Costs - Special order - "Unusual difficulty, complexity or importance of the matter" - Power now from Legal Practice Act 2003 not Supreme Court Rules

Legal Practice Act 2003

Legal Practitioners Act 1893

Supreme Court Act 1935

Esther Investments Pty Ltd v Markalinga Pty Ltd (1982) WAR 400

Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122

Schmidt v Gilmour [1988] WAR 219

Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271

Briggs v Glentham Pty Ltd, unreported; FCt SCt of WA; Library No 930223; 21 April 1993

Cole v Western Australian Coastal Shipping Commission & Ors, unreported; DCt of WA; Library No 3248; 7 June 1991

De Turt v Commonwealth of Australia, unreported; DCt of WA; Library No 4945; 11 June 1996

Doric Products Pty Ltd v Lockwood Security Products Pty Ltd [2002] FCA 282

McDonnell v National Wide News Pty Ltd, unreported; SCt of WA; Library No 920709; 10 December 1992

Shaw v Monley [2001] WADC 150

Snowtop Mushrooms v Powley, unreported; SCt of WA; Library No 4501; 14 May 1982

Tenbohmer v Eden (1992) 6 WAR 366

Verdell Pty Ltd v F & G Nominees Pty Ltd and Anor [2002] WASC 58

1 KENNEDY CJDC: On 1 April 2004 I gave judgment in the substantive matters and the issue of costs was adjourned sine die. Attempts to resolve differences in relation to costs have been unsuccessful and I have before me an application in relation to costs which is:

"2. The first defendants and second defendants pay the plaintiff's costs of the action to date, including any costs reserved, to be taxed, on the basis that:

(a) There be an order pursuant to O 66 r 12(1) of the Supreme Court Rules that the limits for getting up for trial pursuant to item 13 provided for in the Legal Practitioners (Supreme Court) (Contentious Business) Determination which apply from time to time be removed and the allowances taxed without regard to the limits thereby provided.

(b) There be an order pursuant to O 69 r 3 of the Supreme Court Rules that the first defendants and second defendants do pay the plaintiff's costs incurred in obtaining transcript of the proceedings.

2 Subparagraph (b) has been agreed and I will make an order in accordance with that subparagraph.

3 Subparagraph (a) is in issue.

4 Before dealing with the merits of the application there is a challenge that O 66 r 12(1) is now inconsistent with the enabling Act and that therefore the basis on which a special order as to costs can be made has been severely limited.

5 The enabling Act for the Supreme Court Rules is plainly the Supreme Court Act 1935 which provides relevantly:

"167(1) Rules of Court may be made under this Act, by the Judges of the Supreme Court, for the following purposes -

(d) for regulating any matters relating to the costs of proceedings fixed by legal costs determination (as defined in the Legal Practice Act 2003)."

6 The Legal Practice Act 2003 in s 215(2) provides:

"... if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a legal costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or taxed." (Emphasis added)

7 It follows that the enabling legislation is the Supreme Court Act and the Legal Practice Act 2003 and the power to make Rules comes from those Acts.

8 Despite that, O 66 r 12 provides relevantly:

"(1) Where the court is of the opinion that a special order as to costs should be made by reason of the unusual complexity or importance of the case or for any other good or sufficient reason, the court may order that any particular allowances in any relevant scale be raised or a limit removed and in giving any such direction the court may fix a limit within which the Taxing Officer may allow such costs." (Emphasis added)

9 It can be seen that this new legislation does not include the words "for any other good or sufficient reason" which is in the pre-existing Rules. This phrase has been the subject of decisions by the Supreme Court in a number of cases including Flotilla Nominees Pty Ltd v Western Australian Land Authority & Anor [2003] WASC 122 which at p 14 states that "It is clear that the extent of work involved in preparation" may constitute good and sufficient reason. That case referred to the well known cases of Schmidt v Gilmour [1988] WAR 219 and Esther Investments Pty Ltd v Markalinga Pty Ltd (1982) WAR 400.

10 In 2004 there was an amendment of the Supreme Court Act in relation to cost rules. It now refers to the Legal Practice Act 2003 where it had previously referred to the Legal Practitioners Act 1893. At that time there does not appear to have been a review of the Supreme Court Rules.

11 The previous Legal Practitioners Act, that is that of 1893, was last reprinted in August 2001. The Legal Practitioners Act 1893 does not contain a provision similar to s 215(2) of the 2003 Act. It provides for the establishment of the Legal Costs Committee. Then for that Committee to report on the remuneration of practitioners in respect of contentious business and that taxations of bills of costs of practitioners and other aspects of remuneration of practitioners, the subject of a determination, shall be regulated by the determination in force under the Legal Practitioners Act 1893.

12 As a result of the passing of the 2003 Act the rule contained in O 66 r 12 is now inconsistent with an Act of Parliament and apparently beyond power.

13 During the course of argument the defendants' counsel sought to put before me a letter of 18 May 2004 from the Law Society to the Attorney General and his response of 31 May 2004 which confirms the interpretation that I have given to the legislation and the Rules. The plaintiff's counsel made the point, quite correctly in my view, that by virtue of the Interpretation Act 1984 these documents were not to be used for interpretation purposes. It is not necessary to use these documents for interpretation purposes but I do refer to them because I find it extraordinary that this drastic change was made apparently without the input of the Law Society.

14 Moving on from this first matter, the plaintiff's counsel then argued that in any event the cost determination that he was concerned with which was then the latest cost determination in existence was the "Legal Practitioners (Supreme Court) (Contentious Business) Determination 2002". This was made under the Legal Practitioners Act 1893 and the Legal Costs Committee reported under s 58ZA of the 1893 Act. At that time it could not be said that O 66 r 12 was outside the power of the Act. Regrettably I am unable to see how that assists the plaintiff because the power that I have to make a special order now comes from the Legal Practice Act 2003 and the Legal Practice Act 2003 does not allow me to make an order "for any other good or sufficient reason". No doubt the actual taxation of the bill will be done under the 2003 Determination but that is not where my power to make the special order comes from.

15 The only power I have to make a special order for costs comes from s 215(2) of the Act which means that I can make a special order because of "the unusual difficulty, complexity or importance of the matter."

16 Turning now to these particular facts, the trial here took seven days. There were two areas that were particularly factually difficult. The first was the question whether the plaintiff was in fact the employer of the person who actually did the design work. The defendants put this in issue. It was complicated by an attempted change in legal structures in the plaintiff's office during the relevant period and by the pragmatic but not necessarily formally correct way in which the plaintiff's office staff dealt with problems that had arisen. Proving that the designer did in fact work for the plaintiff required a great deal of work, the calling of evidence to explain the sequence of events and the production of a number of documents.

17 The second area was the tracing through of the various stages of the design process. In this matter the first defendants said that the design was done by another designer and he gave that to the plaintiff's designer who made some very minor amendments to it. The plaintiff's case was always that this was not the case, that these initial designs which indeed the first defendants had had done were never given to the plaintiff and that all of the work and all of the designs were the original work of the plaintiff. A great number of different versions of the design plan of this house were put into evidence. Experts were called by both sides to explain the development of these plans and this very complicated and difficult process had to be worked out in advance in a solicitor's office. There was an enormous amount of additional work involved in that.

18 Moving on to the complexity. While in fact I did not find an equitable estoppel, late in the piece this was put in issue by the defendants and there was considerable argument about that. Whether it was complex enough to warrant a special order it is not necessary for me to decide in view of the other decisions I have made.

19 So far as the importance of the matter is concerned, it was important to the local industry because until this decision it was believed locally that there were only two ways in which an aggrieved holder of copyright could be compensated and that was either simply by being paid a design fee or by seeking an account of profits. Either of these posed considerable difficulties for the plaintiff. A design fee is inadequate compensation for what has been lost but an account of profits is a cumbersome and sometimes futile exercise. Considerable argument was put into the way in which the plaintiff should be compensated and amongst other findings I said:

"This was a flagrant breach of the plaintiff's copyright. It was a deliberate breach of the plaintiff's copyright and it was perpetrated over a long period of time. Mr Bond is a businessman. He knows that people do not work for nothing. Furthermore for builders in general to get work it is necessary for them to advertise their wares and that means that they are always at risk of copyright infringement. In a community like ours where home building is considered to be a most important part of the life of many people it is important that it be made clear that it is not lawful to take someone else's plans and use them for your own purposes without their permission and that you cannot always right that wrong if you are caught by simply paying a design fee."

20 In addition to my knowledge of this case from having presided over it, the plaintiff's solicitors have filed lengthy affidavits attached to one of which is the plaintiff's draft bill of costs for taxation. This indicates that the work necessarily done was in excess of the scale and it can be seen from these reasons already that I have accepted what has been said in par 25 of the affidavit of 20 May 2004, namely:

"At trial it was critical for the plaintiff's evidence to be presented in such a way that the evolution of the plaintiff's design could be clearly and logically presented to the Court."

21 I am sure that did necessitate the work that was outlined in prior and subsequent paragraphs in the affidavit.

22 Again in par 28 of the affidavit it is said:

"A central issue to the plaintiff's case was the appropriate measure of damages to be awarded in the event that copyright infringement was proven ..."

23 Again it was an essential matter and the work specified in subsequent paragraphs of the affidavit was necessary.

24 In par 40 of that affidavit and subsequent there is the matters to which I have already referred when I spoke about the employment of the designer.

25 In all the circumstances I am well satisfied that the plaintiff is entitled to the order it seeks in relation to costs.