JILL HALL v CITY APARTMENTS PTY LTD [2024] SASC 64

On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (JUDGE DART) SCCIV-06-121 First Appellant: JILL HALL Counsel: MR N SWAN - Solicitor: COSTS LAW SA Second Appellant: GRANT HALL Counsel: MR N SWAN - Solicitor: COSTS LAW SA Respondent: CITY APARTMENTS PTY LTD Counsel: MR W ERICSON - Solicitor: ERICSON LEGAL Hearing Date/s: 26/03/2024 File No/s: CIV-23-014791 B SUPREME COURT OF SOUTH AUSTRALIA (Appeal to a Single Judge) 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. HALL & ANOR v CITY APARTMENTS PTY LTD [2024] SASC 64 Judgment of the Honourable Justice McIntyre 16 May 2024 PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - APPEALS AS TO COSTS PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - COSTS - TAXATION AND OTHER FORMS OF ASSESSMENT - APPEAL, REVIEW OR REFERENCE - PROCEDURE AND EVIDENCE - MODES OF APPEAL, REVIEW OR REFERENCE The original proceedings commenced in 2006. Costs orders were made in 2007. A Master of the Supreme Court undertook a line by line taxation of over 1,400 individual items out of a total number of over 3000 items before finalising the taxation by way of a lump sum assessment of the remaining items under Uniform Civil Rule 195.9. The appellants sought a review of the lump sum assessment decision, which was dismissed by the Master. The appellants now seek leave to appeal that review decision under Uniform Civil Rule 213.1 citing four appeal grounds. Held: The decision is not attended with sufficient doubt to warrant reconsideration on appeal, nor does it raise an issue of general principle or importance. Leave to appeal is accordingly declined. Uniform Civil Rules 2020 (SA) rr 195.9, 195.12. 213.1, referred to. Hall & Others v City of Burnside & Others [2023] SASC 173; Bayley & Associates Pty Ltd v BDR Australia Pty Ltd [2014] FCA 346; Collins v Djunaedi [2023] SASCA 97; English v Emery Reinbold & Strick Ltd (2002) 3 ALL ER 305, considered. -- 1 of 10 -- -- 2 of 10 -- HALL & ANOR v CITY APARTMENTS PTY LTD [2024] SASC 64 Single Judge Appeal: Civil 1 McINTYRE J: This is an application for leave to appeal under rule 213.1 of the Uniform Civil Rules 2020 (‘UCR’) against a decision by a Master of the Supreme Court relating to an application to review a decision regarding taxation of costs. 2 For the reasons that follow I decline to grant leave to appeal. Background 3 The original proceedings commenced in 2006, with an application for an interlocutory injunction to restrain the respondents from proceeding with the construction of a residential property on land adjacent to the land of the applicants. In 2007 Bleby J made costs orders requiring the appellants to pay the respondent’s costs. Some of these costs were awarded on an indemnity basis. The respondent’s claim extended to more than 3,000 items. Over a period of several years, the Master, Judge Dart, adjudicated more than 1,400 individual items and delivered a number of rulings on various issues of principle. 4 The Master then proposed to finalise the taxation by way of a lump sum assessment of the remaining items under UCR r 195.9(1)(a) and ordered the parties to file written submissions. A hearing was set for supplementary oral submissions on 5 December 2023. On the same day The Master delivered an ex tempore decision fixing a lump sum. The untaxed fees and disbursements were fixed in a total amount of $42,620 made up as follows: • Solicitor’s fees: The Master fixed the untaxed solicitor’s fees in the amount of $54,000 by splitting the difference between the amount claimed by the respondent ($57,346.74) and that contended by the appellants ($56,059.58) and by deducting an amount for the respondent’s failure to provide documents or provide a proper explanation for those amounts. The Master then noted that, of the over 1,400 items that had been taxed in relation to solicitors’ fees, 55% had been taxed off. He therefore applied the same percentage reduction to the untaxed fees to fix solicitor’s fees in the sum of $24,300. • Counsel fees: The respondent claimed $29,459 whereas the appellants submitted that the appropriate amount for counsel fees was $28,010. These fees included costs of mediation that the parties accepted did not fall within the scope of the orders made by Bleby J. The Master rounded counsel fees down to $24,000 to take account of the costs of counsel preparing for and attending mediation. Counsel fees that had been previously taxed were reduced by a lesser percentage than the solicitors’ fees; 32% had been taxed off. The Master applied the same -- 3 of 10 -- [2024] SASC 64 McIntyre J 2 percentage reduction bringing the overall figure for counsel fees to $16,320. • Disbursements: The Master allowed an amount of $2,000 for disbursements against a claim of $2,268. Review decision 5 The appellants were dissatisfied with the outcome of the lump sum taxation and requested a review citing five grounds of review:1 1. In making the orders the court has not given sufficient weight to the matters referred to in the Applicants’ submissions FDN 159 and, in particular, in paragraphs 1-7, 12-33, 35, 36-37, and 38-44 thereof. 2. The application of a 55% reduction for solicitor’s fees to arrive at a lump sum is insufficient to arrive at a fair and reasonable result having regard to the matters referred to in the said paragraphs 12-33 and 35. 3. The application of a 32% reduction for counsel fees to arrive at a lump sum is insufficient to arrive at a fair and reasonable result having regard to the matters referred to in the said paragraphs 35 and 38-44. 4. Alternatively, it would have been reasonable to tax counsel fees in the normal way having regard to the matters referred to in the said paragraphs 35 and 38-44. 5. The allowance of $2,000 for miscellaneous disbursements was made when the nature and status of those amounts remained in question and uncertain as insufficient information had been provided, and does not sufficiently allow for the matters referred to in the said paragraphs 36 and 37. 6 Under UCR r 195.12 (3)(a) a taxation review proceeds before the judicial officer who conducted the taxation.2 7 The Master conducted the review and subsequently delivered reasons for dismissing the review on 5 December 2023.3 In his reasons, The Master set out the principles he applied as follows: 4 The principles in relation to lump sum taxations were set out by Foster J in Bayley & Associates Pty Ltd v DBR Australia Pty Ltd, who said:5 I intend to approach the applicant’s present application by applying the following principles: (a) Rule 40.02(b) of the Federal Court Rules 2011 provides for the award of a lump sum costs order in appropriate circumstances. That rule gives to the Court a broad discretion which should be exercised whenever the circumstances warrant it (see Dunstan v Human Rights and Equal Opportunity 1 Hall & Ors v City of Burnside & Ors [2023] SASC 173 at [21]. (‘Hall’). 2 Uniform Civil Rules 2020 (SA) r 195.12 (3)(a) (‘UCR’). 3 Hall. 4 Ibid at [12]. 5 Bayley & Associates Pty Ltd v DBR Australia Pty Ltd [2014] FCA 346 at [17] (‘Bayley’). -- 4 of 10 -- [2024] SASC 64 McIntyre J 3 Commission (No. 3) [2006] FCA 916 at [23]; Black and Decker Inc v GMCA Pty Limited (No. 4) (2008) FCA 1737 at [3]; and Playcorp Group of Companies Pty Limited v Peter Bodum A/S (No. 2) (2010) FCA 455 at [3]). (b) The Court should not be slow to exercise the relevant discretion in an appropriate case. (c) Any exercise of the discretion to make a lump sum costs order should reflect the overarching principle embodied in s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth). The discretion should be exercised logically, fairly and reasonably (see Beach Petroleum NL v Johnson (No. 2) (1995) 57 FCR 119 at 120F and 123C; Ginos Engineers Pty Limited v Autodesk Australia Pty Limited [2008] FCA 1051; (2008) 249 ALR 371 at 377 [22]; and Sony Entertainment (Australia) Limited v Smith [2005] FCA 228; (2005) 215 ALR 788 at 813 [198] and [199]). (d) The rule serves to avoid the expense, delay and aggravation involved in a formal taxation of costs and associated litigation. In particular, in cases where the incurring of additional costs in taxing bills would result in an additional burden on the successful party, there is strong reason for making a lump sum costs order. A relevant factor in favour of a lump sum costs order will often be that the party against whom the order is sought is in financial difficulties with the consequence that the prospects of the successful party recovering its costs of taxation are poor (Bitek Pty Limited v IConnect Pty Limited [2012] FCA 506; (2012) 290 ALR 288 at 292 [15] per Kenny J). (e) The approach to be taken by the Court in deciding whether to make such an order and in arriving at the quantum thereof should be a broad brush approach. It is one of estimation or assessment and not of arithmetic. The Court should avoid, in effect, carrying out a taxation under the guise of performing a lump sum costs assessment. (f) The fact that the making of such an order may cause hardship on the party against whom the order is made is not relevant. (g) The evidence of an expert costs assessor is both relevant to and probative of whether a lump sum costs order ought to be made and the quantum of any such order. 8 The Master concluded by observing that:6 The process is a broad brush one rather than one of precise calculation. It is an intuitive process which seeks a just outcome. 9 The Master described ground one of the review as a “catch-all” ground set out more specifically in the other four grounds. He noted that the substantive complaints concerning the percentage reduction applied to the solicitor’s fees and counsel fees were encompassed in review grounds two and three.7 The Master rejected the appellants’ submission that, if the taxation had proceeded, the 6 Hall at [13]. 7 Ibid at [22] – [24]. -- 5 of 10 -- [2024] SASC 64 McIntyre J 4 reductions would have been greater for the remaining items and that the respondent’s position would have worsened. He concluded:8 This is a very unusual taxation. The Court does not normally have the advantage, on a lump sum assessment, of having taxed 1,400 items. That is a very large sample size. I am not convinced that the applicants are correct that, if the taxation had continued, the deduction of solicitor and counsel fees would have been greater than for the items taxed. I regard the applicants’ position as optimistic speculation. There is an equal prospect, in my view, that if the taxation had continued that the position of the second respondent would have improved. That is, the percentage of solicitor’s and counsel fees to be taxed off would have diminished. There was a real prospect of that occurring. If that is correct, then the outcome achieved on the lump sum taxation was generous to the applicants. 10 The Master further did not accept the contention, in review ground four, that counsel fees ought not be dealt with on a lump sum basis stating that: 9 The purpose of the lump sum taxation was to find a fair and cost effective way to bring the taxation to a conclusion. Dealing with the counsel fees on the same basis as the solicitor’s fees achieved that aim. 11 Finally, The Master rejected the complaint concerning disbursements in the fifth ground of review citing Bayley as authority for the proposition that it was appropriate to use a broad brush approach of estimation or assessment. The appeal 12 On 22 December 2023 the appellants filed a notice of appeal in relation to the decision by The Master to dismiss the application for review. The notice of appeal raises four grounds:10 1. The learned Judge appealed from has failed to deal properly or at all with the submissions of the Applicants that: (a) The Respondents had not provided grounds to proceed on the basis that the percentage deduction in costs which had been found appropriate for portion of the bill already taxed should apply similarly to the balance of the bill in circumstances where there were facts peculiar to this matter which indicated that a greater deduction was likely to be appropriate; (b) The fact that many costs apparently involved engineering matters which were not part of the claimable costs was an additional reason to not proceed upon a basis that there was a general percentage which could be reliably applied; and (c) The fact that there were changes in the nature of the work carried out in respect of the litigation over time and in particular that any relevance of design work became less with the passage of time meant that one could not proceed upon 8 Ibid at [25] – [26]. 9 Ibid at [27]. 10 FDN 1. -- 6 of 10 -- [2024] SASC 64 McIntyre J 5 the basis that a common percentage was appropriate over the whole course of the matter without further consideration; 2 The learned Judge failed to provide any reason for his expressed view that the Applicants position was “optimistic speculation” and erred as a matter of law in failing to proceed upon the basis that it was for the Respondent to show that the claimed costs were claimable. 3. The learned Judge erred as a matter of law in proceeding upon the basis that because the purpose of a lump sum taxation was to find a fair and cost effective way to bring a taxation to a conclusion that such a process was in fact appropriate in this matter. The learned Judge should have considered whether a lump sum process was logical, fair and reasonable in this matter and whether there was a proper basis to do so. 4. The learned Judge erred in law in failing to give any grounds for his conclusions for rejecting the application for review. 13 The appellants identify The Master’s approach to the percentage reduction, set out in paragraphs 25 and 26 of his reasons for decision, as containing a fundamental error in four respects. These are set out in paragraph seven of the appellants’ written submissions as follows:11 This is a fundamental error in four respects. Firstly, it does not even mention the substance of the submissions made by the appellants and apparently takes no account of them. Secondly, it is inherently illogical to say that because there has been a large deduction to date, the same deduction is appropriate for the balance of the bill without considering the specific reasons for the deductions to date and then considering whether there are additional considerations which apply to the balance of the bill. Thirdly, it takes no account of the obvious fact that the large percentage deducted already is, if anything, an indication that no proper care has been given to the preparation of this bill and that it clearly amounts to an attempt to recover numerous costs not property covered by the relevant. Fourthly, it incorrectly deals with the onus which is on the party seeking to recover costs to justify the amounts claimed. 14 The appellants say that given the complexities of this matter, the appropriate order is for leave to be granted, the appeal to be allowed and either:12 The matter to be remitted to proceed to a full taxation; or It be ordered that to take account of the apparent doubts as to the appropriate amount to be allowed on further taxation but to save the costs of such further taxation an additional 20% be deducted from the claim; or 11 FDN 3. 12 FDN 3. -- 7 of 10 -- [2024] SASC 64 McIntyre J 6 The matter be remitted for a sample of 500 items from 1600 to 2100 be carried out to determine an appropriate percentage deduction. Leave to Appeal 15 The appellants require leave to appeal as this is an appeal against an order or judgment that relates to costs.13 The question of leave to appeal in costs matters was considered by the Court of Appeal in Collins v Djunaedi14 (‘Collins’) where Bleby and Doyle JJA said that:15 …it is necessary to have regard to r 213.1, which addresses the circumstances in which leave to appeal will be required. In particular, r 213.1(1)(c) requires leave to appeal where an appeal is against an order or judgment that “relates to costs.” The reference to “relates to costs” in r 213.1(1)(c) is broad and unqualified, and extends to appeals arising out of orders made in the context of a taxation of costs. 16 The Court then went on to say:16 The question of whether leave to appeal should be granted depends upon consideration of the following: • whether the decision is attended with sufficient doubt to warrant its reconsideration on appeal; • whether the decision raises an issue of general principle or importance; and • whether allowing the decision to stand would work a substantial injustice to the applicant. These considerations must be applied against the backdrop of the jurisdiction that was exercised in making the decision under appeal. In the present circumstances, that backdrop involves a taxation of costs by a master who is a taxing officer under the rules, and hence has particular expertise in determining issues in relation to the quantum of costs. Further, the decision sought to be appealed, whilst including an order requiring payment of a sum of money, relates to a matter of practice and procedure, rather than the substantive rights of the parties in dispute in the proceedings. As such, it is appropriate that the Court exercise caution before granting leave to appeal. Appeals on costs should not be encouraged. [citations omitted] 17 The respondent contends that leave ought not be granted in this matter, saying inter alia that the strictures set out in Collins are applicable to the current case and particularly appropriate to it. First, it is said the current matter involves a lump sum fixing of quantum, unlike Collins where there were additional orders. Second, unlike Collins, the proposed appellant had the advantage of using the review procedure under the UCRs to have the Master reconsider his decision. It is said that the current appeal is, in effect, a second challenge to the original decision. 13 UCR r 213.1 (1)(c). 14 [2023] SASCA 97. 15 Ibid at [20] - [21] 16 Ibid at [31] - [32]. -- 8 of 10 -- [2024] SASC 64 McIntyre J 7 18 The appellants on the other hand, say that the interests of justice warrant leave being granted relying upon what are said to be clear errors on the face of the decision and an apparent lack of consideration of the detailed arguments which have been put by the appellants. The appellants submit that extensive resources have been involved in the taxation over many years occasioned by significant defects in the respondent’s bill as illustrated by the large amounts taxed off the items already considered. It is said that it is inappropriate in these circumstances to apply a broad percentage to differing parts and periods of a bill where there are orders which differentiate between such parts. Discussion 19 This Court ought to exercise caution before granting leave to appeal on a question of costs. This is particularly the case in a matter such as this involving a protracted dispute between the parties involving several rulings by the taxing Master in which the order sought would, if granted, require a line by line taxation of some 1,600 further items. 20 The proposed grounds of appeal raise a number of issues with the review decision. These can be summarised as containing essentially three complaints; the content of the decision, the making of the lump sum order and the quantum of that order being based on the same percentage of reduction as the 1,400 items already taxed. 21 Proposed grounds 1, 2 and 5 represent, inter alia, a complaint about the terms of the decision. Specifically, it is said that The Master did not provide grounds for rejecting the application for review and did not take the substance of the appellant’s submissions into account when considering the application for review. I do not accept this submission. The reasons for decision published on 5 December 2023 set out each ground of review; each is addressed and ultimately rejected. The Master was not required to give detailed and fulsome reasons. There was a rational explanation for the orders made. The fact that he did not recite the submissions of the appellants in detail is not a ground for finding that he did not have regard to them all. 22 The decision to proceed on a lump sum basis was a discretionary one. It is permitted under UCR r 195.9(1)(a). The appeal grounds do not identify that the decision to proceed by way of a lump sum assessment was infected by a process error or an outcome error of the kind identified in House v The King.17 I do not see any basis for finding that there was a process error. The appellants had clear notice of the prospect of a lump sum cost order. They were able to provide written and oral submissions on the issue. The decision acknowledged those submissions and provided, as I have indicated above, a rational basis for the order. In relation to the outcome, there is a lack of particularity or specificity as to the complaint that is sought to be advanced. It is not suggested that, in determining to proceed with a lump sum assessment, The Master acted on a wrong principle, took into account 17 House v The King (1936) 55 CLR 499. -- 9 of 10 -- [2024] SASC 64 McIntyre J 8 irrelevant matters, mistook the facts or failed to take into account relevant matters other than to say that he ought to have considered whether “a lump sum process was logical, fair and reasonable in this matter and whether there was a proper basis to do so”.18 Absent any specific complaint, it is my view that there was ample basis for The Master to conclude that it was appropriate to proceed with a lump sum taxation given the cost and complexity of the taxation to date and the significant number of items that had already been taxed. This was an entirely appropriate matter in which to proceed with a lump sum taxation. This has been a long running costs dispute. Plainly it is in everyone’s interest that this be brought to an end. 23 In relation to the quantum of the assessment, the critical question raised by the proposed grounds of appeal is whether it was appropriate for The Master to use the percentage deductions based upon the items already taxed. This was a decision based upon his experience of the matter and involved no point of principle. The quantum of costs is a matter peculiarly within the special expertise of the taxing Master. The Master had already taxed in the region of 1,400 items and made a number of rulings on matters of principle. I consider that his approach was an orthodox application of well settled principles that were articulated in the decision. Furthermore, the application of those principles took place against the background of his knowledge of the matter. I do not consider that the decision was attended with sufficient doubt to warrant reconsideration on appeal. Further, I do not consider that there is any substantial injustice to the appellants if the orders are left to stand. The orders in question, those from 13 October 2022, while resulting in sums of money payable, relate to matters or practice and procedure arising out of a taxation of costs, rather than the parties substantive rights in the proceedings.19 24 In all of the circumstances, I consider that it is inappropriate to grant leave to appeal in this matter. 18 FDN 3. 19 Collins at [15]. -- 10 of 10 --