Baker Johnson's Bill of Costs, Re [1994] QSC 335 [1995] 2 Qd R 234

IN THE SUPREME COURT OF QUEENSLAND OS No. 821 of 1994 Brisbane [Re: Roberts] Before the Honourable Mr Justice G N Williams IN THE MATTER of the Costs Act 1867 AND: IN THE MATTER of a Bill of Costs of MESSIEURS BAKER JOHNSON, Solicitors of Brisbane, and GARY FRANK ROBERTS AND: IN THE MATTER of GARY FRANK ROBERTS re: Personal Injuries Claim, Department of Defence AND: IN THE MATTER of miscellaneous other matters JUDGMENT - G N WILLIAMS J Judgment delivered 16/12/1994 CATCHWORDS: COSTS - solicitor and client bill - work performed by solicitor useless to client - whether properly and necessarily performed - O. 91 r. 82 considered - failure to comply with ss. 44 and 45 Commonwealth Employees' Rehabilitation - Compensation Act 1988 considered - costs not recoverable on solicitor and client taxation - In re Massey and Carey (1884) 26 Ch.D. 459 and other authorities considered Counsel: Ms M Byrne for applicant J Logan for respondent Solicitors: Baker Johnson for applicant Taylors for respondent -- 1 of 16 -- 2 Hearing date: 5 December 1994 -- 2 of 16 -- IN THE SUPREME COURT OF QUEENSLAND OS No. 821 of 1994 IN THE MATTER of the Costs Act 1867 AND: IN THE MATTER of a Bill of Costs of MESSIEURS BAKER JOHNSON, Solicitors of Brisbane, and GARY FRANK ROBERTS AND: IN THE MATTER of GARY FRANK ROBERTS re: Personal Injuries Claim, Department of Defence AND: IN THE MATTER of miscellaneous other matters JUDGMENT - G N WILLIAMS J Judgment delivered 16/12/1994 This is an application for review of a decision of the Taxing Officer brought pursuant to O. 91 r. 119. The circumstances are somewhat unusual and it is necessary to set out the relevant background facts in some detail. Gary Frank Roberts consulted the applicant, Baker Johnson, Solicitors, on or about 22 March 1990 with respect to a possible claim against the Commonwealth of Australia arising out of an incident during his service in the Army which occasioned him bodily harm. By letter dated 11 April 1990, the applicant informed Roberts of the "avenues open for you to pursue your claim for compensation". The letter referred to the Compensation (Commonwealth Government Employees) Act 1971 and described the two options as being a claim for -- 3 of 16 -- 2 "compensation under the Act . . . very similar to Workers' Compensation" and common law damages. It is not necessary to go in detail through the various steps subsequently taken by the applicant until 19 June 1991 when a District Court plaint was filed claiming damages at common law. In a letter dated 10 July 1991, the Australian Government Solicitor directed the attention of the applicant to s. 44 of the Commonwealth Employees' Rehabilitation and Compensation Act 1988. It was asserted that the section referred to "makes it impossible to maintain this action". On 5 August the applicant asked counsel previously retained, to advise on the significance of s. 44. The Bill of Costs indicates that in April 1992 the applicant sent a letter to The Department of Defence purporting to be a formal notification of election pursuant to s. 45(1). In a response dated 29 May 1992, the Australian Government Solicitor pointed out that the election had to be made before the action was commenced and could only be made where compensation was payable under ss. 24, 25 and 27 of the Act. Again the assertion was made that the action pending in the District Court was barred by s. 44 of the Act. The Bill of Costs refers to steps taken with respect to that proceeding by the applicant up until about February 1994. When the Australian Government Solicitor initially raised ss. 44 and 45 with the applicant, the latter responded by saying that time for delivering a defence would not run while -- 4 of 16 -- 3 that issue was being further considered. It appears that no further formal step was taken by either party with respect to the District Court plaint until February 1994 when the Bill was prepared. As the incident happened on 22 March 1990 the relevant limitation period during which an action had to be commenced expired 22 March 1993, and after that date it was too late for further proceedings to be contemplated. By the time the matter came before the Taxing Officer more than three years had elapsed since the last step was taken in the District Court proceeding. If the action commenced in June 1991 was ineffective because of the operation of s. 44 it is clear that by the time the Bill was taxed Roberts had lost all rights to prosecute any action in which damages were claimed. The relevant sections of the Commonwealth Employees' Rehabilitation and Compensation Act are as follows: "44(1) Subject to section 45, an action . . . does not lie against the Commonwealth . . . in respect of: a) an injury sustained by an employee in the course of his or her employment, being an injury in respect of which the Commonwealth . . . would, but for this subsection, be liable (whether vicariously or otherwise) for damages; . . . 45(1) Where: a) compensation is payable under section 24, 25 or 27 in respect of an injury to an employee; and b) the Commonwealth . . . would, but for subsection 44(1), be liable for damages for any non-economic loss suffered by the employee as a result of the injury; the employee may, at any time before an amount of -- 5 of 16 -- 4 compensation is paid to the employee under section 24, 25 or 27 in respect of that injury, elect in writing to institute an action or proceeding against the Commonwealth . . . for damages for that non- economic loss. (2) Where an employee makes an election: a) subsection 44(1) does not apply in relation to an action . . . subsequently instituted by the employee against the Commonwealth . . . for damages for the non-economic loss to which the election relates; and b) compensation is not payable after the date of the election under section 24, 25 or 27 in respect of the injury. (3) An election is irrevocable. . . . " The implications of those sections for injured Commonwealth employees have been considered in Gerogiadis v. A.O.T.C. (1994) 68 A.L.J.R. 272 and Janssen v. Commonwealth, unreported, C.A. 192 of 1992, judgment delivered 15 March 1993. The applicant delivered a solicitor and client Bill of Costs in taxable form which was filed 26 May 1994. The total amount claimed therein for professional costs and disbursements was $9,019.65. Roberts consulted other solicitors with respect thereto and on 7 June, Notice of Objections to the applicant's Bill was filed. The Taxing Officer heard submissions on 29 June and 9 July 1994. On the latter date the Taxing Officer ruled as follows: "I am satisfied that the plaintiff should have elected to pursue the action for damages before instituting proceedings and because no notice of election has been given the effect of s. 44 is that the present proceedings are a nullity and consequently the costs of instituting and maintaining these proceedings have been wasted and the solicitor should not receive any benefit for the work -- 6 of 16 -- 5 performed. I therefore strike out the bill of costs and allow the client the costs of this application." The applicant then lodged "Objections on Taxation" on 19 August 1994. Therein, at the outset, it was stated: "The solicitors' bill in this matter has been taxed and disallowed in its entirety. Although the client's objections do not in terms, in their general objection to the entire bill, rest their claim expressly on negligence, a perusal of the objection makes it apparent that this is so." The applicant then referred to In re Massey and Carey (1884) 26 Ch.D. 459 in support of the proposition that the Taxing Master had no power to decide a claim of negligence which goes to the whole of the Bill. Then the alternative submission was made "that the work undertaken by the solicitors was not wasted by reason of any alleged negligence in failing to give a Notice of Election to the Commonwealth pursuant to the provisions of s. 45". The Taxing Officer considered those objections and for reasons which he published, he issued his Certificate of Taxation, filed 29 September 1994, certifying that he had taxed the Bill in the sum of $245, and made an order that Roberts was entitled to his costs of the taxation in the sum of $1,032.70. It is not necessary to quote extensively from the Answers to Objections formulated by the Taxing Officer, but it is desirable to outline his reasoning. He noted at the outset that Roberts "raised an issue as to the respondents firm's entitlement to recover any costs at all". He pointed out that at "no time was the issue that was argued described as one of negligence and at no time did any -- 7 of 16 -- 6 party object to the Taxing Officer determining the issue". He acknowledged that "a Taxing Officer has no jurisdiction to determine the question of negligence when it goes to the whole of a Bill". He then recounted the history of the work done by the applicant and pointed out that the initial advice was "flawed" as it referred to 1971 legislation which had been repealed and replaced by the 1988 Act. In consequence the procedural requirements of s. 45 were not satisfied. His reasoning went on: "If the client had no cause of action until an election in writing has been given and I believe, in this case, it is common ground that none was given prior to initiating proceedings, then the applicant by the plaint issued on 19 June 1991 would be unable to successfully pursue his claim for damages. In addition the accident by which the applicant was injured occurred on 7 February 1990. If the solicitors were now to take steps to comply with the Act by giving notice of the applicant's election to the Commonwealth any proceedings 'subsequently instituted' would be statute barred. As a consequence the cost in the bill must be disallowed as the work has become useless to the client." In support of that last proposition the Taxing Officer referred to authorities to which I will refer in a moment. In my view his analysis of the effect of ss. 44 and 45 was correct. Significantly the Taxing Officer then went on to hold that "the initial instructions is not work that has been performed which has been rendered useless by the failure to elect in writing before proceeding. However, it may be that the solicitors should not recover these costs if the matter of their negligence had been argued before me". As the Bill was being taxed on the District Court Scale he allowed the initial -- 8 of 16 -- 7 item for instructions. The authorities on which the Taxing Officer specifically relied were Hill v. Featherstonhough (1831) 7 Bing. 569 and In re Windeyer, Fawl and Co. ex parte Foley (1930) 31 S.R.(N.S.W.) 145. In the former case the question was as to the sufficiency of a direction given to the jury in an action on an attorney's bill. Tindal C.J. said that he left it to the jury "to consider, whether the business which had been done was necessary for the purposes of the client, or useless and unnecessary". He went on to say at 572: "I've always thought that if an attorney, through inadvertence or inexperience, - for I impute no improper motive to the plaintiff, - incurs trouble which is useless to his client, he cannot make it a subject of remuneration, the meaning of which is, a reward for useful labour". In arriving at the same conclusion both Gaselee J and Bosanquet J said much the same thing, but it is worth quoting briefly from each. The former said: "When a client employs an attorney, he relies on the judgment of the attorney, and is entitled to expect the exercise of competent skill; but the attorney has not an unlimited discretion, and is not to pursue a course which will be manifestly useless to his employer." And the latter said: "For when a party employs a professional person, he proposes to profit by the exercise of his agent's skill; and it is a proper question for the jury, whether what has been done was necessary for the object the employer had in view." The passage from the judgment of Tindal C.J. quoted above was cited with approval by the Full Court in Windeyer's case. There, Street C.J. also said at 149: -- 9 of 16 -- 8 "Independently of the express provisions of our Rules of Court relating to the taxation of costs, it is a well recognised principle in taxations between party and party that only such costs can be allowed as are necessary or proper for the attainment of justice or the protection of the rights of the party by whom they were incurred; and it is an equally well recognised principle in the taxation of costs between solicitor and client that, in the absence of special circumstances, a solicitor cannot charge for work which is useless towards accomplishing the object his client has in view." Undoubtedly that learned Judge was referring in that passage to the equivalent of our O. 91 r. 82, which is derived from earlier English Rules. It provides: "On the taxation of costs as between solicitor and client, costs which do not appear to the taxing officer to have been necessarily or properly incurred by the solicitor for the attainment of justice or protecting the rights of the party, or which appear to have been incurred improvidently, or through over caution, negligence, or mistake, on the part of the solicitor, shall not be allowed." The equivalent rule was considered in Simmons v. Storer (1880) 14 Ch.D. 154, Geen v. Herring [1905] 1 K.B. 153, and Etheridge v. The President of the Shire of Berwick (1906) V.L.R. 746. In Simmons, Jessel M.R. observed at 156 that if it "turns out that the proceedings in respect of which the costs were incurred were improper, then no costs ought to be allowed". He went on to say: "Under this rule the Taxing Master is bound to disallow these costs if he thinks fit, and it seems to me that his decision was right." Geen's case involved a taxation of costs on a solicitor and client basis with respect to several causes of action in which documents had been served on a large number of weekly tenants. The Court reached the conclusion that the costs of serving all -- 10 of 16 -- 9 the weekly tenants were unnecessarily incurred and therefore ought to be disallowed. Those two cases were cited with approval by Cussen J in Etheridge in support of the Taxing Master's jurisdiction to disallow costs not properly or reasonably incurred. That learned Judge also analysed the terms of the rule in some detail, but it is not necessary to go further into that for present purposes. Brief reference should also be made to two other cases decided under the general law. Cliffe v. Prosser (1833) 2 Dowl. 21 is interesting because the factual situation was analogous to that under consideration here. The attorney commenced an action in assumpsit, but after it had proceeded some way it was discovered there was a lease under seal and in consequence that action was inappropriate. It became necessary to commence a new action rendering the former proceedings "entirely useless". The Court in effect held that the Master may disallow costs occasioned by the negligence of a solicitor. The other decision is that of the Court of Appeal in the Estate of Ogilvie (1910) P. 243. In the course of his judgment, Cozens-Hardy M.R. referred to Alsop v. Lord Oxford (1833) 1 My. & K. 564 in support of the proposition that if the solicitor negligently or ignorantly takes any unnecessary proceedings it is the duty of the Master to protect the client from any charge in respect of such proceedings. A perusal of all those authorities establishes, in my view, that a Taxing Officer is entitled to disallow costs on a solicitor and client bill where the work done has in the end -- 11 of 16 -- 10 result been entirely useless to the client. That is so, whatever the reason or explanation for the work ultimately being so categorised. Of course this does not mean that on every occasion when a solicitor's advice is held by the Court to be wrong that the solicitor is not entitled to recover solicitor and client costs. If there was an arguable or reasonable chance of the proceeding being successful then the client must pay. Even if the prospects of success were only minimal, the client would have to pay if, having been given appropriate advice, express instructions were given to proceed. But that is not the case here. The applicant advised Roberts to take a certain course of action which was doomed to be useless from the start, because it was inappropriate given the terms of the applicable legislation. The real question therefore becomes whether or not, notwithstanding his reasoning, the Taxing Officer erred because he effectively made a finding of negligence against the solicitor which went to the whole of the bill. Before answering that question it is necessary to refer in greater detail to In re Massey and Carey. In the course of an action the solicitor for the defendant omitted to file a rejoinder "by inadvertence". As a result of that omission certain additional costs were incurred in regularising the proceedings. The Court held that the Taxing Master had power to disallow those costs which were occasioned by negligence or ignorance of the solicitor, but it went on to make observations on the situation where the negligence -- 12 of 16 -- 11 occasioned "the loss of the whole action". Relevantly Cotton L.J. said at 461-2: "In my opinion he was quite right in disallowing them. The proceedings were necessary only for the purpose of extending the time for putting in the rejoinder after the proper time had been allowed to expire. Therefore they were not proceedings necessary for the due conduct of the action, but necessary only to remedy a slip which the appellants had themselves made. It was said that the Taxing Master had no jurisdiction to disallow charges on the ground of negligence, but that an action for negligence ought to be brought by the client against the solicitor. In my opinion the question here is not the same as that which would arise in an action for negligence. The question here is whether the client should be charged with costs which are referable only to amending a slip made by the solicitor. We have made inquiries of the Taxing Masters both of the Chancery and Common Law Divisions as to what has been their practise in such matters. Undoubtedly the Taxing Masters in the Chancery Division are more liberal in entertaining objections on the ground of negligence, perhaps because the order for taxation in the Chancery Division directs payment on taxation, while the order in the Common Law Division is only for a stay of proceedings on payment. Probably at Common Law if the objection was that the whole action had failed by reason of the negligence of the solicitors that would be considered a question proper to be decided not by the Master but in an action by the client for negligence. Whether that would be so also in the Chancery Division I do not know; but it is not necessary to consider that point now, for both at Common Law and in Chancery the Taxing Master will entertain the objection that a certain step in the action would not have been necessary if the solicitor had done his duty in the ordinary way, and would hold that the costs of such a step were not properly chargeable to the client." Bowen L.J. said at 463: "The Taxing Master when taxing a bill of costs relating to proceedings in an action is not bound to allow the costs of proceedings which are apparently unnecessary and which could only be held to be proper if it were shown that they were caused by the act of the client, not by the act of the solicitor. . . . It is true that at Common Law the Taxing Master has -- 13 of 16 -- 12 not the power to decide the question of negligence in all cases. If the negligence goes to the loss of the whole action he cannot entertain the question; but if it relates only to certain proceedings in the action he can. Otherwise the unfortunate result would be that if there was a question as to the proprietary of a particular step in the action, as to which no man is better able to decide than the Taxing Master, you place the client in the position that he would have to pay the charge and then bring an action to get it back from the solicitor. It seems to me the Taxing Master has the power to decide, and that he ought to decide such questions without prejudice to the right of the client to bring an action." Thereafter he referred to Cliffe v. Prosser and observed that that case established that the Master had jurisdiction to disallow items on the ground that the costs were unnecessary. Lastly, Fry L.J. said at 464: "To my mind it is very clear that the Taxing Master has power to decide whether any particular items charged are proper, and to disallow them if they are improper. It is equally clear that no item can be proper which is due the negligence or ignorance of the solicitor." There was no reference in Massey and Carey to the equivalent of O. 91 r. 82. In my view it is clear from the authorities previously referred to, and that Rule, that the Taxing Officer has jurisdiction to disallow costs which have been incurred through the negligence of the solicitor. Massey and Carey supports that proposition insofar as the negligence relates to the taking of unnecessary steps in the course of the action. Fry L.J. does not expressly deal with the situation where the negligence goes to the loss of the whole action. Bowen L.J. says that the Taxing Master does not have the power to decide the question of negligence in all cases; but he does not attempt to define the limit on the jurisdiction other than -- 14 of 16 -- 13 by referring to the loss of the whole action. Cotton L.J. lends most support to the proposition that the Taxing Master has no jurisdiction to disallow charges on the ground of negligence that goes to the loss of the action. All that he says which is relevant to defining the jurisdiction is that the question in the case before him was not "the same as that which would arise in an action for negligence". On careful analysis it seems to me that, assuming there is a rule that the Taxing Officer cannot disallow costs where the negligence of the solicitor has resulted in the loss of the whole action, it only applies where the specific questions raised on the taxation are "the same as that which would arise in an action for negligence" against the solicitor. If the objections to the bill can be determined by considering whether or not the steps taken incurring the costs were entirely useless to the client, or whether or not the work charged for was proper in the sense in which that word is used in the authorities referred to above, then the costs may be disallowed notwithstanding that it is also arguable that the reason for the work being useless was that the solicitor was negligent and that such negligence resulted in the loss of the whole action. There is an obvious injustice in concluding that the solicitor was negligent resulting in the whole action being lost, but nevertheless holding that in the first instance the client should pay the costs; the proviso being that he could seek to recover such costs in a separate action in negligence against the solicitor. -- 15 of 16 -- 14 In this case the Taxing Officer concluded that because the necessary election had not been made pursuant to the statute the work done after the point of time at which the election ought to have been made was useless to the client. Bearing in mind the approach which should be adopted on reviewing a decision of the Taxing Officer (in the Estate of Ogilvie, and Australian Coal and Shale Employees' Federation v. The Commonwealth (1953) 94 C.L.R. 621 especially at 627), I cannot conclude that the Taxing Officer erred in principle or that his decision was wholly wrong. It follows that the summons of 6 October 1994 seeking a review of the taxation by the Taxing Officer should be dismissed. -- 16 of 16 --