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Practice and procedure - Costs - Special orders - Principles

Legal Practitioners Act 1893 s59(3)

Plaintiffs : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney)

Plaintiff : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney)

Plaintiff : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney)

Plaintiff : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney)

Plaintiff : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney)

Plaintiff : Cocks Macnish (as agents for Corrs Chambers Westgarth, Sydney

Collins v Westralian Sands Ltd (1993) 9 WAR 56

Cruickshank v Producers Markets Co-Operative Ltd [1960] WAR 184

D'Alessandro & D'Angelo v Bouloudas & Anor (1992) 10 WAR 191

Geraldton Building Company Pty Ltd v Christmas Island Resort Pty Ltd (1994) 13 WAR 242

Minister for Works v Australian Dredging and General Works Pty Ltd [1986] WAR 235

Palamara v City of Perth (1996) 16 WAR 235

1 ANDERSON J: This is an application for special costs orders in six actions heard together over several weeks in early 1999. Judgment was delivered in June 1999 and each action was dismissed. I made a series of orders, including costs orders, in mid-June 1999 in each action, but deferred some applications for further argument. I heard that argument on 11 February 2000.

2 Counsel for the plaintiffs, Mr Delaney, took the preliminary point that the defendants were not entitled to a special costs order unless they were prepared to state whether there was a costs agreement between them and the defendants and to produce the agreement. For this proposition, reliance was placed upon s 59(3) of the Legal Practitioners Act 1893 which is in the following terms:

"(3) A client who enters into an agreement made under subsection (1) shall not be entitled to recover from any other person, under any order, judgment, or agreement for the payment of costs, any costs which are the subject of that agreement beyond the amount payable by the client to the practitioner under that agreement."

3 In other words, if a solicitor has a costs agreement with his client which limits the amount of costs payable by the client, the other party is entitled to the benefit of that agreement and this places an onus on the first party to produce the agreement. It was put this way in argument by Mr Delaney:

" ... there are two preconditions to the making of a special costs order that your Honour needs to be satisfied about. The first is that by making such an order your Honour would not create a situation where the plaintiffs were required to pay more by way of legal costs to the defendants than the defendants are entitled to be charged by their solicitors.

Now, really, your Honour, this point arises from section 59(3) of the Legal Practitioners Act ... The position, your Honour, is that my learned friend seeks that your Honour should make a special costs order so the onus, in my submission, is upon him to produce the costs agreement that can satisfy your Honour that it's appropriate that your Honour could make an order without contravening the section."

4 The submission was said to be supported by the two Anfrank decisions in this Court; ie, Anfrank Nominees Pty Ltd v Connell (1991) 6 WAR 271 and Anfrank Nominees Pty Ltd v Connell (No 2) (1992) 7 WAR 179.

5 I do not think that either case stands for the proposition that the court cannot make a special costs order or should not do so unless the party seeking the order produces the costs agreement to demonstrate that recovery of costs in the amount taxed pursuant to the special order will not infringe s 59(3). As I understand the cases, they go no further than to say that a solicitor ought not to actually recover costs in excess of those which he is entitled to charge his client pursuant to any agreement he may have with his client; and that to do so may amount to unprofessional conduct. In other words, the question whether there is a costs agreement, and, if so, what is its effect, are questions which become relevant after the bill has been taxed. This is in accordance with the terms of the subsection itself. According to the subsection, what is prohibited is recovery of costs beyond the amount payable by the client.

6 I do not uphold the submission that I should not proceed to consider making a special costs order on the application of the defendants unless and until the defendants produce for my inspection any costs agreement that may have been made between the defendants and their solicitors.

7 One application common to all six actions is an application for a certificate for interrogatories. I will deal with the applications together because they all stand on the same footing. The plaintiffs administered interrogatories to the defendants. In each action, the plaintiffs must pay the defendants' costs incurred in answering the plaintiffs' interrogatories.

8 The defendants administered a sizeable number of interrogatories to the plaintiffs. None were tendered in evidence. I am told none of them was answered and no step was taken to compel the plaintiffs to answer them. Nevertheless, the defendants seek a certificate in respect of these interrogatories. One approach is to take the fact that none of the interrogatories was answered, or pressed, as conclusive of the fact that the interrogatories were not necessary, or were objectionable and, on that basis, to refuse to certify for them. However, I think that would be too severe on the defendants. All of these cases were cases in which it was reasonable to interrogate broadly along the lines of the interrogatories that were administered; and I have little doubt that if the defendants had chosen to press the interrogatories, the plaintiffs would have been ordered to answer at least some of them. Doing the best I can to do justice between the parties, I will certify for one-quarter of the defendants' costs of administering interrogatories in each case.

9 The defendants seek an order that their costs be taxed without regard to the prescribed limit concerning the item Defence. I am not persuaded that any special order should be made with respect to this item. The defence was not, in point of pleading, of any unusual length or complexity. In its final form, it is a pleading of notable quality, but this simply reflects the high standard of work done in getting up the case to that stage. I do not think the task of pleading the defence would have presented counsel, experienced in this field and properly instructed, with any unusual difficulties.

10 The particulars of the defence and counterclaim are lengthy and detailed, but I am not persuaded that the particulars are of unusual length or complexity such as to warrant a special order. I would assess them as being not more than a full day's work for a senior practitioner or junior counsel with reasonable expertise in this field, assuming that the case had been competently got up to that stage.

11 As to discovery, from my knowledge of the case, I think it is very likely that discovery - giving discovery - was unusually difficult. There were about 500 individual documents listed in the discovery affidavits, which is not an exceptionally large volume, relatively speaking. However, no doubt there were other difficulties. The matters in issue required very careful attention to be given to what documents were and what documents were not relevant and the documents concerned included documents relating to a number of separate transactions going back some years. The number of documents actually produced is probably not a true indication of the work done. I am prepared to make a special order in respect to this item. The order will be in terms of par 1(c) of the minute and that is: The defendants' costs be taxed without regard to the prescribed limit concerning the item Discovery.

Transcripts of interlocutory proceedings in all actions

12 An order is sought for certificates in respect to the transcripts of the interlocutory proceedings. It is reasonable to give certificates for these transcripts and the application is not opposed. There will be an order directing the Taxing Master to make an allowance for the costs of transcripts of interlocutory applications.

13 An order is sought that the costs of the callovers held in proceedings CIV 2094 of 1993, 1505 of 1993, 1686 of 1992, 1338 of 1994, 1339 of 1994 and 2119 of 1994 on 17 July 1998 and 17 August 1998 be in the cause. I am prepared to make that order.

14 An order is also sought that the defendants' costs be taxed without regard to the prescribed limit concerning callovers. I am not prepared to make that order. It is true that on more than one callover senior counsel attended. No doubt, the parties had their reasons for instructing senior counsel to attend the callovers, but I am not persuaded it was reasonably necessary to do so. So far as I can tell, nothing was likely to occur at any of the callovers which could not have been handled by a competent senior practitioner.

15 I am satisfied that the prescribed limits with respect to counsel fees in this action should be lifted. Because of the unusual complexity and importance of the case, it was reasonable to engage counsel of special skill and experience and to obtain more than the ordinary amount of assistance from them by way of advice as to pleadings, interlocutory applications, evidence and generally. I am prepared to make an order that the defendants' costs be taxed without regard to the limits prescribed with respect to hourly rates for counsel and without regard to the limits prescribed for fee on brief or to the limits prescribed for the second and succeeding days of hearing.

16 The defendants seek a direction from me to the Taxing Master as to the reasonableness of the time which it is claimed counsel spent in preparing for trial. The amount claimed in respect to senior counsel is 12 days and the amount claimed in respect to junior counsel is 18 days. From my knowledge of the case, I am prepared to say that these times are not unreasonable.

17 I am satisfied that the prescribed limits with respect to getting up case for trial should be lifted by reason of the unusual complexity and importance of the case and because the work reasonably and properly done on behalf of the defendants is not likely to be adequately compensated under the scale. Because of the nature of the proceedings and the many factual difficulties, including the need to undertake a detailed investigation of the source of the funds with which the various parcels of real estate were purchased and improved, and the need to investigate the internal affairs of the two plaintiff companies over a number of years to gain an understanding of the loan account system and in order to rebut the claims of constructive and resulting trusts and the claim of tracing, I am sure it was necessary to do a great deal of work. I have seen material in the affidavits which shows that the work actually done - the hours actually expended - greatly exceeds what might be broadly described as "usual" for getting up work. This material, and my own knowledge of the case, satisfies me that unless a special order is made with respect to getting up, the defendants are not likely to be adequately remunerated under the scale as regards that item.

18 I am not persuaded that any special order should be made with respect to solicitors' hourly rates. Whilst more than the usual amount of hours no doubt had to be put in, I am not persuaded that, with the benefit of the assistance and guidance of expert counsel for which extra remuneration is to be allowed, there is any justification to increase the level of time-charging for solicitors' time.

19 There is one exception to this. I am informed by Mr Styant-Browne, the partner in Messrs Slater & Gordon, solicitors for the defendants who had the conduct and carriage of the action, that he has been admitted in Western Australia for only two years and it is possible that he would therefore not be regarded as a senior practitioner for the purposes of taxation. He is a senior practitioner elsewhere. I am prepared to make a direction to the Taxing Master that claims for time expended by Mr Styant-Browne should be treated as claims for time expended by a senior practitioner. This is not opposed by the plaintiffs.

20 I am requested to fix the value of subject-matter in each action.

21 I fix the value of subject-matter in this action at $1.3 million, that being the price for which the property was sold.

22 These properties were purchased in late 1988 for $11,646,405. Mr William Porteous, a very experienced real estate agent and the husband of Mrs Rosemarie Porteous, has sworn an affidavit that the properties are now worth $13,000,000, in his opinion. It is not a reasoned opinion and I cannot give it much weight. There is other evidence that the properties have fallen in value since they were purchased and Mrs Porteous herself estimated the properties to be worth only $10,215,000 in February 1999 for the purpose of obtaining a bank loan. I think that is probably the best evidence of their value. I fix the value of the subject-matter of this action at $10,215,000.

23 There is no difficulty fixing the value of the subject-matter of this action at $501,266.46. The properties were sold in 1992 and the proceeds of the sale are held in trust pending the outcome of these proceedings. It is the value of the trust fund ($501,266.46) which is the value of the subject-matter of the action.

24 The best evidence I have as to the value of this property is the evidence as to what was paid for it and spent on it. On the basis of that evidence, I fix the value of the subject-matter of this action at $1.6 million.

25 It is not in dispute that the value of the subject-matter of this action is $100,000 and I fix it at that sum.

26 The subject-matter of this action is the grand residence built on several parcels of land in Mosman Park between 1989 and 1991. I heard evidence that a total of $10,985,695 was expended in the acquisition of the land and the construction of the main residence and outbuildings. During the course of the trial, there were some rather wild suggestions that the property was worth as much as $35,000,000. I do not think anyone living in this community could accept, without cogent evidence, that a residential property in Mosman Park could have a market value of $35,000,000. In the affidavit to which I have already referred, Mr Porteous valued the property at $18,000,000. Again, the valuation is unsupported by material that one would usually expect to see supporting expressions of opinion as to real estate values and I cannot accord much weight to it.

27 There is evidence that Mrs Porteous herself estimated this property to be worth $12,000,000 in February 1999 for the purposes of obtaining the bank loan which has already been referred to. I am going to be consistent and I am going to take that as the best evidence of the present value of the property, recognising that the process of reasoning in which I have engaged has no merit except for consistency. I fix the value of the subject-matter of this action at $12,000,000.

28 I was urged by counsel for the defendants, Mr Styant-Browne, to give a direction to the taxing officer as to the allocation of common work. No doubt, there was a lot of work done which was useful in the defence of all six actions. The investigation that had to be undertaken of the pattern of accounting in the Hancock companies over the years in order to defeat the claims of constructive and resulting trusts and the claim of tracing with respect to the action involving Prix d'Amour (CIV 2119 of 1994) was, no doubt, used in defence of the other actions. There was lots of work of that kind, no doubt, which had to be done once only. It is suggested that this should be formalised, or at least recognised, by a direction that 75 per cent of all common work should be allocated to CIV 2119 of 1994 and recovered on the taxation of the bill in that action.

29 I am not prepared to give such a direction. At the outset, it must be appreciated that in none of the other actions was a special order made lifting the scale limits as regards getting up case for trial, etcetera. I fear that to order that 75 per cent of the costs of all the common work may be recovered on the taxation of the bill in CIV 2119 of 1994, with respect to which special orders have been made, is tantamount to making special orders in all actions. I am not sure that that would be the effect of such an order, but there is a risk.

30 Actually, I do not see that there will be any great difficulty if an order such as the one that is sought is not made. It will be for the defendants to show what work was necessarily done in the getting up of CIV 2119 of 1994 and if the work was necessarily done in order to defend that action, it is work the cost of which should be recoverable in that action. It could not be recovered again in any of the other actions. This may or may not produce the same result. I do not know. All I can say is that I am not persuaded to make an order about it and the main reason I decline to do so is that it may turn out to be unfair to one party or the other.

31 In case I have overlooked something, I give general liberty to apply.

32 I invite the parties to agree a minute that gives effect to these reasons and to send it down for my approval.