Application for a review of taxation of bill of costs - Construction of clause in a written costs agreement addressing review of solicitor's hourly rate - Turns on own facts.

Item 17 of 1996 Determination of the Legal Costs Committee - Whether scope of Item 17 extends to include time spent in preparation for a taxation hearing.

Section 69, Legal Practitioners Act - Whether words "incidental to" wide enough to include time reasonably spent in preparation for taxation by a solicitor who is a stranger to proceedings the subject of the taxation - Whether s58ZB(1) of the Legal Practitioners Act limits the power conferred on a taxing officer by s69 of the Legal Practitioners Act.

Exercise of general judicial discretion to interfere with the exercise of the taxing officer's discretion - Turns on own facts.

WA Gilbey Ltd v Continental Liquors Pty Ltd [1964] NSWR 527

This is an application by the practitioner for the review of a practitioner and client bill of costs which was taxed by a Deputy Registrar of the District Court. The taxation of the bill of costs had been referred to the District Court from this Court, and the application for review was made pursuant to s71 of the Legal Practitioners Act 1893.

The bill of costs concerned contentious business in the District Court. The person charged ("the client") sought damages for injury sustained in a motor vehicle accident. The practitioner acted for the person charged in the conduct of that litigation.

Taxation of the practitioner's bill of costs having been required by the client pursuant to s67 of the Legal Practitioners Act, a bill was lodged by the practitioner for the purposes of that taxation. The bill sought costs totalling $51,982.01 plus allowances for interest from the time of rendering certain accounts in respect of the practitioner's costs.

The taxation was an extremely long and meticulous affair. Altogether, 19 hours were actually spent before the taxing officer. The taxation concluded on 10 July 1998. The learned taxing officer allowed the practitioner his costs in the sum of $24,285.12 plus a taxing fee and a filing fee, making in all a total of $24,912.24. The practitioner brought in a number of objections to the taxation, which were the subject of written reasons delivered by the learned taxing officer on 11 August 1998. In those reasons, all of the objections of the practitioner were disallowed. The learned taxing officer also ordered that the practitioner pay the client's costs of the taxation, which he fixed at $3,088.50. The effect of this was to leave the practitioner entitled to costs, after set-off, of $21,823.74.

Three issues, each said to involve a matter of principle, are raised before me on this application for review. First, it is said that the taxing officer wrongly refused to allow the practitioner's fees at the hourly rates provided by a written costs agreement between the practitioner and the client as those rates were varied from time to time in accordance with that agreement. Secondly, it is said that the learned taxing officer erred in allowing to the client costs of the taxation in excess of those provided by the Legal Practitioners (Supreme Court) Contentious Business Determination 1996 ("the 1996 Determination"), which is the relevant determination for the purposes of the taxation of this bill - see s66 of the District Court of Western Australia Act 1969. Thirdly, it is submitted that the total allowance made by the learned taxing officer was so inadequate, having regard to the nature of the work reasonably and properly undertaken by the practitioner, that it should be concluded that the taxation was affected by some underlying error of principle on the part of the learned taxing officer. I will deal with each of these in turn.

The practitioner and the client entered into a written costs agreement pursuant to s59 of the Legal Practitioners Act. The short written agreement was dated 18 July 1990, although the practitioner had been acting since May 1989. It provided, by cl 1, that the charges for the time of solicitors for both office and court work would be at the rate of $140 per hour. Clause 8 provided for that hourly rate and the other charges fixed by the agreement to be reviewed periodically. Clause 8 is in the following terms:

The charges will be reviewed on the 1st of January each year and may be increased by an amount equal to the Consumer Price All Groups Index for Perth increase in the whole of the preceding year."

The practitioner's conduct of the litigation continued over a number of years. The action appears to have been compromised by the acceptance of an offer made by the defendant to the action at a pre-trial conference before a Registrar of the District Court. The notice of acceptance of the defendant's offer to compromise was filed on 30 May 1997.

It appears that the practitioner originally sought costs in respect of the time he spent handling the matter at rates which reflected increases made from time to time on the originally agreed hourly rate of $140. It is accepted before me that these increases exceeded any relevant increase in the Consumer Price All Groups Index for Perth. The learned taxing officer dealt with what had occurred in the following terms:

"The solicitor did not at any stage during the currency of the agreement purport to rely upon [clause 8]. It appears to me that at the very least the solicitor seeking to increase his rate of hourly charges would be required to notify his client that he purported to rely upon this section and to notify his client of the rate which he proposed to charge. In fact the solicitor simply raised his charges from time to time in an apparently arbitrary way, in excess of any amount which would be justified by an increase in the Consumer Price Index and in a manner which appeared to me to be unrelated to clause 8 of the costs agreement. While the costs agreement may permit a solicitor to increase his hourly rates, that increase was not automatic. It required some action to be taken on the part of the solicitor and on the facts that did not happen."

It was accepted before me that the "apparently arbitrary" increases made from time to time by the practitioner were not at the annual intervals contemplated by cl 8. Nor were they related in amount to the increase in the Consumer Price Index for the preceding year. The client having required the practitioner to tax his bill, when the practitioner lodged his bill for taxation, the practitioner recalculated his hourly charges from the higher rates he had originally sought to amounts which reflected the increases which would have been permitted from time to time by cl 8. Thus, the bill for taxation was generally at hourly rates less than the practitioner had originally sought from the client. It is accepted that the hourly rates in the bill were in keeping with the maximum rates which cl 8 would have allowed the practitioner to charge from time to time.

The learned taxing officer only allowed $140 per hour for all work undertaken by the practitioner. It is contended for the practitioner that the learned taxing officer has in effect denied the practitioner the benefit of the terms of the written costs agreement. In particular, it is contended that the learned taxing officer in effect has improperly implied terms into the written costs agreement, in that he implied an obligation to notify the client of any proposed increased rate of charging.

In my view, cl 8 contemplated an annual review of the charges provided by the agreement and provided that the charges "may be" increased by an amount equal to the relevant Consumer Price Index increase. It is not, however, the effect of cl 8 that the rates provided by the agreement should necessarily increase at each annual review whatever had occurred with respect to the relevant Consumer Price Index. Clause 8, in my respectful view, was facilitative, but neither obligatory nor self-operating. The review, as a matter of necessary implication, was to be undertaken by the practitioner and a decision made by him on each review whether or not to increase the rates.

The evidence before the learned taxing officer, as summarised in the passage quoted above from his reasons on the review, indicates that the practitioner raised his charges arbitrarily in two respects. Increases were made from time to time rather than annually, and an increase was decided upon by the practitioner in each case which exceeded an increase justified by the movement in the Consumer Price Index. It is necessarily the case, therefore, that no action was taken by the practitioner pursuant to cl 8. Its provisions were ignored and the practitioner arbitrarily sought to impose increases from time to time. In my respectful view, it is not necessary to go so far as requiring an implication of notice to the client to conclude that what was done in fact by the practitioner was not effective pursuant to cl 8 to increase the rate as agreed between the practitioner and the client. As already indicated, on its proper construction, cl 8 is not self-operating. It follows, there having been no increases in the agreed rate pursuant to or authorised by cl 8, that the only rate provided by the written costs agreement which was operative at the times that work was undertaken by the practitioner was $140 per hour.

It is true that had the practitioner acted pursuant to cl 8 and on a review increased his hourly rate by an amount which equalled the relevant Consumer Price Index increase as provided by cl 8, then he would have been able to charge the client that increased rate pursuant to the written costs agreement. This was not done. Instead, something quite different and not contemplated by cl 8 was done. This was legally ineffective to increase the agreed rate.

It follows, in my respectful view, that the decision of the learned taxing officer in this respect was correct and that the practitioner's submissions in this regard on this review must fail.

At the time of the taxation, the 1996 Determination of the Legal Costs Committee provided in item 17 that, for the item "taxation of costs", costs might be allowed to a maximum rate of $130 per hour. It is the practitioner's contention that, by virtue of s58ZB(1), item 17 limited the allowance that could be made in favour of the practitioner in respect of the taxation of costs as between the practitioner and the client to $160 per hour. It was further submitted that, on its proper construction, item 17 applied only to the time actually spent by the practitioner attending the taxation, ie in the present case 19 hours and that no allowance could be made under the 1996 Determination for time spent by the practitioner in preparing for the taxation.

In this last respect it was the contention for the practitioner that item 16 provided for the drawing of a bill of costs and for the preparation of copies and for service of the bill, and that item 17 provided for the attendance at the taxation itself, there being no other allowance or provision in the 1996 Determination under which any costs might be allowed, whether between party and party or practitioner and client, for preparation by the practitioner for the conduct of the taxation. Counsel for the client accepted that it was the general practice in this Court, and in the District Court, that costs would not be allowed for preparation for a taxation of costs. Nevertheless, it was submitted that this was not the construction that should be placed upon item 17 of the 1996 Determination. The description "taxation of costs" was not expressly confined to an attendance and should be read, it was submitted, as including all that was reasonably incidental to a taxation, including preparation. By way of analogy, reference was made to item 23 of the Determination, which item is for "proceedings in chambers other than proceedings to which item 21 applies". It was submitted that the description of the item is no more to be understood as allowing preparation time than the description "taxation of costs" in item 17, yet time reasonably and properly spent in preparation for the hearing in chambers was typically allowed.

No authority was cited to me in support of either of these propositions, save, perhaps, what might be drawn from passing references in Clybucca Holdings Pty Ltd v Gray, unreported; SCt of WA (Wheeler J); Library No 970191; 30 April 1997, and Crisp v Mossensons, unreported; SCt of WA (Templeman J); Library No 970302; 18 June 1997, although I find neither of those decisions are directly in point.

"17. Taking accounts; inquiries; taxation of costs; and other proceedings not covered by any other item, per hour .... "

It is difficult from the terminology of item 17 to draw any positive conclusion whether time spent in preparation for a taxation of costs, like preparation for any of the other proceedings to which item 17 refers, was intended to be within the scope of the item or not. It is to be noted, however, that item 23, which was relied on for the client, includes under the heading "Time" express provision for two days' preparation as well as one day of hearing for which together there is a global provision of a maximum allowance of $6,900. There is certainly a sufficient reason, from the express reference to preparation time and for the global allowance of a maximum of $6,900, to draw a marked distinction between item 23 and item 17, which has no express reference to preparation and makes provision for a modest hourly rate and no more.

Even were the words in item 17, "taxation of costs", to be construed as including a reference to time spent in preparation for a taxation hearing, it is difficult to see that any allowance might properly be made for time spent in preparation on a party and party taxation. In such a situation, the practitioner has had the conduct of the file during the proceedings and has drawn the bill of costs (item 16). The practitioner's familiarity with the file from these circumstances would preclude the need for further preparation for the taxation of the costs. By way of contrast, there may be some scope on a practitioner and client taxation for there to be a reasonable need for preparation. Where the client has required the practitioner to tax his bill, it is virtually inevitable that another practitioner, briefed to represent the client's interests at the taxation, would be unfamiliar with the file and, of necessity, would need to spend some time in preparation to be able to represent the interests of the client at the taxation. Even so, I hesitate to conclude that it is the proper construction of item 17 of the Determination that "taxation of costs" includes time spent in preparation for taxation. I prefer to leave that issue unresolved.

That is not the end of the matter, however, as counsel for the client also relied upon s69 of the Legal Practitioners Act, which is in these terms:

"69. The costs of and incidental to such taxation shall be in the discretion of the taxing officer."

Section 69 is directly applicable to the costs of the taxation of a bill of costs as between practitioner and client. It is the submission for the client that the phrase "costs of and incidental to" a taxation are necessarily wide enough to include time reasonably spent in preparation for taxation by a practitioner, who is a stranger to the proceedings the subject of the taxation, and who is retained on behalf of a client to dispute the bill of costs of another practitioner who had conducted the principal proceedings on behalf of the client. In my view, the words "incidental to" are wide enough for this purpose and should have that construction.

For the practitioner, it is submitted that s69 should not be construed to override the maximum allowances now provided by the determinations of the Legal Costs Committee pursuant to s58W of the Legal Practitioners Act. In particular, the practitioner relies upon s58ZB(1) of that Act, which provides that the taxation of bills as between practitioner and client or party and party "shall be regulated by" the applicable determination. Section 58ZB(1) must be read, however, with s58ZB(3), which provides:

"(3) Nothing in subsection (1) shall be construed as limiting any power of a court, a judicial officer or a taxing officer of the court to determine in any particular case before that court or judicial officer the amount of costs allowed."

As has been observed by Templeman J in Crisp v Mossensons (supra) and by me in Mossensons v Lane, unreported; SCt of WA (Parker J); Library No 970144; 8 April 1997 at 16, subs(3) is referring to a power which a court already has; the sub-section does not itself invest the court with additional power.

For the client, it is submitted that s69 expressly confers power on the taxing officer in a situation such as the present to determine as a matter of discretion both the costs of, and the costs incidental to, a taxation. It is submitted, therefore, that it is the effect of s58ZB(3) that the power conferred on a taxing officer by s69 is not limited by s58ZB(1). In my view, there is force in this submission. Section 69 is express and was a power existing well before the 1987 amendments to the Legal Practitioners Act which provided for determinations by the Legal Costs Committee. Even though it is clearly the intention of the 1987 amendments, and continued by the 1992 amendments, that the taxation of both practitioner and client and party and party bills should be regulated by a determination, that general scheme is expressly subjected by s58ZB(3) to any continuing power of a court to determine in a particular case the amount of costs to be allowed. As a consequence, insofar as s69 allows the taxing officer to make provision for the costs of preparation for a taxation in a situation where an allowance for preparation is thought by the taxing officer to be appropriate, then I would not construe s58ZB(1) or the relevant determination as precluding the taxing officer for making such an allowance for preparation. I need only add that it should be apparent from what I have already said in these reasons that, in my view, it will not be often that a taxing officer forms the view that an allowance for preparation is appropriate. The present is, however, such a case.

For these reasons, the submissions on the part of the practitioner with respect to the costs of the taxation should fail.

It was readily accepted in the course of the submissions for the practitioner that this third basis was the most difficult for the practitioner to sustain.

It is accepted that, on a review by a Judge, it will only be appropriate to interfere with the exercise of the taxing officer's discretion where that discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong: Australian Coal and Shale Employees Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621 at 628, 629. Exceptionally, the very sum allowed may be such as to indicate that some wrong principle has been followed; Slingsby v AG [1918] P 236 at 239, 244, and as was said in Theocharides v Joannou [1955] 1 All ER 615 at 620 per Harman J, the decision as to quantum alone might be so outrageous as to speak for itself and show that the taxing officer did not exercise his discretion in a proper manner. While it is the effect of decisions such as these, and of those referred to by Heenan DCJ (as he then was) in Grigoletto v Myer Properties WA Ltd, unreported; DCt of WA (Heenan DCJ); Library No 933667; 31 March 1993 at 3, that it is open to me, on a review of the decision of the learned taxing officer, to intervene if it is apparent that there has been an error of principle, an error which may be demonstrated simply by the surprising or outrageous result of the taxation, nevertheless it remains exceptional for intervention at this stage to be justified.

With respect to the merits, in effect the practitioner can do no more than point to the amount claimed in the bill and the substantial sum which was taxed off. While it may be somewhat surprising to see such a large amount taxed off, it must be observed that there has been nothing placed before me upon which I can conclude that that is not due in the present case substantially, if not in whole, to unjustified claims in the bill in the first instance. It is known, as already indicated in these reasons, that the practitioner's claims to an hourly rate were for the most part excessive. While little is placed before me, there is no reason from the nature and circumstances of the action to be surprised by the decision of the taxing officer to allow the bill at only $24,285.12 plus taxing and filing fees. That is not, by any means, a surprisingly small bill for a personal injuries action which settled before trial, even where some matters of complexity might have arisen in the conduct of the file. Indeed, if there were to be any general matter of surprise, it is that a bill in respect of such proceedings should be presented for taxation at a figure of approximately $52,000.

It is accepted before me that there was a most detailed and meticulous attention to the taxation by the learned taxing officer. I have already indicated that altogether the taxation occupied some 19 hours. I am told by counsel who appeared, and it is not disputed for the practitioner, that each document that came into question was examined by the learned taxing officer and each explanation of the practitioner was specifically considered in the course of the taxation.

These considerations, shortly expressed as they have been, are sufficient to indicate why it is that the submissions for the practitioner have failed to demonstrate to me that the learned taxing officer erred in some matter of principle and, in particular, failed to appreciate the complexity of the task undertaken in this particular case by the practitioner. These observations should not be taken as dismissing or diminishing the force of the submissions for the practitioner that the fact that the client was resident in the United Kingdom and that the effects of a "psychological overlay" of the client added considerably to the complexity of the task of the practitioner. It remains the case, nevertheless, that, without more, I do not find it so surprising that the bill should have been allowed at less than $25,000 when the matter settled before trial as to persuade me that there must have been some error in principle in the approach taken to the taxation by the learned taxing officer.

In my view, this third and final limb of submissions for the practitioner fails.

For these reasons, the application on the part of the practitioner for the taxation of costs to be reviewed should be dismissed.