BETWEEN : LAING O'ROURKE (BMC) LIMITED (FORMERLY BARCLAY MOWLEM CONSTRUCTION LTD) (ACN 009 830 460)

Practice and procedure - Appeal from decision of Registrar by way of a hearing de novo - Costs - Whether there is power to direct a party to pay costs incurred by the other party in the course of process of conferral required under O 59 r 9 - Allegations of unreasonableness during "conferral process" - Process of conferral - Whether the costs incurred by the respondent (defendant) in preparing its schedule of objections were properly and reasonably incurred

Rules of the Supreme Court 1971 (WA), O 59 r 1, O 60A r 4, O 60 r 2A, O 65B, O 66 r 18

Supreme Court Act 1935 (WA), s 37

The appellant pay the respondent's costs fixed at $14,000 but subject to review upon further submissions, if any

Project Planning and Management (WA) Pty Ltd v Kinrade Australia Pty Ltd [2003] WASC 25; (2003) 27 WAR 194

Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161

1 MARTIN CJ: This is the plaintiff in the substantive proceedings appeal from the decision of a registrar of the court in which he ordered that:

1. The plaintiff pay the defendant's costs of and incidental to the preparation of objections to the plaintiff's minute of proposed amended statement of claim prepared and served pursuant to the order dated 31 May 2006;

2. the plaintiff pay the defendant's costs in accordance with order 1 to be agreed, or in default of agreement, taxed and paid forthwith;

3. the defendant's costs be taxed pursuant to item 10 of the scale and without regard to the limits set out therein;

4. the plaintiff pay the defedant's costs of the application to be taxed and paid forthwith.

2 Appeals from registrars (other than an appeals registrar) ordinarily lie to a master (O 60A r 4). However, pursuant to O 60 r 2A (as it was when this matter was heard), any matter authorised by the Rules of the Supreme Court 1971 (WA) ("the Rules") to be heard and determined by a master can be brought before a judge by leave of a judge or master. I gave leave in relation to this appeal because by the time it came on for hearing, the case had been admitted to the Commercial and Managed Cases List ("CMC list") and was being case managed by me. One of the philosophies underpinning the CMC list is an endeavour to ensure that, wherever practicable, all interlocutory disputes in one set of proceedings are determined by the same judicial officer.

3 In order to set the context for the issues that were raised in the course of the appeal, it is necessary to set out a little of the history of these proceedings.

4 The proceedings concern disputes arising from a contract under which the appellant agreed to design and construct a Bulk Liquids Berth for the respondent near the existing Dampier cargo wharf in Mermaid Sound, Dampier. They were commenced on 20 April 2006 by a writ endorsed with a statement of claim. The statement of claim occupied over 100 pages, to which a number of schedules were attached. The pleading took a narrative form of a kind commonly used in Points of Claim in commercial arbitrations. However, in addition to its general narrative form, it was divided into a number of sections dealing with specific aspects of the appellant's claim.

5 The pleading was probably not a paragon of the pleader's art, but it performed the function of identifying the essential character of the claims being advanced by the appellant, albeit in a somewhat prolix way.

6 By letter dated 3 May 2006, solicitors for the respondent drew attention to a number of erroneous references and cross-references in the statement of claim which were not said to be exhaustive. The letter was said to relate only to the errors on the face of the pleading and not to the substance of the pleading, in respect of which the respondent's rights were reserved.

7 By letter dated 8 May 2006, the solicitors for the respondent asserted that, "there are fundamental defects in the Statement of Claim". The solicitors for the appellant were advised that objections to the statement of claim were being prepared to be settled by Senior Counsel. The letter did not identify what the "fundamental defects" were said to be, other than to refer to the earlier letter of 3 May 2006. However, as I have observed, that letter did not address the substance of the pleading.

8 By letter dated 11 May 2006, solicitors for the appellant advised that the mistaken references and cross-references had been corrected, but that before an amended statement of claim was issued, they would await receipt of the further objections which had been foreshadowed.

9 By letter dated 16 May 2006, solicitors for the respondent objected to that course and requested delivery of the amended pleading. Accordingly, by letter dated 18 May 2006, solicitors for the appellant provided a proposed amended pleading and requested a clear statement of the objections to the pleading forthwith. The proposed amended pleading sent under cover of that letter was substantially the same as the pleading endorsed on the writ, save for correction of the erroneous references and cross-references.

10 By letter dated 24 May 2006, solicitors for the respondent required the solicitors for the appellant to file the proposed amended statement of claim and foreshadowed, in the most general way, an objection to the relevance of some of the paragraphs of the pleading and to its general style.

11 At a status conference held on 31 May 2006, a Registrar directed that the respondent deliver its objections to the statement of claim by 28 June 2006, that the appellant respond to those objections by 28 July 2006 and that the parties thereafter confer by 9 August 2006 in respect to the objections which were not conceded.

12 By letter dated 1 June 2006, solicitors for the respondent identified a specific complaint in relation to the pleading; being, essentially a complaint that a constructed representation was said to derive from 80 paragraphs of narrative pleading.

13 By letter dated 28 June 2006, solicitors for the respondent conveyed a schedule of objections to part of the proposed amended statement of claim. The schedule comprised some 44 pages and contains at least one objection to almost every paragraph in the pleading and in the case of a number of paragraphs, a number of separate objections. While some of the objections raised issues of substance, it is clear that a significant number of them were of a pedantic kind, often based on semantic issues.

14 By letter dated 7 July 2006, a further schedule of objections to another portion of the proposed amended statement of claim was provided by solicitors for the respondent. It comprised some 22 pages and was of the same character as the first tranche of objections.

15 A third instalment of objections to the proposed amended statement of claim was provided by solicitors for the respondent under cover of a letter dated 12 July 2006. That schedule comprised some 43 pages. It was of the same character as the previous schedules. To take one example, chosen entirely at random, par 12.18 and par 12.19 of the proposed pleading were in the following terms:

"12.18 Further, or in the alternative to paragraph 12.17 above, if the works referred to [sic in] paragraphs 12.5 to 12.16 above did not form part of the Works under the Contract, then the DPA has been unjustly enriched at the expense of BMCL because:

(a) the works referred to [sic in] paragraphs 12.5 to 12.16 above were provided by BMCL at its expense;

(b) The DPA have received the benefit of the works referred to [sic in] paragraphs 12.5 to 12.16 above; and

(c) BMCL provided the works referred to [sic in] paragraphs 12.5 to 12.16 above under the mistaken belief that it would be paid under the Contract.

12.19 In the circumstances pleaded above BMCL is entitled to be paid for the works referred to [sic in] paragraphs 12.5 to 12.16 above on a quantum meruit."

16 Those paragraphs, which appear entirely conventional and comprehensible, precipitated the following objections:

"Paragraph 12.18 should be struck out as it is ambiguous and unintelligible with the consequence that it is embarrassing (Order 20 Rule 19(1)(c)). The plea is theoretical. It pleads 'if the Works referred to in paragraphs 12.5 to 12.16 ...'. Well, were they? It poses a hypothetical. It does not plead anything. Further, paragraphs 12.18(a) to 12.18(c) all contain the phrase 'the works referred to paragraphs 12.5 to 12.16 above'. It is unclear what BCML is alleging to be 'the works' pleaded within each of these paragraphs. For instance, paragraph 12.7 pleads 'By reason of the Superintendent's wrongful rejections of at least 187 days of BMCL's extension of time claims, the DPA has, in breach of GC 20, failed to ensure that the Superintendent had fulfilled all aspects of its roles and functions reasonably and in good faith', which makes no reference to anything that may be considered to be 'the works' provided by BMCL.

We repeat our objections to the use of the terms 'Works' and 'Contract'.

Paragraph 12.19 should be struck out as it is ambiguous and unintelligible with the consequence that it is embarrassing (Order 20 Rule 19(1)(c)). The phrase 'In the circumstances pleaded above' is ambiguous and confusing. Is BMCL referring to everything pleaded from paragraph 1.1 to 12.18?

We repeat our objections under paragraph 12.18 to the phrase 'the works referred to paragraphs 12.5 to 12.16 above'."

17 Objections of that character (and there are many throughout the schedules to which I have referred) are pedantic and unhelpful. They reflect a wilful refusal to draw the obvious sense of a simple and straightforward pleading and appear only consistent with an objective of obfuscation and delay.

18 The final instalment of objections to the proposed pleading was provided under cover of a letter from the solicitors for the respondent dated 14 July 2006. It comprised 39 pages, so that a total of 148 pages of objections had by now been provided. Two pages of those objections related to the schedules to the proposed pleading, so that 146 pages of objection had been provided in respect of a pleading which occupied 111 pages.

19 The fourth instalment of the schedule of objections to the proposed pleading was of the same character as the earlier instalments.

20 The final page of the fourth instalment of the schedule of objections, which was the 39th page of that schedule, concludes with the tantalising statement:

"We reserve the right to raise further or alternative grounds of objections in the event that this matter is subject to a formal hearing in the Supreme Court of Western Australia."

21 To take another entirely random example, the fourth tranche of objections commences with the assertion that:

"As a general comment, the whole of section 13 is embarrassing and likely to prejudice, embarrass or delay the fair trial of the matter (Order 20 Rule 19(1)(c))."

That is a singularly unhelpful assertion, because of its generality.

"All the headings should be struck out as they disclose no reasonable cause of action (Order 20 Rule 19(1)(a)). They are confusing, argumentative and in some cases misleading. By way of example, within the first two pages of s 13, there is a heading summary introduction and overview. How is the DPA meant to respond to these headings?"

23 In my view, this is pedantry of a kind which must be discouraged. Headings to a pleading can be extremely helpful in guiding the reader to the issues which are being addressed. I do not see how it can be seriously asserted that a defendant is prejudiced in any meaningful way by a heading which says "Introduction".

24 The examples of the objections I have set out above have been taken by me entirely at random and although I cannot profess to have gone through each and every objection taken, they are indicative of the pedantry of many of the objections. There may well be issues of substance to be found somewhere within the 148 pages of objections; but if they are there, they have been effectively obscured by the sheer volume of the trivial and pedantic objections taken.

25 On 28 July 2006 the solicitors for the appellant wrote to the solicitors for the respondent in the following terms:

"We have now had an opportunity to review your client's objections. The number and detail of the objections raised appear to us to be, in the main, pedantic, repetitive and focused on the minutia [sic] of the statement of claim. In summary, the objections are really aimed at delaying and obstructing the progress of the case, rather than achieving any sensible objective.

In light of this and generally given the number of objections raised, our client considers that it would be more time and cost efficient to substitute the current statement of claim with the repleaded statement of claim. We are now in the process of preparing this document."

26 It will be clear from the observations I have already made that, in my view, the assertions made by the solicitors for the appellant as to the character of the objections taken were justified.

27 At a status conference held on 15 August 2006, orders were made granting leave to the appellant to file and serve a substituted statement of claim by 7 September 2006 and directions were made for the provision of objections to that amended pleading and for a response to those objections and subsequent conferral. It is unnecessary to now recount what occurred thereafter, other than to observe that a substituted statement of claim was filed and served on 4 October 2006 which was fundamentally different in form to the earlier pleading. Although the substantive claims asserted were essentially the same, the pleading was now much more succinct and occupied some 56 pages. At the same time, the proceedings against the second respondent, who was the original superintendent on the project, were discontinued.

28 The pleading filed on 4 October 2006 precipitated another stream of objections from the respondent, which I characterised as pedantic in nature in an interlocutory decision which I gave on 30 November 2006. I am pleased to record that following conferral thereafter, a further statement of claim has been filed which is no longer the subject of objection and to which a defence and counterclaim have now been provided.

29 In the meantime, the respondent had taken out a summons for costs orders substantially in the form made by the Registrar and which are the subject of this appeal. That application was supported by an affidavit which annexed the correspondence and objections to which I have referred. Also annexed was a draft bill of costs said to have been prepared pursuant to item 32(a) of the Supreme Court Scale of Costs ("the Scale") being "Other work: Time reasonably spent by a practitioner" supported by a schedule setting out the date upon which work was done, a description of the work, the fee earner who had undertaken the work, the time undertaken in performing the work, and the amount claimed. Because some work had been done before 1 July 2006, when the Scale changed, and some after that date, the schedule of work done was divided into two. The total amount claimed in the draft bill was $116,783.02. Although I have not done the calculations myself, it was asserted in argument that the total professional time claimed in the draft bill exceeds 400 hours, or more than 10 weeks of full-time work by one person.

30 The application came before the Registrar on 31 October 2006. During the course of argument, the Registrar pointed out that he would be the officer of the court who would undertake the taxation. His reasons for decision were succinct and can be set out in full:

"I propose making an order in terms of paragraphs 1 and 2 of the minute dated 5 September 2006, and I will also make an order that the first defendant's [respondent] costs be taxed pursuant to item 10 of the scale and without regard to the limits set out therein. Can I just make the point about that, that I'm lifting the limit because it's apparent from the affidavit of Collins in support of the application that an enormous amount of work was done in relation to these objections and the conferral process.

I understand the proposition put by the plaintiff [appellant] that the work was not reasonably and necessarily done, but it does seem to me that that's a proposition which needs to be looked at in greater detail not today but in taxation. So it follows from that, even though I've raised the limit there is authority to this effect and it doesn't mean that the first defendant [respondent] will necessarily recover more than the limit.

It's entirely possible that I will take the view that the work was not reasonably necessarily done and that the limit in item 10 of the scale would be more than adequate, but I do think that by virtue of the amount of work said to have been done, it's appropriate to lift the limit and consider that issue in more detail at the taxation."

Item 10 of the Scale relates to proceedings in Chambers.

31 There are three grounds of appeal. Each asserts error on the part of the Registrar. However, it has been held that notwithstanding that O 60A r 6 provides that an appeal from a registrar "shall be by way of rehearing", the nature of the appeal is by way of hearing de novo: see Project Planning and Management (WA) Pty Ltd v Kinrade Australia Pty Ltd [2003] WASC 25; (2003) 27 WAR 194. In that case, Master Sanderson reviewed the authorities dealing with the nature of review customarily undertaken when judicial power is delegated to an officer who is not a member of the Court. Those cases, and the reasoning of Master Sanderson, lead me to the same conclusion; that is, that the nature of an appeal from a registrar is by way of a rehearing de novo in which it is unnecessary to demonstrate error. Counsel for the respondent to the appeal before me accepted that proposition. Accordingly, it is neither necessary nor appropriate for me to review the process of reasoning undertaken by the Registrar. Rather, the proper course is for me to proceed as if the matters were argued before me afresh, and to form my own view as to the proper disposition of the respondent's application, uninfluenced by the view taken by the Registrar and undistracted by the need to identify error.

32 The appellant submits that there is no power to direct one party to pay the costs incurred by another party in the course of a process of conferral ordered by the court. It is submitted in the alternative that if there is such a power, it should not be exercised in this case because the respondent acted unreasonably in the conferral process.

33 Both submissions assume that the preparation of the schedule of objections was a part of the process of conferral required under O 59 r 9. However, that assumption is not correct. I have previously expressed the opinion that the process of conferral required by O 59 r 9 involves communication, preferably oral, between representatives of the parties with authority to settle a prospective interlocutory dispute undertaken in a genuine and meaningful attempt to resolve the interlocutory dispute without the necessity of resolution by the court: see Youlden Enterprises Pty Ltd v Health Solutions (WA) Pty Ltd [2006] WASC 161. The prolix schedule of objections prepared in this case did not form any part of any meaningful process of conferral of the kind contemplated by O 59 r 9. On the evidence, there appears to have been no oral communication between the representatives of the parties whatsoever. This is to be regretted. Nor was the schedule of objections an appropriate basis or foundation for such a conferral because of its prolix and pedantic character, and the fact that it obscured rather than elucidated the substantive issues about which meaningful conferral was required.

34 Accordingly, the appellant's submission that the court lacks power to order one party to pay costs incurred by another in respect of the process of conferral required by O 59 r 9 does not require determination in this case, but must in any event fail. Section 37 of the Supreme Court Act 1935 (WA) provides that the costs of and incidental to all proceedings in the Supreme Court shall be in the discretion of the court or a judge and the court or a judge shall have full power to determine by whom and to what extent such costs are to be paid. Even if there was no specific item in the Scale relating to conferral under O 59 r 9, that would provide no impediment to an award of costs, having regard to O 66 r 18. Order 66 r 18 which provides that in respect of any matter not specifically provided for in any relevant scale, the court or the Taxing Officer may allow costs by way of analogy according to the item in the scale which is most nearly applicable thereto, or if there is no such item, then such sum as in the opinion of the court or the Taxing Officer is adequate in the circumstances. But, in any event, there is a specific item relating to conferral required by the Rules in each of the relevantly applicable scales; namely, item 23.

35 For the reasons I have given, the schedule of objections prepared by the respondent cannot properly be characterised as part of a process of conferral required under O 59 r 9 of the Rules. How then is it to be characterised? On the view of the document most favourable to the respondent, it could be characterised as the product of work done with a view to encouraging the appellant to withdraw the statement of claim and replead, in which regard it was successful. On another view of the document less favourable to the respondent, it was a misguided and misconceived attempt to provide a series of specific objections which could have provided the basis for an application to strike out the statement of claim. However, in the event no such application was brought. It therefore seems, to me, to be quite impossible to characterise the work done as falling within item 10 of the Scale, which concerns "Proceedings in Chambers". There never were any proceedings in Chambers to which the schedule of objections related and the fact that the schedule was prepared initially in accordance with a timetable set by a direction made in Chambers would not, of itself, bring the work done within the notion of "Proceedings in Chambers".

36 Obviously, because there was no application to strike out the statement of claim, nor any determination of any such application, there has been no occasion to determine the extent to which there are within the schedule issues of substance which were properly ventilated, albeit obscured by the pedantry and prolixity of the schedule.

37 It is important when dealing with issues of this kind to remember that the court has a broad and general discretion in respect of costs and to endeavour to avoid being distracted by the detail of characterisation of items in the Scale, at least until after the principled basis for the exercise of the general discretion has been established.

38 Turning then to the factors which should guide the principled exercise of that general discretion in this case, it is the fact that the appellant produced a lengthy statement of claim from which it voluntarily resiled in the face of criticism by the respondent. The revised statement of claim produced as a consequence of those criticisms was very different in style and format. In those circumstances, it may reasonably be inferred, and counsel for the appellant conceded, that there had been a recognition by the appellant that the form of the initial pleading; being narrative and discursive in style, was inappropriate and that a different form should be adopted. Had the appellant recognised that proposition prior to filing and serving the initial pleading, or after the initial complaint by the respondent, the large amount of work injected by the respondent into the schedule of objections would have been averted.

39 On that view, the work done and the costs incurred by the respondent in preparing the schedule of objections were thrown away by reason of the appellant's repleading of the statement of claim. Of course, the usual practice is to require any party seeking the indulgence of an amendment to a pleading to pay the costs thrown away by reason of that amendment. However, that practice only extends to costs properly and reasonably incurred. On this approach, the real question in this case becomes whether the costs incurred by the respondent in preparing the schedule of objections were properly and reasonably incurred. If, and to the extent they were properly and reasonably incurred, principle would suggest that they should be recouped by the respondent.

40 On one view, that question could only be adequately answered after a detailed review of each and every objection taken over the course of 148 pages in relation to a pleading which has now been abandoned. The obvious difficulty is that such a course would likely involve incurring costs of the same or greater magnitude as are currently in issue and would consume a substantial amount of the limited judicial resources of the court which are much better deployed on more fruitful endeavours. One approach, which has its temptations, would be to leave the identification of the extent to which the costs incurred in the preparation of the schedule of objections were reasonably and properly incurred to a taxing officer. That is essentially the approach adopted by the Registrar. However, the difficulty with that course is that, in substance, it is simply shifting and deferring the burden of attempting to fathom which, if any, of the objections specified in 148 pages of materials were properly and reasonably taken.

41 Difficulties in quantifying and apportioning costs that are not readily identifiable or severable are not uncommon. When they arise, it is the usual practice for the court to adopt a pragmatic approach so that, for example, when a party has been partly successful and partly unsuccessful, the court will fashion an appropriate costs order by reference to a necessarily general assessment of the extent of the work done in relation to that part of the argument that was successful and that part which was not. In those circumstances, the exercise is one of art rather than science.

42 In summary therefore, it seems, to me, that the proper exercise of the court's general discretion in respect of the costs incurred by the respondent in preparing the schedule of objections to a pleading which was later abandoned, is to accept that those costs to the extent that they were reasonably and properly incurred; form part of the costs thrown away, by reason of the abandonment and repleading of the statement of claim; and should be recouped by the respondent. However, there has never been any determination of the extent to which the objections enunciated in the schedule prepared by the respondent were soundly based and it would be a futile and inefficient deployment of the resources of the parties and of the limited resources of the court to trawl through the objections specified in the schedule for the purpose of determining which had merit and which lacked substance.

43 An alternative approach would be to adopt as a surrogate for the assessment of that portion of the costs of preparing the schedule that were in fact reasonably and properly incurred, the costs which could and should have been reasonably incurred if, instead of embarking on the tortuous process of preparing a prolix schedule of objections, the respondent had undertaken a meaningful process of conferral under O 59 r 9 and in the course of that process, communicated to the representatives of the appellant the substantive objections to the pleading.

44 That approach seems to me to achieve the desirable outcome of requiring the appellant to pay an amount which reflects the costs which would have been thrown away if the respondent had responded reasonably, but not those costs incurred in preparing a schedule which was, in my view, an unreasonable and unproductive response to the problems with the pleading. From the perspective of the respondent, an amount assessed in this way would defray its costs actually incurred in an amount equal to the costs which would have been incurred had the response been reasonable and appropriate.

45 The best approach I can take to the estimation of that amount is to make my own assessment taking into account the times claimed in the draft bill of costs and the rates claimed therein. However, because I have not foreshadowed that approach to the parties in the course of argument, nor sought submissions in relation to it, procedural fairness requires that I publish my tentative views and then invite submissions from the parties which I would expect can be provided within 14 days of making these reasons available to the parties, together with an indication from each of the parties as to whether they require a further opportunity for oral argument, which I would hope will not be necessary.

46 Turning then to my necessarily unsophisticated attempt at quantification of the costs that would have been properly and reasonably incurred in the course of a meaningful process of conferral, the first step in such a process would have been a careful review of the statement of claim for the purpose of identifying the substantive issues that were to be raised. I would estimate that process may have taken up to four days of the time of a senior practitioner and therefore, perhaps, 25 hours of professional time. Instructions would then have had to be taken and the process of conferral itself undertaken. I would estimate those processes may have taken a little over two days in total, say, 15 hours of the time of a senior practitioner, giving a total of 40 hours.

47 The rate to be applied to those estimates of time should be the rate specified in item 23 of the Scale which covers conferrals required by the Rules. For the period prior to 1 July 2006, the rate for senior practitioners, was $341 per hour; and after 1 July 2006, the relevant rate was $363. Given that it is not possible to be certain which of the work would or should have been carried out prior to 1 July 2006 and given the necessary imprecision of this exercise, it seems to me to be appropriate to apply an approximate mid-point in that range to all the estimated hours, say, $350 per hour. This process of estimation would allow a sum of $14,000 as being costs which would have been properly and reasonably incurred in responding to the statement of claim which was later abandoned.

48 Accordingly, for these reasons I would be disposed to allow the appeal and in place of the decision of the Registrar, order that the appellant pay, as part of the costs thrown away by reason of the amendment of the statement of claim, the costs of the respondent in responding to the original statement of claim, in an amount to be fixed by me, which I would tentatively assess in the sum of $14,000, but which amount will be subject to review in the light of any further submissions I might receive from the parties.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : LAING O'ROURKE (BMC) LIMITED (FORMERLY BARCLAY MOWLEM CONSTRUCTION LTD) -v- DAMPIER PORT AUTHORITY [2007] WASC 87 (S)

BETWEEN : LAING O'ROURKE (BMC) LIMITED (FORMERLY BARCLAY MOWLEM CONSTRUCTION LTD) (ACN 009 830 460)

Costs - Manner in which to assess costs thrown away as a result of an amendment to statement of claim.

Costs - Costs of application to Registrar in relation to objections and costs of appeal from below.

Costs of the appeal and the hearing before the Registrar be in the cause

1 MARTIN CJ: There are two matters that remain outstanding in relation to the appeal which I heard on 19 December 2006. I have just published my reasons for allowing the appeal. I made an advance copy of those reasons available to the parties a fortnight ago and in doing so, I invited submissions as to the amount I was proposing to fix by way of costs in lieu of the order for taxation made by the Registrar. Those costs are to be awarded to the respondent as part of the costs thrown away as a result of the plaintiff appellant's amendment of the statement of claim.

2 In my published reasons, I proposed to adopt, as a surrogate for the identification of those portions of the schedule of objections prepared by the respondent that may have been properly and reasonably advanced, an alternative method of calculating an amount to be paid to the respondent; and in applying that method, I arrived at the sum of $14,000.

3 I invited submissions from the parties with respect to that methodology and calculation because I had not disclosed it to them in the course of argument. Since then, each party has indicated that they do not oppose that methodology or calculation and therefore I propose to make orders that the judgment of the Registrar be set aside and in lieu thereof there be substituted orders that the appellant pay as part of the costs thrown away by reason of the amendment of the statement of claim the costs of the respondent in responding to the original statement of claim in an amount fixed at $14,000.

4 The second outstanding matter concerns the costs of the application to the Registrar and the costs of the appeal to me. Dealing first with the costs of the application to the Registrar, the position of the parties before the Registrar was that the respondent sought an order for its costs of preparing the schedule of objections, to which I have referred, and had estimated those costs in an amount in excess of $100,000.

5 The appellant on the other hand accepted that an order should be made giving the respondent costs thrown away by reason of the amendment, but opposed any order in respect of the costs of preparing the schedule of objections, any lifting of the scale and any order that the costs be payable forthwith.

6 In my view, it seems that each of the parties have had some measure of success having regard to their positions before the Registrar. From the respondent's perspective, it has had a measure of success in that it has received an amount in respect of its costs of preparing the schedule of objections; being, my surrogate assessment of the costs of that portion of the schedule that I take to have been reasonably and properly incurred in an amount of $14,000.

7 It has also been partially successful, to the extent that that amount exceeds the scale, and it has also achieved an order that those costs be payable forthwith. On the other hand, the appellant has also been partially successful in that the amount of over $100,000 that was sought has been very substantially reduced.

8 Similar considerations apply in relation to the appeal before me. There were issues before me raised by the appellant in respect of the question of whether the Registrar had fallen into error. I did not consider it was necessary or appropriate to resolve those issues. There were also issues before me with respect to whether costs of conferral could be recovered and I resolved those issues adversely to the appellant.

9 In relation to the central question concerning the costs of the schedule, the position of the parties was much the same as it had been before the Registrar. The respondent's position was that the respondent should be entitled to recover its costs of the preparation of the schedule. The appellant's position was that the respondent should not be entitled to recover any of the costs of the preparation of the schedule. I came to the view that the respondent should receive that portion of the costs of the preparation of the schedule that were properly and reasonably incurred and adopted a surrogate method of assessing those costs; so to that extent, the respondent was partially successful.

10 Then again, the appellant was partially successful because it had removed the risk of the assessment of the costs of the preparation of the schedule being substantially greater than my assessment and closer to the amount claimed by the respondent which, as I have said, was in excess of $100,000.

11 It is also appropriate for me to bear in mind that the issues arose with respect to the costs of the preparation of the schedule because of the appellant's withdrawal of the first pleading. The appellant has accepted that an inference of acceptance of the inadequacy of that pleading can be drawn from that fact. It is also fair to say that there was some uncertainty of practice and procedure in relation to issues of this kind arising from the process of conferral that has not been fully resolved by prior decisions.

12 In the result the position at which I arrived on appeal was not substantially different to the position of the Registrar in the sense that we each concluded that the respondent should recover that portion of its costs of preparing the schedule which were properly and reasonably incurred. The Registrar proposed to do that at taxation, presumably by going through the schedule. I adopted a rather different method of assessment, but in the result the position was substantively the same.

13 I would apprehend that this appeal was brought because of the respondent's claim for a sum in excess of $100,000. Had a more modest sum been claimed, it may be more likely that the appellant would have been prepared to take its risk in relation to taxation.

14 The view that I take in relation to the proceedings both before the Registrar and on appeal, is that each party has had some measure of success and each party has had some measure of failure. It seems, to me, that in those circumstances, the proper exercise of my discretion is to regard the costs that the parties have incurred as an unfortunate aspect of the way in which this litigation has been conducted. Therefore, the proper exercise of my discretion is to direct that those costs should be borne by the party who is ultimately held to be responsible for the costs of the litigation generally. I propose, therefore, to order that the costs of the application to the Registrar and the costs of the appeal to me be in the cause.

15 That means the party ultimately responsible for them will be the party who is found to have been responsible for the generation of this litigation. I think these costs are properly regarded as a part of the overall cost of that litigation.