953) 94 CLR 621.

[6] At 628.

[7] For example, Magna Alloys & Research Pty Ltd v Coffee (No 2) [1982] VicRp 10; [1982] VR 97 at 102 per Fullagar J.

[8] Provided upon request pursuant to r.63A.57(6).

[9] Case CI-00-02435.

[10] The judge in Harris apparently provided no written reasons for his decision.

[11] Specifically in relation to item 24 of the Supreme Court scale, which will be discussed shortly.

[12] All rules referred to in these reasons are from the County Court Rules, unless otherwise stated.

[13] His Honour also referred to Magna Alloys & Research Pty Ltd v Coffee (No 2) [1982] VicRp 10; [1982] VR 97 and Prudential Finance Ltd v Davander Nominees Pty Ltd [1992] VicRp 32; [1992] 1 VR 468.

[14] In the second paragraph on page 6 of his reasons, his Honour said "Whether [the scale amount] is too much or too little is something about which opinions may vary, but it is an amount which is progressively reviewed and adjusted over time and represents what the judges have considered to be the proper amount to be allowed for the specified work."

[15] Rule 63A.31 of the County Court Rules sets out the general rule that, except as otherwise provided by the rules or an order of the court, costs are to be taxed on a party and party basis.

[16] The definition of "costs" includes disbursements: r.63A.01(1)).

[17] Donohoe v Britz (No 2) [1904] HCA 25; (1904) 1 CLR 662 at 666 per Barton J; see also Re Lamrock, Brown and Hall [1908] VicLawRp 37; (1908) VLR 238; Stanley v Phillips [1966] HCA 24; (1966) 115 CLR 470.

[18] In Re Malleson, Stewart, Stawell & Nankivell [1931] VicLawRp 22; [1931] VLR 127 at 134, quoted with approval in Magna Alloys & Research Pty Ltd v Coffee (No 2) [1982] VicRp 10; [1982] VR 97 at 103.

[19] Rule 63A.34A(1)(a) requires that, subject to the provisions of the rules, all costs shall be taxed according to the scale of costs in appendix A as in force at the time the costs were incurred. The relevant appendix in this case is the appendix introduced by County Court (Chapter 1 Amendment No.8) Rules 2002, which commenced on 1 January 2003.

[20] The preamble has no equivalent in the Supreme Court Rules, or the version of the Federal Court Rules which was before the court in Fat-Sel Pty Ltd v Brambles Holdings Ltd (1985) 6 FCR 440.

[21] (1899) 25 VLR 379.

[22] At 381.

[23] (1993) 117 ACTR 1 per Higgins J.

[24] [1988] 2 Qd R 476 per de Jersey J.

[25] For example, greater care may be required in copying documents for filing and for service than for use by a party's own solicitors or counsel.

[26] See for example Prudential Finance Ltd v Davander Nominees Pty Ltd [1992] VicRp 32; [1992] 1 VR 468.

[27] St Vincent's Hospital had charged the respondent's solicitors $114.20 to provide a copy of those medical records.

[28] The medical experts received 524 and 483 pages respectively, counsel both received 778 pages and the appellant's solicitors received 540 pages.

[29] At page 6.

[30] The various rules contained in Part 7 of Rule 34A prescribe the use and contents of court books.

[31] Rule 34A.27.