MARONIS HOLDINGS LTD v NIPPON CREDIT AUST. LTD

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

1946/1994 MARONIS HOLDINGS LTD & ANOR v. NIPPON CREDIT AUSTRALIA PTY LTD & ORS JUDGMENT (COSTS) 1 HIS HONOUR: These reasons relate to assessment of the amount payable by the plaintiffs to the fifth defendant Mr McCulloch under my order for costs of 5 October 2001 and also to interest on those costs, which I earlier reserved. In my reasons of 28 September 2001 [2001] NSWSC 854 at paras [17] to [21] I stated reasons for the costs order under which the plaintiffs are to pay Mr McCulloch's costs, his costs are to be assessed on the indemnity basis from 24 April 1996, and the plaintiffs are also to pay his witness's fees. I contemplated that his costs of legal representation if disputed would be settled before an Assessor but the parties have asked me to resolve all his entitlements on written submissions, which I will do. The correspondence set out in Ex SAL 1 to the affidavit of Susan Alicia Lever of 27 June 2002 has been treated as the submissions of the parties and I have acted on that material. Document 19, letter from Henry Davis York to Mr McCulloch 25 June 2002, sets out a summary table showing the state of negotiations and I will adopt it to identify the various claims. 2 In the reasons supporting his claims 5D has explained the time, trouble, inconvenience and loss which he has been put to by Ps' claim. The claim was completely unsuccessful and it has caused him trouble and inconvenience and disturbed his life and his career for about 7 years. However the remedy which I can give to him is limited to assessing costs under the Court's power to award costs. The power is completely different to the power to award damages, which are assessed in different principles and are only available if a party succeeds in passing the stringent conditions for proving an entitlement to damages for maliciously maintaining proceedings. 3 Item 1 - Balance of solicitors' costs. 5D claimed $5,000. Ps contended for $679.80. 5D produced bills from his solicitors totalling $30,817.26. After examining the bills and discussion with 5D, Ps' solicitor contended that the work charged did not all relate to conduct of the litigation, but that some of it related to 5D's claim to establish that he was entitled to indemnity against the plaintiff's claim under an insurance policy written by an insurer who is not a party to the litigation. This point is correct in principle. Further 5D's entitlement to indemnity costs relates to costs incurred after 24 April 1996, and by that date more than half of his legal costs had already been incurred. Ps' contention is that solicitors' costs which should be allowed amount to $22,487. As the parties have discussed this element in terms of payment to be made additional to $21,807.20 already made from money held as security for costs, Ps' contention takes the form that the amount should be allowed at $679.80. 5D's contention takes the form that he should be allowed an additional $5,000 to the amount already paid, implying allowing solicitors' costs at $26,807.20. To attain exactitude it would be necessary to examine 5D's solicitors' time sheets and sever out attendances which related to the insurance matter; this is not a practical, as the cost of pursuing exactitude would be disproportionate to the likely results. I will allow for the elements which should be excluded by adopting 80% of 5D's solicitors' bills, that is, $24,653.80. 4 Item 2 - Cost Consultant's Fees. 5D claims $2,392.56 as the actual charges of the costs consultants who have been assisting him in the lengthy debate about assessment of costs. Ps' solicitor accepted the first invoice claimed; a second was brought forward late in the communications. The second invoice represents charges actually incurred and should be allowed. I will allow $2,392.56. 5 Item 3 - Interest Paid to Solicitors $1,326.59. This is no longer contentious and I will allow it. 6 Item 4 - Interests on Solicitors' costs. 5D's calculations reached $16,826.97. Ps' solicitors' calculations used a software program incorporating changes in Supreme Court interest rates and produced $16,610. Ps' solicitors' calculation was based on costs liability of $22,487 (which they speak of as $679.80). 5D seeks interest on his additional claim for $5,000. I will rate up $16,610 in the proportion borne by $24,653.80, which I have allowed, to $22,487, which Ps' solicitor used in this interest calculation. Accordingly the interest I allow is $18,210.50. 7 Item 5 - Secretarial Typing. 5D claims $7,525 which he supports by invoices from Ms Robinson. I will act on the fact that this claim has been invoiced and allow $7,525. 8 Item 6 - Facsimile Transmissions $167. This is agreed and allowed. 9 Item 7 - Plaintiff's Correspondence. 5D claims $690 referring to cost of paper. Ps offer $30. There are no vouchers. I can only act in an arbitrary way. I regard $100 as altogether adequate and allow $100. 10 Item 8 - Photocopying. 5D claims $4,609.20 for 15364 pages implying 30 cents per page. Ps offer $2,136 implying 13.9 cents per page. There are no vouchers. 5D, running a small home-based operation, would probably incur considerably higher photocopy charges than Ps' solicitors with efficient internal equipment. I have adopted 25 cents per page and allow $3,841. 11 Item 9 - Collation and Delivery. This is agreed at $400 and is allowed. 12 Item 10 - Parking. 5D claims $414 being $18 per day for 23 days attendance at the hearing. Ps' solicitors contend for 6 days being days actually giving evidence. 5D is entitled to actual amounts paid in the nature of travelling to attend the hearing as a witness, but not otherwise. This extends to parking. I allow $108. 13 Item 11 - Travel. 5D claims $235.52 based on attendance at court on 23 days. Ps contend for $61.44, on a similar basis as for Item 10. I allow $61.44. 14 Item 12 - Meals. 5D claims $460 being $20 per day for 23 days. Ps dispute this claim, again on the basis of allowing 6 days rather than 23 days. In my view there should be no allowance for meals, as they are eaten whether one attends court or not. 5D has an entitlement to witness's expenses on days he gave evidence, and is to attend to all private and domestic expenses from his own resources. 15 Item 13 - Witness's Expenses. This is the principal subject of contention. In dealing with it I have to conform with the authoritative statement in the judgment of Mason CJ and other judges in Cachia v. Hanes (1994) 179 CLR 403 at 417: "… in some cases … courts have treated the loss in earnings of a litigant incurred in the course of the presentation or the conduct of his case as a disbursement … Clearly, that is merely an indirect way of recompensing a litigant for time spent in the preparation or conduct of his case which, if it is not contemplated by the relevant legislation or rules, is not permissible. Of course, a litigant who qualifies as a witness is entitled to the ordinary witnesses' fees." These observations closed a question which might earlier have been thought to be open to another view; see the review in Walton v. McBride (1995) 36 NSWLR 440 by Kirby P at 452-453. See too Cole JA dissenting at 472-473. These decisions establish a limit to the power to award costs given to the court by s.76 of the Supreme Court Act 1970, and I am obliged to conform to that limit. A litigant, whether a litigant in person or an unrepresented litigant, cannot go further and recover expenses or recompense for his time and trouble in preparing the case and conducting the hearing. 16 5D has at various points claimed allowances for the value of his time spent reading the plaintiff's materials - 76 hours, attending court on 44 days of the hearing (which lasted 57 days, but he did not attend on every day), and made a calculation of the hours spent at court at 240 hours and travelling time at 44 hours. He also claimed for time spent preparing his own affidavits. The written submissions show that in the course of negotiation Ps were prepared to make an allowance to 5D in respect to this item, although considerably less than 5D's claim. In my view this claim cannot be allowed upon the literal terms in which the opinion of the High Court was expressed, which, in the passage I have quoted, refers to "the ordinary witnesses' fees" and further shows that a litigant is not to be recompensed "… for time spent in the preparation or conduct of his case …". 17 For some years it has been usual practice in the Equity Division to direct that each party file affidavits showing the case in chief; this is practically universal in proceedings commenced by Summons, and very usual in any proceedings commenced by Statement of Claim which involve any complexity. There was such a direction in the present case, and this was appropriate because of the number of parties and the complexities of the issues. The Court's attitude now about what is required for proper case management, fair preparation and procedural justice requires that evidence in chief be put on affidavit and notified in advance in all but the simplest cases. 18 In Cachia v. Hanes there is not to my reading any reference in the judgments or elsewhere in the report to time spent by the defendant in preparing his own affidavit; special leave was confined to the disallowance of the defendant's claim for the loss of his time spent in the preparation and conduct of his case and for out-of-pocket expenses, being travelling expenses, associated with the preparation and conduct of his case. - see page 404. The account given of the disputed items in the judgment of Toohey and Gaudron JJ at 418 does not expressly refer to preparing an affidavit. 19 5D's claim for his time spent preparing his own affidavit requires consideration of whether the claim falls within the meaning of references to costs in s.76 as established by a long course of interpretation by courts of similar provisions and now by the decision in Cachia v. Hanes. The claim falls literally within the language used by the High Court at p417 on the excluding side - "time spent in the preparation or conduct of his case." The claim would fall within the High Court's language on the including side - "the ordinary witness's fees" only if the concept of the ordinary witness's fees is expanded to have regard to the altered practice of the court by which litigants are now directed by the court to put their evidence on affidavit, and by so doing they carry out part of the function which in earlier times they carried out by attending as witnesses. 20 Several observations should be made. One is that, in the ordinary and natural meaning of the word "costs", the time, trouble and loss of opportunity to attend to something else, it may be to some profitable activity, are not costs. They are costs in specialised usage: "opportunity costs". Cachia v. Hanes shows that opportunity costs are not part of the parties' costs within the meaning which has been applied for some centuries to legislation empowering courts to order payment of costs. Another matter that should be observed is that if it is correct that 5D should receive witness's fees for time spent in preparing his own affidavit, the principle involved would relate not only to litigants in person, but also to all litigants who are required by rules of court or directions to give their time to preparing their own affidavits; whether or not they have legal representation. On the other hand it would not extend to time spent by litigants in person, or by other litigants, in attending to obtain affidavits from any other witnesses than themselves personally, and where a litigant was a corporation, it would have no operation at all. 21 My view, conforming to the majority judgment in Cachia v. Hanes, is that recompense for time spent in preparing his own affidavit is not part of the ordinary witnesses' fees, but is time spent in the preparation of his case; it is not costs within s.76 and I should not allow it. I see this as another instance in which the limit on the costs power established in Cachia v. Hanes has a very unfortunate affect in its impact on 5D; I commented on this at para.20 of [2001] NSWSC 854. 5D also made large claims for very long periods of time spent by him in other attendances; reading affidavits of other witnesses, and attendances in court for the evidence of other witnesses. In my opinion these too are not allowable. 22 5D claims $12,845 for attendance at court to give evidence. He makes a further claim for travel time. $12,845, applied to six days attendance as a witness, implies $2141 per day. 5D is a business manager with professional qualifications and a record of positions of high responsibility in large businesses with demanding management tasks over very large resources and funds. I have to assess an appropriate ordinary witness fee for a professional person with such high qualifications based on what it might be expected that such a person would require to be paid to retain him to give evidence. Ps contend for payment of $235 per hour for six hours for each day, such day including travelling time, which implies $1,410 per day and a total of $8,460. My assessment is that the appropriate witness fee is at the rate of $1,750 per day, to include attendance for the whole day, travelling time and all other claims for attendance in the capacity of a witness. In my view I should allow $10,500. 23 Summary. Item 1 $24,653.80 2 2,392.56 3 1,326.59 4 18,210.50 5 7,525.00 6 167.00 7 100.00 8 3,841.00 9 400.00 10 108.00 11 61.44 12 0.00 13 10,500.00 69,285.89 Deduct payment 21,807.20 Amount ordered $47,478.69 24 The total sum which in my view I should allow is $69,285.89, I give credit for payment of $21,807.20 already made out of security for costs and order payment of $47,478.69. 25

Order: Order that the plaintiffs pay the fifth defendant's costs, witness's expenses and interest assessed at $47,478.69

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