Bray v Ryan [1999] WADC 66

Legal Practitioners Act 1893

Chamberlain v Boodle & King [1982] 1 WLR 1443

Cruickshank v Producers Markets Co-operative Ltd [1960] WAR 184

D'Alessandro & D'Angelo v Bouloudas 10 WAR 191

Gonjoletto v Myer Properties WA, unreported; SCt of WA; Library No 5661; 31 March 1993

Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178

Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103

Gallagher v CSR, unreported; SCt of WA; Library No 940165; 31 March 1994

Glenn v Brambles Australia Ltd, unreported; DCt of WA; Library No D980041; 16 February 1998

Re Malleson Stewart Stawell v Nankivell [1931] VicLawRp 22; (1931) VLR 127

Stanley v Phillips [1966] HCA 24; (1966) 115 CLR 470

1 Before me for determination is an application by the defendant pursuant to O66 r55 of the Supreme Court Rules 1971 ("the Rules") for an order that the taxation of an item of the plaintiff's bill of costs for taxation by a Deputy Registrar of this Court be reviewed.

2 By letter dated 16 May 1996 the plaintiff's solicitors gave notice to the defendant's insurer that they were appointed to act on behalf of the plaintiff in respect of a claim arising out of a motor vehicle collision on 16 March 1996. On 24 June 1997 the plaintiff filed a writ herein seeking damages against the defendant arising from personal injuries allegedly sustained by her from the accident as a consequence of the defendant's negligent driving of a motor vehicle. A memorandum of appearance was filed on behalf of the defendant on 10 July 1997. There was some delay in the plaintiff filing and serving her statement of claim. A defence was filed on behalf of the defendant on 28 August 1997. The defendant admitted in para 2 of his defence that the motor vehicle accident was caused solely as a result of his negligence. The plaintiff's action was settled at a pre-trial conference on 27 May 1998 when the parties consented to judgment being entered for the plaintiff against the defendant for $12,500 and costs of the action to be taxed.

3 The plaintiff's bill of costs for taxation was filed on 16 June 1998 and taxed on 24 July 1998. The plaintiff's bill was allowed in the sum of $8,506.68 of which the sum of $5,975 was for profit costs. The balance was made up by various disbursements including filing fees, photocopying expenses and medical report fees. A taxing fee of $207.48 was also included in the sum allowed of $8,506.68.

4 The plaintiff's bill of costs set out inter alia:

5 In the course of the taxation of costs on 24 July 1998 the defendant challenged, inter alia, the claims at Item 6 for getting up case for trial, ie, $1,250 for work done prior to February 1997 and $2,750 for work done after February 1997. Added to this item was the sum of $120 which had been claimed as inspection of documents but which the Deputy Registrar considered to form part of getting up. The amended claim for getting up case for trial was allowed without reduction in the total sum of $4,120.

6 The defendant lodged an objection to taxation on 30 July 1998 claiming that the total allowance made for getting up case for trial was manifestly excessive and grossly disproportionate to the amount of actual work that would reasonably have been required by way of getting up the case to the pre-trial conference. The defendant's objection was heard on 25 January 1999 and on 30 April 1999 the Deputy Registrar published written reasons wherein he expressed the opinion that the costs awarded on taxation represented an appropriate level of recovery for the services provided taking into account where the case properly fell in the range under each scale. Accordingly the Deputy Registrar effectively dismissed the defendant's objection to the taxation.

7 Counsel for the plaintiff suggested to me, but did not follow it up with any argument or authority, that I have no jurisdiction pursuant to O66 r55 to review the Deputy Registrar's dismissal of the defendant's objection to the taxation or the taxation itself because the Deputy Registrar was not required to review the taxation pursuant to O66 r53.

8 Parts of O66 r53, O66 r54 and O66 r55 relevant to this suggestion provide as follows:

"53. (1) 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 any 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.

(2) Pending consideration and determination of the objection, the Taxing Officer may if he thinks fit issue a certificate of taxation for or on account of the remainder or of part of the bill of costs. Any further certificate which may be necessary shall be issued by the Taxing Officer after his decision upon the objections.

54. (1) Upon an application under the last preceding Rule to review the taxation, the 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.

55. (1) If a party is dissatisfied with the certificate of the Taxing Officer as to any item or part of an item objected to under Rule 53 of this Order, he may, within 14 days from the date of the certificate, or such other time as the Court, or the Taxing Officer at the time he signs his certificate, allows, apply to a Judge in chambers for an order to review the taxation as to that item or part of an item."

9 The Deputy Registrar approached the defendant's objection to the taxation on the basis that the defendant had not pointed to any item or part of any item in the bill which had been allowed or disallowed as required by O66 r53. He seemed to take the view that there could be no error in principle in allowing the item of getting up case for trial and in the amount he did because the defendant's objection did not point to any item or part of any item of getting up that was allowed in error. The Deputy Registrar was therefore of the view that he was not required to review the taxation pursuant to O66 r54. Notwithstanding this view he stated that:

"The defendant is entitled to reasons for my determination upon taxation which I provide in response to the grounds enumerated in the objection."

10 The suggestion by counsel for the plaintiff is that there is no jurisdiction for a judge to review the taxation pursuant to O66 r55 because such a review is dependent upon their being a properly grounded objection pursuant to O66 r53 and there was no properly grounded objection in this case.

11 I am not persuaded that this suggestion has merit in this particular case. In Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178 at 183 Jordan CJ 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. (7 C.L.R. at 388); Clark, Tait & Co. v Federal Commissioner of Taxation [1931] HCA 26; (47 C.L.R. 142, at 145-6), but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case."

12 In Gonjoletto v Myer Properties WA, unreported; SCt of WA; Library No 5661; 31 March 1993 his Honour Heenan J referred to part of the above passage with approval and said:

"I have no hesitation in concluding that a taxing officer's decision as to quantum still is open to review if it has resulted from an error in principle."

13 I respectfully adopt the conclusion of his Honour Heenan J as set out above.

14 There is no issue between the parties that in this particular case the Deputy Registrar approached the assessment of getting up case for trial on a global basis having regard to the plaintiff's solicitors broad and general description of the case. The Deputy Registrar did not approach the taxation on the basis that it was necessary for the plaintiff to show what work was done, the time taken to do the work and the personnel who performed such work. The Deputy Registrar stated in his reasons that "the taxing officer ought only to consider the amount of time which it would be reasonable to spend in getting up the action for trial and then make a determination within the range provided in the scale". In my opinion the approach taken on the taxation did not enable the defendant to identify in an objection any particular service provided to the plaintiff which formed part of the item of getting up case for trial. This must be so because the services actually provided to the plaintiff were not identified and considered at the taxation.

15 Order 66 r11(2) provides that subject to the Rules solicitors are entitled to charge and be allowed the fees set forth in any relevant scale. Order 66 r11(1) provides that for the purposes of O66 any relevant scale means any scale regulating the remuneration of practitioners admitted to practise under the Legal Practitioners Act 1893 ("the Act") in or for the purposes of proceedings before the court.

16 Solicitors' remuneration in respect of proceedings in the court, and the nature of the scale and the detail of the items within it are now determined by the Legal Costs Committee ("the Committee") pursuant to s53W of the Act. Section 58ZB(1) of the Act provides inter alia that the taxation of bills of costs of practitioners as between party and party shall be regulated by a determination in force under s58W of the Act. As a consequence of this provision the remuneration scales set by the Judges of the Supreme Court of Western Australia and as provided in the Fourth schedule of the Rules gave way to the determinations made by the Committee pursuant to s58W(1) of the Act.

17 The first determination by the Committee was gazetted on 15 July 1998. The fourth determination of the Committee, the Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996 ("the Determination"), introduced an entirely new scale applying to costs incurred from 1 February 1997. The item of getting up case for trial in the plaintiff's bill of costs is divided into two parts, namely prior to February 1997 and after February 1997 because the Determination became operative as from 1 February 1997.

18 No issue arose because of item 13 in the bill being divided into two parts. In the final analysis the Deputy Registrar made the one allowance for item 13 as a whole. The defendant quite rightly took no objection to that approach. It would have been wrong to consider each part in isolation to the other and then simply add the two sums to arrive at a final figure. The objection is grounded on the argument that the Deputy Registrar failed to properly apply the underlying principles of the Determination in relation to the services provided after 1 February 1997 in arriving at the one allowance for item 13 as a whole.

19 The basis for determining costs under the old scales was explained by Virtue J (with whom Jackson SPJ agreed) in Cruickshank v Producers Markets Co-operative Ltd [1960] WAR 184 at 192 as follows:

"...the 1953 amendments to the cross rules in O LXV and appendix N have introduced a novel basis for the fixing of costs, as a result of which, broadly speaking, the remuneration allowable to the profession in litigious works is to be based not on work done but on the value of the subject matter of the lis - a value to be fixed by the court where the claim is not for a liquidated sum. Formerly the costs recoverable in a civil action were fixed by the Taxing Master after a painstaking and sometimes protracted consideration of the many items contained in elaborate bills of costs culled from diary entries and costs sheets, based on the old 6s 8d attendance with its subsequent increments, and purporting to represent work actually and properly done for the client in connection with the litigation and allowable under the terms of a complex and detailed scale. Under the new scale the costs allowable are by no means measured by the work actually done."

20 The rationale behind the old scales was to keep legal costs low in cases where the value of the subject matter was low and thereby ensure that justice was accessible to the broader community. The lower costs would be compensated by higher costs being awarded where the stakes were considerable. When the old scale was introduced it was thought that it would constitute a quick and effective basis for determining costs. Unfortunately as time passed by a practice development of justifying charges made under the scale by producing very detailed bills of costs resulting in taxations being lengthy and expensive exercises.

21 By clause 6(1) of the Determination the Committee stated that it had decided to alter the basis used for fixing the scale of costs. In clause 6(2) the Committee referred to the passage from the judgment of Virtue J in Cruickshank v Producers Markets Co-operative Ltd (supra) to which I have just referred as stating the underlying basis for the taxation of costs until then. In clause 6(3) the Committee gave reasons why it thought the principles underlying the taxation of costs should be changed and in clause 6(4) it stated the principles underlying the new scale of costs set out in the Schedule of the Determination. The remuneration of practitioners for legal services provided in contentious business from 1 February 1997 is no longer measured by reference to the value of the subject matter. Subclauses 6(3) and (4) provide as follows:

"(3) It is the view of the Committee that it is no longer possible to support a scale based on an ad valorem charge for the main item of getting up case for trial. The scale of litigation and the way it is conducted has changed immeasurably since 1953. A survey of costs charged, time spent, and the amount in issue shows that the scale does not reflect the basis on which man solicitors actually charge for the provision of legal services. This has the consequence that solicitors may enter into agreements under section 59 of the Act in order to avoid the constraints of the scale. On the other hand, the Committee considers that there should not be a return to a scale which produces a bill containing numerous small items.

(4) The new scale of costs set out in the Schedule reflects the fact that the costs of legal services provided in relation to Supreme Court and District Court actions are in the main calculated by reference to the time reasonably spent in the provisions of those services and by applying to that time a reasonable hourly rate, that rate varying according to the seniority and experience of the practitioner and the complexity of the work."

22 The Determination includes a Schedule ("the Schedule") which sets out twenty nine different item descriptions which are essentially the same and in the same order as those set out in the old scale in the Fourth Schedule of the Rules. Item 1 on taking instructions and preparing the writ, excluding the preparation of the statement of claim, and item 28 on execution, provide for a fixed fee. Otherwise the various items in the Schedule indicate a time for performing the itemised services, the rate of remuneration for that time and the level of expertise of the fee earner performing the service.

23 The relevant item in this case for work done prior to 1 February 1997 is item 13 of the old scale and for work done on and after 1 February 1997 is item 13 of the Schedule. In both instances item 13 is described as getting up case for trial. In the new scale in the Schedule a sum of $27,000 is provided which is made up by a senior practitioner performing the services for a time of 100 hours. A table in clause 7 of the determination sets out average maximum rates for various levels of fee earners and the amount for a senior practitioner, a practitioner admitted for more than five years, is $270 per hour.

24 Item 14(f) of the old scale and item 14(h) of the new scale provide that where the only issue tried is the assessment of damages only three quarters of the amounts prescribed by certain other items including item 13 shall be allowable unless otherwise directed by the court.

25 It is important to appreciate that under the new scale in the Determination the amount of $27,000 for getting up case where both liability and quantum are in issue and the amount of $20,250, three quarters of $27,000, where only quantum is in issue, are not to be regarded as maximum amounts. This is clear from reading the Determination as a whole and particularly subclauses 7(1) and 7(2) which provide as follows:

"(1) Another matter also had to be addressed by the Committee. This relates to the circumstances in which a special costs order should be made under O66, R 12 of the Rules of the Supreme Court. The Committee's determinations have never prevented the Court from making special costs orders and such orders are often made. However, the lack of information about how the maximum amounts in former determinations were calculated has made the task of the Court a difficult one. The result is that there is an uncertainty about the likely outcome in relation to special costs order applications.

(2) The new scale of costs shows the time and the fee earner whose hourly rates have been used to calculate the dollar amount in the scale. Set out in the table are the average maxima of hourly and daily rates revealed by the survey. Each item in the scale of costs specifies a dollar amount by reference to a fee earner."

26 The Deputy Registrar expressed the following view in his reasons:

"The process by which costs are determined is established by O66 r11 of the Rules of the Supreme Court. It provides that costs be determined in accordance with the scale, not a determination of the Committee. Section 58ZB(3) of the Legal Practitioners' Act expressly preserves the discretion of the taxing officer. There is no basis upon which to conclude that the discretion of the taxing officer ought to be fettered by the non-scale text of a determination of the Committee. Properly considered it may be that Clause 6(4) illustrates the process by which the range of fees for an item in the scale was constructed. That range being established by r12(2)."

27 In my opinion the reference to "any relevant scale" in O66 r11 of the Rules is by virtue of O66 r11(1), s58W of the Act and the Determination itself, a reference to the whole of the Determination i.e. the text and the Schedule of the Determination, and not just the Schedule of the Determination. Both the text and the Schedule are integral parts of the Determination. The Schedule cannot be used properly without due regard to the text.

28 The reference to O66 r12(2) seems to be misplaced because it does not establish a range or even the minimum of a range. It enables a taxing officer to allow an amount less than the fee or the minimum fee in the scale if the work performed does not justify an allowance according to the fee or equal to or more than the minimum fee. The amount allowed by the taxing officer must be just and reasonable. Order 66 Rule 12(2) is irrelevant in this particular case because the allowance for getting up case for trial is not expressed as a fixed sum and further there is no provision for a minimum sum.

29 In my opinion the Deputy Registrar erred by not applying the principles in clause 6(4) of the Determination when he taxed the plaintiff's bill. Further, s58ZB(3) of the Act, which preserves the discretion of the taxing officer, did not entitle the Deputy Registrar to disregard the principles manifested by the Determination when he taxed the plaintiff's bill.

30 The Deputy Registrar rejected time as being "the measure" of value for services and expressed the opinion that "to translate what ought be necessary to deliver a particular service to a client into a consideration of the amount of time devoted to that process is unnecessary and otherwise would serve not useful purpose.". He also stated that items 14(f), 14(g) and 22 in the new scale are expressed as a fixed hourly rate and that item 13 is not so expressed. He further stated that in determining the quantum of a fee for a service or services the fee expressed in the scale is properly regarded as the maximum.

31 The Deputy Registrar concluded by stating:

"In this case under the old scale the maximum quantum realistically open to the plaintiff was $4,500. Under the new scale realistically the range was to a maximum of $20,250. The action was entered for trial under regime of the new scale. In my opinion the determination made in relation to quantum represents an appropriate level of recovery for the services provided taking into account where that case properly lies in the range under each scale."

32 In my opinion these statements disclose two errors. First, while it is correct to state that time is not "the measure" of value for services it is nevertheless "a factor" which needs to be considered given that costs are in the main calculated by reference to the time reasonably spent in the provision of services and by applying to that time a reasonable hourly rate, that rate varying according to the seniority and experience of the practitioner and the complexity of the work.

33 The Committee was no doubt fully aware of the sentiments expressed by Lord Denning MR in Chamberlain v Boodle & King [1982] 1 WLR 1443 at 1445; and Rogers CJ Comm D in Singleton v Macquarie Broadcasting Holdings Ltd (1991) 24 NSWLR 103 at 109 to the effect that if time was the only measure then efficiency and incompetence would be rewarded and also that rates of remuneration should be linked to levels of expertise.

34 Secondly, it is clear from clause 7 in Part 4 of the determination that the upper limit of $27,000 for getting up case for trial when both liability and quantum are in issue and $20,250 when only quantum is in issue do not necessarily represent the maximum of a range within which costs in a particular case are proportionally assessed. Rather they represent the limits to which costs can be allowed before a party requires a special costs order pursuant to O66 r12 of the Rules.

35 Time is a relevant factor in this way. The starting point of the taxation in any particular case is to determine what services needed to be done. It is only after the necessary services have been identified that a judgment can be made on the complexity or varying complexities of the services, the appropriate level or levels of seniority of the person or persons required to deliver the services and the reasonable hourly rate or rates for such services. The party whose bill is being taxed would most likely have calculated the sum claimed on taxation for getting up case for trial by reference to the time taken by a particular person or persons to provide the services at an hourly rate or rates for such person or persons.

36 The issue of what is a reasonable allowance is not determined by the mere fact that a practitioner claims that a particular number of hours were taken up in delivering the services.

37 In the final analysis it is necessary to first, identify what services were necessary in the particular case and secondly, objectively assess a reasonable allowance for such services by applying the Rules, the Determination and the underlying principles thereof and thirdly, measure the amount actually claimed in the bill for the services against the objective assessment in order to determine whether or not the amount claimed is reasonable and what adjustment, if any, should be made.

38 On the face of it an allowance of $4,120 for getting up case for trial seems excessive bearing in mind that additional profit costs of $1,855 including a total of $795 was also allowed for the writ and the statement of claim and also bearing in mind the amount in issue which was agreed in the sum of $12,500. However it is not open for me to conclude that in this particular case the allowance of $4,120 is manifestly excessive when I have not been informed of the services actually provided to the plaintiff. Without being able to identify what services were necessary I cannot get past first base to make a proper assessment.

39 I should make some comments on O66 r21 given that the plaintiff's claim was settled at a pre-trial conference. Order 66 r21 of the Rules provides in effect that where there is no substantial trial the taxing officer may make such allowance in lieu of the fee prescribed in the Determination as he or she considers to be merited in the circumstances. The Deputy Registrar made no reference to O66 r21 in his reasons.

40 First, I am of the opinion that O66 r21 enabled the Deputy Registrar to allow the sum of $120 for inspection of documents as he did. Secondly, O66 r 21 does not exclude the Determination from being used as the basis to tax costs when the proceedings have been settled at a pre-trial conference or otherwise without a substantial trial. Thirdly, if the taxing officer makes an allowance pursuant to O66 r21 then such allowance should where possible and to the extent possible be assessed having regard to the underlying principles and the Schedule of the Determination.

41 Finally, I wish to make it clear that nothing I have said should be taken as any indication that there should be a return to drafting elaborate bills containing numerous small items which are very time consuming and expensive to tax. It is clear from clause 6(3) of the Determination that the Committee did not want a return to such practice. Item 13 is of an inclusive nature. Although the underlying principles of the new scale represent a change from those of the old scales the words of his Honour Ipp J when he was commenting on the old scales in D'Alessandro & D'Angelo v Bouloudas 10 WAR 191 are still apposite. At p223 he said:

"The practice that has grown of justifying charges made under the scale by producing a traditional detailed bill of costs reflecting each item of work done is unnecessary and undesirable. The amendments to the scale were intended to avoid this time consuming and expensive costs fixing process. It is sufficient for the bill to reflect the costs calculated and identified in terms of the scale. When the taxing of a bill of costs so drawn takes place before the Taxing Officer, oral representations can be made - supported by documentary material if desired - to demonstrate that the charges are reasonable. The Taxing Officers expect such a procedure to be followed; the practice adopted by the practitioner in this case will not produce any benefits."

42 For all these reasons I am of the view that the Deputy Registrar erred in principle when he taxed item 13, getting up case for trial, in the plaintiff's bill of costs

43 Pursuant to O66 r55(2) I am required to make such an order "to rectify the error as the judge thinks just...". The only thing I can do is to remit the plaintiff's bill of costs to the Deputy Registrar for a further taxation of item 13 as a whole in accordance with these reasons.

44 I now make that order.