Bottoms v Reser & Morrissey [2000] QSC 413

State 00 1 Reporting TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIVIL JURISDICTION de JERSEY CJ No 28 of 1998 JOHN RAYMOND REIS BOTTOMS and JOSEPH PATRICK RESER and SHIRLEY A MORRISSEY CAIRNS .. DATE 29/11/2000 .. JUDGMENT 1 Ii rl1111r, The L:iw Courts, Gl'orgc Street, Brisbane, Q. ,WOO REVISED COPIES ISSUED State Reporting Bureau Date 4 / le.. ;c...ooo Applicant Respondents Tclcphoru•: (07) JZ-17 ..jJ(,0 F:1x: (07) J.!-17 5S.l2 -- 1 of 7 -- · 2~112000 LJR (De Jersey CJ) HIS HONOUR: On the 7th of October 1999, Justice Williams ordered the applicant to pay the respondents' "solicitor and own client" costs. It will be noted that his Honour made that order after the commencement of the Uniform Civil Procedure Rules. 10 The Uniform Civil Procedure Rules do not refer to assessment on the "solicitor and own client" basis. They refer in Rules 703 and 704 only to "the standard basis" and "the indemnity basis." His Honour's order used the "solicitor and own client" formulation to reflect what had been agreed 20 upon between the parties. When the matter came before the Registrar in Townsville, an issue arose as to the manner of assessment. The Registar referred the matter to the Court. Mr Jonsson, who appears today for the respondents, asks me to direct that the costs ordered to be paid be taken to include "all costs incurred by the respondents' solicitors 30 on the respondents' behalf provided that any such costs have ~ been authorised, approved or ratified by the respondents." Traditionally, here and in England, orders for the assessment of costs as between solicitor and own client have been equated with indemnity assessment (see EMI Records v. E so M Wallace Limited [1983] 1 Chancery 59 at 65). As Sir Robert Megarry said at page 74: JUDGMENT 2 60 -- 2 of 7 -- · 2~112000 LJR (De Jersey CJ) "The effect of an order on an indemnity basis is ... that all the costs incurred will be allowed except any which have been unreasonably incurred or are of an unreasonable amount; and in applying these exceptions, the receiving party will be given the benefit of any doubt." In his equating an order for solicitor and own client costs with an indemnity order, I am however conscious that he also observed at page 74 that an order for solicitor and own client costs covers not only costs "which are not unreasonable but also all ... other costs however unreasonable or extravagant they are so long as their clients approve them." That observation does not appear to me to sit 10 comfortably with what is said at page 65 of the report, that 20 "often such orders (i.e. indemnity orders) have been more or less equated with orders for costs as between solicitor and own client." Mr Jonsson submitted that the Uniform Civil Procedure Rules 3~ should not be approached on the basis that they codify any basis for assessment, confining them to the standard or the indemnity bases. He referred to section 180(6) of the Property Law Act 1974, particularly applicable in this case as authorising an order for costs, and section 221 of the Supreme Court Act 1995 which confirms the Court's general power to award costs. Each of those provisions expresses the power or the discretion, as the case may beJ without fetter. JUDGMENT 3 40 50 60 -- 3 of 7 -- · 29112000 LJR (De Jersey CJ) Megarry VC would perhaps have read Rules 703 and 704 of our Uniform Civil Procedure Rules as not excluding, in modern day Queensland, assessment under an order for costs on a solicitor and own client basis with more generous latitude than under the indemnity basis. I refer to his Lordship's observations in EMI at page 69 letters C to E. 10 It does however appear that the intention behind Division 3 of Part 2 of Chapter 17 of the Uniform Civil Procedure Rules, which includes Rules 703 and 704, is to specify the only bases for modern day assessment of costs, that is either the standard basis or the indemnity basis. In this case, following the parties' formulation, his Honour should, in my respectful view, be taken to have considered that a taxation on the "solicitor and own client" basis comprehended what is now regarded as the indemnity basis under Rule 704. That encompasses all costs except so far as they may be of unreasonably amount or where unreasonably incurred. For recent examples of that formu8lation, see 20 30 Helljay Investments Pty Ltd. v. Deputy Commissioner of 40 Taxation [1999] HCA 56 .at paragraphs 26 and 27 per Hayne J and Patrick Stevedores number 2 Pty Ltd v. The Proceeds of Sale of MV "Skulptor Konenkov" [2000] F.C.A. 1710 at para 11 per Tamberlin J. That approach is confirmed in the terms of Rule 7 04 ( 3) which requires the Registrar to allow "all costs 50 reasonably incurred and of a reasonable amount." JUDGMENT 4 60 -- 4 of 7 -- 29112000 LJR (De Jersey CJ) In approaching such an assessment, the Registrar ought to be conscious of the caution of the Vice-Chancellor in EMI that in determining reasonableness, "the receiving party will be given the benefit of any doubt" (see page 74). In other words, considerable liberality should ordinarily be extended in assessing reasonableness. That is indeed implicitly 10 recognised by the reference in para B of sub-rule 3 to any costs agreement between a client and the client's solicitor. It would perhaps be an unusual case where, costs having been agreed in that way, they were then, on this process of assessment, to be excluded as "unreasonable." Plainly however if they warranted characterisation as outlandish, they ought no doubt nevertheless to be excluded. I emphasise my view that in such an assessment, no niggardly 20 or unduly narrow approach would be warranted. The 30 expectation of parties adopting such a formulation, "solicitor and own client", to be equated with "indemnity", is plainly reflected in those very words. It would be odd, in short, if parties, having agreed upon an indemnity assessment, contemplated the possibility of a Registrar's substantially cutting back upon the costs to be allowed, thereby leaving the donee of the order bereft of the indemnity envisaged. That is why the ultimate limitation is itself restricted to the unreasonable, but "unreasonable" 40 viewed in the overall context - which invites consideration so expressly of the terms of the agreement between the client and the solicitor. JUDGMENT 5 60 -- 5 of 7 -- ··2§112000 LJR (De Jersey CJ) On the Registrar's reference, I direct that the costs ordered to be paid by the applicant to the respondents on the 7th of October 1999 are to be assessed on the indemnity basis as prescribed by Rule 704 of the Uniform Civil Procedure Rules. Nothing further? MR JONSSON: The only other possible issue is whether the costs of today, how they fall----- HIS HONOUR: Well, they should follow the event plainly, shouldn't they? It was a reference from the Registrar. MR JONSSON: In my submission they should form part of the costs of Justice Williams' order. MR ROBINSON: Your Honour has made orders substantially in accordance.or with the submissions of my client before the Registrar. HIS HONOUR: But the Registrar simply wasn't prepared to determine the issue, was he - I see what you mean. MR ROBINSON: That is so, your Honour, which is why the reference was made to this Court. But given that that was 10 20 the position taken by my client at that time, the event has 30 been that your Honour has found substantially in accordance with the position taken by my client, your Honour, at that stage and in accordance with the proposition that costs should follow the event, they should in that light go to my client. If your Honour were minded not to do that, then in my submission the next appropriate order for your Honour to make would simply be no order as to costs given that there's no other way of deciding it other than by giving them to the 40 other side since they must have their costs of the taxation in terms of the order made by his Honour Justice Williams. HIS HONOUR: The issue, although reasonably clear to me, was not entirely free of doubt. It was reasonable for the beneficiaries of the order to query its extent and effectively, through the Registrar, to seek elucidation from so this Court. That is particularly so bearing in mind the intention behind the order when effectively agreed upon between the parties precedent to his Honour's formal JUDGMENT 6 60 -- 6 of 7 -- ~ 29112000 LJR (De Jersey CJ) direction. The justice of the case does at this stage, albeit that the position I have directed accords with the position taken by Mr Robinson, for the respondent, warrant my directing that the costs of and incidental to this hearing form part of the costs ordered in favour of the respondents, and that they fall to be assessed on the same 10 basis as that ordered by Justice Williams. 20 30 40 50 JUDGMENT 7 -- 7 of 7 --