VINCENT SMITH AS ADMINISTRATOR FOR COLE ENGINEERING PTY LTD (UNDER ADMINISTRATION)

COLE ENGINEERING PTY LTD (UNDER ADMINISTRATION) (ACN 008 825 689)

Practice and procedure - Costs - Review of taxation - Whether Taxing Officer erred in principle in allowing costs for getting up when no statement of claim had been served - Taxing Officer entitled to allow costs under other provisions - Whether Taxing Officer erred in principle in allowing costs of proceedings in chambers when more than one practitioner involved in preparation

Rules of the Supreme Court 1971 (WA), O 66 r 55, r 21

Legal Practitioners (Supreme Court) (Contentious Business) Determination 1999

Anfrank Nominees Pty Ltd & Ors v Connell & Ors (No 2) (1992) 7 WAR 179

Australian Coal & Shale Employee's Federation v Commonwealth [1953] HCA 25; (1953) 94 CLR 621

1 TEMPLEMAN J: The plaintiff has applied by chamber summons for a review of taxation of costs pursuant to O 66 r 55 of the Rules of the Supreme Court 1971 (WA). The rule entitles a party who is dissatisfied with the certificate of a Taxing Officer to apply to a Judge in chambers for an order to review the taxation in whole or in part. Order 66 r 5(2) provides:

"The Judge, if of opinion that the Taxing Officer has made an error in principle, may thereupon make such order to rectify the error as the Judge thinks just."

2 On 20 November 2000, the plaintiff commenced proceedings by writ containing an indorsement of claim in the following terms:

"1. The plaintiff claims as against the defendant relief under the Corporations Law for the extension of time to convene a meeting under section 439A(6), the removal of the Administrator and the prevention of the placing of the Company into Liquidation by the First Defendant, breaches of duties by the First Defendant causing the plaintiff and the second defendant losses contrary to the interests of the creditors.

2. The plaintiff claims losses as a result of the actions of the First Defendant including losses to the Second Defendant, breach of fiduciary duty and other duties under the Corporations Law."

On the following day, the plaintiff applied ex parte to a Judge in chambers and obtained an interim order restraining the first defendant, who was the administrator of a company under administration, from holding a meeting of the company's creditors.

3 Later that day, after the first defendant had been served, he applied inter partes to the Judge who varied the earlier orders and gave directions for the further conduct of the matter.

4 On 29 November, after both the plaintiff and the first defendant had filed further affidavits, there was a hearing before another Judge in chambers who discharged the injunction.

5 On 19 December, there was a further application to a Judge in chambers. The plaintiff sought a review of the first defendant's remuneration. The application was dismissed.

6 On 23 February 2001, the plaintiff discontinued his action without having filed a statement of claim. As a result of the rules relating to discontinuance, and the costs orders which had been made down to that date, the plaintiff became liable to pay the first defendant's costs of the proceedings.

7 The first defendant's solicitors lodged a bill of costs for taxation. The bill included an amount of $10,505.00 for getting up under item 13 of the Supreme Court Scale. So far as relevant, that item is described as follows:

"Getting up case for trial ... (includes work reasonably and necessarily undertaken prior to commencement of proceedings)."

Since 1 July 1999, the maximum fee allowable in respect of item 13 is $27,000.

8 In an annexure to the bill, the solicitors described the work which had been charged in relation to getting up. It was as follows:

"Time spent on getting up relates to correspondence with plaintiff's solicitors, correspondence with client, correspondence with Court, telephone attendances on plaintiff's solicitor, telephone attendances on client, telephone attendances on Court, research, meetings with client, meetings between instructing solicitor and Counsel, meetings between clerks and junior practitioner, and general care and attention."

9 The solicitors claimed also, $7,288.00 for the proceedings in chambers on 20 and 29 November 2000 and $3,405.00 for the proceedings in chambers on 19 December 2000. Each of those charges was made under item 23 in respect of which a maximum fee of $6,900 is prescribed.

10 The solicitors provided a breakdown of the amounts claimed. These included amounts for the preparation for the hearing in chambers and the preparation of affidavits.

11 The breakdown disclosed that affidavits had been prepared by more than one person. For example, one affidavit had been prepared by a senior and junior practitioner: another by a senior practitioner and a clerk. The time spent and the amount charged in respect of each practitioner was itemised in the bill.

12 On taxation, a portion of each of the items claimed was taxed off as follows:

• Getting up was reduced from $10,505.00 to $4,505.00

• Proceedings in chambers on 20 and 27 November was reduced from $7,288.00 to $6,900.00

• Proceedings in chambers on 19 December reduced from $3,405.00 to $2,465.00

13 The plaintiff was dissatisfied with the outcome of the taxation and sought a review by the Taxing Officer pursuant to O 66 r 54. The Taxing Officer was not persuaded that he was in error and duly signed his certificate of taxation.

14 In this application, the plaintiff contends that no allowance should have been made for getting up and that the amounts allowed for proceedings in chambers were excessive. I deal with each contention in turn.

15 The plaintiff submits that the Taxing Officer made two errors in principle. First, it is submitted that the Taxing Officer allowed costs for work which could not properly be categorised as getting up for trial. This is because no statement of claim was filed: and there never was a trial. There were only the proceedings in chambers for which the first defendant was remunerated separately under item 23.

16 The scope of work included in getting up for trial was considered by the Full Court in Anfrank Nominees Pty Ltd & Ors v Connell & Ors (1991) 6 WAR 271. Malcolm CJ, with whom Nicholson and Wallwork JJ agreed, held (at p 280) that item 13:

" ... includes all work done in preparing for trial not covered by any other item, including the preparation of the brief, the perusal and copying of relevant documents, any advice on evidence, notices to produce and admit, the preparation of subpoenas, papers for the judge, entry for trial and attending counsel with the brief and conferring with him. It may also cover work done by counsel in relation to these matters."

(my emphasis)

17 In Clybucca Holdings Pty Ltd v Gray, unreported; SCt of WA; Library No 970191; 30 April 1997, Wheeler J held that it would be wrong to regard the description of getting up given by the learned Chief Justice in Anfrank Nominees "... as an exhaustive statement of everything which could conceivably be covered by item 13." It is necessary, her Honour said, to consider the expression "getting up for trial" in its ordinary and natural meaning. I respectfully agree.

18 In the present case, counsel for the first defendant submits that it was necessary to carry out the work charged under the heading of getting up because of the breadth of the claim set out in the indorsement of the writ. Counsel submitted that the allegations of breach of fiduciary duty, breaches of "other duties under the Corporations Law" and the allegations of loss to the plaintiff and the second defendant, required the first defendant's solicitors to carry out all the work charged in the bill of costs as getting up.

19 Counsel for the first defendant submits further, that on the basis of Anfrank Nominees Pty Ltd & Ors v Connell & Ors (supra) and Thiess Contractors Pty Ltd v Bond Corporation Pty Ltd, unreported; SCt of WA; Library No 8409, 3 August 1990, costs which are reasonably and necessarily incurred in the course of preparing a case and which are not claimable under any other item of the Scale are claimable under item 13.

20 In my view, that submission is too broad. That is because item 13 relates not to the general preparation of a case, but to getting up a case for trial. I accept that there may be an overlap. However, in a case such as the present, where there is no statement of claim, I do not think the preliminary work carried out by the defendant in response to the writ can properly be described as getting up for trial.

21 That being so, it seems that the Taxing Officer may have erred in principle in allowing $4,505.00 as getting up.

22 I say that the Taxing Officer may have erred because I do not have the benefit of his reasons for deciding the matter as he did. It is open to a party who applies for a review of taxation to require the Taxing Officer to give his reasons: O 66 r 54(2). It is regrettable that the plaintiff's solicitors did not obtain the Taxing Officer's reasons in the present case.

23 If the Taxing Officer did make an error in principle, it is necessary to consider whether any order should be made to rectify the error.

24 Counsel for the plaintiff submits that the costs relating to getting up should be disallowed. In my view, it would be inappropriate to make an order in those terms. That is because the Taxing Officer was obviously satisfied that work to the value of $4,505.00 had been carried out by the first defendant's solicitors in relation to the matters included in the bill (albeit inappropriately) under the heading of "getting up". In my view, it would have been open to the Taxing Officer to allow those costs either under O 66 r 21 or under item 13A of the Scale: indeed, he may have done so.

"Where for any reason there is no substantial trial, the Judge or the Taxing Officer may make such allowance in lieu of the fees prescribed by any relevant scale as he considers to be merited in the circumstances."

26 Item 13A of the Scale enables charges to be made for time reasonably spent by a practitioner, clerk or paralegal on work not covered by any other item in the Scale.

27 Given that the Taxing Officer obviously considered that $4,505 was a reasonable remuneration for the work carried out, I think it would be unjust to the first defendant to disallow those costs.

28 The plaintiff's second submission in relation to getting up is that the Taxing Officer erred in principle by starting with the claimed amount of $10,505 and discounting it to $4,505. Counsel is submits that the appropriate starting point was nil: the onus being on the first defendant to justify an increased allowance by reference to the work done.

29 I do not accept that submission. It was a matter for the Taxing Officer to determine the amount of work which could properly be charged to the plaintiff. In my view, it is immaterial whether the Taxing Officer chose to start at nil and work upwards, or to disallow some of the costs claimed, in order to arrive at a proper figure. In either approach, the result would be the same.

30 The plaintiff contends that the Taxing Officer erred in principle in allowing for time spent by both senior and junior practitioners carrying out the same work. It is submitted that there is no scope in the Scale for the costs of "tiers" of representation to be recovered from an unsuccessful party.

31 In order to consider that submission, it is necessary to understand the basis on which the Scale has been compiled. This is explained in the Legal Practitioners (Supreme Court) (Contentious Business) Determination 1999. The Determination is set out in Seaman at par [4557].

"The hourly and daily rates set out in the Table to this clause are the maximum hourly and daily rates which the Legal Costs Committee determines shall be used to calculate the dollar amounts in the Scale of Costs set out in the Table to clause 6. Each item in the Scale of Costs specifies a dollar amount with reference to the fee earner."

33 The table then sets out the maximum costs which may be charged by practitioners in accordance with their standing. Thus a senior practitioner (admitted for more than five years) is entitled to charge at a maximum rate of $270 per hour. A junior practitioner may charge up to $180 per hour, and so on.

34 Item 23 of the Scale, which applies to proceedings in chambers, provides for a maximum of $6,900. This has been calculated as two days preparation and one hearing day at the junior counsel rate of $2,300 per day.

35 If a party chooses to engage a senior practitioner or Queen's Counsel to conduct proceedings in chambers at a cost which exceeds $6,900, the bill will be taxed down to reflect the costs which ought reasonably to have been incurred in carrying out that work. Thus the Scale does not prohibit over-servicing: it prevents the cost of over-servicing from being passed on to the unsuccessful parties.

36 Equally, in my view, the Scale does not prohibit team work. Indeed, it is often necessary - or at least desirable - that work be carried out under supervision. That is the way in which junior practitioners become more learned in their profession. Such a course may very well involve overlapping or duplication of work. However, on a taxation, it would be quite unreasonable to proceed on the basis that the duplication should be unravelled and the costs attributable to one practitioner disallowed. All that is required if, for example, an affidavit was prepared in draft by a junior practitioner and settled by a senior practitioner, both of whom attended chambers, is that the Taxing Officer allow a reasonable amount for that work, subject to the maximum of $6,900.

37 In the present case, the Taxing Officer determined the value of the work undertaken by the first defendant's solicitors in relation to the proceedings in chambers. In my view, it is has not been demonstrated that he made any error in principle.

38 For these reasons, I conclude that the application should be dismissed.