CLONE PTY LTD v PLAYERS PTY LTD [2024] SASC 59

Applicant: CLONE PTY LTD Counsel: MR B ROBERTS KC WITH MR B ERICSON - Solicitor: FINLAYSONS Respondent: PLAYERS PTY LTD Counsel: MR J WHITINGTON WITH MR T COGAN - Solicitor: GRIFFINS LAWYERS Hearing Date/s: 27/02/2024 File No/s: SCCIV-04-319 B SUPREME COURT OF SOUTH AUSTRALIA (Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. CLONE PTY LTD v PLAYERS PTY LTD (No 9) [2024] SASC 59 Judgment of Auxiliary Judge Norman a Master of the Supreme Court 30 April 2024 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - PARTICULAR ITEMS - SOLICITOR'S PROFIT COSTS - ATTENDANCES Rulings as to Counsel fees on a taxation of costs. 1987 Rules 101.07(6)(a); 2006 Rules 264(2); Professor Dal Pont Law of Costs (3rd edition); Lexis Nexis Legal Costs (South Australia) , referred to. Blair v Curran (Adam’s Will) (1939) 62 CLR 464; Players Pty Ltd v Clone Pty Ltd [2006] SASC 118; Players Pty Ltd (in liq) & Ors v Clone Pty Ltd [2015] SASC 133; Clone Pty Ltd v Players Pty Ltd (in liq) [2016] SASCFC 134; Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 264 CLR 165; Churchill v University of Sydney (No 2) [2020] NSWSC 1808, applied. -- 1 of 21 -- -- 2 of 21 -- CLONE PTY LTD v PLAYERS PTY LTD (No 9) [2024] SASC 59 Supreme Court – Civil Application Background 1 NORMAN AJ: This is the continuing taxation of the costs of the applicant (“Clone”) in these proceedings. 2 In the process of assessing Counsel fees an issue has been raised by the respondents (commodiously described in these reasons as “Players”) as to whether certain discrete items within the Counsel fees claimed by Clone should be disallowed by reason of “serious malpractice” which they submit Clone’s Counsel were found to have engaged in at the 2005 trial before Vanstone J. 3 Preliminary submissions were presented during the taxation but subsequently as has been agreed by the parties, the matter has proceeded on written submissions. 4 These comprise of Players’ written submissions filed on 29 November 2023 (FDN 323), including annexures, Clone’s responding written submissions filed on 30 January 2024(FDN 324), Players written submissions filed on 12 February 2024 (FDN 325) in reply, and Clone’s responding written submissions filed on 19 March 2024 (FDN 329). 5 Although Players made written concessions to their original application, they have nevertheless continued to pursue their objections to certain items within Clone’s Counsel fees, namely the fees relating to the preparation of the written submissions and oral submissions made before Vanstone J. 6 In essence, the issue for determination involves whether in the circumstances of this case it is appropriate for me as taxing officer to reduce Clone’s counsel fees by reason of the provisions of the applicable 1987 Rule 101.07(6)(a) and the general principles of taxation when Clone holds a costs order in its favour which has been upheld on appeal. Submissions of the parties Players’ submissions 29 November 2023 7 Players contended that certain discrete items of Clone’s Counsel fees should be disallowed by the Court on account of “serious malpractice” findings as to Counsel’s conduct at the 2005 trial before Vanstone J. Although they did not ask the Court to make any new findings with respect to the conduct of Clone’s Counsel, they did rely on the extant findings of “serious malpractice” made by Hargrave AJ at the second trial in Players Pty Ltd (In liq) & Ors v Clone Pty Ltd [2015] SASC 133, and by the 2016 Full Court in Clone Pty Ltd v Players Pty Ltd (in liq) [2016] SASCFC 134. The latter findings, by Blue J and Stanley J, had upheld various findings made below by Hargrave AJ together with additional findings. Players argued that these findings had not been disturbed by the High Court in Clone Pty -- 3 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 2 Ltd v Players Pty Ltd (In liq) (2018) 264 CLR 165, because the grant for special leave to appeal given to Clone had been limited solely to the legal issues of whether “serious malpractice” was sufficient to set aside a perfected judgment, or whether fraud in a strict sense was the required threshold to set aside a perfected judgment, or if malpractice was sufficient, or what the relevant test or principles were. 8 In support of this contention, Players relied on Clone’s application for special leave to appeal and the High Court’s order granting special leave which was limited to the two grounds therein specified. 9 Because the findings of the 2016 Full Court that Clone’s Counsel had engaged in serious malpractice during the 2005 trial before Vanstone J remained undisturbed, Players argued, certain of the Counsel fees which related to the serious malpractice, or which was relevantly “infected” or “tainted” by those findings should be disallowed, on the basis that these costs had not been reasonably incurred by Clone. 10 In their initial submissions, Players had contended that these costs included aspects of the cross examination by Clone’s Counsel of Mr Gregory Griffin on 11 and 12 April 2005, and of Mr Chris McDermott on 14 April 2005, and aspects of Clone’s Counsel’s written and oral closing submissions. 11 However, in their subsequent 12 February 2024 submissions, they confined their objections to only the claims of Counsel relating to the closing written submissions and the closing oral submissions, in relation to both of which Players contended there had been express findings of serious malpractice made by the 2016 Full Court. 12 They submitted that the appropriate exercise was for the Court to apply an appropriate discount to the challenged counsel fees items on a broad axe approach. 13 Players addressed the relevant legal principles. 14 Rule 101.07(6)(a) of the 1987 Rules applied at the time that Vanstone J gave her judgment, including the costs judgment. It provided that: (6) In any rule or order unless the contrary meaning is indicated by the context or other factors: (a) Costs as between party and party, or a like expression, means only the costs which have been necessarily and reasonably incurred by the party in the conduct of the litigation. 15 Similar, although not identical, provisions were incorporated in subsequent equivalent rules. 16 Rule 264(2) of the 2006 Supreme Court Civil Rules provided: -- 4 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 3 (2) As a general rule, however, costs are awarded as between party and party (that is, on the basis that the party entitled to the costs will be reimbursed for costs reasonably incurred by the party in the conduct of the litigation to an extant determined by reference to the scale of costs in force, under these Rules or the old rules, when the costs were incurred). 17 Rule 191.1 of the Uniform Civil Rules 2020 defines “standard costs basis” to mean: A basis on which costs are required to be shown by the person entitled to payment of costs to have been reasonably incurred in the proceeding (or the relevant part of the proceeding) determined by reference to the relevant costs scale in force when the costs were incurred. 18 There was, accordingly, a consistency between the three the different iterations of the Rules, it was submitted. 19 Although 1987 rule 101.07(6)(a) of the 1987 Rules applied to the costs order made by Vanstone J, the “misconduct” factor was a relevant factor for Court to consider when awarding costs. 20 Rule 194.6 of the Uniform Civil Rules 2020 entitled “Discretionary factors” relevantly stated: (1) In exercising its discretion as to costs, the Court may have regard to any factors it considers relevant. (2) For example, the Court may have regard to the following factors: (a) any misconduct or unreasonable conduct of a party in connection with a proceeding; and (b) any breach by a party of overriding obligations, these Rules, or an order of the Court. 21 While the “discretionary factors” referred to in UCR 194.6 concerned the matters a Court may have regard to when making an order as to costs (as distinct from the separate discretion exercised by a taxing Master on a taxation of costs), Players submitted that those matters (namely the “discretionary factors”) could inform the taxing Master’s exercise of his / her discretion on a taxation of costs. They submitted that “Misconduct” in the context of UCR 194.6 must necessarily include “serious malpractice” as found by the 2016 Full Court. 22 UCR 195.5 was entitled “General taxation principles” and sub-rule 195.5(3) stated: (3) Costs will not be allowed insofar as they result from over-caution, negligence or mistake. 23 Players submitted that in the context of that sub-rule “negligence” and/or “mistake” must necessarily include “serious malpractice” as had been found by the 2016 Full Court. -- 5 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 4 24 Dal Pont’s Law of Costs (3rd Edition, 2013) Chapter 13 concerned costs orders against lawyers, the learned author noting at [23.44] - [23.45]: Conduct that attracts the jurisdiction. [23.44] The conduct that attracts the rule-based jurisdiction to make costs orders against lawyers personally varies between jurisdictions. The Australian Capital Territory and Queensland rules speak of costs incurred due to ‘delay, misconduct or negligence’, and in the High Court, of costs incurred because of a lawyer’s ‘delay or misconduct’. The Federal Court Rules target additional costs incurred because of the lawyer’s ‘misconduct’, which it defines to include, inter alia, where the lawyer incurs costs improperly or without reasonable cause, incurs costs that are unnecessary or wasteful, or is guilty of undue delay. The Family Law Rules refer to costs thrown away as a result of the lawyer’s ‘improper or unreasonable conduct’ and ‘undue delay or default by the lawyer’. The rules in the Northern Territory speak of costs ‘incurred improperly or without reasonable cause’ or ‘wasted by undue delay or negligence or by other misconduct or default’. The Victorian rules are similar except that the second phrase above refers to costs ‘wasted by a failure to act with reasonable competence and expedition’. In Tasmania and Western Australia the rules refer to costs ‘incurred improperly, or without any reasonable cause’, or are wasted or thrown away due to ‘undue delay’ or ‘any other misconduct or default’. In New South Wales, the Civil Procedure Act 2005 confers a jurisdiction to make costs orders against a lawyer who is guilty of ‘serious neglect, serious incompetence or serious misconduct’ or who has caused costs to be incurred ‘improperly, or without reasonable cause’. The South Australian rules follow a different schema, and premise the jurisdiction on a lawyer being responsible for a ‘procedural irregularity’, which is defined to include inter alia, ‘unnecessary delay’, ‘prolixity in the statement of the party’s case’, and also ‘the unnecessary, vexatious or otherwise improper commencement of, or an unnecessary, vexatious or otherwise improper step in, a proceeding’. Costs 'improperly' or 'unreasonably' incurred [23.45] The term 'improper' attracts the meaning attributed to it by the case law on the inherent jurisdiction, and includes conduct that would ordinarily 'justify disbarment, striking off, suspension from practice or other serious professional penalty', and 'any significant breach of a substantial duty imposed by a relevant code of professional conduct'. It may even extend to conduct that would be regarded as improper according to the consensus of professional opinion even if it does not violate the letter of the professional rules. The term 'unreasonable' is synonymous with the phrases 'not reasonable' and 'without reasonable cause'. It describes conduct that is 'vexatious, designed to harass the other side rather than advance the resolution of the case', whether or not the product of 'excessive zeal and not improper motive', but is hardly limited to such conduct. Conduct cannot be described as unreasonable simply because it leads to an unsuccessful result or because other more cautious lawyers would have acted differently. The acid test, it has been said, ‘is whether the conduct permits of a reasonable explanation'. For example, if the facts support a finding that the lawyer was party to a course of action 'designed to achieve a collateral object, rather than to achieve the purpose for which the proceedings were ostensibly brought, that conduct might properly be described as unreasonable'. This is not to suggest that conduct that is 'improper' is mutually exclusive from 'unreasonable’ conduct, or that that any such exclusivity exists between 'unreasonable' and 'negligent’ conduct, as there may be an overlap between these categories. As such, it has been said that 'any sharp differentiation between these expressions' is neither -- 6 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 5 useful, necessary or intended. However, a finding of 'improper' conduct is likely to cast doubt on the lawyer's integrity, which is not necessarily so where the finding is one of unreasonableness or negligence. 25 Players submitted that those “general taxation principles” should also reflect or acknowledge the “discretionary factors” enumerated in 1987 rule 194.6(2) in the context of the making of costs orders, for example “misconduct” or “unreasonable conduct”, and that by applying those “general taxation principles” referred to in 1987 sub-rule 195.5(3), informed to the extent that it may be necessary by the 1987 rule 194.6(2) “discretionary factors”, costs (counsel fees) should not be allowed to Clone insofar as they resulted from, or were incurred in connection with, the conduct of Clone’s Counsel which was found to be “misconduct” and / or “malpractice”, or costs which are “infected” or “tainted” by the “serious malpractice”. 26 They contended that “misconduct” in this context necessarily included or incorporated “serious malpractice.” 27 In any event, they contended, irrespective of considerations of the “general taxation principles,” as a matter of ‘first principles’, costs incurred in connection with “serious malpractice” were not costs which had been “reasonably incurred” within the meaning of 1987 rule 101.07(6)(a). 28 In summary, they submitted, the impugned Counsel fees claimed by Clone which were “infected” or “tainted” by the “serious malpractice” findings were not relevantly costs “reasonably incurred” by it in the context of the litigation, within the meaning of 1987 rule 101.07(6), and that the taxing Master was empowered to so find on this taxation, such that those fees (or relevant portions of them) should be disallowed in the exercise of the taxing Master’s (discretionary) powers. 29 Players analysed the relevant parts of the Judgment of Blue J in Clone Pty Ltd v Players Pty Ltd (in liq) [2016] SASCFC 134, observing that at [254] - [255], His Honour had found that aspects of Clone’s Counsel’s written closing submissions were misleading, and at [256] to [260], that aspects of counsel’s oral closing submissions were misleading. They also noted that at [420] Stanley J had said that subject to several issues, he generally agreed with the reasons of Blue J. These had related to the existence of the hotel licence copy of the agreement to lease, which was an important issue in the case. 30 Players submitted that Vanstone J’s order of 25 August 2005 awarding its costs to Clone came at a time when the 1987 Supreme Court Rules were in operation, and that by reason of 1987 rule 101.07(6)(a) the impugned items were infected or tainted by the serious malpractice findings, so they were costs which were not “reasonably incurred” and should be disallowed on the taxation. 31 Players also referred to the findings as to the malpractice issue which had been analysed in detail in Blue J’s reasons in the Full Court. Hargrave AJ had in the second trial concluded that Clone had engaged in malpractice by failing to -- 7 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 6 discover the hotel licence copy which had been in its “power” and by not calling on a notice to produce in open court. On appeal, Blue J, examining the submissions of Clone’s Counsel before Vanstone J at paras [254], [255], [256] to [258], [259] to [260] and [262], had found that the written closing submissions were misleading, as was the oral closing address. Players referred in this regard to the written submissions as to topic number three (the draft agreement to lease pages 30 to 54) and topic number seven (the credit of Mr Griffin pages 86 to 95). 32 In relation to the written submissions, Players identified the Senior Counsel fee items under challenge as being within invoice number G6/21 rendered on 28 April 2005, comprising 15 April 2005 - daily fee, preparation of outlines of argument, of $3,000; 16 April 2005 - reading, noting up and preparation of outline of argument, at $4,200; and 17 April 2005, 16 April 2005 - reading, noting up and preparation of outline of argument, at $4,200. 33 In relation to Junior Counsel fees, concerning Clone’s written submissions, Players identified invoice number 008 rendered on 28 April 2005, comprising 15 April 2005 - preparing closing address, one day, at $1,800; 16 April 2005 - preparing closing address, one day, at $1,800; and 17 April 2005 - preparing closing address, one day, at $1,800. 34 Players emphasised that they could not impeach the entirety of the counsel fees and instead invited the application of an appropriate discounting. 35 In relation to Counsel’s oral submissions, Players referred to the hearing dates for 19 April 2005 (transcript page 2446 line 34, submissions beginning at approximately 11:00 am, page 2513, the Court adjourning at 3:57 pm) and 20 April 2005, (transcript page 2514, Court resuming at 10:10 am and at page 2140, court adjourning at 12:49 pm) and indicated that the counsel fees of both Senior and Junior Counsel fees were challenged. In the case of Senior Counsel fees, these were those contained in invoice number G6/21, rendered on 28 April 2005, with a daily fee of $3,000, and in the case of Junior Counsel these were contained in invoice number 008, rendered on 28 April 2005 for an attendance on 19 April 2005 at the Supreme Court for trial and conferences, one day at $1,800. Copies of the accounts were provided. Clone’s submissions 30 January 2024 36 Clone opposed the costs order sought in its entirety. Its submission was that Players’ application was an impermissible collateral attack on the court’s costs order and had impermissibly sought to go behind it. Although Hargrave AJ had amended Vanstone J’s otherwise unqualified costs order to reserve the costs to the judge hearing the retrial, the High Court had in turn reversed this order and had reinstated Vanstone J’s original order awarding costs to Clone. Clone was entitled to its costs without any relevant deduction and the High Court had declined to intervene notwithstanding the malpractice issue. 37 Pertinently, it was submitted, the High Court had written at [71]: -- 8 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 7 Whether or not Players’ submissions are correct about the manner in which the case was run, Clone should be entitled to the usual order for its costs in the courts below and in this Court. 38 The attempt to overturn the costs orders made by Vanstone J had faced the same insuperable difficulty as Players’ loss in the High Court, Clone submitted, and there was no scope to go beyond, it or behind it. Recoverable costs would have been incurred in any event, and to tax off a portion would be impossible as fresh factual findings would be required. Players was unable to identify any costs said to have been an occasioned by the contention of wrongdoing. The disallowance of counsel fees would be inconsistent with, and in defiance of, the unqualified costs order made in favour of Clone both by Vanstone J at first instant and subsequently reinstated by the High Court. Players was bound by an issue estoppel on this issue. 39 Clone also addressed the scope of the power to make an order of the nature sought, submitting that this was properly within the purview of the primary Judge and not vested in a taxing Master. 40 It addressed the proper scope of the Court’s power on a taxation of costs. A court’s taxing function involved an assessment of costs in conformity with and directed by the terms of the costs order. The principles and considerations for each were distinct and were not interchangeable. The power to make a costs order was broad and unfettered: Churchill v University of Sydney (No 2) [2020] NSWSC 1808 and see also Uniform Civil Rules 2020 (SA) (UCR) rule 194.3, and although it might be tailored by the trial Judge to exclude certain costs, the case was that once a costs order was made, the taxing officer carried that order into effect and quantified the costs in accordance with it. What Players were seeking was not open on a taxation. 41 Clone also challenged Players’ submission that the items in dispute had been “infected” or ‘tainted” but they had not particularised precisely what work was alleged to be infected, rather they had simply sought that there should be a broad axe discounting applied. This concealed their inability to point to any wasted costs. On a proper analysis none of the alleged misconduct of counsel could be said to have caused Clone to incur extra fees payable to its counsel. It had not been contended that counsel had carried out any extra work or devoted any extra time in connection with the impeached conduct. The recoverable costs would have been incurred in any event. 42 In relation to Clone’s written and oral submissions, these had been presented in the context of a truncated time frame fixed by Vanstone J, and even if the third copy of the agreement had been discovered, Clone’s Senior Counsel could have made the same submission as he did, and in fact the time spent would have been greater. The submissions of Junior Counsel including preparation had been directed to other issues in the trial and were distinct and separate from the question -- 9 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 8 of rectification and the deletion issue. This had been observed by Debelle J who had dissented in the Full Court. 43 As to Player’s request that the taxation involve a “broad axe” approach in fixing an appropriate discounting of counsel fees, Clone submitted that it would be complete guess work for the court to do this, and it should be not attempted nor should the concept be entertained. The fee notes relied upon by Players were not sufficiently detailed to permit such apportionment in any event. 44 Finally, Clone submitted that fresh factual findings would be required. Players’ submission that the taxing Master was bound by the findings made by Hargrave AJ and the Full Court, and would simply be applying those pre-existing findings as a basis to disallow Clone’s Counsel fees, would be inappropriate, as a raft of fresh findings of misconduct would need to be made. Players had implicitly accepted this by noting that no express findings of malpractice had been made by the 2016 Full Court in respect in the cross-examinations of Mr Griffin and Mr McDonald. 45 In summary, Clone submitted, Players’ submissions should be rejected, and it should receive its costs of the argument and incidental matters as costs on the taxation. Players’ reply submissions 12 February 2024 46 As indicated above, in these submissions Players submitted that having reflected on Clone’s reply submissions they accepted that because no express findings of serious malpractice had been made either by Hargrave AJ or by the 2016 Full Court regarding the cross-examination of Mr Griffin and Mr McDermott, they no longer pressed their challenge to counsel fees concerning cross examination. They limited it to the counsel fees concerning written and oral closing submissions, relying on the express findings of serious malpractice made by the 2016 Full Court, and on the argument that these had not been reasonably incurred within the meaning of 1987 rule 101.07(6)(a). They noted that Clone had failed to grapple with or even mention this rule in its submissions, and submitted that its contention as to a collateral attack going behind Vanstone J’s cost order was a false issue, because the rule itself meant that only those costs which were necessarily and reasonably incurred could be recovered. 47 It was the role and function of the taxing Master to determine what costs had been reasonably incurred. All Players was seeking to do was to apply that rule according to its terms, considering the Full Court’s findings of serious malpractice, which had not been set aside by the High Court. No issue of estoppel arose. Players was not asking the Court to make any fresh factual findings. 48 Players also addressed Clone’s submission that the malpractice had not caused wasted or unnecessary increased costs, saying that this was asking the wrong question. What was relevant was whether the impugned Counsel fees were -- 10 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 9 necessarily and reasonably incurred, and fees which had been found to constitute serious malpractice could never come within that definition. 49 Clone’s assertion that Players had argued before the High Court that Clone should not get its costs of the proceedings below because of the findings of serious malpractice even if Clone won the High Court appeal, was not correct, Players contended. They had never made a submission in those terms - ground 1 in Clones’ Notice of Appeal had been proposed by the Attorney-General, and Players’ costs submission to the High Court had arisen because the High Court had given permission to Clone to include the Attorney-General’s proposed ground of appeal in Clone’s Notice of Appeal. If Clone were to succeed in the High Court on that basis, then in the exercise of the High Court’s discretion, Clone should not recover its costs either for the 2015 trial before Hargrave AJ or before the 2016 Full Court. The High Court had rejected this submission because the ground 1 issue was a live issue in the case by reason of the Attorney-General having raised it below, even though it was not part of Clone’s case. Clone had not been given special leave by the High Court to challenge the underlying findings of serious malpractice, instead the appeal was confined to the two legal issues summarised in Players’ primary submissions at paragraphs [4] and [5]. The High Court had never considered the issue of what costs were reasonably incurred by Clone in the conduct or litigation within the meaning of the 1987 rules. 50 Vanstone J’s costs order had never been the subject of a taxation, so no issue estoppel could arise with respect to Players’ 1987 rules submission, which had never arisen before for consideration in the litigation. 51 Players referred to the general taxation principles contained in the UCR including that costs would not be allowed in so far as they resulted from over caution, negligence, or mistake: UCR 195.5(3) – which necessarily embraced or included costs incurred in connection with serious malpractice. That subrule applied to the conduct of this taxation by virtue of UCR 1.4(1), which stated that the UCRs applied to a step in a proceeding taken after the commencement date. 1987 rule 101.07(6)(a) applied to the proper interpretation or meaning of Vanstone J’s costs order because it was in operation at the time when Her Honour’s costs order was made. The Uniform Civil Rules applied to the taxation process and the conduct of the taxation in respect of that costs order. 52 Finally, Players addressed Clones’ contention that the findings of serious malpractice made by Hargrave AJ and the 2016 Full Court could not be relied upon by the taxing Master, because those Judges had made their findings by applying an incorrect legal test. This, Players argued, was an utterly disingenuous argument, because each of Hargrave AJ and Blue and Stanley JJ in the 2016 Full Court had applied the very legal test which Clone itself submitted that they should apply. It was only once Clone appealed to the High Court, on the back of the Attorney - General’s first ground, that it changed its case regarding the correct legal test. In any event, none of that undermined the applicability to the present circumstances of the findings made by Hargrave AJ, and of the -- 11 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 10 2016 Full Court, which findings remained undisturbed by the High Court. In essence, what the High Court had held was that those findings of serious malpractice were not sufficient to set aside a perfected judgment because “actual fraud”, was required for that purpose and serious malpractice was not enough. 53 In conclusion, Players submitted, nowhere in Clones’ submission did it grapple with the central proposition advanced by Players that the costs incurred for the work of Clone’s Counsel which constituted serious malpractice were not costs which were reasonably incurred within the meaning of the 1987 rules. Clone’s reply submissions 18 March 2024 54 In these submissions Clone maintained its primary submissions and submitted that nothing in Players’ reply had undermined these. 55 All that remained of Players’ argument was their objection to the work undertaken by Counsel in preparing written submissions and making oral submissions, which amounted to the sum of $21,600. Clone submitted that a successful party at trial holding a benefit of an unqualified costs order should not be denied any portion of its costs associated with the successful closing of its case. The fact was that Junior Counsel’s work on the submissions did not touch on the rectification and deletion issue, and it could not be the case that he had unreasonably permitted Senior Counsel to advance his submission on this issue VIP. 56 Further, the vast preponderance of Senior Counsel’s work had been unrelated to any suggested malpractice, and the fact was that any conduct asserted by way of non-disclosure concerning the lease in issue was one of omission, and not of commission. Players proposition that because Senior Counsel had unreasonably failed to disclose the existence of the third copy of the agreement, Clone should not recover the costs of the work that he had reasonably undertaken in relation to his written and oral submissions was disingenuous, and it was noted that Players had previously impliedly accepted that a level of causation was required to be established. 57 There was no warrant or basis in the rules to link potentially disentitling conduct to the recovery of properly incurred costs because they were said to be somehow tainted by being in connection with some broader form of malpractice, and doing so, would be a fundamentally erroneous application of principle. Players had not, nor could they, identify any direct incurring of costs because of malpractice. A direct causative link was required. 58 There had been no increase in costs caused. 59 Clone submitted that the extant costs orders stood according to their terms. Whilst a trial Judge might have regard to the conduct of the proceedings and show disapproval of this by making an arbitrary broad axe reduction without having to specifically identify any additional costs referable of the conduct to misconduct, a -- 12 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 11 taxing Master did not have such a jurisdiction or power. The taxing Master’s task was to give effect to the terms of the costs order, and the use of the taxing process would be an impermissible collateral attack on the order itself. To hold otherwise was not only beyond power but also offended the paramount principle of finality by effectively permitting re-litigation and re-examination of determined issues in a forum auxiliary to the trial proper. 60 Clone’s position was that fresh factual findings were required to give effect to Players’ contention, for example no finding had been made that any counsel fees resulted from malpractice, nor that that Clones’ submissions before Vanstone J did not have foundation or could not have been made as they were, had the third copy agreement been disclosed. To the contrary, the High Court had found that there was an ample basis for Vanstone J’s findings, referring to paragraph [26] of the High Court’s reasons where it had summarised the six principal bases why Vanstone J had rejected Mr Griffin’s evidence, and had found in favour of Clone. Fresh findings could not now occur. 61 Clone said that the High Court had specifically dealt with costs, and the cost consequences generally had been discussed there and ventilated. Players had been aware of the alleged serious malpractice issue when costs were discussed before the High Court. Vanstone J’s costs orders, having earlier been set aside and nullified, were reinstated by the High Court, which had found that Clone was entitled to its costs below, Players were bound by this outcome, and any orders or similar would have had to be sought and agitated at the time, but they were not, so it was now too late to raise them. 62 Clone addressed Players’ submission that the general taxation principles relating to costs being disallowed in so far as they were not necessarily or reasonably incurred, embraced, or included costs incurred in connection with serious malpractice. This, Clone submitted, confused the power to disallow on taxation any wasted costs directly resulting from recognised conduct, with the more plenary power, unfettered by direct causation requirements, to sanction a party for misconduct which was solely invested in a trial Judge. 63 Finally, addressing the impossibility of a taxation attempting to apportion Clone’s costs, the latter noted that Players had not made submissions in reply to its original submissions as to the impossibility of any apportionment being undertaken. It could not be guessed or calculated in any sort of reasonable way by Players, and would be purely speculative. 64 Clone sought the total rejection of Players submissions and sought the costs of the argument and all incidental matters on an indemnity basis, or at the minimum an order that the costs of the argument should be certified as fit for Senior Counsel. Consideration and Conclusions 65 Several issues have arisen in the parties’ submissions. I have come to the following conclusions. -- 13 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 12 Applicable rules governing the taxation 66 The case has spanned three Supreme Court rules regimes, namely the 1987 Rules, the 2006 Rules, and the Uniform Civil Rules 2020. 67 When Vanstone J delivered her costs order on 25 August 2005 (Order 5) the 1987 Rules were in operation, and rule 101.7(6)(a) thereof provided that in any rule or order, unless the contrary meaning was indicated by the context or other factors, costs as between party and party, or a like expression, meant only the costs which had been necessarily and reasonably incurred by the party in the conduct of the litigation. 68 Although the orders of Vanstone J were varied by Hargrave AJ in the set aside action in 2015, the High Court reversed that order and reinstated the original orders of Vanstone J. 69 The taxation had then commenced (before Withers M) following the original trial, but was suspended during the appeal processes and the Hargrave AJ trial, resuming before myself during the currency of the 2006 Rules and then the UCRs. 70 The UCR transition rule, UCR 1.4 (1) provides that unless the Court otherwise orders, the UCRs apply to a step in a proceeding taken after the commencement date. 71 The taxation is a “step in a proceeding,” and as it had commenced before the commencement date, accordingly the 1987 Rules, including rule 101.7(6)(a) apply to it. This is confirmed in Players’ submissions dated 7 November 2023 at para [27] and is not disputed by Clone in either its 30 January 2024 or 19 March 2024 submissions. 72 Accordingly, the Court is required to consider the dispute between the parties in the context of the application of the 1987 rule 101.07(6)(a). Its terms are set out earlier in these reasons. The proper scope of power on a taxation 73 The judicial function exercised upon a taxation involves an assessment of a party’s costs in conformity with and directed by the terms of the costs order. Whilst the power to make a costs order is broad and almost unfettered, and may be tailored by a trial Judge to exclude certain costs, once it is made the taxing officer carries it into effect by quantifying the costs in accordance with that order. The carving out of a component and acting contrary to the costs order founding the taxation is not open to the taxing officer. 74 There is a clear distinction between the power to disallow on taxation any wasted costs directly resulting from recognised conduct, with the more plenary power, unfettered by direct causation requirements, to sanction a party for misconduct which is solely vested in a trial Judge or an appellate court. -- 14 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 13 75 These role of a taxing officer by reason of the rules have been summarised in Lexis Nexis Legal Costs (South Australia) at para [2093]. 76 Taxing officers apply the costs rules and various general principles, namely that costs will be allowed so far as they are necessary and reasonable but not so far as they result from over-caution, negligence or mistake; that the necessary and reasonable costs of procuring evidence reasonably required for the presentation of a party's case will generally be allowed; that if the same solicitor or firm of solicitors represents two or more parties to an action costs will not be allowed separately for each party, but on the basis of the aggregate work necessary and reasonable for the representation of both or all parties; that if proceedings are adjourned because of the default of a party it should bear the costs, and that if proceedings are adjourned because of the default of a party's lawyer, the lawyer should bear the costs. 77 In determining what costs are “necessary or proper” it is appropriate to look to the circumstances at the time the work was done, rather than to look to a later set of circumstances. The general test is whether a sensible solicitor at the time at which it is proper to do so would have regarded the item of work or expenditure as reasonable in the interests of the client. 78 As a matter of utility such matters routinely arise the course of a taxation of costs and are decided by the taxing officer rather than the trial Judge or appellate court. 79 However, costs issues of a more substantial nature are determined not during a taxation, but by the primary Judge or appellate court providing what costs order is to be made. There are numerous examples of such determinations. These include the appropriate costs when a claim and counterclaim are determined, the effect of costs offers (formal and informal), the conduct of the parties and their lawyers, and cases when an apportionment of costs is undertaken based on issues heard and determined. I refer to Legal Costs South Australia at paras [1894] to [1899], referring to instances where successful parties are not awarded their full costs by reason of issues on which they are unsuccessful, and conversely, where unsuccessful parties might not be ordered to pay the full costs of the successful parties by reason of issues on which the latter failed to succeed. There are numerous other examples of costs orders made by a Court tailored to the circumstances of each case. 80 Where a trial Judge or appellate court has definitively ruled on a costs issue, it is inappropriate for the court taxing the costs to interfere or to make a contrary ruling inconsistent with the terms of the costs order itself. The application is an impermissible attack on the High Court’s costs order 81 Clearly, the applicable costs order here is that made by Vanstone J on 25 August 2005 which provided that the Players parties pay Clone’s costs, -- 15 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 14 including all reserved costs, to be taxed as between party and party, being those costs of Clone’s claim against Players, and of the counterclaim by Players. 82 This order was reinstated by the High Court. At the conclusion of its reasons, the High Court wrote at para [71]: Players submitted that if the appeals were allowed then Clone should not be entitled to its costs in the courts below. Players said that, despite Clone's pleading to the contrary, Clone had accepted that if its conduct had misled the courts then it was capable of amounting to malpractice sufficient to set aside the original judgment. Players said that Clone's position had only changed in this Court. There was a dispute about the extent to which Clone had accepted this proposition and whether this should affect an order as to costs. However, as Clone observed, the Attorney-General for South Australia, whose submissions were of considerable assistance in this Court, had submitted in the courts below that fraud or conduct analogous to fraud must be proved. The parties had joined issue on this point in the courts below. Whether or not Players' submissions are correct about the manner in which the case was run, Clone should be entitled to the usual order for its costs in the courts below and in this Court. 83 The terms of the High Court’s judgment are clear. Notwithstanding that the findings of “serious malpractice” by Hargrave J and the 2016 Full Court were undisturbed by the High Court (by reason of the terms of the grant of special leave) the outcome of the proceedings was that Clone remained entitled to recover its costs without relevant deduction based on any malpractice. As parties in the proceedings, Players were aware of the serious misconduct issues at the time the costs were being considered by the High Court. In their written submissions to the High Court dated 11 August 2017 at paras [11] to [20] they addressed the malpractice issue and its background, and at [70] they sought costs orders in their favour against Clone. Further, in their oral submissions presented to the High Court on 13 December 2017, their Counsel raised the issue of costs at page 48, 75, and 76. At page, 82 Keifel CJ made it clear that the hearing that day was a hearing on all issues, including costs. The malpractice issue was well and truly before the High Court, and Players had the opportunity to, and did, seek special costs orders (as is noted in para [71] of the High Court’s reasons, referred to above) but it declined to make such an order, and in unequivocal terms it awarded to Clone its full costs of the proceedings. 84 Players had previously sought to set aside Vanstone J’s costs orders. Before Hargrave AJ, they had sought orders setting aside each of paragraph 5 of Vanstone J’s orders at trial, paragraph 7 of the Orders of the Full Court dated 4 July 2006, paragraph [1] of Vanstone J’s order dated 19 December 2006, an order that Clone pay Players costs of the proceedings before Hargrave AJ on an indemnity basis, an order that Clone pay Players costs of defending Clone’s costs claim in the proceedings before Vanstone J on an indemnity basis, and an order that Clone repay to Players all costs paid by them in respect of Clone’s costs claim against Players in the proceedings before Vanstone J, together with interest on those monies calculated at the post-judgment interest rate of the Supreme Court. -- 16 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 15 85 However, what Hargrave AJ ordered on 9 November 2015 in Players Pty Ltd (in liq) & Ors v Clone Pty Ltd [2015] SASC 133 was that the costs of and incidental to the original action incurred prior to 17 December 2010, (including the question of any costs of Players, Mr Griffin, Mr Cahill, and Mr McDermott thrown away by reason of the conduct of Clone, through its lawyers which had been the subject of findings), be reserved to the Judge hearing the re-trial of the original action. 86 As previously indicated, in the result, the High Court definitively reinstated Vanstone J’s order made at first instance. 87 In these circumstances I have determined that Players’ submission that the taxing Master should go behind this costs order by excising certain (unascertainable) costs (or “issues”) that they assert are “infected” is an impermissible collateral attack on the cost order itself, and they cannot undermine and vary the operation of the Court’s extant costs orders under the guise of taxation, the effect of which would partially neutralise the order itself. 88 By “carving out’ costs which Players’ assert are referrable to misconduct, the Court would be defeating and sidestepping the High Court’s decision that Clone should have its costs “below and in this court” (“below” meaning the cost orders referrable to the Vanstone J judgement). 89 I accept Clone’s submission that having made an application to set aside the costs order, and lost, Players are bound by an issue estoppel on this issue. This principle is that parties and their privies cannot call into question an issue of fact or law that has been resolved between them in litigation, and is referred to as estoppel by record or issue estoppel: Blair v Curran (Adam’s Will) (1939) 62 CLR 464 at 532 where Dixon J explained that issue estoppel as to facts was confined to “those ultimate facts which form the ingredients of the cause of action” and “the actual ground upon which the existence of the right was negatived”. It has not been established that the conduct of Clone’s counsel was causative of unnecessary and unreasonable costs 90 Players challenged Clone’s claims for counsel fees for portions of Clone’s written and oral closing submissions; based on the submission that there are “extant findings” of “misconduct” that “taint” or “infect” this work. 91 In summary, the fees now challenged are the sums of $4,800.00 for oral submissions and $16,800 for written submissions, a total of $21,600.00. It is conceded that because the challenged items are not “infected” or “tainted” in their totality, only an (unascertained) portion of them is sought to be taxed off. However, Players have not particularised precisely what work constituting that total is alleged to be “infected”. Instead, they have simply sought that there should be a “broad axe” discount applied. 92 The key component of the attempt to disallow costs sought by Players is that “wasted costs” have been incurred. The rule on which they relied, -- 17 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 16 1987 rule 101.17(6)(a), refers to costs needing to be reasonably “incurred” to be recoverable on a party/party taxation. 93 However, having regard to the material before the Court, I cannot find evidence that the found misconduct has caused Clone to have incurred extra fees payable to its Counsel for Clone, or that they have charged it fees which would not otherwise have charged. 94 It has not been said that the submissions of Clone’s Counsel submissions, written or oral, were either prolonged or prolix, or that they provoked or occasioned extra work on the part of Players at the trial. 95 The submissions made by Clone to the trial Judge could still have been made, and there was foundation for its Counsel to do so, and the discovery of the additional photocopy of the Agreement did not remove the foundation for the submissions that were made by Clone. 96 As has been pointed out, the High Court summarised the six principal reasons why Vanstone J had rejected Mr Griffin’s evidence and found in favour of Clone. The associated submissions were all properly open to be made, and the topics on which Vanstone J was allegedly “misled” or otherwise affected were not causative of any wasted costs due to an alleged malpractice. 97 Pointedly, the High Court observed at [26] that: The reasons why the trial judge rejected Mr Griffin's evidence included the following. First, none of the directors initialled alongside the alleged striking out of the word. This contrasted with the initialling by the directors alongside other changes to the agreement to lease and their initials at the foot of each page. Secondly, it was unlikely that a commercial solicitor, such as Mr Griffin, would have been satisfied with a provision that provided for the licences to be transferred "for consideration". There was a provision, with initialled changes, for resolving disputes about market value of plant and equipment (cl 11(j)) and another provision to resolve disputes about a rent review (cl 7) but no provision for resolving a dispute about the "consideration" for the licences. To this might be added the legal and grammatical nonsense of a clause which would have required transfer of the licences "held in respect of the premises [words struck out] consideration". Thirdly, as Mr Griffin acknowledged, the deletion would not have accorded with any prior agreement between the parties but Mr Griffin made no attempt to bring the alteration to the attention of any officer or agent of Clone. Mr Griffin also made no attempt to alter other clauses that were inconsistent with representations made to him by Clone. Fourthly, Mr Griffin's complaint, which asserted, incorrectly, that Clone had attempted to "pull a swifty" by inserting the word "NIL" into the agreement, had only been communicated to Clone 10 years later. Indeed, reference to the deletion of the word "NIL" was only made obliquely in a letter from Players before its original defence was filed and Players did not include such an allegation in its original defence. Fifthly, the memorandum of lease did not contain a clause requiring any consideration to be paid. Clauses 7.3 and 8.8 of the memorandum of lease provided for the delivery up of the hotel and gaming machine licences on determination of the lease without any requirement for payment of consideration. Sixthly, there was evidence from Clone's witnesses, which her Honour accepted, that they would have seen the blue line striking through "for NIL" if it were there. -- 18 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 17 98 The High Court at [28] had further observed that the Full Court in Players Pty Ltd v Clone Pty Ltd [2006] SASC 118 at [189] comprising Doyle CJ, Sulan and Layton JJ had upheld the conclusion of the trial Judge on that point, and that Doyle CJ (with whom Sulan and Layton JJ had agreed) had described the reasons why the trial Judge had rejected Mr Griffin’s evidence as matters having “considerable force”. 99 A further aspect on this topic relates to the significant truncation of the time allowed by Vanstone J for the presentation of oral submissions. Her Honour indicated to the parties at the hearings on 11 April 2005 and on 12 April 2005 that she was concerned at the length of time the case was taking (see Trial transcript pages 1925 and 2038) and accordingly the time for presenting submissions was necessarily limited. It is clearly arguable that even if the third copy of the Agreement had been discovered, Senior Counsel would have made the same submission. This was discussed in Clone Pty Ltd v Players Pty Ltd (in liq) [2016] SASCFC 134 at [635] by Debelle J in his dissenting reasons, so the time taken would not have been increased. 100 The preponderance of Clone’s Senior Counsel’s work was unrelated to any suggested malpractice, and any conduct by him asserted by way of non-disclosure concerning the lease in issue was one of omission, and not of commission. 101 In relation to Junior Counsel for Clone, his work was directed to other issues in the trial separate and distinct from the rectification and deletion issue. This issue was discussed by Debelle J in Clone Pty Ltd v Players Pty ltd (In liq) [2016] SASFC 134 at [635] in which he referred to confined his reference on this topic to the submissions of senior counsel. 102 In the circumstances, I have determined that the conduct of Clone’s Counsel was not causative of unnecessary or wasted costs by it. Impossibility of Apportionment 103 Even if I am wrong in concluding that ruling in favour of Players application would be beyond the scope of a taxing officer, or that Players are bound by an issue estoppel, or that the conduct of Clone’s Counsel was not causative of unnecessary or wasted costs by it, I have formed the view that it would be complete guesswork to attempt to ascertain an appropriate discount as has been sought by Players, and it should not be attempted or the concept entertained. 104 The fee notes relied upon by Players as referred to in paras [79] to [90] of their primary submissions are not sufficiently detailed to permit any apportionment, and at para [83] thereof, Players acknowledge that as they cannot impeach the entirety of these counsel fee items, the appropriate exercise of my discretion as taxing officer is to apply an appropriate discount of the items using a “broad axe” basis. However, they provide no objective criterion by reference to which the extent of any discount can be calculated, and any endeavour by the court -- 19 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 18 to use a “broad axe” discounting would inevitably involve considerable guesswork. Fresh factual findings would be required 105 Finally, I turn to the issue as to whether as the taxing officer hearing this application it is necessary that fresh factual findings be made. 106 Players’ position is that this is unnecessary and that the Court is bound by the findings made by Hargrave AJ and by the subsequent Full Court hearing and that I would simply be applying these pre-existing findings as a basis to disallow Clone’s Counsel fees. 107 Clone’s position on the other hand is that a raft of fresh findings of misconduct will need to be made, and it submits that Players had implicitly accepted this when they stated at para [20] of their primary submissions that no express findings of malpractice had been made by the 2016 Full Court respecting the cross-examinations of Mr Griffin and Mr McDermott because the Court had not been asked to do so. 108 Further, Clone pointed out, Players had also submitted in para [18] of their primary submissions that it was clear from Blue J’s judgment (with which Stanley J relevantly agreed) that he considered that both Mr Griffin’s and Mr McDermott’s cross-examinations had effectively “miscarried” and they had submitted in para [19] that Senior Counsel had mislead Vanstone J with his submissions which in effect expressly denied the existence of the hotel licence copy of the agreement to lease. 109 In my view giving effect to what Players seek would not merely apply what were asserted to be binding extant factual findings, but rather it would require express findings, made on the taxation, that such existing findings had a more expansive operation and effect. This would go beyond the scope of the evidence at trial. No such finding could now be made. 110 Clone further argued that it would be unsafe on the taxation, even as a matter of discretion, to bring to account the findings made by Hargrave AJ or the majority (Blue and Stanley JJ) of the Full Court in Clone Pty Ltd v Players Pty Ltd (in liq) [2016] SASCFC 134. This was because there was no clear and consistent set of reasons. Each of Hargrave AJ, Blue and Stanley JJ had reached their conclusions differently. Because these findings were found by the High Court at the conclusion of its reasons at [69], to be in furtherance of an incorrect legal test, Clone submitted, their whole foundation and basis was undermined, so placing any reliance on them would be unsafe and inappropriate. 111 Players on the other hand submitted that this was an utterly disingenuous argument, as the Judges below had applied the legal test which Clone had itself submitted that they should apply, and it was only when Clone had appealed to the High Court that it had changed its case as to the form of the correct legal test. None -- 20 of 21 -- [2024] SASC 59 Auxiliary Judge Norman 19 of this, Players submitted, undermined the applicability to the case of the findings made by Hargrave AJ and the 2016 Full Court, which remained undisturbed by the High Court. The High Court had held that the findings of serious malpractice were not sufficient to set aside a perfected judgment, because actual fraud was required for that purpose and serious malpractice was not enough. 112 Notwithstanding Players’ contentions, in my view there could well be a need for fresh findings to be made in the circumstances, even if this merely involved examining nuances of their Honours’ respective reasons. 113 This would be a wholly inappropriate exercise on the taxation. 114 For the above reasons, I dismiss Players’ application to disallow certain discrete items of Clone’s Counsel fees based on the “serious malpractice” issue. 115 I will hear submissions from the parties as to the costs of this aspect of the taxation. Orders 1. I dismiss Players’ application to disallow certain discrete items of Clone’s Counsel fees based on the “serious malpractice” issue. 2. I will hear submissions from the parties as to the costs of this aspect of the taxation. -- 21 of 21 --