In that factual context, I return to s 215(2) of the Legal Practice Act. The first question that arises for my consideration is the nature of the task performed by the court under that section, and, in particular, the question which the court is required to address. Before the court can make an order under the subsection, the court must form an opinion which has two components. The first is that 'the amount of costs allowable in respect of a matter under a legal costs determination is inadequate', and the second is that the inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'.
The question posed to the court under s 215(2) will almost always arise before taxation has occurred. It is of course the responsibility of the taxing officer to tax the bill and identify with precision the amount that should be allowed in respect of the particular claim for costs. Section 215(2) also falls to be construed in the context of the well-known principle that at least in respect of costs as between party and party, the principle is that the successful party should be compensated by the unsuccessful party for their costs (see O 66 r 1, Rules of the Supreme Court 1971 (WA)).
Those two considerations provide a guide to the proper approach to be taken to the question posed to a court when an application is made under s 215(2). The policy considerations that should guide a court when addressing an issue under s 215(2) are, firstly, that the court should not usurp the role of the taxing officer and, secondly, that at least where party and party costs are concerned, the court should make an order that would give effect to the general principle of allowing the successful party to be compensated for their costs by the unsuccessful party, where appropriate.
There are two alternative ways in which one might approach the question of inadequacy posed by s 215(2). The first would be to require an applicant for an order under that subsection to satisfy the court that the bill to be taxed will, on the balance of probabilities, tax at an amount that is greater than the limit that would be imposed by the item in the relevant costs determination, which is therefore inadequate. The alternative approach would simply be to require an applicant for an order under the section to satisfy the court that there is a fairly arguable case to be put before a taxing officer to the effect that the bill to be taxed should tax out at more than the limit that would be imposed by the costs determination.
On this alternative view of the section, the court could arrive at the conclusion that the limit was inadequate because the maintenance of the limit would preclude the applicant from presenting a fairly arguable case to the taxing officer. The considerations to which I have referred, and in particular the view that the court should not, under this section, usurp or anticipate the role of the taxing officer, lead me to conclude that the latter of those two alternatives is the preferred approach to an application under s 215(2).
It therefore seems to me that the requirement of inadequacy will be demonstrated if the applicant shows that there is a fairly arguable case that the bill to be presented to the taxing officer may tax at an amount which is greater than the limit that would be imposed by the relevant costs determination. Of course, as I have pointed out, that is only the first question which the court must address. The second question is whether that inadequacy arises because of the unusual difficulty, complexity or importance of the matter.
It is common ground between the parties that the word 'unusual' qualifies only the expression 'difficulty' and does not qualify the words 'complexity' or 'importance'. Another issue was, however, raised in argument in relation to those words, and that concerns the meaning to be given to the word 'importance'. Heartlink submits that the criterion of importance cannot be met having regard to the interests of the parties only, but must, in order to be satisfied, import an element of importance to the community.
I cannot see any reason in policy or principle why the word 'importance' should be construed in this way. If it had been the intention of the legislature to require the court to give consideration to an issue of community or public importance, then I think it would have been reasonable to expect the legislature to use words that would connote that meaning, such as the well-known phrase 'public importance' which is found in a number of other legislative provisions.
It seems to me that by reference to 'importance' in this context, the legislature is allowing the court to have regard to the question of whether the work done was appropriate to the significance of the issues that arose in the litigation. Significance can arise either because of the significance of the issues to the parties or because of the significance of the issues to other prospective parties or to the public or to the community generally. In this case, the issues raised were of considerable significance to the liquidators in the practice of their profession, and in respect of whom serious allegations were made.
Another consideration that appears to me to be significant to the construction and application of s 215(2) also arises from the time at which that determination is to be made. Because it is a determination which will ordinarily be made in advance of taxation, it should be made as a matter of impression rather than as a matter of detailed evaluation. An approach which would require an applicant to demonstrate that a limit is inadequate by reference to a detailed evaluation of a draft bill for taxation would carry the risk that what has elsewhere been described as 'satellite litigation' (and which I would describe as parasitic litigation), might assume a life and dimension of its own, disproportionate to its significance.
Such an approach should be discouraged, because it is in the interests of the parties and of the public for disputes with respect to costs to be resolved as quickly and as efficiently and as inexpensively as possible.
Accordingly, approaching the matter as one of impression, the question which I pose to myself is whether the limit of $27,456, which would be imposed if I do not grant the application sought, would be inadequate because it would preclude the liquidators from advancing to the taxing officer a fairly arguable case that their bill should tax at an amount greater than that. Approaching that question as a matter of impression, having regard to the affidavits which have been filed and which I have read, and having regard to the affidavit evidence of Mr McLeod to which I have referred, I am satisfied that the amount to which the liquidators would be limited under item 11 is inadequate in the sense that I have described.
I turn then to the second question for my determination under s 215(2), which is the question of whether that inadequacy arises because of the 'unusual difficulty, complexity or importance of the matter'. ...
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Of course, nothing that a court does in determining an application under s 215(2), can in any way bind or impinge upon the decisions to be made by the taxing officer as to whether or not work was appropriately and reasonably done, or as to the proper amount to be allowed in respect of that work. In my view, the question for determination at this point of the proceedings is not whether the bill will, in fact, tax out at more than the limit, but rather whether there is a fairly arguable case that it may tax out at an amount above the limit.
It would be quite consistent with that approach for a taxing officer to conclude, after considering the bill in detail, that in fact the amount to be allowed on taxation is less than the limit. So it will be entirely for the taxing officer to determine whether or not the work was properly and appropriately done and, if so, the amount properly allowed. ...