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[2009] VSC 91
Supreme Court of Victoria
2009-03-20
BEACH J
Original judgment source is linked above.
COSTS - Review of orders of the Taxing Master - Party/party costs - Relevance of retainer - Costs awarded by way of indemnity for costs incurred by successful party - Sections 86 and 91 Legal Practice Act 1996 - Section 3.4.17 Legal Profession Act 2004 - Rule 63.57 Supreme Court (General Civil Procedure) Rules 2005.
**1 On 4 September 2003, Mr Gabriel Kuek, the appellant, brought proceedings in the Magistrates' Court against Devflan Pty Ltd and Mr Ljubomir Nikolovski, the respondents. The claim was for less than $4,000. The claim was dismissed by the Magistrate with costs. Mr Kuek then appealed on a question of law to this Court.[1] That appeal was dismissed by Balmford J on 18 May 2005.[2] Mr Kuek then appealed to the Court of Appeal. That appeal was dismissed,[3] save that an order for indemnity costs against Mr Kuek was set aside and Mr Kuek was ordered to pay the respondents' party/party costs of the appeal before Balmford J and the appeal to the Court of Appeal.
2 On 10 October 2007, the respondents' costs were taxed in the sum of $39,105.20. The appellant then sought a review pursuant to Rule 63.56.1. As a result of this review, a further sum of $375 was taxed off by the Taxing Master[4] on 8 February 2008. On 26 March 2008, the Taxing Master ordered there be no order as to the costs of this review. This order was made without the benefit of the respondents' submissions, which had been filed but had not found their way onto the Court file. Upon these submissions being drawn to the attention of the Taxing Master and upon hearing further argument, the Taxing Master then (on 29 October 2008) set aside his order of 26 March 2008 and ordered the appellant to pay 90% of the respondents' costs of the review up until 26 March 2008. On 12 November 2008, the appellant filed a notice of application to review the orders of the Taxing Master made on 8 February 2008 and 29 October 2008. This is the determination of that review.
3 In relation to the order of 8 February 2008, the appellant seeks to review the following items on the following grounds:**
"1. Items 1 to 276 inclusive [save for those items that have been disallowed], on the grounds that:
(a) ... the Court cannot be satisfied the total amount of $39,105.20 allowed did not exceed the Respondents' actual liability to their lawyers.
(b) the Appellant was denied natural justice and/or procedural fairness by the Respondents' refusal, neglect and/or failure to produce documents relating to their liability for legal costs and disbursements.
In place thereof, a total amount not exceeding the Respondents' actual liability to their lawyers.
In place thereof, allowances for only the items that were necessary or proper for the attainment of justice or for enforcing or defending the rights of the Respondents.
In place thereof, amounts as reasonably reflect the work actually done.
In place thereof, that the items be disallowed in full.
In place thereof, an allowance of $2,500.00."[5]
**4 In relation to the order made 29 October 2008, the appellant contends that the Taxing Master's discretion "miscarried by reasons of the errors he committed when arriving at his orders of 8 February 2008". In lieu of the 29 October 2008 order, the appellant seeks an order that the respondents pay the appellant's costs of the review.
5 For the reasons given below, the appellant's application for review will be dismissed and the orders made by the Taxing Master on 8 February 2008 and 29 October 2008 will be confirmed.**
Principles to be applied in conducting the review
6 Rule 63.57 of the Supreme Court (General Civil Procedure) Rules 2005 provides:
"(1) An order of the Taxing Master under Rule 63.56.1 may be reviewed by a Judge of the Court.
(2) Where any party interested objects to an order of the Taxing Master under Rule 63.56.1, a Judge of the Court may on the application of that party review the order if the Taxing Master has given reasons under paragraph (7) of that Rule.
(3) An application under paragraph (2) shall be made by notice.
(4) The notice-
(a) shall state by a list each item in the bill in respect of which the party objects to the order of the Taxing Master on the review; and
(b) shall also state specifically and concisely the grounds of objection to that order and the order sought in its place.
(5) The notice shall be filed, a copy lodged with the Taxing Master and a copy served on each party interested within 14 days after the making of the order of the Taxing Master or the giving of reasons, whichever is the later.
(6) On the review, unless the Judge of the Court otherwise orders-
(a) further evidence shall not be received;
(b) the party giving notice shall not raise any ground of objection not stated in the notice.
(7) On the review, the Judge of the Court may-
(a) exercise all the powers and discretions of the Taxing Master with respect to the subject matter of the review;
(b) confirm, set aside or vary the order of the Taxing Master;
(c) remit any item in the bill to the Taxing Master;
(d) make such other order as the case requires.
(8) Except so far as a Judge of the Court or the Taxing Master otherwise orders, a review under this Rule shall not operate as a stay of execution or of proceedings under the order of the Taxing Master to which the review relates."
"Argument was addressed to me on the general topic of the attitude which ought to be adopted, on an application such as the present, to decisions of the taxing officer on questions of quantum. No doubt there are to be found, in some of the cases on the subject, statements to the effect that the discretion of a taxing officer will not be interfered with by a judge unless the taxing officer has erred on a question of principle, and not at all on a mere question of quantum; see, for example, Alsop v Lord Oxford; Re Catlin; In the Estate of Ogilvie; Coon v Diamond Tread Co. So, too, there are to be found in many of the cases decided upon the wider question as to the proper attitude of a court of appeal to any judgment given in exercise of a discretion, statements appearing to limit the function of the appellate court to correcting errors of principle. Yet in that wider area it is clear that such statements are not exhaustive. I shall not repeat the references I made in Lovell v Lovell to cases of the highest authority which appear to me to establish that the true principle limiting the manner in which appellate jurisdiction is exercised in respect of decisions involving discretionary judgment is 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. A degree of satisfaction sufficient to overcome the strength of the presumption may exist where there has been an error which consists in acting upon a wrong principle, or giving weight to extraneous or irrelevant matters, or failing to give weight or sufficient weight to relevant considerations, or making a mistake as to the facts. Again, the nature of the error may not be discoverable, but even so it is sufficient that the result is so unreasonable or plainly unjust that the appellate court may infer that there has been a failure properly to exercise the discretion which the law reposes in the court of first instance: House v The King. So, too, in my opinion, the exercise of the jurisdiction to review a taxation of costs is subject to no narrower limitation than that which was stated by Bovill CJ and Brett J in Hill v Peel: - 'A very wide discretion must necessarily be left to the taxing officer, which must be exercised by him after a careful consideration of the particular circumstances of each case; and where, after properly considering the matter, the master has arrived at a decision, it lies upon those who impeach his decision to satisfy the Court that he is wrong. Where a principle is involved, the Court will always entertain the question, and, if necessary, give directions to the master; but, where it is a question of whether the master has exercised his discretion properly, or it is only a question as to the amount to be allowed, the Court is generally unwilling to interfere with the judgment of its officer, whose peculiar province it is to investigate and to judge of such matters, unless there are very strong grounds to shew that the officer is wrong in the judgment which he has formed'.
I take it to be true that the decision of the taxing officer as to quantum is generally speaking final, and that it must be a very exceptional case in which the Court will even listen to an application to review such a decision: In the Estate of Ogilvie. But the authorities as a whole (not omitting to notice White v Altrincham UDC, do not establish as an absolute proposition that a judge will never review a taxing officer's decision on a question of quantum only. Swinfen Eady LJ said in Slingsby v Attorney-General, after quoting the passage from Ogilvie's Case to which I have referred: 'The decision of the taxing master is not absolutely final, even on a question of quantum'; and so it has been held several times in Victoria, where the view has been accepted for many years that a taxing officer's decision on quantum will be corrected if the judge concludes that 'he has clearly made a mistake': In Re Melbourne Parking Station Ltd; House v Life Insurance Co of Australia Ltd; Dwyer v National Trustees Executors & Agency Co of Australasia Ltd (No 3); Carrazzo v Weyman; McCoughtry v Schrick; see also, Russo v Russo. I respectfully adopt the summary of the law on this matter which was made by Jordan CJ, with the concurrence of Harvey CJ in Eq and Street J, in Schweppes' Ltd v Archer. His Honour said: - '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; Clark, Tait & Co v Federal Commissioner of Taxation, 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'."[8]
8 I turn now to deal with the review so far as it concerns the order made on 8 February 2008.
9 Rule 63.57(5) requires a notice of application to review to be filed and served within 14 days after the making of the Taxing Master's order.[9] The application for review in relation to the 8 February 2008 order is out of time. In his affidavit of 16 March 2009, Mr Kuek deposes to the reason for not filing a notice of application to review in respect of the 8 February 2008 order within the 14 day time period. In essence, he chose not to do so because there were ongoing costs issues which resulted in the making of the orders of 26 March 2008 and 29 October 2008. Mr Kuek says that he thought "the statutory scheme reserved the right of review ... until after taxation had concluded"[10] and that he was "reinforced" in his view because he was "aware from past cases that superior courts had disapproved of applications that fragmented legal proceedings".[11] I have no reason to doubt Mr Kuek. Further, the respondents have not suggested any prejudice in permitting Mr Kuek's application in relation to the 8 February 2008 orders to be made out of time.[12] In any event, the correctness of the 8 February 2008 orders will be required to be examined in determining the correctness of the 29 October 2008 order. In the circumstances, I am prepared to extend the time within which to file and serve the application in relation to the 8 February 2008 orders to the date upon which the application was filed and served, namely, 12 November 2008.
**10 The challenge made to the Taxing Master's orders under this heading is based on the proposition that, because costs are given as an indemnity, it follows that a party cannot recover against the paying party more than the amount for which he is liable to his own solicitor. The arguments runs that if the respondents are not liable to their own solicitor in an amount that is at least equal to the amount of the party/party bill as taxed, then the bill should be taxed further so as to reduce its total to the amount for which the respondents are in fact liable to their solicitor. Support for this argument can be found in cases such as Irving v Gagliardi; Ex parte Gagliardi (No. 2),[13] Adams v London Improved Motor Coach Builders Limited,[14] Backhouse v Judd,[15] Johnson v Santa Teresa Housing Association[16] and Wentworth v Rogers.[17] In some of those cases, the principle underlying this aspect of the appellant's argument is referred to as "the indemnity principle".[18]
11 Before the Taxing Master, the appellant sought production of what he described as "the respondents' lawyers' retainer letters".[19] These were sought principally to advance an argument that, by s 86 of the Legal Practice Act 1996 and/or s 3.4.9 of the Legal Profession Act 2004, the respondents' solicitor was obliged to provide statutory disclosures to the respondents. If these sections were not complied with, then by the operation of s 91 of the Legal Practice Act and/or s 3.4.17 of the Legal Profession Act, the amount of costs chargeable by the respondents' solicitor to the respondents could be reduced "proportionate to the seriousness of the failure [to comply]".[20] The respondents resisted an order for production of the retainer letters before the Taxing Master. The Taxing Master did not order their production.
12 Before me, production was similarly resisted. Production was resisted on the following bases:
(a) First, it was said that the solicitor for the respondents is an officer of the Court and it should be assumed would not seek to recover more from the appellant than his own clients were obliged to pay him. This argument is not persuasive, as it would involve the solicitor being a judge in his own case as to whether the amount of the party/party bill exceeded his own clients' liability to him. If the appellants' underlying argument is a good one, then the issue should be determined by the Court, rather than by one of the solicitors for the parties.
(b) Secondly, it was submitted that the retainer letters were irrelevant. The answer to this submission is that whilst an examination of the retainer letters may in fact not disclose anything that alters the outcome of the taxation, the documents satisfy the test of relevance required for their production in that they are reasonably likely to add in some way or other to the relevant evidence in the taxation.[21] Put another way, the test of relevance required for production is satisfied if the documents relate to the subject matter of the proceeding.[22] Clearly, the retainer letters satisfy this test.
(c) Thirdly, production was resisted on the basis that the occasion for the production of the documents had passed. The respondents' argument was that if the appellant wished to argue that the retainer letters would show a liability of the clients that was smaller than the amount of the party/party bill, then this should have been done before the Court of Appeal. Reliance was placed upon authorities in which like issues had been raised before the judge hearing the trial, rather than the Taxing Master.[23] However, the mere fact that a party may seek to raise at trial an issue of the kind the appellant now seeks to raise does not foreclose the possibility of the matter being raised at taxation. Indeed, there are a number of cases where the indemnity principle was raised for the first time before a taxing officer.[24] Had Mr Kuek sought production of the retainer letters before the Court of Appeal for the purpose of making submissions concerning his liability as to costs, it is hard to imagine that the Court of Appeal would not have taken the view that this was a matter for taxation.
(d) Fourthly, production was resisted on the grounds that to permit the appellant to run an argument based upon s 91 of the Legal Practice Act or s 3.4.17 of the Legal Profession Act would be (at the least) inconvenient, requiring a potential taxation of a solicitor/client bill as well as a party/party bill. It was also put that any such taxation of the solicitor/client bill would not be permitted pursuant to s 101(2) of the Legal Practice Act.[25] However, such an argument does not preclude production - it merely foreshadows a basis for contending that an aspect of the appellant's underlying argument (but not the whole of it) arguably cannot be made out.[26]
(e) Fifthly, production was resisted on the basis that there are authorities where it has been held proper to award costs to a party notwithstanding the fact that the party did not have to pay costs to his or her solicitor (see for example Dyktynski v BHP Titanium Minerals Pty Ltd[27]). However, the fact that in certain cases (dependent upon their own facts) such orders have been made does not foreclose the possibility of the appellant successfully arguing that the present case is not one of those cases.
"However, in taxation proceedings in this Court, the claimant's solicitor is not required to produce the file. Furthermore discovery is not available in a taxation of costs."
**Reliance was specifically placed upon the fact that discovery is not available. This proposition (whilst undoubtedly true in the High Court) is beside the point in this case. Discovery was not sought either before the Taxing Master or before me. What was being sought was production of relevant documents at the hearing of the review by the Taxing Master. In any event, I note the decision of Smith J (with which I agree) in Ausvest Holdings Pty Ltd v Russell Kennedy (A firm)[30] wherein his Honour said[31] that the Taxing Master not only has a power to order specific discovery but can also order production of documents under rule 40.12.
13 As the retainer letters had the capacity to bear upon the amount of the appellants' liability pursuant to the party/party orders for costs made against him, they were relevant and I ordered their production. The respondents then produced letters from the respondents' solicitors to the respondents dated 19 November 2003, 27 November 2003, 26 November 2004, 10 June 2005, 17 August 2005, 23 May 2006 and 6 June 2006, together with a document headed "Retainer Costs and Fees Agreement" dated 21 November 2003 and signed by Mr Nikolovski. The letters were more than mere retainer letters. They dealt with the terms of the retainer and other matters. I permitted the respondents to redact from the letters those parts which I ruled to be irrelevant and privileged.[32] Counsel for the appellant submitted that I should not uphold the respondents' claims for privilege on the basis that the litigation the subject of the present dispute is now concluded. However, the privilege subsists notwithstanding any conclusion of the litigation and I rejected this submission. The appellant then tendered the redacted versions of the letters to which I have referred, together with the signed costs agreement.[33]
14 Notwithstanding the suggestion before the Taxing Master that an examination of the retainer letters might establish a failure to comply with the disclosure requirements of the Legal Practice Act and/or the Legal Profession Act entitling the appellant to seek to reduce his liability pursuant either to s 91 or s 3.4.17, upon production of the retainer letters no submission was made that they were in any way deficient or that their terms justified a reduction in the liability of the respondents to their own solicitor. Remembering that the reduction that might be imposed by s 91 or s 3.4.17 is from the solicitor/client liability of the client to the solicitor, before the appellant could avail himself of these sections, he would have to establish a deficiency of such seriousness to warrant a reduction from what the costs might tax at on a solicitor/client basis to an amount below what they might tax at on a party/party basis.[34] There being no deficiency in the respondents' solicitor's compliance with the statutory disclosure requirements, there is no basis for reducing the amount of the party/party bill pursuant to either s 91 or s 3.4.17.
15 Whilst the argument before the Taxing Master concerning the retainer letters centred on the possibility of a reduction in the amount of costs for failure to comply with statutory disclosure requirements, greater emphasis was placed before me by the appellant on the possibility that the retainer letters would disclose that the respondents were liable to their solicitor in a smaller amount than the amount of the party/party bill.[35] I have examined the retainer letters, the party/party bill and the signed costs agreement. Having examined these documents, I am unable to conclude that the total of the party/party costs as allowed by the Taxing Master is greater than the amount in which the respondents are liable to their solicitor. Insofar as it was submitted by the appellant that the respondents on the party/party taxation should be required to produce a bill in taxable form based upon the costs agreement, I reject this submission. There is nothing in the rules or the authorities governing issues of taxation that warrants such an approach. There is nothing in the costs agreement that suggests that the amounts that could properly be claimed by the respondents' solicitor for solicitor/client costs were, or were likely to be, less than any amount that might be recoverable for party/party costs. Indeed, in his letter of 17 August 2005, the respondents' solicitor noted that the costs of the appeal before Balmford J and the Court of Appeal, when taxed, would be likely to indemnify the respondents for only 60% to 70% of their actual costs.
16 As an alternative argument, the appellant contended that I should examine individual items in the bill and compare them with the amounts payable under the costs agreement. Specifically, I was referred to amounts in the bill for facsimile transmission (outgoing) and the receipt of facsimile transmissions. The items claimed and allowed in the bill (pursuant to the Supreme Court Scale) were $33 and $34 for each transmission and receipt. Under the costs agreement, outgoing facsimiles were to be charged $5 for the first page and $1 per subsequent page, and incoming facsimiles were to be charged $1 per page. It was contended by the appellant that many of the faxes would have been only a few pages and so should have been allowed at amounts significantly less than $33 or $34. The answer to this is that the principle that the respondents should recover in costs no more than their liability to their own solicitor does not mandate a line-by-line analysis of a party/party bill to see whether a particular item has been allowed at more than the same item might have been claimed under a costs agreement. The indemnity principle is "not to be applied rigidly". It is to be applied "flexibly and reasonably".[36] The very fact that the costs are calculated differently will lead, from time to time, to the possibility of different amounts being allowed in respect of the same matter. The shortfall involved in ordering party/party costs rather than solicitor/client costs is not to be exacerbated further by reducing individual amounts below the party/party scale merely because the particular way in which a costs agreement provides for the calculation of those costs produces an item from time to time that is costed at an amount less than the same would be costed on a party/party basis. It is to be remembered that the scale in the Rules only contains 48 items[37] and therefore some steps that might be taken by a solicitor do not receive any allowance under the scale.[38] There may be many reasons why a solicitor would agree to charge for some items referred to in the scale at an amount lower than the scale where he or she will also be charging the client in respect of amounts not mentioned in the scale. Provided that the client has a liability to the solicitor for an amount equal to or greater than the party/party bill, the indemnity principle is not necessarily infringed. In this case, having considered the appellant's arguments, I do not find that the indemnity principle has been infringed.
17 The complaint by the appellant that he was denied natural justice and/or procedural fairness by the respondents' refusal to provide the retainer letters before the Taxing Master now has no force, because those letters[39] were provided to him on this review.[40] For the reasons given above, the other complaint made by the appellant under this heading that "the Court cannot be satisfied the total amount of $39,105.20 allowed did not exceed the respondents' actual liability to their lawyers" cannot be upheld. It is not for the respondents on this review to prove that the amount of party/party costs ordered in their favour does not exceed their actual liability for costs. There is no reason to suppose that the respondents' actual liability for costs is less than the amount of the party/party bill as taxed. Further, the effect of the letters which form Exhibit 1 (the so-called retainer letters) is that the solicitor/client costs chargeable under the costs agreement will exceed the amount recoverable on a party/party basis. Additionally, there is nothing to suggest an intention by the respondents' solicitor to waive any entitlement he might have to be paid party/party costs should the respondents obtain such an order in their favour. The tenor of the correspondence is that whilst the respondents' solicitor was doing as much as he could to reduce the costs of the proceedings in the Supreme Court, costs would be chargeable on the basis that they were recoverable from the appellant.[41]
18 For the reasons given above, the complaint in relation to Items 1 to 276 inclusive relating to the respondents' actual liability is not made out.**
Ground 2: Items 17, 22, 68, 87, 98, 111, 151, 172, 195, 198, 207, 209 and 256
19 Items 17, 22, 68, 87, 98, 111, 151, 172, 195, 198, 207, 209 and 256 relate to facsimile transmissions. The amounts claimed were allowed on scale. The argument is that facsimile transmissions are not "necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed".[42] The suggestion by the appellant is emails, rather than faxes, could have been used. In his reasons for judgment of 8 February 2008, the Taxing Master dealt with the appellant's submissions as follows:
"32. All these items are claimed pursuant to the relevant scale of $33.00 and $34.00 for the transmission of documents by the solicitor for the Respondents to the Appellant by facsimile.
33. The previous Taxing Master allowed facsimiles as a matter of course on the basis that this had become the normal mode of communication and transmission of documents in modern litigation. Facsimiles have the advantage over ordinary mail by establishing an exact date and time of receipt and transmission.
34. The written submission of the Appellant mounts an argument that email also has the characteristics of being 'instantaneous, reliable, simple to use, does not impose a transmission charge and generates an electronic record of transmissions made. The technology is modern convenient and superior to facsimile machines'. By implication it is put that emails should have been sent instead of facsimiles. The scale of costs provides for letters and facsimiles but no email. The Respondents' written submission merely states that the previous Taxing Master consistently held that facsimiles between solicitors for the parties ought ordinarily be allowed on party and party taxation and that 12 of the 13 items were facsimiles to the Appellant and one to the Court.
35. It is correct that Appellant's objection relates to 13 facsimiles sent to him in the course of the litigation before Balmford J and the Court of Appeal. During the same period however the Appellant sent 23 facsimiles to the solicitor for the Respondents (items 19, 63, 84, 88, 91, 99, 117, 138, 140, 144, 153, 158, 160, 164, 169, 173, 175, 178, 182, 185, 187, 201, & 203). The solicitor for the Respondents also received 6 facsimiles from the Court (54, 64, 164, 168, 186, & 200) and sent 3 to the Court in return (items 58, 77 & 207). These figures underscore the conclusion that the use of facsimiles is one of the normal modes of communication in modern litigation. The question is whether it was necessary or proper for the Respondent to have sent these 13 facsimiles in the course of this litigation to the Appellant, in circumstances where the Appellant has chosen to communicate by facsimile with them. In my view the items objected to are proper and there is no variation on review."
20 I agree with these reasons. Consistently with the principles extracted in paragraph 7 above, there is no basis for overturning or altering the Taxing Master's conclusions in relation to these items. It follows that this ground of complaint fails.
21 The circumstances in which complaint came to be made about these items and the various rulings made in respect of them by the Taxing Master are set out in paragraphs [37] to [42] of the Taxing Master's judgment of 8 February 2008. The Taxing Master stated:
"37. These items relate to perusing and scanning documents. A perusal is a scale item (items 25 & 26). 'Scanning' is the term to describe a lesser amount allowed pursuant to the discretion to allow a lesser sum referred to in scale item 26. At the initial hearing on 17 August 2007 the Appellant submitted that the Respondents must produce time sheets or proof that the documents were read. I ruled at that time that the existence of such documentation was not necessary in order for me to consider what to allow for perusal and scanning of documents. The Appellant sought to re-open and re-argue this issue at the resumed hearing on 10 October 2007. I allowed the production of any supporting documentation on that date as I took the view that while the existence or otherwise of such documents was not critical to the allowance or otherwise of perusal items, the documentation, if it included time spent on the activity, could assist in whether to allow the perusal rate (higher) or a lower allowance for scanning.
38. The written submission of the Appellant contains two headings - 'Respondents' failure to produce file notes on 17 August 2007' and 'Allowance on the perusal rate erroneous'. The Appellant argues a denial of procedural fairness on the basis that as a result of me changing the ruling made on 10 October 2007, (that is, to one in the Appellant's favour), the Respondents gained an advantage on 17 August 2007 to the extent that having failed to produce the file notes on that day I should have disallowed the items claimed for perusal or scanning on that day. The flaw in this argument is that a ruling was made by me on 17 August 2007. The Respondents merely raised an objection to production on 17 August 2007 and that objection was upheld by me on that day.
39. As an alternative to this submission that I should disallow all claims for perusals or scanning that were not supported by file notes on 17 August 2007, it is submitted that an hourly rate instead of a perusal or scanning rate should have been allowed. The example of item 167 is given where a file note of 40 minutes was said to have been produced and the perusal rate of $1,835.20 was claimed at the perusal rate for 496 folios - ie 4,960 words. I exercised my discretion on this item to allow half the sum claimed on the basis that scanning rather than perusal was proper. The submission was made that there was no valid reason to allow a scanning rate.
40. In summary the Respondents' written submission is that proof was tendered at the taxation that this work was performed in relation to these items (comprising affidavits, exhibits and a draft Summary of Proceedings Issues and Facts). Affidavit material was prepared on behalf of the Respondents and therefore it is inconceivable the solicitor for the Respondents did not peruse or scan the Appellant's material, and to find otherwise would be to hold that the case was conducted negligently.
41. In my view even the absence of a file note altogether would not be conclusive on the point and the time recorded on a particular file note is also not definitive. The quantum of the scale item is pegged at a sum to recognise that a document is read more than once. The fact that it is read more than once does not have to be established. A solicitor may be charging their client on a scale basis so there would be no point in recording how long it took on each occasion the document was read. The point of including a perusal/scanning item in the scale is to avoid having to establish all the time spent in looking at each document on each occasion it is looked at and charging the Taxing Master with a responsibility to assess whether on each occasion it was necessary or proper to do so. This is the rationale behind a folio rate - that is a 'once and for all' allowance in a lump sum. If it were intended that perusal of documents is to be assessed on a time basis, then there would be no perusal rate in the scale and all work would be assessed on a time basis. This point is underscored by scale item 27 where the scale item for 'examining a document or checking a proof or print or examining an appeal book' is on a time basis. This is the exception however, the general rule is that quantification of the costs of perusal of a wide range of specified documents (notably including affidavits) per folio is the norm (see scale items 25 and 26).
42. In effect I am being asked to assume that the document was not read in the absence of a file note or to only allow a time spent rate when there was one. This is not an acceptable argument and is inconsistent with the scale. The rulings made on taxation are not altered on review."
22 Having reviewed the matter, I see no error in the Taxing Master's approach. Again, consistently with the principles extracted in paragraph 7 above, there is no basis for overturning or altering the Taxing Master's conclusions in relation to these items. It follows that this ground of complaint fails.
**23 Item 212 is the item "Instructions for brief". It was originally claimed at $2,400 and was allowed by the Taxing Master at $2,000. The appellant submits that it should have been allowed at only $1,200. In summary, the appellant's submission was:
(a) The respondents' claim for letters, attendances, etc, if allowed in full, total $626.
(b) A total of 15 minutes legal attendance and 199 photocopies cannot justify an allowance of $2,000 and the Court should allow no more than $1,200.
24 In his reasons of 8 February 2008, the Taxing Master said that he took a global view and that the sum allowed was "a lump sum that represents a figure for the conduct of both a single judge and Court of Appeal matter". It was said not to be based on a mathematical calculation of the items included and the application of a percentage loading for skill, care and attention. The Taxing Master correctly noted that the amount for "Instructions for brief" is discretionary, referring to Item 9 in the Scale. He then correctly made reference to rule 63.48 and the matters that are required to be taken into account.[43] Having reviewed the matter, I have concluded that no error has been shown in relation to this aspect of the Taxing Master's decision. Accordingly, this ground of complaint fails.**
Ground 5: Items 213, 214, 215, 216, 225, 226, 239, 240, 243 and 244
**25 Items 213, 214, 215, 216, 225, 226, 239, 240, 243 and 244 are objected to by the appellant on the ground that the retention of senior counsel was not necessary or proper for the attainment of justice or for enforcing or defending the rights of the respondents. The respondents engaged senior counsel for the hearing of the appeal to the Court of Appeal. The claim against the respondents in the Court of Appeal concerned allegations of negligence and a claim that the respondents had defectively repaired the appellant's motor vehicle. As such, issues of the professional and business reputation of the respondents were at stake. No such issues arose so far as the appellant's reputation was concerned. However, I note in passing that the appellant also briefed senior counsel in the Court of Appeal. The appellant does not identify any error of principle in the Taxing Master's decision to allow fees in respect of senior counsel. The appellant's complaint can be summarised that, prior to the Court of Appeal stage, the respondents were represented by junior counsel and that no evidence or explanation has been given as to the basis upon which the retention of senior counsel by the respondents was justified.[44] The matter was not one which required evidence or explanation - it was capable of being determined as it was by the Taxing Master on his understanding of the facts as disclosed in his judgment and by reference to the issues as more fully set out in the Court of Appeal's judgment.[45] The Taxing Master applied the correct test, namely, whether a reasonable and prudent, but not over-cautious person, would in all the circumstances, seek the services of two counsel, notwithstanding the expense. He looked at the relevant matters and answered that question in favour of the respondents. Again, consistent with the principles set out in paragraph 7 above, I see no reason to disagree with the Taxing Master.
26 During the hearing, counsel for the appellant attempted to gain some support for his argument from references in the retainer letters to it being usual for senior counsel to appear in the Court of Appeal.[46] However, these statements do not militate against a favourable conclusion for the respondents on this issue. The "reasonable and prudent but not over-cautious person" test fell to be applied. It was applied correctly by the Taxing Master. No error has been shown. This ground of complaint must fail.**
27 The complaint made in respect of this item is that the respondents' liability for senior counsel's fee was capped in the sum of $5,000. Senior counsel had written a letter[47] in the following terms:
"I refer to my tax invoice dated 8 September 2007 in the sum of $11,000, summarised in items 216(a) - (c) of the bill of costs.
I confirm that the fee arrangement with Mr Brygel and the client was and remains that I would be prepared to accept the amount of $5,000 or the amount allowed on taxation, whichever is the higher.
I note that Mr Brygel has provided an undertaking to pay same within 14 days of receipt of costs pursuant to taxation or by agreement."
**28 The appellant relies on this letter to establish his assertion that the respondents' liability was capped at $5,000. I reject the appellant's submission. Senior counsel was doing no more than is sometimes done by reasonable and responsible members of counsel in agreeing (having already marked a fee) to receive a lesser amount in the event that the Taxing Master did not allow on a party/party basis the whole of counsel's fee. There was no cap on the respondents' liability as asserted by the appellant. The fee was $11,000, but senior counsel was prepared to accept a lower fee being the greater of $5,000 or the amount allowed on taxation.
29 Whilst the notice of application to review pursuant to which this review was conducted did not make any assertion that senior counsel's agreement was champertous, I note that such a submission was made to the Taxing Master.[48] It did not seem to me that this matter was pursued on the review. Certainly, no oral argument was directed towards it. However, in the unlikely event that the submissions made below as to champerty have not been abandoned, then I would in any event reject them. There is simply no basis for saying that senior counsel's agreement in respect of his fees was champertous or of such a kind as to justify some further reduction in the allowance made under Item 216.[49] It follows that this ground of complaint must fail.**
30 Item 220 relates to fees due to junior counsel. Junior counsel wrote a letter in the same terms as that written by senior counsel (extracted above). The same arguments were advanced by the appellant in respect of junior counsel as were advanced in respect of senior counsel. The arguments falls to be rejected for exactly the same reasons as those given above in relation to senior counsel.
31 The order of 29 October 2008 is challenged on the basis that the Taxing Master's discretion miscarried because of the errors he committed when arriving at his orders of 8 February 2008.[50] I have already found that the Taxing Master did not commit any errors in arriving at his orders of 8 February 2008. That is sufficient to dispose of this aspect of the review. However, there is a further basis for dismissing the review in relation to the 29 October 2008 order. Rule 63.57 permits this Court to review an order of the Taxing Master made under rule 63.56.1. Rule 63.56.1 permits the Taxing Master to review an order allowing or disallowing any item in a bill. In making his order of 29 October 2008, the Taxing Master was not allowing or disallowing any item in a bill. Therefore, rule 63.57 has no application to the complaint made by the appellant. However, even if the appellant had sought leave to appeal out of time pursuant to rule 77.06,[51] I would have dismissed such an application[52] for the reasons already given.
32 For the reasons given above, the appellant's application to review the orders of the Taxing Master made on 8 February 2008 and 29 October 2008 will be dismissed. The orders of the Taxing Master will be confirmed pursuant to rule 63.57(7)(b). I will hear the parties on the precise form of order and the question of costs.
[1] Pursuant to s 109 of the Magistrates' Court Act 1989.
[4] Referred to as the Associate Judge who is the Taxing Master in s 104(2)(b)(iii) of the Supreme Court Act 1986.
[5] Paragraph A of the notice of application to review order of Taxing Master.
[8] See also Isildur Pty Ltd v Cadar Pty Ltd [2001] VSC 25 at paragraph [10].
[9] Or the giving of reasons, whichever is the later. However, in this case nothing turns on this point as the date of the reasons was the same as the date of the order.
[10] Paragraph 7 of his affidavit sworn 16 March 2009.
[11] Paragraph 14 of his affidavit sworn 16 March 2009.
[12] Indeed, counsel for the respondents fairly conceded that the respondents could not point to any prejudice (T30.27).
[18] See for example Wentworth, supra at p.486 [45].
[19] See paragraph 18(a) of the appellants' submissions for review of taxation dated 16 December 2007.
[20] Almost certainly the relevant Act in this case is the Legal Practice Act 1996. The relevant provisions of the Legal Profession Act 2004 came into operation on 12 December 2005. See also cl 3.1 of Schedule 2 of the Legal Profession Act which gives continued operation to the relevant provisions (so far as this case is concerned) of the Legal Practice Act 1996.
[21] See generally Waind v Hill & National Employers' Mutual [1978] 1 NSWLR 372.
[23] See for example Johnson Tiles Pty Ltd v Esso Australia Pty Ltd (No. 2) [2003] VSC 212 at paragraph [122] and following.
[24] See for example Backhouse v Judd (1925) SASR 395.
[25] So far as the Legal Profession Act is concerned, cf ss 3.4.30 and 3.4.44A.
[26] Ultimately, for the reasons which appear below, it is not necessary to resolve this issue. However, see generally Leong v JP Sesto & Co [2009] VCAT 99 at paragraphs [105] to [108] and Garweda v Shaw [1999] VSC 474.
[32] On the grounds of relevance and privilege I ruled out the following material from the following letters:
(a) 26 November 2004: Last three paragraphs of p.1 and first two paragraphs of p.2.
(b) 10 June 2005: First sentence and last four paragraphs of p.1.
(c) 17 August 2005: First page, last two lines of p.2, first three lines of p.3, the first heading on p.3 and the material under that heading, the last heading on p.3 and the material under that heading and the first sentence under the heading "General" on p.5.
(d) 23 May 2006: First sentence, last three paragraphs of p.1 and all of p.2.
[34] In Qantas Airways Limited v Dillingham Corporation (unreported Supreme Court of New South Wales Rogers J delivered 14 May 1987) reference was made to a then belief that party/party costs generally tax at one half to two thirds of actual costs. See also Yunghanns v Elfic Limited (unreported Gillard J delivered 16 July 1998) wherein the Court noted the gap between costs on a party/party basis and a solicitor/client basis was greater then "than in yesteryears".
[35] As taxed and reviewed by the Taxing Master.
[36] See Commonwealth Bank of Australia v Hattersley [2001] NSWSC 60; (2001) 51 NSWLR 333 at 340 [26], Dyktnyski v BHP Titanium Minerals Pty Ltd [2004] NSWCA 154; [2004] 60 NSWLR 203 at 220 [100] and Wentworth v Rogers [2006] NSWCA 145; (2006) 66 NSWLR 474 at 486 [45]. But cf Wentworth supra at 510 [161].
[37] Plus Item 11A in relation to corporations short form bills.
[38] For example (as is asserted by the appellant), emails transmissions.
[39] Excluding irrelevant and privileged material.
[40] Remembering that rule 63.57(7)(a) permits this Court to "exercise all the powers and discretions of the Taxing Master with respect to the subject matter of the review".
"If, as expected, the further appeal is dismissed and you obtain a cost order against Mr Kuek (which is ultimately recovered) then I would expect that you would be refunded at least 80% (if not all) of those funds."
"Those costs would then need to be taxed (together with the costs of the initial appeal) and you would, in all likelihood, obtain an award for approximately 60-70% of the costs that I would ordinarily charge you (however, as with the Magistrates' Court proceeding, I anticipate that I would usually reduce my rates, having regard to the amount in dispute and also having regard to the ultimate outcome)."
[43] No issue was taken with the Taxing Master's use of the word "can" in the third line of paragraph [47] of his reasons - and in any event there is no suggestion that he did not take into account the matters required to be taken into account by rule 63.48.
[44] See paragraphs 38 to 42 of the appellant's submissions for review of taxation dated 16 December 2007.
[46] See for example the last two lines on p.2 of the redacted version of the letter of 17 August 2005 and the third line of the redacted version of the letter of 23 May 2006.
[48] See paragraphs 43 to 46 of the appellant's submission for review of taxation dated 16 December 2007.
[49] See generally Campbells Cash & Carry v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386, and in particular at paragraphs [68] - [70].
[50] It is clear from the notice of application to review order of Taxing Master filed 12 November 2008 that complaint is no longer made by the appellant in relation to the re-opening of the order of 26 March 2008 and the ordering of the appellant to pay 90% of the respondents' costs if the orders of 8 February 2008 are held not to be erroneous. In any event, had these matters been agitated in oral argument before me, I would have held that no error was shown in respect of these aspects of the case.
[51] See in particular rules 77.06(2) and (3).
[52] Or the appeal, if leave had already been granted.
Kuek
Devflan Pty Ltd & Anor [2009] VSC 91
(1953) 94 CLR 621
(2006) 66 NSWLR 474
(2004) 60 NSWLR 203
(1991) 171 CLR 592
(2001) 51 NSWLR 333
(2006) 229 CLR 386