Plaintiff v First Defendant

2 The plaintiff and the defendant have each engaged an expert costs consultant to provide a detailed estimate as to the party and party costs which are likely to be recoverable by the defendant in the event that it is successful in its defence of the proceeding. There is a wide disparity between the two estimates. The principal reason for this disparity is that the experts differ as to a necessary key assumption.

3 The difference between the experts arises, in large part, from the fact that the defendant has engaged the Sydney office of the national firm Minter Ellison to act on its behalf in the proceeding as its principal solicitors. However, an appearance has been filed on behalf of the defendant by the Melbourne office of Minter Ellison. The evidence establishes that the Melbourne office acts as a mere post box, with all substantial work being performed by the Sydney office.

4 In these circumstances, the defendant contends that it will, if successful in defending the proceeding and obtaining an order that the plaintiff pay its costs, be entitled to be paid party and party costs for all solicitors' work performed in Sydney at the rates allowable for that work in New South Wales. It is common ground that these rates far exceed the rates recoverable on a party and party taxation for solicitors' work performed in Victoria. In 1994, most scales of costs were abolished in New South Wales. From that time, party and party costs for substantial commercial cases in New South Wales have been allowed on a basis which is broadly comparable with the approach in Victoria to solicitor and client costs.

5 In these circumstances, I heard argument as to the operation of the relevant rules of court in respect of the amounts to be allowed on a party and party basis in respect of the costs charged by the defendant's Sydney solicitors.

6 The governing rule concerning allowable costs on a party and party taxation is r 63.29.[1] Rule 63.29 provides:

On a taxation on a party and party basis all costs necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed shall be allowed.

7 Under r 63.29, the taxing master must determine whether the costs which are claimed are necessary or proper. To the extent that they are, other rules govern the amount of the costs to be allowed.

8 In respect of charges for work done by a lawyer practising in Victoria, r 63.34(1) specifies a minimum scale of costs which must be allowed. Rule 63.34(3) gives the taxing master a discretion to allow an increase of up to 30% above the scale.

9 In respect of charges for work done by a lawyer practising in a place out of Victoria, r 63.44 provides:

Where a bill includes a charge for work done by a lawyer practising in a place out of Victoria -

(a) the charge shall be shown as a disbursement; and

(b) so far as practicable, the charge shall, if allowed, be allowed in an amount appropriate to the place where the lawyer practises.

10 Counsel for the defendant submitted that r 63.44 is in mandatory terms. Accordingly, he submitted that the taxing master must allow all charges for work in fact done in a place out of Victoria, by a lawyer practising in that place, at rates which would be allowable on a party and party assessment in that place. Counsel submitted that, provided the charges for this work are shown in the bill as a disbursement (with all necessary detail) and the taxing master determines that the costs were necessary or proper under r 63.29, the taxing master has no discretion to allow charges at a lesser rate, such as the charges allowable under the Victorian scale.

11 Counsel for the plaintiff submitted that r 63.44 must be read subject to r 63.34(1) which provides:

(1) Subject to paragraph (3), the solicitor for the party to whom costs are payable shall be entitled to charge and be allowed the fees set forth in Appendix A.

12 Counsel for the plaintiff submitted that r 63.44 conflicts with and is subordinate to r 63.34(1). He submitted that the proper interpretation of the regime for party and party taxation is that parties are only entitled to their principal solicitor's costs on the scale set out in Appendix A of the Rules, even though it would be for "work done by a lawyer practising in a place out of Victoria". Counsel submitted that r 63.44 only applies in circumstances where the principal solicitor on the record requires the assistance of an agent solicitor outside Victoria, for limited work not related to the general carriage of the case.

13 I do not accept this submission. In my view, the specific terms of r 63.44 should be given their plain meaning. The structure of rr 63.29, 63.34 and 63.44 demonstrates a clear intention that the taxing master should allow, so far as practicable, the costs of lawyers practising in a place out of Victoria at rates which would be allowable on a party and party assessment in that place. There is no conflict between r 63.34(1) and r 63.44. They each deal with a different subject matter.

14 The above interpretation of the relevant rules is enough to dispose of the issue raised for determination. However, I note that this approach is consistent with a number of authorities, to which I was not referred by either counsel, that deal with similar costs rules in other Australian jurisdictions.

15 In Elders Trustee & Executor Co Ltd & Anor (as executors of the Estate of Howard) v The Estate of Herbert and Anor[2] the Northern Territory Court of Appeal considered the taxation of bills of costs of a successful defendant to an action brought in the Supreme Court of the Northern Territory where that defendant engaged as principal solicitors an Adelaide firm of solicitors. The relevant representatives of the successful defendant were based in Adelaide and the Adelaide firm engaged, as agent, a firm in Darwin to act as a post box in their conduct of the litigation. It was quite clear that the Adelaide principal solicitor conducted the bulk of the legal work.

16 The relevant rule of the Northern Territory Supreme Court Rules was 63.42, in the following form:

(1) Where a bill includes a charge for work done by a lawyer practising in a place out of the Territory -

(a) The charge shall be shown as a disbursement; and

(b) So far as practicable, the charge shall, if allowed, be allowed in an amount appropriate to the place where the lawyer practises.

(2) Where sub-rule (1) applies, a bill in taxable form of that lawyer's fees shall be attached to the bill of the party claiming the disbursement.

the commonplace situation of Darwin solicitors conducting litigation as solicitors on the record for solicitors throughout Australia or elsewhere who have not been admitted to practice in the Territory is not to be impeded in any way by the spectre of substantial litigation being conducted in the Territory pursuant to such an arrangement, and the un-admitted solicitor being at risk about proper recovery on behalf of the client of that solicitor's fees. Provided the fees are properly incurred and reasonable, they are always recoverable on taxation pursuant to an order for costs in the proceedings.[3]

18 In Maggbury Pty Ltd v Hafele Australia Pty Ltd (No. 2)[4] Wilson J considered the position under r 714 of the Uniform Civil Procedure Rules 1999 then applying in Queensland. The successful second defendant received a costs order in its favour. The second defendant was a German manufacturing company and it had an Australian subsidiary which carried on business in Victoria, where its head office was located. Its customary practice was to retain a Melbourne firm of solicitors for all of its legal work. The company was sued in the Supreme Court of Queensland and, according to its usual practice, it instructed its Melbourne solicitors to defend the action. The Melbourne solicitors engaged a Brisbane firm of solicitors to be their agents for the conduct of the proceeding and to appear as the solicitors on the record. It was accepted by her Honour that the vast bulk of the work in preparing for and conducting the trial was performed by the Melbourne solicitors. Relevantly, r 714 provided as follows:

714.(1) A solicitor who includes in a costs statement a charge for work done by another solicitor practising in Queensland as agent for the solicitor must claim the charge as a professional charge, not as a disbursement.

(3) However, if a solicitor includes in a costs statement a charge for wok done by a solicitor or barrister practising outside Queensland, the solicitor must claim the charge as a disbursement.

(4) If the registrar allows a charge mentioned in subrule (3) when assessing costs, the amount the registrar allows must, so far as practicable, be an amount appropriate in the place where the solicitor or barrister practises.

19 Her Honour held that the successful defendant's costs relating to work done by its Melbourne solicitors should be assessed according to the scale of costs appended to the Supreme Court (General Civil Procedure) Rules in Victoria.

20 The position under the Queensland r 714 was further considered this year in Base Metals Exploration NL (In Liq) v Huntley Management Ltd (formerly Teys Management Ltd).[5] In the interim, r 714 had been amended and now reads as follows:

(1) If a costs statement includes a charge for work done by a solicitor practising in Queensland and acting as agent for a party's solicitor, the charge must be shown as a professional charge, not as a disbursement.

(3) If a costs statement includes a charge for work done by a solicitor or barrister practising outside Queensland, the charge must be shown as a disbursement.

(4) If the registrar allows a charge mentioned in subrule (3) when assessing costs, the amount the registrar allows must, so far as practicable, be an amount appropriate in the place where the solicitor or barrister practises.

21 Moynihan J considered and rejected submissions raising concerns that a litigant represented by an interstate practitioner could recover costs on a higher rate than would apply to a litigant represented by a solicitor in Queensland. His Honour held that subrules (3) and (4) of r 714 are not by their terms confined to cases where the solicitor on the record retains an interstate solicitor as agent. In referring to both Elders Trustee and Maggbury, his Honour noted:

By its terms subrule (4) contemplates payment of an amount appropriate in the place where the solicitor or barrister practise for work done by a solicitor or barrister practising outside Queensland.

In both [Elders and Maggbury] rules in equivalent terms were applied to the professional costs of solicitors directly retained by the client as principal. In each case it was held to the effect that the principal solicitor's fees were properly claimable as a disbursement when they retained interstate solicitors as agents.[6]

22 Further, there is in my view a sound policy underlying r 63.44 and rules elsewhere to like effect. The Court should recognise the common practice of litigants instructing solicitors in their home state or territory to act as their principal solicitors in prosecuting or defending actions in other Australian jurisdictions. For administrative and jurisdictional reasons, the principal solicitors will ordinarily engage local agents to deal with the local court and appear as the solicitors on the record. There will be usually nothing improper or unreasonable about such an arrangement.

23 Accordingly, in fixing the appropriate amount to order as security for costs, I will act on the basis that charges for work done by Minter Ellison Sydney should be assessed at a rate which would be allowable upon a party and party assessment of costs in New South Wales.

24 This interpretation of r 63.44 does not mean that all of the work performed by the defendant's Sydney solicitors will, if it is successful and obtains a costs order, necessarily be allowed at the rates applicable in New South Wales. Although I am satisfied that it was reasonable for the defendant to engage Sydney solicitors as its principal solicitors in this proceeding, the taxing master's discretion under r 63.29 should nevertheless be exercised for each item, or class of items, which it is claimed should be allowed. That is, in cases such as this the taxing master will ordinarily consider whether it was "necessary or proper for the attainment of justice or for enforcing or defending the rights of the party" to use the interstate solicitors for that aspect of the work? If so satisfied the charge should, "so far as practicable", be allowed in the amount appropriate to the place where the lawyer practises. The words "so far as practicable" should be interpreted as meaning "insofar as the taxing master is reasonably capable of doing so on the basis of the evidence and his or her experience".

25 I will make orders allowing the parties to file any further evidence upon which they intend to rely in light of the above reasons. I will then proceed to hear and determine the application, and fix an appropriate amount to be provided by the plaintiff as security for costs.

[1] Supreme Court (General Civil Procedure) Rules 2005.

[4] [2001] QSC 78; (2002) 1 Qd R 183.

[5] [2007] QSC 194.