Submission (c): error in relation to cross-claim costs
67 The claimant submitted that Harrison AsJ failed to appreciate and consider his complaint in this respect and erred in failing to uphold it, alternatively that she rejected it on a basis of which there was no evidence.
68 There was often confusion in the references to cross-claim costs. Yawz cross-claimed against the opponent, then the claimant was joined as second defendant, then the opponent cross-claimed against Yawz. The opponent incurred costs initially as cross-defendant, then as defendant and then as cross-claimant. The costs in question were at least the opponent's costs as cross-defendant to the cross-claim brought by Yawz, but may also have been its costs as cross-claimant against Yawz.
69 The claimants' initial objections to the bill of costs included that -
" … none of the professional work undertaken by the Second Defendant's Solicitors from January 2000 until March 2001 should be the subject of this Bill of Costs as, during that period of time, the Second Defendant had been joined in the litigation by the (First) Defendant by way of a Cross Claim … ".
70 The objections further included that the disbursements for counsel's fees for the period prior to 20 March 2001 were not recoverable because -
" … only subsequent to which point did the Plaintiff join the Second Defendant but prior to which the First Defendant had raised a Cross Claim against the Second Defendant in its capacity at that time solely as a Cross Defendant … ".
71 This did not question any item in the bill of costs for work done after the joinder of the opponent as second defendant on the ground that it was referable only to the opponent's position as cross-claimant or cross-defendant. A later letter conveying objections, however, included objection to recovery of "the Costs of the Cross-claim in relation to which the First Defendant's Solicitors have informed us and conceded that Consent Orders had been filed between those parties for them to meet and bear their own liability for the same", and claimed excision of costs "relating to or associated with the Cross Claims". At that time specific objection was taken to a number of items for work or disbursements after the joinder of the opponent as second defendant on the ground that they were cross-claim costs. The language varied, but was for example that the costs "related to the Cross-Claims for which separate orders were filed", and in at least one instance it was directly asserted that a disbursement was "incurred by the Second Defendant in respect of its own Defence to the First Defendant's Cross-Claim".
72 The costs assessor said in his reasons only -
" Costs of the Cross Claim
The order for costs was a general order that the Respondent pay the Applicants [sic] costs of the proceedings. This includes works [sic] done on the Cross Claim [sic]."
73 The claimant's grounds for review by the panel asserted error by the costs assessor in that he had "interpreted the Judgment to permit and [had] failed or refused to disallow recovery of professional costs and disbursements associated with the two (2) Cross Claims between them [Yawz and the opponent] which were abandoned during the hearing".
74 The panel said as to this -
" Grounds 1 and 2 . The Review Panel notes that the cross-claims as between the parties were resolved. The Review Panel notes that the final orders as to costs were three (3) in number and made on 3rd December 2002, the 15th April 2003 and in the Court of Appeal on 12th May 2003. On 3rd December 2002 the plaintiff (Review Applicant) was ordered to pay the defendant's (Review Respondent) costs following a judgment in favour of the Review Respondents. On the 15th April 2003 the court determined an application by the Review Respondent for indemnity costs. The application was dismissed and the Review Respondent was ordered to pay the Review Applicant's costs. On 12th May 2003 the Review Applicant withdrew an appeal and was ordered to pay the Review Respondent's costs.
It is clear that no other orders were made between the Review Applicant and Review Respondent concerning costs. The Review Panel is satisfied the Cost Assessor took the orders into account and specifically addressed the submissions of the Review Applicant in relation to the costs relating to the cross-claim."
75 I have described the errors of law asserted in the grounds of appeal to the Supreme Court. The relevant ground asserted error in failing to hold that the claimant was not liable to pay "the Defendant's costs of cross-claims issued by the Defendant". This was curious: it apparently limited the complaint to the opponent's costs as cross-claimant. It does not seem to have been treated as so limited before Harrison AsJ, and in this Court the submissions were particularly directed to the opponent's costs as cross-defendant in the period prior to its joinder as second defendant.
76 The learned Associate Justice said -
"17 I shall start with the cross claim issue which [was] raised on appeal. The first and second defendants filed consent orders that dismissed the cross claim between themselves on the basis that they would each pay their own costs of the cross claim.
18 In March 2001 the plaintiff filed an amended statement of claim joining the Owners Corporation (the cross defendant) as a second defendant in the proceedings. When the bill of costs was drawn up it was done so on the basis that claims were made for some work carried out in relation to the cross claim where the work was also associated with preparation of the defence . The Costs Assessor reasoned that the order for costs was a general order that the respondent pay the applicant's costs of the proceedings and this [order] included work done on the cross claim. The Review Panel was satisfied that the Costs Assessor took the orders into account and specifically addressed the submission of the review applicant in relation the costs relating to the cross claim. The bill of costs was drawn to only include costs where the work done was an overlap between the defence and cross claim . The cross defendant became the second defendant well prior to the hearing. In these circumstances the reasons of the Panel are adequate. There is no error of law under s 208L of the Act." (emphasis added)
77 I have emphasised the passages which the claimant submitted were without support in the evidence. Again, since the learned Associate Justice was hearing an appeal from the panel's determination the focus must be on that determination. But the starting-point is the costs assessor's determination.
78 In my opinion, it is clear that the costs assessor took the costs order made by Coorey DCJ, "The plaintiff is to pay the defendants [sic] costs", as extending to the opponent's cross-claim costs. The costs assessor's reference to the cross-claim in the singular obscures whether the costs were the opponent's costs as cross-defendant (including for the period from January 2000 until the opponent was joined as second defendant in March 2001), as cross-claimant, or as both, but presumably as both to the extent that the bill of costs included cross-claim costs: on the costs assessor's view of the order as a general order, it was not necessary for him to consider the cross-claim status of any of the items.
79 The costs assessor was in error. The order on its natural reading was an order for the costs incurred by the opponent as (second) defendant to the claimant's claim. If it were to have a wider scope, that would have been made clear by, for example, addition of a form of Bullock or Sanderson order. The order on a proper appreciation of its scope may have entitled the opponent to recover some of its costs incurred prior to its joinder as second defendant, and recovery of costs referable to both defence and cross-claim and questions of apportionment could have arisen, see below. But the costs assessor did not undertake consideration of the costs in either of these ways. Because he began from a wrong appreciation of the order, his determination in this respect was fundamentally flawed.
80 It is hard to know what the panel did. It recognised that there were no other orders as to costs, but whether that meant that it took a more confined view of scope of the order made by Coorey DCJ is unclear. The panel had to determine the application in the manner that a costs assessor would be required to determine it, and so had to form its own view on the scope of the order and address for itself the claimant's submissions. It was both incorrect and meaningless for it to say that it was satisfied that the costs assessor "took the orders into account" and "specifically addressed the submissions", and what view the panel took of the scope of the order made by Coorey DCJ, if any, is not apparent. The panel did not discharge its function in this respect, and the purported reasons for (apparently) including cross-claim costs in its assessment were wrong insofar as they deferred to the costs assessor's determination and inadequate as an independent determination of the claimant's objections.
81 The emphasised passages in [18] of the reasons of the learned Associate Justice proffer a different basis for acceptance of cross-claim costs. While her Honour recites the central statements by the costs assessor and the panel, she does not engage with their meanings or correctness. There is no suggestion of the factual basis give by her Honour in the reasons of the panel and, if those passages did justify allowance of cross-claim costs, it is not easy to see how they made the reasons of the panel adequate when the panel had said nothing to like effect. I respectfully can not agree with her Honour, and consider that she should have held that the panel's reasons were inadequate.
82 In my opinion, however, the claimant's submission that the emphasised passages were not supported by evidence should be accepted. There was no evidence that the work the subject of the items in the bill of costs was, where in relation to the cross-claims, also associated with the opponent's defence of the claimant's claim. I do not accept the opponent's submission that that can be inferred from commonality in the issues on Yawz's cross-claim against the opponent and the claimant's claim against the opponent and from perusal of the bill of costs, but of more significance it can be seen with sufficient certainty that her Honour was under a misapprehension in what she said.
83 The evidence included part of Yawz's bill of costs, tendered for its reference to the consent dismissal of the cross-claims between Yawz and the opponent. The narration in the Yawz bill of costs, the itemisation of which was not in evidence, included -
"12. Our client and the Second Defendant subsequently filed consent orders dismissing our respective cross claims on the basis that we would each pay our own costs of those claims. Claims are made in this Bill of Costs for some work carried out in relation to the cross claim against the Second Defendant where the work was also associated with preparation of our client's defence . It is submitted that the Plaintiff would not, in all probability, have joined the Second Defendant to the proceedings if our client had not brought its cross claim." (emphasis added)
84 It should be concluded, in my opinion, that her Honour mistakenly took this as a narration in the opponent's bill of costs. There was no such narration in the opponent's bill of costs. Nor would it be correct to translate what was said in Yawz's bill of costs to the opponent's bill of costs. Yawz's defence of the claimant's claim and its cross-claim against the opponent were largely contemporaneous, but the opponent only became the second defendant after it had been defending Yawz's cross-claim for over a year. It is not evident from her Honour's reasons that she paid regard to this. Even for the costs while the cross-defence and defence were running contemporaneously, the issues were by no means identical. If the factual basis preferred by her Honour were to be considered, exploration would be necessary of recoverability of costs incurred prior to joinder of the opponent as second defendant and of questions of apportionment where costs were referable to both defence and cross-claim (with the complication of the opponent's costs as cross-claimant). There was no such exploration before her Honour or in this Court.
85 In my opinion, the learned Associate Justice erred in failing to hold that the panel had erred in law in the inadequacy of its reasons and, so far as it was open to her Honour to uphold its determination in relation to cross-claim costs on a new factual basis, that basis was not made out.