GRUNDY -v- CASSAR [No 2] [2012] WASC 103 (5 April 2012)

3 These reasons concern orders the plaintiff seeks in respect of her costs, including certain reserved costs, on an indemnity basis, in whole or in part, or alternatively on the basis of certain special costs orders, as well as a certificate for the transcript, and that the first defendant pay the costs of the present hearing on an indemnity basis.

4 I should immediately put aside the matter of the costs of the transcript: the first defendant conceded an order for such costs was appropriate.

6 It was not in contest that the plaintiff should have her costs, including reserved costs, at least on a party and party basis. I agree: see Rules of the Supreme Court 1971 (WA) (RSC), O 66 r 1. The contest between the parties was over the indemnity basis the plaintiff sought for such orders.

7 The claim on an indemnity basis was put in three forms.

8 One, in the plaintiff's minute of orders dated 21 March 2011 (the plaintiff's minute), order 2, was for all of the plaintiff's costs on an indemnity basis, including the costs reserved on 23 December 2010 (as indicated, the date of delivery of Grundy v Cassar) and 9 February 2011 (when orders were made as to the first defendant purchasing the depot property and programming this hearing).

9 The second basis, order 3 in the plaintiff's minute, was for the plaintiff's costs on a party and party basis until 14 September 2007 and on an indemnity basis thereafter as for order 2, including the reserved costs referred to. The date of 14 September 2007 is that of a letter from the solicitors for the plaintiff to the solicitor for the first defendant (the letter of 14 September 2007) in which the solicitors for the plaintiff inquired whether the first defendant was prepared to execute a transfer of land form executed by the plaintiff in October 2004, which I understood was to transfer the depot property into the joint names of the parties pursuant to an agreement which I found in Grundy v Cassar had been made.

10 The third basis, order 4 in the plaintiff's minute, was for the plaintiff's costs on a party and party basis until 27 May 2009 and on an indemnity basis thereafter as for order 2, including the reserved costs referred to. The date of 27 May 2009 is that of a letter from the solicitors for the plaintiff to the solicitor for the first defendant (the letter of 27 May 2009) in which an offer of settlement is made and that offer is described as made 'pursuant to the principles in' Calderbank v Calderbank [1975] 3 All ER 333.

11 I turn to review the principles applicable to making indemnity costs orders, including indemnity costs orders for costs incurred after a Calderbank offer. Those principles as I state them from the authorities referred to below appeared not to be in contest.

13 The general principles applicable to making indemnity costs orders were recently summarised in Swansdale Pty Ltd v Whitcrest Pty Ltd [2010] WASCA 129 (S) (Pullin JA & Kenneth Martin J) as follows [10]:

The principles applicable to the making of indemnity costs orders in litigation may be briefly summarised, as follows:

1. A superior court, in its inherent jurisdiction, may make an indemnity costs order (see also Supreme Court Act 1935 s 37, and Legal Profession Act 2008 s 280).
2. An indemnity costs order departs from the usual costs disposition order, whereby costs are awarded on a party/party basis: EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59.
3. The court's discretion as to the making of an indemnity costs order is a discretion that must be exercised judicially. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd [1988] FCA 202; (1988) 81 ALR 397, 400 Woodward J said:

'Courts in both the United Kingdom and Australia have long accepted that solicitor and client costs can properly be awarded in appropriate cases, where "there is some special or unusual feature in the case to justify the court exercising its discretion in that way". (emphasis added)'

1. To obtain an indemnity costs order, it is not the case that the successful party needs to show a collateral purpose, or establish some species of fraud against the unsuccessful party. In J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers (WA Branch) (No 2) [1993] FCA 42; (1993) 46 IR 301, 303 French J by reference to the observations of Woodward J in Fountain Selected Meats, said:

'It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case.'

1. Furthermore, in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, FCA, 3 May 1991) (referred to by Ipp J in Unioil International Pty Ltd v Deloitte Touche Tohmatsu (No 2) (1997) 18 WAR 190, 191) French J observed:

'The categories in which the discretion may be exercised are not closed.'

1. Competing principles need to be balanced in assessing the making of a potential award of indemnity costs. In Quancorp Pty Ltd v MacDonald [1999] WASCA 101 [7], Wheeler J observed:

'On the one hand, a party should not be discouraged, by the prospect of an unusual costs order, from persisting in an action where its success is not certain. Uncertainty is inherent in many areas of law, and the law changes with changing circumstances. It is inappropriate that a case be too readily characterised as "hopeless" so as to justify an award of indemnity costs to the successful party. However, where a party has by its conduct unnecessarily increased the cost of litigation, it is appropriate that the party so acting should bear that increased cost. Persisting in a case which can only be characterised as "hopeless" is an example of the type of conduct which may lead the court to a view that the party whose conduct gave rise to the costs should bear them in full.'

1. An indemnity costs order may be appropriate in situations which are shown to involve some element of improper, or at least unreasonable, conduct by a party or the party's legal advisers: see Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225, 233 (Sheppard J), referred to by Pullin J in Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [9].
2. A properly crafted special costs order may obviate the need for an indemnity costs order, where components of cost scale items are allowed above the applicable scale ceiling: see Flotilla [20] - [24].
3. An indemnity costs order may not be appropriate if the claimed costs would be likely to be recovered under the standard order for party and party costs, or under a special order raising or removing a scale ceiling allowance: Flotilla [11]. In Unioil (No. 2) (193), Ipp J observed:

'However, counsel for the plaintiffs was unable to identify any costs so incurred that would not be covered by an order for party and party costs. An order for indemnity costs on this ground is therefore not warranted.'

1. Nonetheless, an indemnity costs order will constitute an appropriate sanction marking the disapproval of improper or unreasonable conduct: see Brookvista Pty Ltd v Meloni [2009] WASCA 180 [32], Flotilla [25]. In Flotilla Pullin J said [26]:

'A solicitor should not, in my view, resort to an application for an indemnity costs order merely to secure the recovery which could be achieved by a properly formulated special costs order, unless the unsuccessful party's conduct is genuinely to be impugned by the successful party.'

14 There has been a recent review of the principles applicable to costs orders for costs following a Calderbank offer. On such offers generally, being ones outside RSC O 24A, see Kendall C and Curthoys J, Civil Procedure in Western Australia [24A.0.5A] (Service 124). As will be seen counsel for the plaintiff did not press his case that the letter of 14 September 2007 was a Calderbank offer, while I did not understand it to be in issue that the letter of 27 May 2009 was such an offer. That review is in Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1 [16] [32] (Buss JA, Wheeler JA agreeing). I consider the following represents a sufficient statement for my purposes with the addition I will indicate [16] [19], [21]:

A Calderbank offer will not justify an award of indemnity costs unless its rejection was unreasonable. See Jones v Bradley (No 2) [2003] NSWCA 258 [7] - [9]; Herning v GWS Machinery Pty Ltd (No 2) [2005] NSWCA 375 [4]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298; (2005) 13 VR 435 [23]; Berrigan Shire Council v Ballerini (No 2) [2006] VSCA 65 [10]; Ofria v Cameron (No 2) [2008] NSWCA 242 [20].

All of the relevant facts and circumstances must be considered in determining whether a party's rejection of a Calderbank offer was unreasonable. See SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 [37]; Jones v Bradley (No 2) [7] - [9]; Leichhardt Municipal Council v Green [2004] NSWCA 341 [46]; Hazeldene's Chicken Farm [23]; Berrigan [10]; Ghunaim v Bart (No 2) [2006] NSWCA 82 [23].

The mere fact that the recipient of a Calderbank offer is ultimately worse off than he or she would have been had the offer been accepted, does not mean that its rejection was unreasonable. See SMEC [37].

As the Court of Appeal of Victoria noted in Hazeldene's Chicken Farm, deciding whether conduct is 'reasonable' or 'unreasonable' always involves matters of judgment and impression [24]. Although it is neither possible nor desirable to enumerate exhaustively all circumstances which must be taken into account, in a particular case, in deciding whether the rejection of a Calderbank offer was unreasonable, the Court of Appeal said that, ordinarily, regard should be had to, at least, the following:

(a) the stage of the proceeding at which the offer was received;

(b) the time allowed to the offeree to consider the offer;

(c) the extent of the compromise offered;

(d) the offeree's prospects of success, assessed as at the date of the offer;

(e) the clarity with which the terms of the offer were expressed; and

(f) whether the offer foreshadowed an application for ... indemnity costs in the event of the offeree's rejecting it. [25].

...

The party who makes a Calderbank offer that is rejected bears the onus of satisfying the court that it should make an award of indemnity costs in his or her favour. See Evans Shire Council v Richardson (No 2) [2006] NSWCA 61 [26]; Ghunaim [25]; Commonwealth of Australia v Gretton [2008] NSWCA 117 [46], [74].

15 The addition is from Buss JA's consideration of whether a refusal of a Calderbank offer must be shown to be 'manifestly unreasonable', 'plainly unreasonable' or 'so unreasonable', as distinct from 'merely unreasonable' [27] [28]. I note his conclusion, as follows [28]:

In my opinion, the weight of recent authority at the level of Australian intermediate courts of appeal is against qualifying the concept of 'unreasonableness' by words such as 'manifestly', 'plainly' or 'so' which, on one view, suggest (if not require) a more stringent test.

16 The plaintiff's case in relation to the first form of costs on an indemnity basis was that the first defendant's conduct of the matter, aside from the adjournment of the trial on the first commencement of the trial, was unreasonable. See Swansdale [10](7). The unreasonableness was said to be found in the raising of complex issues which were subsequently abandoned, the denial of material matters which were subsequently admitted and the defence of the case on a basis on which in any event the plaintiff at trial was found to be entitled to judgment. There is a further basis, having to do with the way the first defendant's case emerged at the trial itself, to which I will return separately.

17 The first matter, of the raising of complex issues subsequently abandoned, was the plea of the plaintiff's failure to account as to the proceeds of sale of the transport business and in effect the misappropriation of funds of the first defendant, which entailed substantial discovery and preparation on the part of the plaintiff's legal advisors. There was also a reference in the exchanges between the parties before me to the first defendant bringing into issue the parties' contributions to a property on Fewster Street in Muchea in which they had both been interested, where it transpired it was not in contest that the first defendant received her entitlement in respect of the proceeds of that property's sale.

18 The second matter, of the denial of matters subsequently admitted, was the first defendant's execution of the relevant transfer of land document, which was only admitted after the first commencement of the trial, resulting in delay and additional costs in the progress of the matter to the eventual trial.

19 The third matter, of the defence of the case on a basis on which the plaintiff was found entitled to succeed, concerned an agreement for equal shares in the depot property which the first defendant accepted but which she also contended had been terminated.

21 It was not finally in contest that both of those matters were covered by previous orders for costs on an indemnity basis I made on 20 July 2009 and 30 July 2009. The orders of 20 July 2009, on the first commencement of the trial, were in material part for '[c]osts being all costs reasonably incurred thrown away to be for the Plaintiff in any event to be taxed on an indemnity basis'. The orders of 30 July 2009, on the first defendant's application for leave to amend her defence and counterclaim, were in material part for '[c]osts thrown away of the amendments ... to be the plaintiff's in any event' and '[c]osts of the plaintiff of and incidental to the grant of leave ... be the plaintiff's in any event'; while

[t]he first defendant pay all the costs incurred by the plaintiff of the hearing of 30 July 2009 except in so far as they are of an unreasonable amount or have been unreasonably incurred so that subject to the above exceptions [none applicable] the plaintiff is completely indemnified by the first defendant for the plaintiff's costs.

22 As to the third matter, in my view it was not made out. It is true that I considered that, drawing on the first defendant's acceptance as to the parties' agreement referred to in relation to the depot property, the plaintiff was entitled to the same relief subject to the same allowances as on the partnership basis the plaintiff had put forward. This was the alternative basis for judgment for the plaintiff to which I referred at the outset of these reasons.

23 However, to reach that conclusion on that alternative basis, I rejected the first defendant's contention as part of its case that the cessation of the parties' arrangement for equal sharing had the effect that the equal shares in the depot property ceased with the effect that those shares fell to be determined by reference to their respective contributions up to the time of the cessation of those arrangements in 2005. See Grundy v Cassar [107] [109], [146], [166], [170]. The only evidence that I concluded there was with respect to such cessation was of the first defendant, which I concluded I would not accept: see [146] read with [72] [90].

24 Therefore I consider that the plaintiff has not shown me elements of unreasonable conduct in the respects claimed by the first form of indemnity costs order which would make that form of order appropriate.

25 The plaintiff's case in relation to the second form of indemnity costs order was not pressed, in my view rightly. The letter dated 14 September 2007 on which the second form of indemnity order rests does not in my view clearly represent an offer to settle the action.

26 The plaintiff's case in relation to the third form of indemnity costs order was that the letter of 27 May 2009 was clearly a Calderbank offer to settle the action which had been unreasonably refused, and indeed had not been replied to. The terms of the offer were materially that the first defendant pay the plaintiff $350,000 by way of repayment to the plaintiff for her capital share in the depot property and the action be dismissed with no order as to costs. The first defendant did not respond to this offer within the time it allowed or at all, which I took as a peremptory refusal of the offer.

27 In my view the plaintiff has not shown me the refusal of the offer in the letter of 27 May 2009 was unreasonable. In this regard I consider I should note in particular that the offer came at a relatively late stage of the proceedings (not long before the trial listed to commence on 20 July 2009): see Ford Motor Company [19](a). However, the extent of the compromise was not readily assessable as other than not considerable: see [19](c), as I will explain. The first defendant's prospects of success, assessed as at the date of the offer, could not be said, for reasons I will also explain, to be so low as to make persisting in the case a 'hopeless' or even unreasonable course: see [19](d); and Swansdale [10](6).

28 The other factors referred in the inclusive list in Ford Motor Company, [19](b), (e) and (f) all point towards an offer in the form of the letter of 27 May 2009 capable of making its rejection unreasonable, but carrying the matter no further than that. No emphasis was placed on any of those other factors, or on any other said to be relevant, with one exception I will shortly reach.

29 I consider the three factors I first referred to, Ford Motor Company [19](a), (c) and (d), in more detail.

30 As to the first, Ford Motor Company [19](a), I consider it must be assessed together with the third factor, [19](d). The third factor requires an assessment of the first defendant's case as at 27 May 2009. That case in my view depended on an assessment of whether or not the first defendant's account of the relevant agreement would be accepted. See Grundy v Cassar [72] [90] read with [146]. It was not made evident to me that, as at 27 May 2009, considered as a date close to trial, that account was hopelessly vulnerable.

31 As to the second factor, this in my view also falls to be assessed, in part at least, with the third factor. This is because the rejection of an offer not readily assessable as a considerable compromise might still be seen as unreasonable where the offeree's prospects of success, while not assessable as hopeless, should nonetheless be assessed as so low as to make persistence in all of the circumstances, including the difference between the offer and the offeree's own case, unreasonable.

32 I consider that the assessment of the extent of the compromise represented by the offer in the letter of 27 May 2009 depended most substantially on the assessment to be made of the value of the depot property as at 27 May 2009. Account also had to be taken of the costs the plaintiff might be expected to be awarded had she succeeded.

33 The only evidence as to the value of the depot property at the trial (see Grundy v Cassar [114] [115]) was the valuer's evidence for the first defendant as at 25 October 2005 of $250,000 (the date for determination of the value of the plaintiff's interest in the depot property in the first defendant's amended defence and counterclaim) and as at 13 December 2006 of $375,000, respectively (exhibit 12). The valuer's evidence for the plaintiff was as at 1 January 2005 of $300,000 (at the eventual trial, the parties agreed that the value of the depot property as at this date should be taken as $275,000), 11 July 2007 of $700,000, 15 December 2008 also of $700,000, 23 June 2009 of $730,000 and 10 February 2010 $775,000, respectively (exhibit 10). I made no determination of value as at any date. However, it is not evident to me from this evidence that the offer in the 27 May 2009 letter should reasonably have been assessed, even allowing for costs, as a considerable compromise as at that date.

34 By contrast, the value of the plaintiff's interest in the depot property, on the case of the first defendant, was on any view very much lower. The value of that interest was to be assessed as at 25 October 2005, at the eventual trial changed to 1 January 2005, based on the value of the depot then and relative contributions.

35 In terms of that comparative assessment, and given that on which the first defendant's case depended, being the assessment of the first defendant's evidence I have referred to, the rejection of the offer in the 27 May 2009 letter and persistence with that case have not been shown to me to be unreasonable.

36 I note for this purpose the following, from Ford Motor Company [20] with respect to determining whether or not to accept a Calderbank offer:

In Premier Building & Consulting Pty Ltd v Spotless Group Ltd (No 13) [2007] VSC 516, Byrne J made these observations in relation to the meaning of 'unreasonable' in the context of the rejection of a Calderbank offer:

'A decision to accept or not an offer of this kind will ordinarily be based upon the offeree's perception of its ultimate chances of success, that is, it involves a prediction as to the likely outcome of the trial. At the time the debate about costs occurs the trial will normally be over; the event will have demonstrated that the prediction which underlay the decision was not fulfilled, that it was erroneous or even imprudent (Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 228, per Sheppard J). I put to one side the case where the decision was one based on factors other than the prospect of success. A decision to commence or to press on with litigation which is based on the desire to grind a less resourced opponent into capitulation or to put it out of competitive business could hardly be countenanced by the court. If an offeree sought to justify its decision to refuse an offer by reference to some consideration other than the prospect of success, this would be a matter for it to raise, leaving always the ultimate onus on the issue upon the offeror. In the same way that the failure to achieve a more advantageous result will not automatically put the offeree at risk, so too it is not sufficient for it to avoid the consequence of its erroneous prediction that it says only that the outcome was uncertain. The outcome of almost all litigation is uncertain. The erroneous prediction may not, however, be an unreasonable one if the predictor was not, at the time, for good reason in possession of sufficient information to make an assessment or if the circumstances upon which it was based later changed. It must be acknowledged that it is part of the ordinary function of a lawyer to make predictions of this kind. The lawyer must make them at the outset and during the litigation in order to enable the client to make responsible and informed decisions to commence the litigation, to pursue it and to make the various decisions in the course of the proceeding's progress to trial and judgment [13].'

37 However, counsel for the plaintiff appeared to put to me that in fact an assessment of the kind I have just provided was not one it was reasonable to expect the first defendant to have been in a position to make. That was because of the way the first defendant's case emerged at trial. I accept that there was difficulty in determining the detail and basis of the first defendant's case: see Grundy v Cassar [107] [109]. However, I consider that on the pleadings of the first defendant as they were amended following the orders of 30 July 2009 that case was sufficiently clear to permit an assessment of the kind I have just provided to be undertaken.

38 This conclusion makes it unnecessary for me to consider, as counsel for the first defendant put to me, that assessment of the value of the offer in the letter of 27 May 2009 relative to the eventual outcome in the action should await the assessments of the parties' respective interests in the depot property under orders I made following judgment up to the hearing on 1 April 2011. In any event it seems to me that a determination of unreasonableness by such a yardstick is inconsistent with the approach in Ford Motor Company [89].

39 I should not leave the matter of the making of an indemnity costs order without considering whether or not the matters referred to by counsel for the plaintiff, having to do with the way the detail and basis of the first defendant's case emerged at the eventual trial, were such as to warrant making an indemnity costs order to mark the court's disapproval of the conduct of the legal representative of the first defendant that had contributed to that difficulty. See Swansdale [10](10).

40 I accept that the way in which the legal representative of the first defendant conducted the first defendant's case at the trial might be seen to have made a contribution to the difficulty I have referred to. However, as I will explain in more detail below, the trial concerned a factually and legally complex matter; and, as I have explained, the first defendant's case was eventually pleaded prior to the eventual trial in sufficient detail to permit the eventual trial to proceed to its conclusion. I accept the trial may have taken longer than it would have done had that detail and basis been clearer from the outset. However, in my view the conduct of the first defendant's legal representative viewed in the context of a trial of a factually and legally complex matter was not such as to warrant such a mark of disapproval.

41 Further, to the extent the length or complexity of the trial was increased unnecessarily by the conduct of the first defendant's legal representative, I consider that the special costs order the plaintiff seeks, which as I will explain I will grant, obviates the need for an indemnity costs order in respect of that increase: see Swansdale [10](8).

42 I turn now to the matter of the making of special costs orders.

43 The plaintiff, by the plaintiff's minute order 5, sought special costs orders to remove the limits of the applicable scale in respect of the items getting up the case for trial, counsel fee on brief and the second and subsequent days of the trial and preparation and attendance at a mediation conference on 30 August 2007. See respectively Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2008 (WA) (the 2008 scale) items 16, 19(a) and 19(c) and Legal Practitioners (Supreme Court) (Contentious Business) Report and Determination 2006 (WA) (the 2006 scale) item 23 for those limits.

44 I note that the claim for such an order in respect of the mediation conference on 30 August 2007 was not pressed. I should note that I did not see a basis for it in the affidavit of Ivy ChuiKee Innes in support of the application for costs orders sworn 23 February 2011 (the Innes affidavit), nor in the case for the special costs order counsel for the plaintiff put to me that I will describe.

45 I turn now to the principles applicable to making special costs orders. Again, there appeared to be no contest as to these principles.

46 It was not in contest that the power to make the orders the plaintiff sought in this case is that conferred by Legal Practice Act 2003 (WA) s 215. I agree, given that the plaintiff first instructed her legal advisors prior to 1 March 2009: see Legal Profession Act 2008 (WA) s 616(1).

47 Legal Practice Act s 215 in material part is as follows:

(1) Subject to sections 221 and 241 of this Act and section 14 of the Legal Aid Commission Act 1976 -

(a) the taxation of bills of costs of legal practitioners, as between legal practitioner and client or party and party; and

(b) any other aspect of the remuneration of legal practitioners the subject of a determination,

is regulated by a legal costs determination in force under section 210.

(2) Despite subsection (1), 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.

48 It will be seen that the plaintiff seeks a special costs order pursuant to Legal Practice Act s 215(2)(c).

49 I consider that the applicable principles relevant to the making of such an order may be taken in large part from Heartlink Ltd v Jones as liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11] [13], [16], [20] [21] (Martin CJ):

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.

...

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.

...

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.

50 As to the second question for determination under Legal Practice Act s 215(2), whether 'inadequacy' had been shown to have arisen because of the 'unusual difficulty, complexity or importance of the matter', I note the accepted view that 'unusual' qualifies 'difficulty', but not 'complexity' or 'importance'. See SDS Corporation Ltd v Pasdonnay Pty Ltd [2004] WASC 26 (S2) [102] [106] (RobertsSmith J) and Green v Wilden Pty Ltd [2005] WASC 83 (S) [182] (Hasluck J).

51 It appeared not to be in contest that the first question for determination under Legal Practice Act s 215(2), whether 'inadequacy' had been shown, should be answered affirmatively. I agree, by reference to the annexures to the Innes affidavit ICI14 ICI24, while recognising some of those attachments may relate to costs matters to which the orders of 20 July 2009 and 30 July 2009 relate.

52 The contest rather was in respect of whether or not the second question for determination under Legal Practice Act s 215(2) should also be answered affirmatively.

53 As to that contest, I consider that I am in a position to address it as a matter of 'impression rather than detailed evaluation': EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7] (Martin CJ). In that address, as the judge who presided both at the first commencement of the trial and the eventual trial, I am able to draw on my experience of the hearings: see Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] (Wheeler J).

54 Drawing on my experience referred to, I consider that this was a case which as eventually tried was of some significant complexity, as was put to me by counsel for the plaintiff. However, I consider that complexity did not derive simply or even for the most part, as appeared to be the submission for the plaintiff, from the difficult way the first defendant's case fully emerged at the trial. There were two factors that in my view contributed to the complexity of the matter.

55 One was the nature of the factual matters that were put. Much but by no means all of those matters were common ground between the parties. See Grundy v Cassar [3], [6] [103]. The factual matters were the complex patterns in the business and personal relationships between the parties. Those patterns gave rise to complex questions of law. See [104] [176]. I particularly note [19] and [51] on that factual complexity; and [129] [135] on that legal complexity.

56 The other factor making a significant, although in my assessment lesser, contribution to that factual and legal complexity, was the difficulty I experienced, and which I accept the plaintiff experienced, in determining certain detail for and the basis of the first defendant's case, which evolved at the trial. As I have previously indicated the conduct of the first defendant's legal representative might be seen to have made a significant contribution to that difficulty. See on that difficulty [107] [108] and [146].

57 I further consider that the inadequacy I have previously referred to is because of the complexity I have described. I so consider having regard to the nature of that complexity and the evidence as to inadequacy in the Innes affidavit to which I have referred, in the light of my experience as the judge who presided at the first commencement of the trial and at the eventual trial.

58 I consider then that I should make the order called for in the plaintiff's minute order 5, except as to the mediation conference on 30 August 2007.

59 I note that no submissions for the first defendant were put to me that only particular limits from the applicable scale item, such as hours worked rather than hourly rate (see for example the 2008 scale item 16), should be raised or dispensed with. On special costs orders with respect to particular limits see Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [20] [23] (Pullin J). In this case it seems to me that, in view of the nature of the complexity I have described, the evidence in the Innes affidavit to which I have referred and my experience as the presiding judge at the first commencement of the trial and at the eventual trial, there is a fairly arguable case to be put before the taxing officer that the bill to be taxed in respect of the items the subject of order 5 in the plaintiff's minute, save for the mediation conference, should be taxed without regard to any of the limits prescribed by the relevant scale. On such a conclusion, see Cazaly Iron Pty Ltd v Minister for Resources [No 5] [2008] WASCA 181 [9] [10] (Buss JA).

60 I have concluded for the foregoing reasons that, while I would not make any of the orders in the plaintiff's minute order 2, order 3 or order 4, I should, in addition to making an order that the plaintiff have her costs of the action including reserved costs, to be taxed if not agreed, and making order 6 in the plaintiff's minute, make order 5, save for order 5.3 (mediation conference), in the plaintiff's minute.

61 As I have indicated, the plaintiff also sought her costs of the hearing on 1 April 2011 on an indemnity basis. It was not evident to me on what basis such an order was sought to be made. No conduct of the first defendant or her legal representative at that time was evident to me on which a claim for indemnity costs might be rested.

62 However, it cannot be doubted that the plaintiff has been successful in her application for special costs to the extent of the special costs orders she sought, and that that result has obviated the need to make indemnity costs orders in the respect I indicated, and so I would make an order for the plaintiff to have her costs of the hearing of 1 April 2011, to be taxed if not agreed.

63 I will hear from the parties as to the detail of those orders and also what other orders I should make arising out of these reasons.