Costs - Review of taxing officer's decision by a judge - Late application for adjournment by reason of absence of taxing officer's reasons - Adjournment refused

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175

Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181

Gibson v Commonwealth of Australia [2002] WASCA 323

May v Smith [2001] WASC 352

W J Green & Co (1984) Pty Ltd v Tace Pty Ltd [No 3] [2009] WASC 165

(This judgment was delivered extemporaneously on 9 November 2010 and has been edited from the transcript.)

1 I am dealing with the defendants' chamber summons of 2 July 2010 seeking a review of a taxation outcome on the plaintiffs' bill of costs taxed under indemnity orders of Master Sanderson made 15 June 2009.

2 The learned Master's decision in W J Green & Co (1984) Pty Ltd v Tace Pty Ltd [No 3] [2009] WASC 165 resulted in orders being made against the defendants which imposed the sanction of indemnity costs - based upon Master Sanderson's assessment of conduct and circumstances outlined in his reasons. Master Sanderson was highly critical of the defendants' conduct, particularly the third defendant. In particular, commencing from [17] in his reasons to [41], Master Sanderson identified a catalogue of conduct with which the defendants were associated, which he assessed as warranting the punitive sanction of orders for indemnity costs. I refer to, without citing, [14] of Master Sanderson's reasons.

3 In the wake of Master Sanderson's orders for indemnity costs in June 2009, the plaintiffs prepared a bill of costs for taxation. The bill was filed on 22 July 2009. An appointment for the taxation followed before Registrar Powell as taxing officer on 27 April 2010, at which time a taxation of the plaintiffs' bill proceeded. As is customary however, the bill of costs was not signed off by the taxing officer that day.

4 Shortly, thereafter a request was made on behalf of the defendants for the taxing officer to review his decision before signing off on a certificate completing the taxation process. The request invoked a review process by the taxing officer under O 66 r 53(1) of the Rules of the Supreme Court 1971 (WA) which provides:

A party who contends that the Taxing Officer has made an error in principle in allowing or disallowing any item or part of an item in a bill of costs taxed by him may, at any time before a certificate of taxation dealing finally with that item is signed, or at such earlier time as may, in the case be fixed by the Taxing Officer -

(a) deliver to the other party interested in the allowance or disallowance and carry in before the Taxing Officer, an objection in writing to the allowance or disallowance specifying in the objection by a list, in a short and concise form, the items or parts of items objected to, and the grounds and reasons for the objections; and

(b) thereupon apply to the Taxing Officer to review the taxation in respect of those items or parts.

5 The taxing officer on 18 June 2010 convened a further attendance by respective counsel for the parties before him. But he made no alterations to allowances in respect of the bill of costs as assessed and provisionally determined on 27 April 2010.

[T]he Taxing Officer shall reconsider and review his taxation in relation to the objections, and he may, if he thinks fit, receive further evidence in respect of the objections.

If so required by a party the Taxing Officer shall state in his certificate of taxation or by reference to the objection, the ground and reason of his decision on the objection, and any special facts or circumstances relating to his decision.

8 Here, those outcomes did not alter in terms of allowances under the plaintiffs' bill of costs submitted for taxation as between 27 April and 18 June 2010.

10 Order 66 r 55 permits a party, dissatisfied with a certificate of a taxing officer as to any item or part item that is objected to under r 53, to apply to a judge in chambers for judicial review as to items earlier objected to. Order 66 r 55(2) provides:

The Judge, if of opinion that the Taxing Officer has made an error in principle, may thereupon make such order to rectify the error as the Judge thinks just.

11 It is explicit that the judicial review under O 66 r 55(2) is confined to the identification and correction of errors of principle that have been the subject of identification by way of earlier objection to the taxing officer on the earlier requested review under r 53; see O 66 r 55(1). Clearly the review is not then a review by the judge afresh.

12 The review process to a judge envisaged under O 66 r 55 was sought to be invoked by the defendants' chamber summons filed 2 July 2010. The application was filed within a 14-day window allowed as to the certificate signed by the taxing officer on 18 June 2010.

13 The taxation process had allowed on the plaintiffs' bill an amount by way of costs payable to the plaintiffs by the defendants in the vicinity of $22,000. At this time I am advised by counsel that the taxed costs remain wholly unpaid. Moreover, they remain unpaid in circumstances where it was the underlying conduct of the defendants, heavily criticised in 2009 by the Master which caused the indemnity costs order against the defendants to be imposed in the first place.

14 The chambers summons seeking judicial review of the taxation outcome was duly listed for hearing on 9 November 2010. On 4 November 2010 the court received the defendants' written submissions (signed by counsel) and a list of authorities in support of the application for a judge's review of the taxing officer's decision of 18 June 2010. The defendants' written submissions carry the implicit representation that the matter was ready to proceed to argument and disposition at the special appointment set. The written submissions identify objections to the decision of the taxing officer in terms of what are characterised as unreasonable determinations against the paying party and also errors of principle as to allowances.

15 What has transpired is that yesterday (Monday, 8 November 2010) around the close of business for the day, I received through my Associate a communication sent from the solicitor for the defendants foreshadowing, for the first time, that the matter was not in a position to proceed today, on the basis that the reasons for decision of the taxing officer, Registrar Powell, orally delivered on 18 June 2010, had not yet been obtained by the defendants, and needed to be obtained in order for the review to proceed.

16 Let me immediately say as to those developments, that apart from advice as to an adjournment being extraordinarily late, it was also a somewhat surprising submission at the time. There is a practice in this court which establishes a need to obtain and provide to a judge conducting a review under O 66 r 55 the taxing officer's reasons. So much might be thought to be abundantly obvious from the term 'review' and the express reference to an error of principle in O 66 r 55(2). But if authority is necessary it is to be found in May v Smith [2001] WASC 352, a decision of Templeman J. That decision is mentioned in the commentary to vol 1 of Civil Procedure Western Australia at par 66.54.2, where the learned authors Kendall and Curthoys observe:

It is a regrettable omission for a practitioner to apply to a judge for a review without obtaining the taxing officer's reasons.

17 In preparing for today's appointment, I had occasion to look through the court file to obtain a copy of the transcript of the hearing before Registrar Powell for 18 June 2010 (the transcript refers to that hearing as having been continued from 27 April 2010). It is apparent from the transcript of 18 June 2010 that objection was raised to the learned Registrar by counsel for the taxing party against a review as was then proposed to the taxing officer - on a basis that there had been noncompliance by the defendants with the requirements of O 66 r 53(1) - by a failure to identify an objection to an item by reference to an error of principle sufficient to allow a review to the taxing officer to rationally proceed at that time. I refer, without quoting, to observations recorded in the transcript (ts 51) by the learned Registrar as regards an issue raised concerning the allowance sought under a time billing claim for 38.3 hours work by the plaintiffs' solicitors. The issue was raised with reference to the rate allowed and an exchange with counsel for the defendants at the time (Mr Galic). The Registrar refers to the Court of Appeal decision concerning costs, Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181(although it is misspelt in the transcript). The transcript records at ts 51 Mr Galic submitting, in answer to a question by the learned Registrar, '[n]o, I'm not quarrelling with that issue and that's not the issue here, in my submission', to which the learned Registrar is recorded as replying, '[w]ell, I can't understand what you are quarrelling about'.

18 From correspondence provided to me this morning, a request has belatedly been made by the solicitor for the defendants to the Registrar (taxing officer) seeking to obtain a copy of his settled reasons for decision of 18 June 2010. It is apparent from the transcript (ts 54) of 18 June 2010 that after hearing submissions by counsel for the taxing party (the plaintiffs) that there was an objection by the plaintiffs to the defendants' review of the taxing officer's decision on the first taxation of the bill on 27 April 2010. Reasons were delivered upholding the objection. I would have expected that the terms of the oral reasons for decision given at the time by the taxing officer would have been at least noted by the solicitor for the defendants. I would also have expected that notes of the taxing officer's reasons for decision would then have been provided to counsel for the defendants, as part of his brief, being material indispensable to counsel's proper preparations in respect of an application seeking a judge's review by O 66 r 55, where it is required under r 55(2) that error of principle be identified. None of that seems to have occurred.

19 Communications sent on 5 November 2010 by the solicitor for the defendants to the Associate to Registrar Powell, advised:

It has been pointed out to us by counsel who will be appearing on Tuesday, Mr David Garnsworthy, that we will require written reasons from Registrar Powell and until we have those reasons, next Tuesday's hearing is most likely to be adjourned.

We would be grateful if we could receive written reasons from Registrar Powell. We apologise for the late notice. If it's not possible to receive written reasons before next Tuesday's hearing (as we anticipate), then Tuesday's hearing will most likely need to be adjourned.

20 The Registrar immediately responded (the same day) to the defendants' solicitor in these terms:

This is the first time I have become aware that you are applying to a Judge and require those reasons, I assume under Order 66 rule 55, for that taxation to be reviewed.

I am not in a position to drop everything to accede to your request.

There is already a transcript of the hearing on 18 June 2010 and an unedited draft reasons. You may have a copy of the former but not the latter. If you do not have a copy of the draft reasons, you may obtain a copy from the Central Office of the Court. If I do not hear from you by 10 am Monday 8 November 2010 to the contrary, I shall proceed to edit the draft reasons and provide copies to the parties.

Order 66 r 54(2) provides that if so required by a party the Taxing Officer shall state in his certificate or by reference to the objection the ground and reason of his decision on the objection.

There was no such requirement by you and no such statement was included in my certificate (the signed allocator).

There may be a query on whether those reasons can now be required. I have no objection to providing them but I do so subject to any objection by the Plaintiff whether I have the power to do so after the allocator has been signed.

21 I have also seen in my preparation for this hearing the draft reasons for decision of the learned Registrar as taxing officer on 18 June 2010. They are, of course, presently unsettled and unedited. They are to be assessed by reference to the passing correspondence of 5 November 2010 as to their unsettled present status.

22 The foregoing is the context in which I evaluate the defendants' application for an adjournment of today's hearing.

23 Fundamentally, an application to a judge seeking a review pursuant to O 66 r 55(1) is limited in the scope of the review undertaken. The envisaged process is not in any sense a review de novo. Rather, it is a review confined to an examination directed at ascertaining whether or not the already reconsidered decision of the taxing officer contained an error of principle. A review by a judge under O 66 r 55(1) is no occasion for new points of challenge to emerge, or for issues not raised to the taxing officer or for points inadequately argued before the taxing officer to be re-ventilated afresh. Obviously, taxing officer's 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 am extremely limited one. See the observations by EM Heenan J in Gibson v Commonwealth of Australia [2002] WASCA 323.

24 A number of considerations are against acceding to the application for the adjournment sought today by the applicants/defendants. First, the application is made in the underlying context of an indemnity costs order imposed by way of sanction against the conduct of the defendants. The force of an intended sanction would be undermined by an adjournment, since the amount of the costs allowed under the bill, which currently stand settled in the order of $22,000, will likely remain unsatisfied.

25 Second, the recent solicitor correspondence of 5 November 2010 to Registrar Powell to which I have referred, seems to be a curious and late request in the extreme, particularly when the defendants' chamber summons seeking a judge's review of the taxing officer's certificate was issued as long ago as 2 July 2010.

26 Third, a last-minute request for an adjournment of the hearing at a special appointment draws upon and wastes limited resources of the court. The High Court, in its decision Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 has recently emphasised that the concept of prejudice extends more broadly than just as a consideration arising between particular participants in litigation. There are wider policy concerns in respect of other parties in the system kept waiting for hearings, bearing in mind the limited resources of the judicial system. Those persons are negatively and unnecessarily impacted against by wastage carried under unnecessary adjournments arising in circumstances where court rules have not been complied with.

27 A final consideration against the adjournment of the present application is that the processes of review to a judge allowed by O 66 r 55(1) require there to be a challenge by reference to error of principle by the taxing officer. This review is framed on a narrow basis, by reference to a precise identification of an alleged error of principle. The alleged error of principle is to be assessed by reference to the taxing officer's reasons for decision. What is envisaged has not been done here. It is an obvious failure not to have provided the court with the reasons of the taxing officer at a much earlier time - bearing in mind the defendants' chamber summons was filed on 2 July 2010. For a point about absence of reasons to emerge only on the day before the date fixed for the special appointment, is wholly inexcusable. By that remark I do not intend a criticism of counsel for the defendants, who did his best (valiantly) to secure an adjournment of the application on his instructions. But overall, there has been such a derailment of the limited review process before a judge envisaged under O 66 r 55, that to accede to an adjournment at this late point would be positively contrary to the interests of justice. I cannot allow this to occur. On that basis, I refuse the adjournment.