BEACH PETROLEUM NL and CLAREMONT PETROLEUM NL v MALCOLM KEITH JOHNSON and OTHERS

osts orders were earlier made which envisaged taxation in the ordinary way. In Leary v Leary (1987) 1 All ER 261 the Court of Appeal considered an English rule of court which permitted the award of a gross sum instead of taxed costs. The principles upon which that power should be exercised are there discussed. The purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation. The power is appropriate to be used in complex cases. An order that costs be assessed as a gross sum does not envisage that any process similar to that involved in taxation should take place, but the power must be exercised judicially and after giving the parties an adequate opportunity to make submissions on the matter (see p 265d). When this application came on for hearing I obtained the consent of the parties to have Deputy Registrar Fisher, who conducts taxations of costs in this Registry, to sit with me. He has been able to confirm submissions made by the parties about normal practices on taxation, and about rates customarily allowed by taxing officers in this State. In support of the present application the applicants brought into Court 11 arch lever folders of paper comprising a 58 page affidavit of explanation and compilation of the costs sought by Mr P J Norman, an acknowledged expert in legal costs in this State, a bill of costs in taxable form for the action up to 31 August 1992, and a complex estimate of costs thereafter which included and identified all out of pocket expenses in that period. The bill in taxable form and the estimate, which together I shall refer to as "the bill", run into 4,303 pages. As well there are about 120 pages of additional material. In his affidavit Mr Norman explained that upon receiving instructions to draw the bill he was engaged for 8 weeks familiarising himself with the matter and sorting the solicitors' files into chronological order. He then spent 7 weeks dictating a bill of costs in which it was necessary to separately identify those amounts sought by way of indemnity costs from those sought by way of party and party costs. At the end of 15 weeks the bill had been drafted only to 31 August 1992 - two months into the trial. At this point Mr Norman and the applicants took stock of the position and realised that the task of drawing a bill for the whole action in taxable form was too great a task. Detailed calculations were then made to estimate the costs for the balance of the trial, drawing on the bill in taxable form to 31 August 1992 as well as actual out of pocket expenses as guides to the likely quantum of the further costs. The matter was undoubtedly complex. The preparation involved very extensive enquiry and search for information relating to the numerous transactions involved to piece together the international fraud alleged and proved by the applicants. Mr Norman's affidavit goes into these matters at length. By agreement with the client, the applicants' solicitors on file charged for solicitors and staff time at hourly rates, the rates varying according to the expertise of each person involved. Time charging in this manner is not wholly in accordance with the scales of costs provided in the Rules of Court, but has for some years been common practice in the legal profession, particularly in commercial litigation, and is recognised and permitted in South Australia by s 42(6) of the Legal Practitioners Act 1981. Where a court makes an order for costs on an indemnity basis against a party, the court may tax the costs so awarded according to a time cost agreement between the successful party and his solicitor unless the taxing officer considers that in all the circumstances it would be unreasonable to do so: Singleton & Anor v Macquarie Broadcasting Holdings Limited (1991) 24 NSWLR 103 at 105, 115. In the present case the indemnity costs sought against Enterprise and Jingellic are based on time costs. This Court has held that a party awarded costs on an indemnity basis is entitled to all the costs he or she has incurred except those costs that are unreasonable in amount or have been unreasonably incurred: see Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401 and Ragata Developments Pty Ltd v Westpac Banking Corporation (unreported) decision of Davies J delivered on 5 March 1994. See also Singleton & Anor v Macquarie Broadcasting Holdings Limited at 107. Actual disbursements have been included throughout the bill prepared by Mr Norman. The disbursements are very high, reflecting large fees paid to expert witnesses, to overseas witnesses, for travel and accommodation, for photostatting (in excess of 2 million pages), for professional fees paid to overseas and interstate lawyers in connection with investigations and in answering subpoenas, and for counsel fees. Counsel fees included in the table below total $1,666,897. The fees now sought by gross sum orders are as follows: Indemnity costs against Enterprise and Jingellic Disbursements - actual 4,772,204 Solicitors fees - actual 3,718,824 8,491,028 Drawing bill (actual incl. disbursements) 286,670 Total 8,777,698