Polleycutt v Taylor [2020] ACTSC 158

McWilliam AsJ:

1. On 5 July 2019, judgment was delivered in respect of three appeals brought by the appellant, Mr Eric Polleycutt, from orders made in the Magistrates Court of the Australian Capital Territory. In the appeal against Ms Aleah Taylor, the respondent (proceedings RO 249 of 2017 in the Court below), the appellant was successful in one respect, with this Court setting aside a gross sum costs order in the respondent’s favour in the sum of $6,000: see Polleycutt v Aldcroft [2019] ACTSC 174 at [58] and [72].

2. Following the delivery of judgment, the parties to the appeal were given the opportunity to make submissions on whether the outstanding issue of the assessment of costs should be remitted to the Magistrates Court, or whether it was appropriate for this Court to re-exercise the discretion to deal with the question of the quantum of costs.

3. On 26 July 2019, having heard from the parties, I made directions for the outstanding question of costs to be dealt with in this Court, and on the papers. That course appeared to me to be one that best achieved the purpose stated in s 5A of the Court Procedures Act 2004 (ACT), of facilitating the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.

4. The parties were given the opportunity to file and serve any written submissions and any further evidence relevant to the quantum of costs in proceedings RO 249 of 2017.

5. The respondent relied on the earlier evidence given to the Magistrate, including the affidavit as to costs, sworn by her then solicitor, Mr Andrew Byrnes of Capital Lawyers.

6. The appellant was given until 23 August 2019, and then a further extension until 30 September 2019, to file any submissions or further evidence. On 19 September 2019, the appellant instead sought, by unilateral email communication to chambers, to have the assessment of costs put aside until an appeal he intended to file was heard. The subsequent delay in finalising the costs question has been due to intervening maternity leave, rather than the Court acceding to the appellant’s request. Assuming the appellant’s request had been properly made, there is no persuasive reason for deferring the resolution of this confined issue until after any appeal of the orders dated 5 July 2019 has been heard and determined.

The judicial exercise of the power to fix costs

7. The Personal Violence Act 2016 (ACT) (PV Act) permits the awarding of costs if the proceedings are found to have been vexatious, frivolous or in bad faith. The Magistrate found the proceedings in the Court below to be frivolous and that finding was not disturbed on appeal. Accordingly, the task for this Court is solely whether it is appropriate to make a gross or lump sum costs order, and if so, to determine the quantum of any such order. The costs that are allowable ‘must not be more than the costs reasonably incurred by the other party’: s 67(4) of the PV Act.

8. Rule 1720(3)(c) of the Court Procedures Rules 2006 (ACT) enables the Court to fix an amount for costs, rather than to leave the costs to be assessed. Some of the principles applicable to fixing a lump sum for costs, rather than proceeding to an assessment of costs, have been set out by Refshauge J in Andara Homes Pty Limited v Nicholas Palm and Ling Jiang [2014] ACTSC 141 (Andara Homes) at [45]- [48], [50] and adopted by Mossop J in The Owners of Unit Plan 932 v De Andrade (nee Marhaba) (No 3) [2017] ACTSC 410 at [3]. They are as follows:

(a) The purpose of the rule permitting such a procedure is to avoid the expense, delay and aggravation involved in protracted litigation arising out of an assessment of costs: see Beach Petroleum NL v Johnson (No 2) [1995] FCA 1250; 57 FCR 119 (Beach Petroleum) at 120.

(b) There is clearly a strong case for assessing a fixed sum where the party required to pay the costs is unlikely to be able to do so due to his, her or its financial position and when a formal assessment will add to the financial burden of the party entitled to the costs without a likelihood of recovering the extra costs spent: see Dunstan v Human Rights and Equal Opportunity Commission (No 3) [2006] FCA 916 at [29], Boyapati v Rockefeller Management Corporation (No 2) [2008] FCA 1375 at [42].

(c) The conduct of the litigation by the party liable for the costs may also be a very relevant factor in determining whether the Court should assess the costs. Where that party has caused trouble and expense in the proceedings, delayed or failed to comply with court orders, or otherwise failed to ensure an expeditious and efficient disposal of the litigation, this may well indicate a protracted process of assessment that would be unfair or unreasonable to impose on the party entitled to the costs: see Sony Entertainment (Australia) Pty Ltd v Smith [2005] FCA 228; 215 ALR 788 (Sony Entertainment) at [192], Summerfield v Summerfield [2007] Fam CA 804 at [109].

(d) The likelihood that the party liable for the costs will not attend the formal assessment of costs is also a relevant factor when deciding whether to fix a lump sum: see Sony Entertainment at [193].

(e) A simple matter may make it entirely appropriate to save the parties the difficulties and inconvenience, and added expense of assessment: see Australasian Performing Rights Association Ltd v Marlin [1999] FCA 1006 at [4]; Keen v Telstra Corporation Ltd (No 2) [2006] FCA 930 at [6]-[7].

Should the Court make a lump sum costs order?

9. Each of these guiding principles has some force in the present case. The overriding consideration is that the matter in the Magistrates Court was simple and the amount of costs in question is under $10,000, making the further time and costs that would be incurred through an assessment unfair or unreasonable. It is therefore appropriate to make a costs order in a fixed amount. What amount is appropriate?

10. As to how to approach the task of fixing a gross sum costs order, I have applied the following principles:

(a) A gross or lump sum order is not the result of a process of assessment of costs. The Court does not undertake the detailed scrutiny normally reserved for formal assessments. The lump sum can only be fixed broadly, having regard to the information before the Court: Beach Petroleum at 124; Ginos Engineers Pty Ltd v Autodesk Australia Pty Ltd [2008] FCA 1051; and Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 at [22]; cited in Andara Homes at [49].

(b) The evidence relating to the costs sought must be sufficiently detailed and must clearly identify the components of the costs incurred and how they have been calculated: Motor Trades Association of Australia Superannuation Fund Pty Ltd v Rickus [2007] FCA 1878 at [26].

(c) To ensure that a weaker party is not disadvantaged by a lump sum costs order, the Court may adopt a careful and conservative approach to fixing the costs: Dunstan v Seymour [2006] FCA 917 at [25].

(d) The Court must be astute to prevent prejudice or injustice, either to the party ordered to pay the costs (by overestimating the costs), or to the successful party (by adopting an arbitrary “fail safe” discount on the cost estimates before the Court): Beach Petroleum at 124; cited in Andara Homes at [49].

(e) The Court may take into account that the costs should bear some relationship to the size of the applicant’s victory and should be proportionate to the nature and importance of the case: Canvas Graphics Pty Ltd v Kodak (Australasia) Pty Ltd [1998] FCA 23.

11. I have reviewed the Bill of Costs annexed to Mr Byrnes’ affidavit and the transcript of the submissions made by Mr Byrnes to the Magistrate in the Court below. The amount sought is $7,500, said to be exclusive of GST.

12. There are a number of difficulties with the Bill of Costs. First, it is said to be on a party/party basis, however no figure was provided as the actual solicitor/client costs, so as to enable the Court to have confidence in the sums said to be party/party costs.

13. Second, the document does not set out the time spent, only the amount charged. The solicitor’s affidavit does not depose to an hourly rate or who did the work. The solicitor with carriage of the matter informed the Magistrate in the Court below that the charge out rate used was $300 per hour, which the Magistrate did not consider to be excessive. I have assumed that it was Mr Byrnes who was undertaking the work.

14. Third, a number of the entries in the Bill of Costs contain only very general descriptions of what work was undertaken. These include statements such as ‘time engaged in drafting email of advice to clients’ or ‘time spent perusing email correspondence from [the respondent’s father]’, who was also a respondent in related proceedings. The lack of any detail makes it difficult to be satisfied that those costs were reasonably incurred and properly attributable to the respondent’s proceedings.

15. The reason the uncertainty arises in this case is due to the fact that the solicitors for the respondent were also acting for the respondent’s parents, who were each the subject of separate proceedings brought by the appellant. The solicitor’s evidence in the affidavit was that although there were three separate proceedings, only one file was maintained for all three respondents. The costs that were attributable only to the present respondent’s matter were separated out at a later date, when the Bill of Costs was being created for the purposes of the costs hearing.

16. This may explain the lack of specific detail in some of the particulars describing the nature of the work undertaken for this particular respondent, however the onus is on her to prove the reasonable incurrence of the costs in relation to the proceedings. Amounts incurred relating generally to advice may not have been relevant to the respondent’s proceedings.

17. Although the sum is to be fixed broadly and not by detailed scrutiny, I have concerns about three specific items. The first relates to an application to strike out the claim which never proceeded. The Magistrate held that it was not appropriate to allow such costs and I agree with that finding.

18. The second and third items relate to a charge of $900 for work undertaken in preparing documents for a costs hearing and appearing at the costs hearing. I have earlier held that the costs hearing should not have proceeded in the way that it did, with the appellant not having had the opportunity to consider the evidence presented to him before he saw it for the first time during a hearing he had not anticipated. The respondent’s costs of appearing at such a hearing ought not to be paid by the appellant.

19. The amount charged for the hearing rolled up the preparation of the Bill of Costs in anticipation of the hearing. As such, the Court is unable to determine how much time was spent in the preparation of the Bill of Costs. I can see why the approach taken by the solicitors for the respondent in charging time in one block, despite there being three clients, may have been a method convenient to the solicitors for the respondent, but the appellant should not then have to pay for the extra work the solicitors undertook in creating the Bill of Costs for a costs hearing that related to only one of the respondents. If the costs had been separately charged in each of the three proceedings, little to no extra time would have been necessary in presenting the Bill of Costs for the consideration of the Court below, or this Court on appeal.

20. In light of these concerns, a conservative approach should be adopted, albeit one which does not unduly discount the fees charged by the respondent’s solicitors. Taking all these matters into account and the importance of maintaining the proportionality of the costs incurred to the nature of the dispute between the parties, I consider that it is appropriate to fix the costs payable by the appellant in the sum of $4,500.

21. The Court makes the following orders: (1) In proceedings RO 249 of 2017, the appellant is to pay the respondent’s costs fixed in the sum of $4,500.

I certify that the preceding twenty-one [21] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Associate Justice McWilliam.

Associate:

Date: 18 June 2020