Macphillamy v Vizovitis [2003] ACTSC 60

Supreme Court of the ACT|2003-08-01|Before: Higgins CJ, Gray J

2. The parties may be heard as to the costs of this review.

1. This is an application, pursuant to Order 65 Rule 66 of the Supreme Court Rules 1937 (ACT) (the Rules) to review the taxation of items 35, 36, 37, 57 and 92 detailed in a bill of costs taxed pursuant to an order of Gray J made on 12 April 2002.

2. That order had been made following the dismissal of the appellant's application for leave to appeal against a decision of Special Magistrate Symons delivered in the Small Claims Court on 3 August 2001. In that proceeding the respondent had claimed to be entitled to damages in the sum of $8,429.72 from the appellant. The basis for the claim was that, pursuant to the terms of the retainer agreement between them, the appellant, a solicitor, had overcharged the respondent, his then client, in respect of proceedings by the respondent for damages arising out of a motor vehicle accident. The appellant counter-claimed for an additional $8,452.77. The basis for this claim was that, having challenged his original memorandum of costs, the respondent was liable to pay costs as taxed on a solicitor/client basis without reference to the costs agreement between the appellant and respondent.

3. That claim, questionable enough in principle, was further weakened by the fact that, though the appellant had prepared such a bill, it had not been taxed. The bill would have been relevant had it been asserted that the costs agreement had produced a grossly excessive result. It would have supported the rejection of such a contention. Mere excessiveness relative to the scale is not a sufficient reason to refuse to enforce a costs agreement (see Re Law Society of the ACT and Barry Joseph Roche and Christopher Roche [2002] ACTSC 104 (21 October 2002) and Passey v Bandarage t/a City First Solicitors [2002] ACTSC 105 (28 October 2002)).

4. The learned Special Magistrate entered judgment for Mr Macphillamy on the original claim and entered judgment for Mr Vizovitis on the counter-claim.

5. The appellant applied to Gray J for leave to appeal from the finding on the counter-claim. That application failed and, as noted, Gray J ordered the appellant to pay the respondent's costs of and incidental to that application.

6. On 29 May 2002 the respondent submitted a bill of costs for taxation. It was brought in at $7,616.39 but was taxed and allowed on 30 September 2002 at $5,459.50.

7. On 6 August 2002 the appellant filed notice of objection to the allowance of some items claimed.

Perusal of Amended Particulars of Plaintiff's claim, Amended Defence & Reply and Defence to Cross-claim (29 folios)

9. The objection to them was expressed as follows:

"Ian Gillespie-Jones who is the Solicitor who had the conduct of this matter appears as In-house Counsel in this matter for which he has claimed a Fee on Brief at Item 57. It is submitted that the work claimed in Items 35, 36 and 37 constitute the preparation for the hearing which is encompassed in the allowance for the Fee on Brief for Counsel's fees and therefore these items represent a duplication of Item 57.

In the alternative it is submitted that the amounts claimed for these items represent a total of 6 hours at the high care, skill rate which is excessive and unreasonable. If an allowance for these items is found to be necessary or proper these costs should only be allowed on a reasonable time spent basis.".

10. That objection was rejected, though upon objection to the preparation of the Outline of Submissions, (items 38, 39, 40, 41, 44, 45, 46, 47) of the respondent prepared for the hearing before Gray J, those items were disallowed in full and item 48 (for copies of the Outline) was disallowed in part, a total disallowance of $791.95.

Attendance by Ian Gillespie-Jones on hearing of appeal as counsel for respondent

12. Only $1,125 was allowed. The objection to the item had been expressed as follows:

"This was an Application for Leave to Appeal the scale amount for which is $1,320.00. As this matter was conducted by Ian Gillespie-Jones, the appropriate allowance is therefore $1,320.00 x ¾ = $990.00."

13. Item 92 was - "preparing for trial". It was claimed at 35% of all items specifically claimed otherwise - except the brief fee, the reworking of Outline of Submissions, and items concerning taxing the bill of costs and the payment of those costs. On the sum of $2,702.91, being the sum of those items, this item was brought in at $948.40.

"...the allowance of 35% on all items claimed in the Bill other than as indicated is grossly excessive and does not conform with the scale, the accepted practice for the allowance of skill, care and responsibility as considered and endorsed by Higgins J in Cape v Redarb Pty Ltd."

15. The Deputy Registrar allowed that item in the sum of $734.23.

16. On 3 October 2002, the appellant requested the Deputy Registrar, pursuant to O 65 r 64 of the Rules, to review her decisions in respect of the above items, as well as the allowance of item 58, being $184.26 claimed for the attendance of an instructor at the hearing.

17. This request for review was filed on 3 October 2002. The Certificate of Taxation had been signed on 30 September 2002. It follows that the request was out of time for the purposes of O 65 r 64(1). It should not have been considered unless an extension of time had been granted by the Court.

18. On 19 February 2003, Deputy Registrar Glover delivered her reasons for refusing to vary the allowances made in respect of items 35, 36, 37 and item 57. However, she did reverse her decision in respect of item 58 and disallowed it.

19. This application is brought before this Court purportedly pursuant to O 65 r 66:

"Party dissatisfied with taxing officer may apply to judge

Any party who is dissatisfied with the certificate or allocatur of the taxing officer as to any item or part of an item which has been objected to, may, within 14 days from the date of the certificate or allocatur, or such other time as the court, or the taxing officer at the time he or she signs his or her certificate or allocatur, allows, apply to the judge at chambers for an order to review the taxation as to the same item or part of an item, and the judge may thereupon make such order as the judge thinks just, but the certificate or allocatur of the taxing officer shall be final and conclusive as to all matters which have not been objected to in the manner provided in this order."

20. It follows that, as the Deputy Registrar's jurisdiction to review her taxation of costs had not been engaged, the disallowance of item 58 was not effective. It was not one of the items in respect of which the appellant has sought judicial review. It is therefore the case that the Certificate of Taxation is "final and conclusive" in respect of these matters, absent any remedial order.

21. The appellant has also sought in his application for judicial review, to include a review of item 92. That had not been the subject of objection under O 65 r 64(1) in the application to the Registrar. That does not, however, of itself preclude review, though it may raise a discretionary issue as to whether to entertain the review in that respect.

22. However, though an application under O 65 r 66 does not depend on a review first being undertaken under O 65 r 64(1), the consequence is that there is only one Certificate of Taxation that has issued and that is dated 30 September 2002. It follows that the present application is also out of time.

23. The issue as to time was not raised by either party. The appellant did not ask for an extension of time, though a discretion so to do is conferred on the Court pursuant to O 64 r 5. Nor did the respondent object to the lack of timeliness of the applications for review pursued by the appellant. He did not seek to reinstate the sum disallowed on review by the Deputy Registrar, albeit that it was not validly disallowed.

24. Whilst keeping to prescribed time limits is important for the timely conduct of litigation and should be departed from only for good reason, it seems to me that justice requires that the times for review both by the Deputy Registrar and by me should be extended to validate the applications filed, by extending the time for doing so to the dates that they were in fact filed. That validates the disallowance of item 58.

25. I am able, therefore, now to proceed to consider the appellant's objections on their merits.

26. These items represent work that would, had independent counsel been briefed, have been performed by the instructing solicitor, so far as it was reasonable or necessary to do so, properly to brief counsel.

27. The substance of the appellant's objection to item 35 was threefold. First, whether "perusal" was necessary or merely "scanning" (scale item 19) and, second, whether it should be part of and included in item 57 "Fee on Brief".

28. That latter contention was supported by reference to Prudential Finance Ltd v Davander Nominees Pty Ltd and Ors [1992] VicRp 32; [1992] 1 VR 468; Magna Alloys and Research Pty Ltd v Coffee (No. 2) [1982] VicRp 10; [1982] VR 97 and Clark, Tait & Co v Federal Commissioner of Taxation [1931] HCA 26; (1931) 47 CLR 142 at 146. The reduced fee overall was justified by reference to Commonwealth of Australia v Magriplis (1962) 3 FLR 47 at 48.

29. It was submitted that those perusals, preparatory to the preparation of the written submissions, were part of the work of counsel and should be regarded as subsumed within the fee on brief. That was the third alleged error. It effectively allowed, it was said, a further $1,756.80 (inclusive of the item 57 uplift) on top of the fee for brief.

30. Mr Chapman, for the appellant, made it clear that, in substance, the objection was to the total allowed for the sum of the items objected to. Thus, to the extent that these items were allowed, it was contended, the sum to be allowed for fee on brief should be reduced. Further, whilst item 92 was objected to, it became clear in argument that it was not objected to per se, but rather insofar as it represented a further allowance on top of the sums already allowed for items 35, 36 and 37. It added further weight to the contention that an excessive sum had been allowed for what in truth was work done under the item "fee on brief".

31. Mr Gillespie-Jones contended that the perusals were necessary in the circumstances, particularly given the lapse of time since the decision appealed from had been made. Further, he submitted, it had also been necessary to consider whether the respondent had grounds to cross-appeal.

32. In any event, he contended, that was essentially a factual question, albeit containing an element of discretionary judgment, and ought not to be disturbed unless manifestly wrong (see Australian Coal and Shale Employees' Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621).

33. In my view, the perusals would have been a necessary and proper part of the solicitor's preparation of the brief for counsel. The solicitor would then be entitled to a fee for preparation of that brief and for attending to confer with and to instruct counsel on the hearing.

34. In addition, counsel would have been entitled to a fee on brief. It was conceded that the approved scale of counsel's fees recommended $1,320 as the fee for applications for leave to appeal. However, Mr Gillespie-Jones contended, in a case such as the present, counsel would have had to prepare forthwith to argue the appeal if leave was or might be granted. The fee on brief for an appeal, fully defended, is in the range $1,180 to $1,850.

35. It was conceded on each side that, depending on the complexity and importance of the matter being litigated, a brief fee in excess of those fees could, as a matter of discretion, be warranted and that, in the case where a solicitor for a party also appears as counsel briefing himself or herself, a reduction in the brief fee is appropriate to recognise the saving of effort involved in merging the dual roles of solicitor and counsel.

36. It is, as Mr Chapman correctly submitted, an element of a brief fee that it contains an allowance for preparation. The extent of that allowance is usually reflected in the difference between the fee on brief and a refresher, the latter conventionally being two thirds of the full brief fee.

37. In Magna Alloys v Coffee (No 2) (supra) counsel had spent considerable time in preparation for the hearing. Fullagar J considered that 10 hours preparation should have been allowed in the brief fee but it was clear that, whilst a substantial portion of a day should be regarded as so included, additional fees may be allowed if warranted by the complexity of the matter.

38. Ashley J expanded further on the issue of preparation and daily fees for counsel in Prudential Finance Ltd v Davander Nominees (supra). His Honour affirmed the view that, not only does a taxing officer have a discretion in an appropriate case to allow a higher than usual fee to counsel, it is open to allow a separate fee in addition to a brief fee for preparation beyond that which normally would be included in the brief fee. Fees may, in the alternative, be allowed on a daily rate plus preparation. Addressing that latter issue, his Honour said, at 473:

"It is my clear impression that cases in which it will be proper to allow preparation fees at a daily rate on party and party taxation are likely to be more common, numerous and less `exceptional' in consequence than was the case a decade ago."

39. It should be emphasised, as Ashley J did, that the mere investment of time does not translate automatically into an allowance of fees calculated by reference to time spent. The time must be spent efficiently. It must be "necessary" or, at least, "proper" to spend that time. That is the virtue of the conventional allowance of a brief fee calculated according to the usual scale.

40. Nevertheless, subject to that caveat, there may be virtue in appropriate cases in assessing a fee for preparation as well as a daily rate. It does have the virtue of transparency. The time spent in preparation, and on what, is then revealed and is open to scrutiny.

41. The preparation fee ought not, in the usual case, be less than 50% of the appropriate daily rate, (that is, the refresher rate). It may be assumed that would be the minimum fee appropriate for proper preparation but, if more is sought, it would need to be justified.

42. As I pointed out in Bennett v Seaman & Ors (1993) 117 ACTR 1; [1993] ACTSC 71 (30 July 1993) in relation to the "necessary or proper" test, work which is "proper" may, in hindsight, be found to have been unnecessary. But it may still be allowable. For example, preparing to meet an argument which though open, is not, in fact, relied upon is "proper". It is neither proper nor necessary to meet a fanciful argument nor one which, prior to preparation for the hearing, has been expressly abandoned.

43. Insofar as Mr Gillespie-Jones sought to rely upon Fat-Sel Pty Ltd v Brambles Holdings Ltd (1985) 61 ALR 536 for the view that perusals must be allowed at the scale rate, I would note that in Bennett (supra), at [17] - [20], I pointed out, in the analogous case of photocopying, that there is a discretion to disallow a sum that appears excessive, even if it was calculated in accordance with the scale.

44. In respect of perusals (that is, careful reading) there may be documents that need to be perused, but others may need merely to be scanned. The latter now expressly attracts a lower remuneration. However, once more, the issue is whether it is apparent from the outset that a document needs only to be scanned. A solicitor may need to peruse a document in order to decide that counsel need not peruse it, or need only scan it, or need not see it at all.

45. Having determined the documents relevant for counsel's consideration, the solicitor should next prepare the brief, including observations to counsel. The latter ought not be a mere formality, though the complexity and guidance they may give to counsel will, no doubt, depend on the skill and experience of the solicitor. The solicitor will then deliver the brief to counsel and attend to confer. Again, the degree of care and skill exhibited by a solicitor in that context will vary, but it is not a mere formality. Nor is attending to instruct counsel.

46. Order 65 r 83(1) contemplates this situation and provides:

"...Where a barrister and solicitor acts in both capacities, or appears as a barrister, instructed by his partner acting as solicitor, neither he nor his partner shall be entitled to make any charge for `Instructions for brief', or for `Drawing' or `Engrossing brief', but, in lieu of all such charges, such barrister and solicitor, or partner, as the case may be, shall be entitled to such fees as are allowed by the taxing officer for `Preparing for trial', and for `Preparing brief notes for use on trial'."

47. In GBT Corporation Pty Ltd v Scott, Sheils and Glover [1994] ACTSC 70 (5 July 1994), I noted that this rule does no more than "reflect a necessary consequence of the combination within a firm of the roles of barrister and solicitor in relation to particular litigation" [22].

48. I also referred, as did counsel in this matter, to the observations of Bridge J in Commonwealth of Australia v Magriplis (supra). I said:

"[23] His Honour noted that, where a solicitor briefs himself [or herself] as counsel, or briefs a partner as counsel ... there is a reduction in the extent of the work required by reason of the fact that the person briefed is not a stranger to the matter."

49. That consideration led his Honour to recommend that, as a general rule, self-briefed counsel should be allowed fees at 3/4 of the rate otherwise appropriate. A solicitor briefed by a partner should be allowed fees at 5/6 of that rate.

50. There are, perhaps, two qualifications that need to be made. The first is that the term "partner" is not intended to exclude non-partner members of firms, though the allowance for such a person's services may be less. The second is that a taxing officer may, if he or she, for good reason, considers it appropriate, vary that allowance.

51. Turning then to the objections. It was a matter within the taxing officer's discretion to determine whether the perusals claimed were, and to what extent, "necessary or proper". It was clearly reasonable for all the matter perused to be considered for the reasons Mr Gillespie-Jones advanced. Had he been briefing counsel he would have needed to go to the same material, and to the same extent, in order to prepare the brief to counsel.

52. I would add that, although briefing himself, Mr Gillespie-Jones was entitled to prepare "brief notes for use at trial". That was, clearly enough, the purpose of his "Outline of Submissions". It would have been a matter for the taxing officer to assess the extent to which the Outline prepared was within or beyond that which was necessary or proper for the purpose, but it does seem to me that it was not necessary for the Deputy Registrar to have entirely disallowed the fees claimed for the preparation of the "Outline of Submission". It is true that an "Outline of Submissions" is for counsel's use at the hearing, but that is precisely what O 65 r 83(1) contemplates in the case where the solicitor is "self-briefed".

53. It is also true, as Mr Chapman contended, that had this been regarded as a simple application for leave to appeal, no more than 75% of the recommended fee of $1,320 should, prima facié, have been allowed.

54. However, the Deputy Registrar allowed a fee of $1,500 as the full brief fee, reducing that figure to 75% thereof. That was on the basis that, in prospect, it was reasonable for Mr Gillespie-Jones to have been prepared to argue the substance of the appeal as well as the question only of leave to appeal.

55. In my view, there is no error in that approach and the Deputy Registrar correctly declined to vary it by reducing the fee further than she had done.

56. I would add that, although some preparation would doubtless be included within that fee, the preparation of briefing notes should also have attracted a fee, albeit not necessarily to the extent claimed. It is unnecessary to attempt to quantify that allowance, it suffices to say that that consideration renders the allowance made in item 57 all the more defensible.

57. I dismiss the appellant's application and will hear the parties as to the costs of this review.

I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Higgins.

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Judgment (65 paragraphs)

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Cases Cited (4)