SIMMONS -v- LOVE [No 2] [2016] WASC 167 (7 June 2016)

1. the defendant pay the plaintiffs' costs of the action up to and including 10 November 2014, such costs to be taxed if not agreed;
2. the plaintiffs pay the defendant's costs of the action from 11 November 2014, such costs to be taxed if not agreed; and
3. the defendant pay the plaintiffs' costs of the counterclaim, such costs to be taxed if not agreed.

4 On this review, I am only concerned with the first of those orders, as to the plaintiffs' allowed taxed costs against the defendant up to 10 November 2014. As to those costs, the plaintiffs lodged a bill of costs on 20 August 2015. Under that bill, the plaintiffs were seeking, in respect of their claimed costs of the action to 10 November 2014, $100,867.85, plus disbursements of $4,654.64.

5 Specific items in the plaintiffs' bill of costs that are relevant to this review include:

• Bill Item 5 - Reply (May 2014)
• Bill Item 7 - Giving discovery (May 2014)
• Bill Item 9 - Amended reply (June 2014)
• Bill Item 10 - Supplementary discovery (June 2014)
• Bill Item 13 - Re-amended reply (August 2014)
• Bill Item 15 - Supplementary discovery (September 2014)

6 The plaintiffs' bill of costs of 20 August 2015 was taxed by Registrar Dixon on 8 October 2015. By letter from their solicitors dated 21 October 2015, the plaintiffs objected to various allowances that were made at that taxation. The objections letter was in accord with RSC O 66 r 53(1), as regards a process for a party dissatisfied with taxation then to object and to apply for review to the taxing officer.

7 Specifically, the plaintiffs sought a review of the taxing officer's disallowance of claimed costs under submitted bill items 9 and 13 (in respect of two amended reply pleadings), as well as bill items 10 and 15 (in respect of the giving of supplementary discovery by the plaintiffs on two occasions).

8 On 22 December 2015 the taxing officer completed the review of the taxation, determining that the allowances for bill items 9 and 13 (the amended replies) would not be increased, but that additional allowances would be made for bill items 10 and 15 (the supplemental discoveries). The taxing officer allowed the bill (after taxing off an amount of $30,028.33) and signed a certificate of taxation, certifying he had 'taxed the plaintiffs' bill of costs filed 20 August 2015 and allowed the sum of $77,381.51'.

9 As will be seen, the amount now at issue in this review of the review of taxation is not large.

10 For the hearing on 22 March 2016, the plaintiffs relied on a written outline of submissions filed 21 March 2016, which was supplemented by further submissions at the hearing. The defendant filed no submissions and represented himself before me. I should also note that the defendant did not file any submissions in response to the objections that were made to the taxing officer by the letter of the plaintiffs' solicitors of 21 October 2015, for the purpose of that initial review of the taxation.

Two areas of disallowance complained about First area

11 In the initial taxation of the plaintiffs' bill on 8 October 2015, the taxing officer indicated a position in respect of disallowing claimed sums in respect of bill items 9 and 13 (involving an amended reply pleading and then a reamended reply pleading).

12 The maximum allowance for a reply under scale item 4 of the Legal Practitioners (Supreme Court) (Contentious Business) Determination 2012 (WA) (the 2012 Costs Determination) is $4,510 (GST inclusive). That maximum allowance represents an amount arrived at on a basis of a 10hour allowance for a Senior Practitioner (SP) working at the maximum hourly rate (for a Senior Practitioner) of $451 per hour - see cl 8 of the Schedule to the 2012 Costs Determination.

13 At the initial taxation, the taxing officer had allowed $3,500 for a reply pleading under bill item 5, which was the full amount claimed. As regards bill item 9, the amended reply, the taxing officer foreshadowed allowing only $1,010 and taxing off $794. That allowed amount was roughly two-thirds of the amount claimed in respect of that amended reply (the claim being on the basis of some four hours of engagement by a Senior Practitioner at the maximum hourly rate (ie, 4 x $451)). Thus, as regards the claimed allowances on the taxation in respect of two iterations of a reply pleading under bill items 5 and 9 of their bill, the taxing officer foreshadowed allowing only an aggregate amount of $4,510, which (as noted) is the maximum allowance for a reply pleading under scale item 4 of the 2012 Costs Determination.

14 In respect of bill item 13, the amount claimed in respect of the reamended reply pleading was $2,500. The taxing officer foreshadowed disallowing all of that amount. The bill of costs did not indicate the number of hours of work or the level of the legal practitioner involved (or the hourly rate that applied) for bill item 13.

15 A second area of controversy was over reduced foreshadowed allowances in respect of the giving of supplementary discovery by the plaintiffs. The plaintiffs' bill claimed allowances for giving of discovery of documents by bill items 7, 10 and 15. The plaintiffs' bill of costs did not indicate the number of hours of work or the level of the legal practitioner involved (or the hourly rate that applied) for those three bill items.

16 By item 7 of the bill, the plaintiffs claimed, by reference to scale item 7(b) (Giving discovery of documents), an amount for May 2014 in respect of giving discovery and reviewing documents in the preparing of the affidavit of discovery of $4,510 - that being the maximum allowance for the giving of discovery under the 2012 Costs Determination. Again, that maximum allowance under the scale represents an amount arrived at on a basis of a 10hour allowance for a Senior Practitioner (SP) working at the maximum hourly rate for that fee earner.

17 There is no challenge to the foreshadowed disallowance by the taxing officer of the amount of $610, in respect of bill item 7 for the first wave of discovery on the part of the plaintiffs.

18 Controversy in this second area has arisen as regards a foreshadowed disallowance by the taxing officer of the plaintiffs' claims in respect of the giving of supplementary discovery in June and September 2014. The taxing officer's unpublished reasons disclose that the June 2014 supplementary discovery listed a further six documents, while the September 2014 supplemental discovery had listed a further 11 documents. The initial May 2014 discovery had disclosed 395 documents.

19 The plaintiffs' claims for supplementary discovery sought an extra allowance of $902 (under bill item 10), under scale item 7(b), in respect of the giving of supplementary discovery in June 2014, and then a further allowance of $3,410 (under bill item 15), in respect of the giving of supplementary discovery in September 2014. [I assume the claim under item 15 of the bill also to be articulated under scale item 7(b) - albeit the plaintiffs' bill identifies this claim as made under scale item 20(c), the latter basis being wholly untenable, as scale item 20(c) refers to a counsel fee for the second and successive day of a trial hearing. I proceed on the basis that there is error in the bill in that respect and the intended reference was to scale item 7(b).]

20 At the initial taxation hearing the taxing officer indicated he would be minded to disallow the extra discovery claims under bill items 10 and 15, in respect of claimed supplementary discovery allowances.

21 However, as is customary, the taxing officer did not sign off on a taxed bill of costs for the plaintiffs at that time. He allowed time for the foreshadowed allowances and disallowances to that point to be considered.

The review of the taxation by the taxing officer

22 Objections put forward by the plaintiffs' solicitors in the letter of 21 October 2015 were directed towards disallowances under items 9 and 13 of the plaintiffs' bill (for the amended reply pleadings) and under bill items 10 and 15 (for giving supplementary discovery).

23 The objections made at 21 October 2015 led to a review of the disallowances as foreshadowed by the taxing officer, pursuant to RSC O 66 r 54. Order 66 r 54 (1) provides:

Upon an application under rule 53 to review the taxation, the taxing officer shall reconsider and review his taxation in relation to the objections, and he may, if he thinks fit, receive further evidence in respect of the objections.

24 The plaintiffs did not file any affidavits for the initial review of the taxation.

25 The decisions of the learned taxing officer as to the review of taxation are expressed in his unpublished reasons of 22 December 2015, which have been provided to me.

26 In short (and for reasons that I will recount in due course), as regards bill items 9 and 13, the taxing officer re-affirmed his negative assessments concerning the amounts ($3,294) disallowed under those two bill items, concerning the two amended reply pleadings.

27 As regards bill items 10 and 15 (the claimed supplementary discovery allowances), the taxing officer revised the taxation position slightly. He noted (at page 6 of the unpublished reasons):

The allowance is claimed for the June 2014 supplementary discovery is $902 and for the September 2014 discovery is $3,410. I think that both those sums are excessive for the costs of simply preparing affidavits of discovery and lists of documents. I will however allow $451 for the June 2014 discovery and $473 for the September 2014 discovery, each being an hour of a senior practitioner's time under the relevant scale. The allowances include contacting the clients regarding the need to give further discovery.

28 The extra allowance of $473 for the September 2014 discovery was by reference to the maximum hourly rate for a Senior Practitioner under the Legal Profession (Supreme Court) (Contentious Business) Determination 2014 (WA), which came into effect on 1 July 2014, and which was the Costs Determination that applied to that occasion of giving discovery.

29 The plaintiffs now apply for a review of the taxation of 22 December 2015 pursuant to RSC O 66 r 55(1).

30 In a review of taxation by a judge there must be demonstrated some error of principle by the taxing officer within the taxing process: O 66 r 55(2). Furthermore, as multiple case authorities show, the asserted error of principle needs to have been the subject of an express objection, which was taken at the initial review of the taxation, conducted by the taxing officer under O 66 r 54: see Rankilor v Circuit Travel Pty Ltd [2012] WASCA 155 [74] .

31 In 2010, I addressed this court's taxation review rules in WJ Green & Co (1984) Pty Ltd v Tace Pty Ltd [No 4] [2010] WASC 363. Since then, the review principles have been canvassed at length by Murphy JA in Rankilor at [62] - [78] (McLure P & Newnes JA agreeing). I will also mention the observations of the Court of Appeal in Soia v Bennett [2014] WASCA 204 as to showing errors of principle, at [31] and following.

32 At par 10 of their written outline of submissions (filed 21 March 2016) for the present review application, the plaintiffs submit that the taxing officer had determined, in respect of the reply pleadings, that:

[H]e was bound by the maximum allowance under item 4 of the scale for all versions of the reply filed.

'Costs throw [sic] away' do not include amendments the plaintiffs were required to make to their reply consequent on amendments by the defendant to his defence.

The wasted costs simply comprised the plaintiffs' lawyers having to consider the reply on 2 additional occasions rather than pleading out the reply in full on the first occasion and those costs are modest and are incorporated in the allowance of $4510 being the maximum allowance under the scale.

33 At par 11 of their submissions, the plaintiffs submit the taxing officer was in error in:

(1) failing to give appropriate meaning to order 6 of the consent orders made by the case manager, Beech J, on 7 May 2014; and

(2) finding that he was bound by the maximum allowance under scale item 4 for all iterations of the reply, notwithstanding the terms of consent order 6.

34 They submit, further, that the two amended defences raised new pleas, which required the plaintiffs' solicitors to take further instructions from the plaintiffs, to consider the applicable documents again, and to prepare appropriate amendments to the reply. They also submit that both sets of amendments required the plaintiffs to consider what additional documents needed to be disclosed.

35 At paragraphs 17 and 18 of their submissions, the plaintiffs submit that:

[Consent order 6 of 7 May 2014] specifically provided for the costs of dealing with each of those amendments to be borne by the party bringing in the amendments. The plaintiffs do not require a special 'uplift' order to recover the full costs of taking instructions and amending their reply and considering and providing additional discovery.

It would be artificial to seek such costs under item 33 of the scale, which, it is submitted, is the effect of the Registrar's determination that he is bound by the maximum allowance under the items for 'reply' and 'discovery'. The conclusion must be that the Registrar found that item 33 is the only item under which effect can be given to [consent order 6].

36 Scale item 33 (Other work), in both the 2012 and 2014 Costs Determinations, deals with costs for time reasonably spent that is not otherwise covered under any other scale item. However, cl 9(b) of the Schedule to both the 2012 and 2014 Costs Determinations provides that:

Allowances made under item 33 of Table B are only to be awarded as between a law practice and its client, or if costs are awarded on an indemnity basis and not between party and party unless the Court otherwise orders.

37 From their submissions of 21 March 2016, and from the objections raised in the letter from the plaintiffs' solicitors of 21 October 2015, it appears that the plaintiffs proceed, for the present review application, on a basis of the following propositions:

(1) The amendments to the two reply pleadings of the plaintiffs, being the subject of bill items 9 and 13, were consequential amendments - in a sense that those pleading amendments were accepted as being occasioned by earlier pleading amendments, as made by the defendant to his pleaded defences. A reamended defence of the defendant was filed 12 June 2014 (noted on its face as a pleading pursuant to orders made by Beech J on 7 May 2014). Then there was a further reamended defence (again said to be pursuant to orders of Beech J of 7 May 2014) filed on 30 July 2014. Those amended defence pleadings led to the plaintiffs' respective pleading amendments to their reply which were, first, the plaintiffs' amended reply of 18 June 2014 and then the further amendments seen (marked in green) under the reamended reply pleading of the plaintiffs, on 19 August 2014. For the initial review of the taxation, the taxing officer appears to have accepted that the amendments were consequential in the sense described above.

(2) Similarly, all the supplementary discovered documents of the plaintiffs, as were provided under the further verified lists of documents, in June 2014 (for six supplementary documents) and in September 2014 (for 11 supplementary documents) were extra documents that became potentially relevant in the litigation from a discovery perspective for the plaintiffs by reason of the issues posed under the anterior amendments made to the defences, by raising issues that required further discovery by the plaintiffs. The taxing officer also appears to have accepted, for the initial review of the taxation, that the additional discovered documents in June and September 2014 were extra documents in this sense.

(3) The effect of order 6 of the consent orders of 7 May 2014 was to free the taxing officer of the constraint which would otherwise be imposed by a maximum allowance for scale item 4, which would necessarily take effect as a 'global limit' in respect of the different iterations of reply pleadings filed by the plaintiffs, there having been no special costs order made. The plaintiffs also contended similarly, as regards the multiple occasions for the giving of discovery not being bound by any 'global limit' imposed by a maximum allowance for scale item 7(b). The taxing officer did not accept this basis of the plaintiffs' objections in his initial review of the taxation.

(4) The plaintiffs' claimed entitlement to the costs of the consequential amendments to the reply and of the supplementary discovery, by virtue of consent order 6 of 7 May 2014, rested on a proper construction of the term 'costs thrown away'. In the letter of 21 October 2015, the plaintiffs' solicitors observed that the phrase 'costs thrown away' was 'usefully discussed' by Le Miere J in Ashwin v Minara Resources Ltd [No 2] [2010] WASC 330 [8], where his Honour said:

Both parties seek 'costs thrown away'. The term 'costs thrown away' is not defined in the rules. An order for costs thrown away means that the beneficiary of the order receives the costs incurred for work done but wasted as a result of the other party's error or failure to comply with the procedure set by the rules: Dal Pont GE, Law of Costs (2nd ed), [1.23]. Quick on Costs at [1.1230] says:

The costs thrown away are such costs as the taxing officer determines have in the circumstances of the case been reasonably incurred and related to work done which has been wasted as a result of the successful application ... Costs attributable to work useful for the ongoing conduct of the substantive proceedings are not costs thrown away. Costs thrown away are costs incurred which must be incurred a second time for the purpose of a trial in the future.

In short, the plaintiffs contend that the claimed costs for the reply amendments and extra discovered documents were 'costs thrown away'. As will be seen, the taxing officer accepted that the plaintiffs had some entitlement to costs incurred and thrown away, but also proceeded on a basis that costs attributable to work that was useful (in the sense of remaining of utility) for the ongoing conduct of the substantive proceedings were not wasted costs.

(5) The effect of the taxing officer's determination that he was bound by maximum allowances for scale items 4 and 7(b), for the three reply pleadings and for the three occasions of the giving of discovery (respectively), was that the plaintiffs could then only seek their 'full' costs (as claimed) under scale item 33, in order to give effect to consent order 6 of 7 May 2014. This specific point as regards scale item 33 does not appear to have been raised before the taxing officer. The plaintiffs' bill of costs does not claim any costs under scale item 33, and the taxing officer's unpublished reasons do not mention scale item 33 at all.

38 On my assessment, no errors of principle have been demonstrated in the approach of the learned taxing officer, for reasons I explain below.

39 The taxing officer said, at pages 2 - 3 of his unpublished reasons, in respect of the claims to allowances in respect of the amended reply and reamended reply:

[T]he bill is drawn on the basis that the plaintiffs are entitled to a fresh allowance under item 4 of the scale for each version of the reply filed. It remains my view that, absent a costs order that provides to the contrary, the maximum allowance under item 4 for the reply, or indeed for any pleading, applies however many versions of the reply the plaintiffs filed. I accept though that the position is different if there is an order which allows otherwise, such as a special costs order which lifts the limits for a pleading. The plaintiffs say, in effect, that the costs thrown away order in paragraph 6 of his Honour's orders also does so.

40 The taxing officer then referred to the observations by Le Miere J in Ashwin v Minara Resources [No 2] [8], mentioned in the letter from the plaintiffs' solicitors of 21 October 2015, and said, at pages 3 - 4:

I accept that the plaintiffs are entitled to recover costs incurred and thrown away, if any, by reason of the defendant's amendments to his defence. I also accept that there are some costs thrown away here, but they are very limited. They do not include the amendments themselves which were made to the reply and the amended reply. I say that because what seems to have occurred here is that on the three occasions that the defendant amended his defence he simply added new pleas. That then resulted in the plaintiffs amending their reply twice so as to add new responsive pleas which ultimately made up the final version of the reply. The cost incurred in the amendments themselves were costs which 'were attributable to work useful for the ongoing conduct of the substantive proceedings' and are not wasted costs in my view.

41 The learned taxing officer's rejection of the plaintiffs' allowance claims in respect of the supplementary discovery of documents in June and September 2014 presents on a similar conceptual basis. On page 5 it is said:

As with the reply, my view is that, absent an order to the contrary, the maximum allowance for giving discovery applies no matter how often discovery is given. There is of course a continuing obligation to give discovery and it is common for discovery to be given on a number of occasions. It is not the case though that on each occasion a fresh maximum allowance applies. If it seems that the allowance for discovery is inadequate having regard to the number of times discovery is given and to the number of documents that are discovered, then the party should consider applying for a special costs order.

42 A further rationale for the taxing officer's approach is found in the following observations at pages 5 - 6:

It is said in the final paragraph of the letter from Chris Stokes & Associates dated 21 October 2015 that 'the costs claimed under items 10 and 15 are necessarily costs thrown away that could otherwise have been incorporated in the original affidavit of discovery and list of documents but for the defendant's successive amendments'. I understand therefore that the costs said to have been thrown away are limited to the costs of having to prepare two additional affidavits of discovery and list of documents on the basis that but for the defendant's amendments to his defence, only one affidavit and list of documents would have to have been prepared which listed all the discoverable documents.

I do not understand it to be said that because of amendments to the defence documents that were originally discoverable were no longer relevant to the matter. It follows that all the documents discovered by the plaintiff would have been discovered and there were no costs thrown away in that respect. I respect however that there were costs thrown away by virtue of two additional affidavits of discovery and list of documents having to be prepared and that the allowance that I made at the taxation giving discovery does not reflect this.

Determination upon the review of the review The consent orders made by Beech J on 7 May 2014

43 The action in CIV 1303 of 2014 was commenced by a writ of summons, filed 28 February 2014. There followed the filing of a defence on 4 April 2014 and a reply on 7 May 2014. The matter was admitted to the Commercial and Managed Cases (CMC) List on 4 April 2014.

44 On 7 May 2014, Beech J made consent orders in the terms of a memorandum of consent orders dated 7 May 2014. Those orders were case management orders and included orders in terms:

(a) any party may without leave amend any pleading at any time prior to the date 7 weeks before the day fixed for the commencement of the trial by filing and serving the amended pleading; and

(b) any other party may without leave make consequential amendments within 7 working days from service of the amendment by filing and serving the amended pleading.

1. Within 7 days after the service on a party of a pleading amended under paragraph 3, that party may apply to the Case Manager to disallow the amendment.
2. Unless the Case Manager otherwise orders, the costs incurred and thrown away by reason of a party amending a pleading under paragraph 3(a) be the other parties in any event.

45 The references seen in consent order 5 to par 3 and in consent order 6 to par 3(a) appear to be in error. The intended references were clearly to par 4 and to par 4(a) respectively, and I proceed on that basis.

46 On 6 March 2015, after delivering his primary reasons for decision in Simmons v Love, Beech J ordered that the issue of costs be decided on the papers. On 20 March 2015, his Honour issued final orders that:

(1) The defendant pay the plaintiffs' costs of the action up to and including 10 November 2014, such costs to be taxed if not agreed.

(2) The plaintiffs pay the defendant's costs of the action from 11 November 2014, such costs to be taxed if not agreed.

(3) The defendant pay the plaintiffs' costs of the counterclaim, such costs to be taxed if not agreed.

47 His Honour's reasons as to costs are in the first supplementary Simmons v Love decision. See also Simmons v Love [2015] WASC 79 (S2), as regards an application under the slip rule for an order to amend an order as to costs.

The consent orders and the 'usual orders' for CMC matters in the Consolidated Practice Directions

48 The plaintiffs' submissions of 21 March 2016 direct considerable reliance on order 6 of the consent orders made by the case manager, Beech J, on 7 May 2014. Consent order 6 addressed allowing pleading amendments without leave and costs resulting from such amendments, such that: 'unless the case manager orders otherwise, the costs incurred and thrown away by reason of a party amending a pleading ... will be the other parties' in any event' (my emphasis). That is in a context where amendments to pleadings may now be made without leave at any time in the period in an action, until seven weeks before the trial: RSC O 21 r 3(1).

49 Orders 4, 5 and 6 of the consent orders of 7 May 2014 are all programming orders relating to the amendment of pleadings. They reflect several of the 'usual orders' dealing with amendments to pleadings contained in the 'CMC List of Usual Orders' at Practice Direction (PD) 4.1.2.2, such that consent orders 4, 5 and 6 adopt verbatim the text of 'usual orders' 8, 9 and 10 (respectively).

50 The CMC List 'usual orders' seen at PD 4.1.2.2 are not prescriptive, but are intended as a guide to aid parties in the drafting of directions and orders and, thus, are to be customised to suit the circumstances of the case - see PD 4.1.1 at par 4 and PD 4.1.2 at par 6.

51 As the plaintiffs' submissions relate particularly to the proper construction of the phrase 'costs incurred and thrown away', I set out 'usual order' 10 (from PD 4.1.2.2) for reference below:

Unless the case manager otherwise orders, the costs incurred and thrown away by reason of a party amending a pleading under para 8(a) be the other parties' in any event. (my emphasis)

General rule as to costs for amendments to pleadings

52 It is helpful at this juncture to observe the terms of RSC O 66 r 3(1), and to note that that rule uses the phrase 'of and occasioned by' instead of the phrase 'costs incurred and thrown away'. RSC O 66 r 3(1) says:

The costs of and occasioned by any amendment made without leave in the writ or any pleading shall be borne by the party making the amendment, unless the court otherwise orders. (my emphasis)

53 For amendments in circumstances where leave to amend is required, see Scaffidi v Montevento Holdings Pty Ltd [2011] WASCA 146 (S), where Murphy JA (Buss JA & Hall J agreeing) said:

The general rule is that where leave to amend is granted, the amending party is liable to pay the costs of the application to amend and any consequential costs 'thrown away'. However, the court will still have regard to the nature and extent of the amendments, together with the reasonableness of the other party's conduct [25].

Effect of the consent orders made 7 May 2014: RSC O 21 r 3 & O 66 r 3

54 The effect of consent order 4 and consent order 5 was to implement, with some modification, RSC O 21 r 3(1) to (4).

55 The effect of consent order 6 was to displace any operation of O 66 r 3(1). The plaintiffs' two reply pleadings (an amended reply and re-amended reply) were responsive to two amended defence pleadings that had been filed without leave. Consent order 6 of 7 May 2014 had addressed the issue of costs arising out of amendments without leave, specifically.

56 More generally, the effect of consent order 6 was to establish a presumptive costs consequence as regards costs incurred and thrown away by reason of a party amending a pleading, in circumstances where leave was not required, and unless the court were to order otherwise. From a pragmatic, efficiency perspective, the effect of having such a presumptive costs consequence in place is to establish some clarity as to liability for costs in relation to the amendment of pleadings (without leave) and to impose some potential cost consequences for pleading amendments that lead to wasted costs for the other parties.

57 Nonetheless, several things must be borne in mind. First, consent order 6 was an interlocutory case management order that - by using the phrase 'unless the court orders otherwise' - would appear to expressly anticipate the potential for the subsequent displacement of that costs consequences by a further order of the court. Second, the order provided that the costs incurred and thrown away would be the other parties' 'in any event', meaning that the taxation of those costs would only occur after the conclusion of the main proceedings (assuming there was no settlement): Vella v Bowden [2011] WASCA 158 (S) [2]. Thirdly, the order nowhere says anything about the uplift or removal of any applicable scale limits, in contrast to how special costs orders pursuant to s 280(2) of the Legal Profession Act 2008 (WA) are typically worded, which is usually to the effect of removing or uplifting the limit on costs fixed for a specific relevant scale item (or items) under the applicable costs determination. Finally, the consent order does not appear to interfere with the discretion of the taxing officer as to his or her determination of what costs were indeed reasonably and properly incurred and thrown away by reason of an amended pleading by the other party.

Construction of the phrase 'the costs incurred and thrown away'

58 As noted, the terminology of RSC O 66 r 3(1) ('the costs of and occasioned by any amendment') differs from that of consent order 6 ('the costs incurred and thrown away by reason of a party amending a pleading').

59 Objectively, the phrasing of consent order 6 operates, first, to displace the operation of RSC O 66 r 3(1). Second, it then implements an arrangement under which a party making an amendment is made liable for the other party's costs to the extent that those costs: (a) were incurred by the making of the amendment and (b) had been wasted (in a sense of not being useful to the ongoing conduct of the proceedings).

60 This conjoint approach is pragmatic, recognising, as it does, that pleadings often develop in the course of proceedings and sometimes a number of amendments (without leave) may be required during the interlocutory stages of an action - but, nevertheless, costs consequences ought to be visited on parties whose amendments lead to costs being thrown away for the other parties.

61 The words 'incurred' and 'thrown away' should be read conjunctively to recognise that a taxing officer must undertake a two-phase assessment in a determination as to whether or not the costs are properly regarded as thrown away. First, the claimed costs must be reasonably and properly incurred in responding to an amendment. Second, the claimed costs must have indeed been wasted.

62 As to that two-phase process, in Brookvista Pty Ltd v Meloni [2009] WASCA 180 [28] Newnes JA (Buss JA agreeing) said that '[f]or costs to be thrown away, they must have been reasonably incurred and relate to work which in the circumstances has been wasted' and then referred to The Fashion Warehouse Pty Ltd v Pola [1984] 1 Qd R 251. In that latter case, Williams J discussed a line of authority relating to the phrase 'costs thrown away' and said that '[a]ll that those cases establish is that for costs to be allowed as "costs thrown away", they must have been, in the opinion of the Taxing Officer, reasonably incurred and relate to work done which has become wasted in the circumstances' (254).

63 The nature of that two-phase process is also addressed in Laing O'Rourke (BMC) Ltd (formerly Barclay Mowlem Construction Ltd) v Dampier Port Authority [2007] WASC 87 (Martin CJ), particularly at [39] where his Honour said:

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.

64 There is, on my assessment, no error in principle demonstrated in the taxing officer's determination as to what costs were reasonably and properly incurred and had been wasted, in relation to the plaintiffs' claims for costs under bill items 9, 10, 13 and 15.

65 In Atwell v Roberts [2013] WASCA 37 (S), the Court of Appeal said that s 37(1) of the Supreme Court Act 1935 (WA) 'confers a broad discretion on the court in relation to costs with full power to determine, relevantly, to what extent such costs are to be paid. This discretionary power enables the court to make orders with respect to the allowance of costs generally' [7]. Section 37(1) provides:

Subject to the provisions of this Act and to the rules of court and to the express provisions of the Magistrates Court (Civil Proceedings) Act 2004, or any other Act, the costs of and incidental to all proceedings in the Supreme Court, including the administration of estates and trusts, shall be in the discretion of the Court or judge, and the Court or judge shall have full power to determine by whom or out of what estate, fund, or property, and to what extent such costs are to be paid.

66 Section 280(1) of the Legal Profession Act provides that, subject to any relevant costs agreement, the taxation of bills of law practices is regulated by an applicable costs determination.

67 Section 280(2) modifies the operation of s 280(1) by allowing for the making of special costs orders. It says:

Despite subsection (1), if a court or judicial officer is of the opinion that the amount of costs allowable in respect of a matter under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the matter, the court or officer may do all or any of the following -

(a) order the payment of costs above those fixed by the determination;

(b) fix higher limits of costs than those fixed in the determination;

(c) remove limits on costs fixed in the determination;

(d) make any order or give any direction for the purposes of enabling costs above those in the determination to be ordered or assessed.

68 Section 280(2) is a power conferred with particular preconditions for its exercise. In Town of Port Hedland v Hodder [No 2] [2012] WASCA 212 (S), which dealt an application for special cost orders, the court said:

Special costs orders can be made either pursuant to s 280(2) of the Legal Profession Act 2008 (WA), or pursuant to s 37(1) of the Supreme Court Act 1935 (WA). In either case, before the power will be exercised, the court must form the view that the maximum amount allowable under the relevant scale item is inadequate in the sense that there is a fairly arguable case that the bill to be presented to the taxing officer may properly tax at an amount which is greater than the limit which would be imposed by the relevant costs determination (see Heartlink Ltd v Jones As Liquidator of HL Diagnostics Pty Ltd (in liq) [2007] WASC 254 (S) [11]). If that threshold is crossed, under s 280(2) other questions arise for determination. However, until that threshold is crossed, the power will not ordinarily be exercised.

69 In Mentha as Receiver and Manager of Westgem Investments Pty Ltd (in liq) v Hughes as Liquidator of Westgem Investments Pty Ltd (in liq) [2014] WASC 478 (S) Martin CJ described the forming of the opinion required by s 280(2) as a 'condition of the powers conferred by that section' [11].

70 The making of a costs order to uplift the scale allowance for a particular scale item does not impede the discretion of the taxing officer - such an order merely allows that taxing officer to tax at an amount for that scale item which is greater than the limit that would otherwise be imposed for that scale item under the applicable costs determination. Conversely, the taxing officer may also, in the exercise of their discretion, decide not to allow costs above the scale limit. It remains for the taxing officer to consider the necessity for the work that was done and the reasonableness of the remuneration claimed: Esther Investments Pty Ltd v Markalinga Pty Ltd (1992) 8 WAR 400, 404.

71 The relevant scale allowances can also be said to inform, in a general way, the taxation process, even when a costs order removing a scale limit has been made. In Mentha, Martin CJ said:

The particular orders sought by the defendant are a little unusual in that they propose that costs be taxed 'without regard to the scale or hourly limits imposed under the relevant legal costs determinations'. I am not prepared to make an order in those terms, as it seems to me that the scale, and the amount formulated by reference to the allowances included within the scale is relevant to the process of taxation. However, I am prepared to make an order under s 280(2)(c) removing the limits on costs fixed in the relevant item of the applicable determination, which is item 11 [12].

72 RSC O 66 r 11, which must be read with s 280 and other provisions of the Legal Profession Act, emphasises that, unless otherwise indicated: (a) a relevant scale operates as a maximum for what costs are to be allowed as between party and party and (b) the allowance for the amount of hours and fees is to 'cover all work done'. The text of O 66 r 11 - which I have highlighted in bold below at O 66 r 11 (2), (3) and (4) - provides:

any relevant scale means any costs determination, as defined in the Legal Profession Act 2008 section 252, that relates to the costs that may be charged by law practices in respect of business before the Court carried out by practitioners.

(2) Except when otherwise ordered, solicitors are, subject to these rules, entitled to charge and be allowed the fees set forth in any relevant scale in respect of the matters referred to in that scale and higher fees shall not be allowed in any case, except such as are by this Order otherwise provided for.

(3) Subject to the provisions of the Legal Profession Act 2008 permitting legal practices to make costs agreements with their clients, and to the provisions of these rules, the fees allowed under any relevant scale shall apply both as between party and party, and solicitor and client ...

(4) Subject to the provisions of this Order, and to any order made by the Court and the terms of any relevant scale, the fees prescribed by any relevant scale cover all work done, whether by the solicitor or by counsel. (my emphasis)

73 Clause 9(a) to the Schedule to both the 2012 and 2014 Costs Determinations also emphasises that the allowances under a scale item are intended as a limit (or maximum). Clause 9(a) says:

Subject to the provisions of the Act permitting a law practice to make a written agreement as to costs with a client, the costs of or in relation to a party to an action or other proceeding (inclusive of GST and counsel fees, but exclusive of other disbursements) -

(1) recoverable by one party from another party; or

(2) payable by a party to that party's own law practice,

shall not exceed the amounts set out in Table B (except as otherwise provided in item 33 of Table B). (my emphasis)

74 Table B is the 'Supreme Court Scale of Costs'. That scale presents as a table showing: (column 1) a list of legal work (scale items); (column 2) a descriptor or brief description of the type of work covered by that scale item; (column 3) an amount of time (in hours) allocated for that work; (column 4) the applicable fee earner (eg, Senior Practitioner, SP) (for the purpose of identifying a relevant maximum hourly rate, which is then multiplied by the number of hours allocated to calculate a maximum allowance - see cl 8 of the Schedule); and (column 5) an allowance amount (in dollars) for that scale item.

75 The descriptors and descriptions in column 2 of the scale in the 2012 and 2014 Costs Determinations do not contain any reference to amendments or amending of any pleading type.

76 The lack of any specific reference in the scale as to the frequently occurring phenomenon of amendments of pleadings suggests that a scale item allowance for a pleading is intended to include all work in relation to the preparation of that pleading (whether the work is in the nature of drafting, settling or amending the pleading) and, thus, to encompass the extent of the costs that are recoverable for all iterations of that pleading (leaving aside the application of any costs agreement or special or indemnity costs orders).

77 That construction is consistent with the reference to 'all work done' seen in RSC O 66 r 11(4), and with the allowance of time and costs for a scale item being expressed as a maximum amount (ie, an amount not to be exceeded). The structure of the scale and the accompanying statutory framework are also such as to suggest, at least prima facie, that the costs incurred under a particular scale item might generally be expected to be less than the full amount of time/costs allowed - unless, of course, the particular characteristics of the matter warrant otherwise.

78 It therefore presents as significant that the only express statutory mechanism by which a court can uplift or remove an applicable scale allowance is via s 280(2) of the Legal Profession Act - but then only if the court is of the opinion that the amount of costs allowable under a costs determination is inadequate because of the unusual difficulty, complexity or importance of the whole of the matter: see Electricity Generation and Retail Corporation (t/as Synergy) v Woodside Energy Ltd [2014] WASC 469 (S) [5], [12] (Martin CJ).

79 As to the nature of the post-1996 costs determinations generally, see also Flotilla Nominees Pty Ltd v Western Australian Land Authority [2003] WASC 122 (S); (2003) 28 WAR 95 [14] - [15].

Further difficulties with the plaintiffs' submissions

80 There are difficulties, both conceptually and as a matter of policy, with plaintiffs' view that the effect of consent order 6 of 7 May 2014 was to somehow remove or uplift a scale allowance for a consequential pleading or giving of discovery, such that either no allowance would apply at all or an allowance for that scale item could apply iteratively, with the plaintiffs being entitled to a 'fresh' allowance for each version of a consequential pleading or occasion for discovery of documents.

81 The first issue is that the plaintiffs can point me to no authority supporting that view, notably in the context of the local Western Australian framework for costs.

82 Secondly, if each iteration of a pleading generates a new or fresh entitlement to a scale allowance for time/costs, then it is not at all clear how the extent of that new allowance ought be calculated. Should it be, again, for the maximum allowance of time/costs given for the scale item? If not, then on what basis would the appropriate allowance of time/costs for an amended pleading be derived? That uncertainty would leave a taxing officer without sufficient direction as to what, if any, maximum allowance (or allowances) in time/costs might apply for the taxation of costs under a particular scale item. Such an outcome is unsatisfactory at best, particularly as the underlying logic of a scale of costs - as operative in the 2012 and 2014 Costs Determinations - is that a maximum allowance for a particular scale item should manifest as a straightforward calculation of a number of hours of work multiplied by the maximum allowable hourly rate for a particular fee earner type (ie, level of legal practitioner).

83 Thirdly, if it were the policy that all iterations of a pleading (or occasions of discovery of documents) could receive a new or fresh entitlement to an allowance for time/costs (leaving aside the issue of the quantum of that allowance), then towards what other scale items could that cumulating iterative approach also apply? Potential ramifications beyond this present taxation seem to be complex and multi-fold.

84 Finally, the view that the effect of consent order 6 - made early in the interlocutory stages of the action and creating a costs consequence relating to the amendments of pleadings in circumstances where leave is not required - should be to uplift or remove the applicable scale allowances for the relevant scale item, sits rather uneasily with the manner in which power to remove scale limits is conferred pursuant to s 280(2) of the Legal Profession Act. I refer particularly to the requirement that the court form an opinion as to whether the amount of costs allowable in respect of a matter the subject of a cost determination is inadequate and - also - as to the 'unusual' difficulty, complexity or importance of the matter as a precondition to the exercise of that power.

85 While the questions arising under s 280(2) are to be addressed as matters of impression, rather than science or mathematical precision (see EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2008] WASC 275 (S) [7]), there must be some basis by which the court is to form the opinion needed to exercise the power conferred by s 280(2) - whether that be by having regard to: (eg) the overall circumstances of the case; the knowledge acquired by acting as the case manager and/or as the trial judge; the pleadings, transcripts and other court file documents; or affidavits or other materials put before the court for the purposes of making or opposing an application for a special (or indemnity) costs order: see Verdell Pty Ltd v F & G Nominees Pty Ltd [2002] WASC 58 (S2) [14] - [15], cited with approval in Frigger v Lean [2012] WASCA 66 [82].

86 The better view then is that, where a legitimate claim for taxed costs is likely to exceed a maximum allowance under the scale, the successful party should apply - if there are proper grounds - for a special costs order, to ensure that a taxation officer is not otherwise inhibited in rendering a just quantum of allowance(s) by an applicable scale limit: see, in that respect, Flotilla at [19] and [23].

87 In Flotilla, Pullin JA dealt with an application for a special costs order in the context of an amended pleading. At [40] - [42] his Honour said:

The plaintiff has filed an affidavit which reveals that a large amount of work was done in the conduct of this case, and based on that affidavit I am satisfied that a special costs order should be made lifting the limit on some, but not all, of the items which the plaintiff refers to.

...

I am very conscious of the need not to fall into the trap of making an estimate of the time which I consider would have been spent on the tasks, when I do not have all the information before me to make a judgment. Nevertheless, in relation to item 6(d), the 51.1 hours said to have been spent in relation to the preparation of the reply and defence to counterclaim strikes me as very high. The work involved could not have taken that long if regard were only had to the original reply and defence to counterclaim, which consisted of either admissions, non-admissions or denials. However, as counsel for the plaintiff pointed out, there was an amended reply which raised issues about the plaintiff's change of position to meet the counterclaim, and this involved more work than simply admitting, denying or not admitting paragraphs in the counterclaim. However, whether the drawing of the amended reply to introduce the new paragraph dealing with change of position warranted over 50 hours, which would be five days' work at 10 hours per day or seven full days' work at seven hours chargeable work per day, will be a matter for the taxing officer and so I will make the order sought in relation to item 6(d).

88 More recently, in Apache Oil Australia Pty Ltd v Santos Offshore Pty Ltd [2015] WASC 318 (S) [23] - [24] Chaney J observed, in relation to scale items 3(b) and 3(c) (for a defence and counterclaim, respectively):

The relevant scale items for each of the defence and counterclaim provide for a maximum of 10 hours work at the maximum hourly rate provided for a senior practitioner. Mr Murphy deposed to the fact that in the period covered by the 2012 Determination, the actual charges incurred by the defendant involved 138.6 hours work for a total amount of $71,521.56. After the 2014 Determination came into effect, a further 33.2 hours work was done giving rise to charges of $21,232.27. Mr Murphy's affidavit reveals that, during the course of the action, the defendant's solicitors filed and served a defence and counterclaim on 31 January 2014, an amended defence and counterclaim on 24 December 2014, a re-amended defence and counterclaim on 6 February 2015 and a third amended defence and counterclaim on 9 March 2015.

The plaintiffs submit that reference to the three amending pleadings is irrelevant, since the defendant is obliged to pay the costs of those amendments by reason of O 66 r 3 of the Rules of the Supreme Court 1971 (WA) and pursuant to an order to that effect in relation to the amended pleading dated 9 March 2015. There is force in that submission, but it is not a complete answer to the question as to whether the limits in items 3(b) and 3(c) should be removed in so far as the defendant is entitled to recover costs of its defence and counterclaim. The case substantially turned upon the defence and counterclaim, given that the proceedings were initiated by the plaintiffs in an attempt to pre-empt its removal as operator of the Spar Joint Venture. The defendant was thus required to pursue a positive case on questions of construction, breach and materiality. While it may well be that work involved in the various amendments to the pleadings by the defendant do not constitute recoverable costs, that is a matter which can be dealt with by the taxing officer. Having regard to the complexity and importance of the matter, the limits imposed by scale items 3(b) and 3(c) should be removed.

89 RSC O 66 r 3 is found set out earlier in these reasons. As regards the operation of RSC O 66 r 3(1) and its relationship to a scale allowance for a pleading, Edelman J rendered the following observations (with some passages of present relevance which I have highlighted in bold) in The Pilbara Infrastructure Pty Ltd v Brockman Iron Pty Ltd [No 2] [2014] WASC 345 (S) [19] - [22]:

The Scale makes provision in Item 3(b) for 10 hours preparation of a defence by a Senior Practitioner. The total ceiling cost is $4,510. The approximate cost initially said in affidavit evidence to have been incurred by Brockman Iron is almost ten times the Scale limit, $43,000. Then, in subsequent affidavit evidence, a draft bill of costs was included which substantially increased this amount. That draft bill, prepared by counsel who appeared for Brockman Iron on this application, suggested that the cost of preparation of the defence was $56,295.20. This was said to include the defence, amended defence, further amended defence, further re-amended defence, and second further re-amended defence.

I am satisfied based upon my knowledge and impression of the case that there is a fairly arguable case that a taxing officer might properly allow costs for more than 10 hours of preparation of a defence. Although the defence was brief, consisting of around 17 paragraphs, the legal and factual issues raised by TPI needed to be understood and considered as part of the process of pleading the defence. Those legal and factual issues were not simple, the core issue was important and had never been previously decided, and the matter was of significant commercial significance to the parties. The defences were signed by Senior Counsel and Counsel for Brockman Iron. Senior Counsel for Brockman Iron spent 3.75 hours working on the defence and, as counsel for TPI properly conceded, an uplift of the rates for Senior Counsel would require an uplift of the limit on costs allowed for the Defence.

As for the number of hours required for the preparation of the defence, I take into account that a substantial amount of the cost, perhaps a majority of it, will have been incurred as a consequence of four different versions of TPI's statement of claim, including a re-amended defence which prompted a strike out application by TPI. These are costs that O 66 r 3 the Rules of the Supreme Court 1971 (WA) require TPI to bear, in the absence of a contrary order. Counsel for TPI submitted that the costs of these amendments that TPI will be required to bear are costs that stand outside the Scale for the purposes of a taxation. Counsel for Brockman Iron said that these costs fell within the Scale Item for a defence. Neither counsel made any detailed submissions concerning the proper construction of the Rules on this point. My tentative view is that there is nothing in O 66 r 3 that would take the costs of amendment outside the Scale, although there may be an issue whether the reference to a 'defence' in the Scale includes an 'amended defence'. Counsel for Brockman Iron only sought the increase in the Scale for work done on both the defence and amendments to the defence. If the Scale were to include both, counsel for TPI conceded that the Scale limit on hours for a defence should also be raised. Since there is common ground between the parties that the limit for hours of work for a defence should be increased if the Scale included both the defence and amendments to the defence, and since a taxation will need to consider the costs of amendments to the defence in any event, it is sufficient to increase the limit on this basis. It is not necessary to determine the construction of O 66 r 3 or issues concerning costs of amendments to a defence that are not 'occasioned by' the amendment.

The limits for the rate for preparation of the defence, the time limit of 10 hours for preparation of the defence, and the corresponding total amount of costs that can be claimed for this item should be lifted. (my emphasis)

90 I respectfully endorse the tentative view expressed by Edelman J at [21] above as regards RSC O 66 r 3. Moreover, my view is that the allowance is applicable for the cost of all iterations of a pleading, thereby including all amendments unless a costs order is made to uplift or remove a relevantly applicable scale allowance.

91 Here, the terms of order 6 of the consent orders of 7 May 2014 had the effect of displacing the operation of RSC O 66 r 3(1), albeit its applicability had that been the case would have rendered no material difference to the end position here.

92 There is nothing in the terms of the 7 May 2014 consent orders - or in any local case - that would provide a proper precedential basis for the plaintiffs' claim that their costs for preparing the three reply pleadings (ie, a reply, an amended reply and a re-amended reply) ought be allowed to exceed a maximum allowance imposed by a costs determination for a reply pleading, in an absence of a costs order lifting a relevantly applicable scale limit.

93 The same reasoning is applicable as a matter of policy as regards the claims for the three occasions of discovery by the plaintiffs. Once again a costs order would be required in such a circumstance, once a relevantly applicable scale allowance limit was exceeded.

94 The plaintiffs' points of objection raised on this review application fail. Consequently, the application must be dismissed.

95 Since the defendant, Mr Love, appeared in person, there will be no order as to the costs of this review application, which was ultimately in his favour: see Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 403.