SMOOTHPOOL & ANOR v PICKERING & ORS No. SCCIV-88-2452 [2001] SASC 131

"That an interim allocatur be issued to reimburse the plaintiffs for a portion of costs and disbursements which had been paid in the sum of a $568,000 made up as follows:

3. Court Administration Authority fees $31,263.40

She has also indicated that her instructions are that the plaintiffs would, in addition to that interim allocatur, be seeking that the further determination of the plaintiffs' costs be on a lump sum basis pursuant to r 101.01(a).

It seems to me, with respect, that the order sought in the plaintiffs' application for an interim allocatur is misconceived. The procedure under r 101.01(1)(a) allows, as I have said, for the Court to award a lump sum in lieu of or in addition to any taxed costs. This aspect of the plaintiffs' application, which was the second ground of the application, is not in accordance with r 101.01(1)(a). In effect, the plaintiffs are seeking, on this aspect of their application, an interim allocatur whilst a Short Form Bill of Costs is prepared. I think there is no doubt that the taxing officer, or Master, would have power to grant an interim allocatur whilst a taxation is proceeding: r 101.13. That is, however, not what is sought by the plaintiffs. They seek to invoke the jurisdiction of the Court to make that order independently of any taxation. In my opinion, I do not have power to make an order pursuant to r 101.13. The absence of the power is not because I am not a taxing officer but it is because I am not conducting a taxation of costs. Indeed, the very point of the plaintiffs' application, at least that part of it pursuant to r 101.01(1)(a), is to avoid a taxation of costs. In my opinion, therefore, the application for an interim allocatur must be dismissed.

However, the plaintiffs rely upon Ms Stevens' affidavit, two affidavits of Steven Philips, and the affidavit of Sarah Urry, both law clerks and employees of the plaintiffs' solicitors, in support of the first ground of the application, that is for a lump sum in lieu of taxed costs. The law clerks have deposed to the method by which they have carried out the arithmetical calculation of the costs claimed by the plaintiffs.

I admitted each of the affidavits of Ms Stevens, Mr Philips and Ms Urry, notwithstanding the objection of Mr Clayton QC, senior counsel for the defendants, to various aspects of their affidavits.

It was argued that the affidavits contained hearsay evidence and opinion evidence. In my opinion, that submission had to be rejected. The deponents offered evidence only as to what they had done. The plaintiffs left it to me to determine whether what was done was reasonable. In those circumstances, the evidence was not hearsay nor opinion and I admitted each of the affidavits.

This case has had a checkered history. The present solicitors were only retained reasonably shortly before the trial. For the first eight or nine years of the litigation the plaintiffs were represented by other solicitors. It is not unfair to say that those solicitors did not progress the matter expeditiously over the period during which they were retained. It is right to say that the plaintiffs themselves were always anxious to have the matter disposed of. However, their former solicitors did not conduct the litigation with the expedition which would be consistent with modern case management. The present solicitors not only inherited that delay, but clearly enough from the affidavits which have been filed, inherited records which are difficult to understand and insufficient in detail to easily use to draw a Bill of Costs. That has been a difficulty which has confronted the two law clerks who have acted on the instructions of Ms Stevens in relation to this application in collating information relating to costs.

There is another complication. The plaintiffs not only brought this action but at the same time they brought an action against another firm of solicitors. That matter went through all the interlocutory processes and, indeed, commenced its hearing before me at the same time as this matter. It was a few weeks into the hearing of both matters that the plaintiffs reached a compromise of a kind which was never disclosed to the Court in relation to the action against those other solicitors.

However, the files which have been obtained from the former solicitors do not easily discriminate between the two actions and it is not easy to determine, at least from the present solicitor's point of view, what work applied to this matter and what work applied to the matter which was compromised.

The third matter which is important is that because this matter has continued over a long period, the plaintiffs have retained a number of different counsel from time to time. Ms Stevens has exhibited the fee accounts of a number of counsel for the period between 1988 and 2000. Some of those counsel are no longer in practice. Indeed, some of them are now Judges. It is not easy to determine from some of the accounts what work was done in relation to which action and for what aspect of that action.

In any event, Mr Philips and Ms Urry have deposed to the method by which calculation of the plaintiffs' costs has been made. It is not necessary, for the purposes of these reasons, to identify the procedures.

Mr Philips has deposed to the further work which has been carried out in the calculation of the plaintiffs' costs since Ms Stevens' affidavit. He says that on the procedures which have been used, upon the instructions of Ms Stevens that the total of the Bill of Costs, after deducting the 20 per cent in accordance with my order of 10 August, is a figure of $789,230.14 made up as follows:

3. Other disbursements $69,789.42. Total $789,230.14.

As I have already pointed out, those individual figures and, of course, the total figure, reflect 80 per cent of the plaintiffs' party/party costs as claimed by the plaintiffs.

The plaintiffs submitted Ms Stevens', Mr Philips' and Ms Urry's affidavits to Mr Timothy Cogan, a solicitor in Adelaide who specializes in matters relating to costs in the Supreme Court and the District Court. His qualifications and expertise are not under challenge by the defendants. Mr Cogan also met with the three deponents to the affidavit and conferred with them. He has offered the opinion that the claim by the plaintiffs for party/ party costs is appropriate and that the various scales of costs have been applied in accordance with the practice of the taxing Masters of this Court. He has offered the opinion that the claimed costs should be reduced by 10 per cent to reflect the likely reduction in costs by a taxing Master.

The plaintiffs accept and rely on Mr Cogan's opinion and they have asked me to fix a lump sum of in the order of $700,000 to reflect Mr Cogan's opinion.

Each of the affidavits refers to a number of documents. Under r 59.02, the defendants could have required the production of the documents referred to in the affidavits. They have not adopted that course of action. The defendants did not require any of the deponents to present for cross-examination under r 83.12 of the rules. The defendants offered no evidence contrary to the evidence adduced by the plaintiffs.

The defendants, however, have argued that I do not have jurisdiction to make the order under r 101.01(1)(a) for two reasons; first, because the rule itself does not provide the jurisdiction. In that regard the defendants have relied upon a decision of Matheson J in Osborne v Kelly [1995] SASC 5329. In the alternative, the defendants have argued that if the rule gives jurisdiction to make such an award, I am functus officio by reason of the order which I made on 10 August 2000, and thereby without jurisdiction. In the further alternative, the defendants have argued that if jurisdiction exists under r 101.01(1)(a), and I am not functus, I should not make the order because there is insufficient evidence upon which an assessment of a lump sum can be made.

Osborne v Kelly was an appeal against a decision of a Master of the Court on a taxation. In that case the successful party had been awarded costs as between party and party to be taxed, if not agreed. When the matter went to taxation the Master indicated that because of the complexity of the matter and the time which it would take to tax the bill he would, in lieu of the order made, order a lump sum be paid by the unsuccessful party. He proceeded on that basis. The matter was appealed to Matheson J who determined, rightly, in my opinion, that the Master had no jurisdiction to proceed in that way. It was clear from the order of the Judge at trial that the successful party was only entitled to costs to be taxed or agreed. They had not been agreed, so in those circumstances the only entitlement to costs arose if they were taxed. In those circumstances the Master had no jurisdiction to refuse to tax the bill and instead award a lump sum.

Indeed, because of that decision the rules were amended to include r 101.13 to allow a Master or taxing officer the very jurisdiction which Matheson J found the Master in that case lacked.

However, I think Osborne v Kelly has no application to this case. In my opinion the jurisdiction to make the order clearly arises under r 101.01(1)(a), which expressly gives the Court jurisdiction to award a lump sum in lieu of or in addition to any tax costs.

The Court, in my opinion, can, subject to the second argument which I will address in a moment, award a lump sum in lieu of, or in addition to any taxed costs. The decision in Osborne v Kelly does not, in my opinion, call into question the jurisdiction which is given by the plain words in r 101.01(1)(a).

The second point is more difficult. The defendants argue that I am functus officio by reason of the order which I made on 10 August 2000. They say that the plaintiffs' claim to costs, if it was to be for other than taxed costs, should have been determined at that time. They say that the plaintiffs sought an order that the costs be taxed; that I acceded to that application and in those circumstances the plaintiffs cannot thereafter seek an award of a lump sum in lieu of, or in addition to any taxed costs.

Mr Clayton QC has argued that there is a significant difference between r 101.01(1)(a) and O 62, r 4(2) in the Federal Court Rules. In the Federal Court where the Court orders costs to be paid to any person, the Court "may further order" that that person be entitled to a gross sum specified in the order instead of taxed cost. Mr Clayton has pointed to the use of the words "may further order" in the Federal Court rule. In my opinion that is not a point of distinction. In my opinion the words "may further order", do not have a temporal meaning and do not indicate a separate jurisdiction to make an order at a later time. Rather the words mean that the Court can make a consequential order in relation to the original order for costs. I do not believe there is any distinction, even though the words "further order" are included in the Federal Court Rules, between that rule and the rule of this Court.

In my opinion the fact that I made an order for costs on 10 August 2000 does not disqualify me from now making a further order that in lieu of the order for taxed costs which I previously made, the plaintiffs be entitled to a lump sum.

I do not believe that the making of an order for taxed costs would make me functus officio upon an application of this kind. Indeed if the defendants' contention was correct, it would mean that a Master would have a jurisdiction to make an order for a lump sum after a Judge had made an order for taxed costs (r 101.13). However, a Judge would not be entitled to make an order for a lump sum after he or she had made such an order. That seems to me to be a construction which should not be arrived at unless necessary, and in my opinion it is not necessary.

If I am wrong about that, and my order of 10 August 2000 makes me functus officio, Mr Walsh QC argued that I could, in those circumstances, invoke r 84.12, or r 3.04 and in the case of the former vary or set aside the order for costs, and in the case of the latter correct, revoke or vary the order for costs.

I do not think r 3.04 has any application. That rule, it seems to me, is reserved for circumstances where, if there has not been a slip, there has been an error of some kind. There was no error in the order I made on 10 August 2000, and I think r 3.04 has no application.

However, I think I could invoke r 84.12 and set aside my order for costs made on 10 August 2000 if I believed that the justice of the case required me so to do. In the circumstance of this case, if I was called upon to exercise a power under r 84.12, which, in my opinion, I do not need to exercise, because I am not functus officio, I would not exercise that power. The orders which I made on 10 August 2000 are under appeal and will shortly go before the Full Court. Both parties have appealed against my orders for costs. In those circumstances I would not, whilst the matter is presently proceeding to the Full Court, exercise the power in r 84.12. In any event, for the reasons I have given I believe I have jurisdiction to entertain this application.

The third argument put forward by the defendants was that in the circumstances I should not make an order for lump sum. I have read the evidence contained in the affidavits. I am aware of the reasons for the application. However, I believe that I am constrained to find, as the defendants claim, that there is insufficient evidence before me upon which I could make a meaningful assessment of an appropriate amount for a lump sum. The plaintiffs have not provided me with even a draft of the plaintiffs' solicitor's costs in any form, let alone in any taxable form. They have not provided me with an opinion from a costs expert who has examined the files, which form the subject matter of the application. Mr Cogan was not asked to examine the files. He merely reviewed the affidavits and conferred with the deponents. I am not satisfied that there is sufficient evidence before me upon which I can make a proper assessment of a lump sum which would be fair to all parties.

Mr Walsh argued that I should, in the circumstances, take a broad axe to the plaintiffs' assessment and reduce it significantly for any reason which I saw fit. Indeed, he accepted that there should be the allowance suggested by Mr Cogan; there should be some further allowance made in relation to counsel fees; there should be some further allowance made in relation to the previous solicitor's bills, but still there should be an award of a lump sum.

I have some sympathy for Mr Walsh's argument. If this matter has to proceed to taxation the costs incurred by all parties will be very large. The plaintiffs will undoubtedly spend money to obtain the costs to which my order entitles them.

However, even if I adopted the procedure advocated by Mr Walsh I would not be satisfied on the information presently before me that I was doing justice between the parties. I would not be satisfied from either parties' point of view that I was awarding an appropriate lump sum. Whilst the plaintiffs are prepared to take the risk of me making an award that would be unfavourable to them, the defendants do not consent to that risk. I am not prepared to require them to submit to that risk.

In those circumstances the application for a lump sum award of costs in lieu of the order for taxed costs is refused.

52. MR WALSH: I don't think I can argue against that.

53. HIS HONOUR: The plaintiffs pay the defendants' costs of and incidental to the application.