SOORD -v- YACOUB [2017] WASC 295 (12 October 2017)

3 The objections take a somewhat unusual form. No judicial authority is directly cited in support of the paying parties' assertion of a right to inspection prior to taxation.

4 In support of those submissions the practitioner for the paying parties referred to a paper delivered by Registrar Sandra Boyle to a Law Society continuing education conference on the question of costs held on 30 and 31 August 2003. The paper is entitled 'Special Costs Order - is it all Over?'. A section in that paper is headed 'The burden or onus of proof'. That contains the following observation:

It was long ago established [EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59; [1982] 2 All ER 989] that the effect of an indemnity costs order is clearly to shift the onus of establishing that the work was not necessary or reasonably done, or that is was not done for a reasonable charge, to the paying party.

5 Following an observation that nothing in an indemnity costs order removes the obligation on the receiving party to establish that the work was done, and must support the claim with some primary evidence, there appears the following further comment:

This necessitates the receiving party giving the paying party an opportunity to inspect the supporting materials.

6 It is a conventional remark that the effect of EMI Records Ltd v Ian Cameron Wallace Ltd [1983] Ch 59; [1982] 2 All ER 980 is to reverse the burden of proof: it is a frequently made and can be found in a number of cases on the subject of indemnity costs orders. EMI Records was a decision of Sir Robert Megarry VC sitting with assessors. The reasons of such an eminent judge always deserve careful reading. The following passages appear at (71 72):

To say that on a taxation 'all costs shall be allowed except in so far as they are of an unreasonable amount or have been unreasonably incurred' seems to me to be giving the litigant a complete indemnity, shorn only of anything that is seen to be unreasonable. The litigant does not have to establish that the costs were necessary or proper, or that the costs were of a reasonable amount and reasonably incurred. Provided they are costs of and incidental to the proceedings, he is entitled to recover them, subject only to the qualification that they are liable to be reduced in respect of anything that the taxing master considers to fall within the headings 'unreasonable amount' or 'unreasonably incurred'. In a word, the difference is between including only the reasonable and including everything except the unreasonable. In any taxation there must be many items or amounts that are plainly allowable, and many others which are plainly not allowable. In between, there must also be many items or amounts which do not fall clearly within either extreme. On a party and party taxation, or on a taxation on the common fund basis, many such items may fail to be allowed; on a taxation on an indemnity basis, they will all be included.

I do not think that it would be right to express this difference in terms of the burden of proof being shifted from the winner to the loser, though no doubt in many matters much of the argument during the taxation will proceed on these lines. But during a taxation the taxing master sees many things which are not revealed to the party against whom the order for costs has been made, and so that party will lack some of the relevant material. Instead, it is more a question of who gets the benefit of any doubt in the mind of the taxing master. On a party and party taxation, nothing will be included unless the taxing master reaches the conclusion that it satisfies the requirement of 'necessary or proper'. Similarly, where the taxation is on the common fund basis, the taxing master will include nothing unless he considers that it satisfied the requirement of 'a reasonable amount in respect of all costs reasonable incurred'. On neither basis do the rules give the benefit of any doubt to the party in whose favour the order has been made. Nothing is included unless it satisfied the words of inclusion. The indemnity basis, as I would construe it, is the other way round. Everything is included unless it is driven out by the words of exclusion, namely, 'except in so far as they are of an unreasonable amount or have been unreasonably incurred'. I should add that in applying to an opposing party a rule intended for taxations as between a solicitor and his own client, I think that it is open to the paying party to take any point and make any objection which the client could have raised, had he been taxing the bill.

7 What his Lordship was saying was not that the burden of proof on a taxation shifts when costs are taxed pursuant to an indemnity costs order, but simply that the boundary between what is recoverable and what is not recoverable shifts. That is, on an ordinary party and party taxation, the receiving party must satisfy the taxing officer that what has been claimed is 'necessary or proper': on an indemnity taxation, the receiving party still bears the burden of satisfying the taxing officer that the costs are not 'of an unreasonable amount or unreasonably incurred'.

8 That may seem a fine distinction, but I think it is important for the following reason. The argument by the paying party that it ought to be allowed to inspect the receiving party's files is grounded to a considerable extent on the proposition that the paying party bears the burden of proof but the receiving party is in possession of all the evidence.

9 In my respectful view, the analysis by Sir Robert Megarry is correct. The burden of proof does not shift. If that is so, then much of the force of the paying party's submission disappears.

10 There is also a critical difference between the English practice under consideration in EMI Records and the present state of the law in Australia. That relates to the question of legal professional privilege. The position in Australia is in my view authoritatively established by Giannarelli v Wraith (No 2) [1991] HCA 2; (1991) 171 CLR 592. The English practice, as illustrated by EMI Records, was that the taxing master would require the production of, and inspect, a great deal of material from the receiving party. Some of that would obviously be the subject of legal professional privilege. The taxing master would not make that available for inspection by the paying party, but would nevertheless rely on it in taxing. The English practice is a procedure that Giannarelli v Wraith (No 2) determines not to be proper. The tribunal determining a fact may not use evidence not available to both sides.

11 The practitioner for the paying party is correct in asserting that there has been (in my observation as a taxing officer) an increasing insistence by paying parties on inspecting an opponent's files, often at great length. It is also correct that the process seems to have become somewhat entrenched.

12 It is however my experience as a taxing officer that these inspections are of little utility on a party-party taxation (as distinct from a practitionerclient assessment under the Legal Profession Act 2008 (WA)), regardless of whether the taxation is on the ordinary partyparty basis or on an indemnity basis.

13 That is because the ultimate question for the taxing officer is whether the amount claimed for an identifiable head of work is properly to be allowed on the applicable test. The paying party must always establish that the work claimed for was done. The question is how that is to be evidenced. In the case of litigation, the first and foremost test is to look at the work product, almost all of which will be on the court file. Pleadings and affidavits will be on the file; so will submissions; and time spent at court will always be evidenced by records on the file. The real weight or difficulty of factual and legal matters that are argued is usually best judged by looking at delivered reasons. There will be transcripts of significant hearings. A claim for time spent in preparing an affidavit can be assessed for its reasonableness by looking at the affidavit that is produced: that is a better test than any number of time sheets.

14 These are two bills for approximately $24,000 and $8,000 respectively. Each is in respect of a discrete and easily identifiable proceeding or portion of a proceeding. The evidence necessary to adjudicate whether the receiving party's claims are justified (on the appropriate basis of taxation) is overwhelmingly to be found on the court files.

15 Directing that the paying party's files be made available for inspection would in my view generate costs disproportionate to the real extent of the controversy between the parties. It would risk generating second-order parasitic disputes about such matters as privilege. In my view it would be a distraction. There will be no direction that the receiving party make its files available.

16 I accordingly decline to review the taxation and have signed the allocator.