FEDERAL COURT OF AUSTRALIA

Auspine Ltd v Australian Newsprint Mills Ltd [1999] FCA 673

COSTS – application to fix a gross sum pursuant to O 62 r 4(2) – application of South Australian Supreme Court Guides to Counsel Fees – “care and conduct” – relevance to circumstances of present case.

Federal Court Rules O 62 r 4(2), O 62 r 19

Practice Direction (No 2 of 1992) Supreme Court Taxing Office [1993] 1 All ER 263

The Legal Reporter Vol 7 No 7 15 April 1986

Leary v Leary [1987] 1 WLR 72 considered

Beach Petroleum NL v Johnson (1995) 57 FCR 119 cited

Stanley v Phillips (1966) 115 CLR 470 applied

Donohoe v Britz (No 2) (1904) 1 CLR 662 applied

Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (unreported, judgment delivered 14 April 1986: Waddell CJ in Eq. Supreme Court of New South Wales) followed

Brookfield v Davey Products Pty Ltd (unreported: judgment delivered 19 December 1997) applied

Re Eastwood (dec’d), Lloyds Bank Ltd v Eastwood [1937] Ch 112 not followed

Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169 cited

Magna Alloys & Research Pty Ltd v Coffee (No 2) (1982) VR 97 cited

Ralkon Agricultural Company Pty Ltd v Aboriginal Development Commission (unreported: judgment delivered 11 July 1986) cited

Lumley Life Ltd v IOOF of Victoria Friendly Society (unreported: judgment delivered 23 April 1992) considered

Re a Company (No 004081 of 1989) [1995] 2 All ER 155 cited

KPMG Peat Marwick McLintock v HLT Group Ltd [1995] 2 All ER 180 cited

Canvas Graphics Pty v Kodak (Australasia) Pty Ltd (unreported:  judgment delivered 23 January 1998) cited

AUSPINE LTD (ACN 004 289 730) v AUSTRALIAN NEWSPRINT MILLS LTD (ACN 009 447 132)

NO SG 26 OF 1997

O’LOUGHLIN J

21 MAY 1999

ADELAIDE

THE COURT ORDERS THAT:

The respondents pay to the applicant, in satisfaction of its entitlement to costs in this action, the sum of $307,776.00.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

Application for the determination of a gross sum for costs pursuant to O 62 r 4(2)

1                     Auspine Ltd (“Auspine”) instituted proceedings in this Court, alleging that Australian Newsprint Mills Ltd (“ANM”) had breached an agreement that was said to subsist between the parties.

2                     Auspine carried on business in the timber industry at the times that were material to these proceedings.  In particular, it conducted a timber mill at Scottsdale Tasmania; a by-product of its milling operation was woodchip.  ANM was, at that time, the proprietor and operator of a newsprint and timber mill at Boyer, Tasmania.  Broadly, the case for Auspine was built around an allegation that in August 1995 ANM committed itself, for a term of three years, to purchase all of Auspine’s woodchip that was produced at its Scottsdale mill.  It was Auspine’s case that ANM was not therefore entitled to discontinue its purchase of that chip as it purported to do in a letter of 22 January 1997.

3                     Auspine sought interlocutory injunctive relief; however, it was not necessary for the Court to resolve that application, for the parties came to an agreement that they would continue their trading arrangements pending the outcome of the substantive litigation.  Consent orders were made to accommodate the parties’ temporary resolution of their dispute.

4                     The parties were also in dispute over the quality of some of the sawlog that ANM supplied to Auspine.  Auspine rejected deliveries of sawlog from the Star of Peace plantation on the ground that the logs were not to specification.  ANM denied Auspine’s allegation and cross-claimed seeking damages as a consequence of Auspine’s refusal to accept that sawlog.  ANM sought further damages from Auspine, alleging that it breached various agreements to supply wood chip to specification.

5                     During the pre-trial processes, it was agreed by the parties that it would be expeditious to proceed to the trial of certain limited issues relating to liability, leaving for a later date questions of the quantification of damages if and when they should arise; it was for that reason that the Court published “Findings of Fact and Law”; it was contemplated that, in due course, the parties would make their submissions on the further prosecution of the proceedings.

6                     After a lengthy hearing, reasons were published that favoured Auspine.  The Court made findings to the effect that:

·        The parties entered into a contract for the supply of woodchip for a period of three years from 1 August 1995;

·        The quality of the woodchip was to be such that it would be suitable for use in the Boyer mill;

·        Although there were occasions when deliveries did not match the required quality, ANM did not assert such rights as it may have had to terminate the contract;

·        ANM’s notice of intention to “discontinue its purchase from Auspine of sawmill chips” was without justification and its intended conduct, in refusing further deliveries after the end of March 1997, would have been an unlawful repudiation of the parties’ agreement.

7                     The Court said that it would hear the parties further on such consequential findings as should or might be made.  For that purpose, leave was granted to relist the matter for mention on 14 days notice; it was anticipated that the parties would present argument on the question of costs.

8                     In due course the parties addressed the subject of costs and subsequently, on 15 May 1998, it was ordered that Auspine should recover 90 per cent of its taxed costs. Auspine has since moved the court on notice of motion filed on 1 October 1998 for orders:

“1.       That the costs payable by the respondent pursuant to the order of this Honourable Court made on 15 May 1998 be assessed as a gross sum pursuant to Order 62 Rule 4(2) of the Federal Court Rules.

2.       Assessing the costs payable by the respondent to the applicant.

3.       Such further or other orders as this Honourable Court deems fit.

4.       That the costs of and incidental to this Notice of Motion be included in the gross sum assessed pursuant to paragraph 2 above.”

9                     On a normal taxation, the costs allowable for work done and services performed by solicitors are those set out in the second schedule of the Federal Court Rules (“the second schedule”):  O 62 r 12.  That rule also states that “higher fees shall not be allowed in any case except such as are by this Order otherwise provided for.”

10                  Order 62 r 4(2)(c) during the relevant period, prior to 15 July 1998, provided as follows:

“4.(2) Where the Court orders that costs be paid to any person, the Court may further order that as to the whole or any part of the costs specified in the order, instead of taxed costs, that person shall be entitled to -

            (a)        ...

            (b)        ...

            (c)        a gross sum specified in the order instead of the taxed costs; or

            (d)        ...”

11                  In the United Kingdom, the Court of Appeal in Leary v Leary [1987] 1 WLR 72 considered its equivalent rule, saying of it:

“The purpose of this rule is to achieve … the avoidance of expense, delay and aggravation involved in a protracted litigation arising out of taxation”(76)

Von Doussa J applied this statement to the provisions of sub-r 4(2)(c) in Beach Petroleum NL v Johnson (1995) 57 FCR 119, adding that the power “is appropriate to be used in complex cases” (120).

12                  Even though the Court is invited to proceed to determine a gross sum under O 62 r 4, and even though that allows a judge an exercise of discretionary powers, it still remains necessary for that discretion to be exercised judicially.  Thus, it remains necessary to bear in mind certain fundamental principles, such as those contained in O 62 r 19:

“On every taxation the taxing officer shall allow all such costs charges and expenses as appear to him to have been necessary or proper for the attainment of justice or for maintaining or defending the rights of a party, but, except as against the party who incurred them, costs shall not be allowed which appear to the taxing officer to have been incurred or increased -

            (a)        through over-caution, negligence or misconduct;

(b)                by payment of special fees to counsel or special charges or expenses to witnesses or other persons; or

            (c)        by other unusual expenses.”

13                  It is also necessary to bear in mind what Barwick CJ said in Stanley v Phillips (1966) 115 CLR 470:

“The emphasis throughout is upon obtaining an adequate presentation to enable justice to be done:  it is not upon the propriety of the steps taken by a litigant to ensure the maximum of success in his own cause.  That of course he may do but not, in my opinion, at his opponent’s expense.”(478)

14                  Earlier Barton J had expressed the same sentiments in Donohoe v Britz (No 2) (1904) 1 CLR 662 when he said:

“It is a general rule that, as between party and party, the luxuries of litigation must be paid for by those who indulge in them, the necessaries only are to be paid for by the losing side.”(666)

15                  These passages explain why there is, invariably, a substantial gap between party and party costs and solicitor and client costs.  On the taxation of a bill of costs, on a party and party basis, a taxing officer will allow all necessary and proper costs that have been incurred, but not those costs that arise as a result of an overcautious or an excessively investigative approach.  On the other hand, one would expect that those costs would be allowed on the taxation of a bill that has been prepared on a solicitor and client basis, assuming always that the work was done in accordance with the client’s instructions.

16                  I feel that there is a need to comment upon the manner in which ANM has approached the question of Auspine’s costs.  It did not challenge the use of the gross sum taxation; it could have – it could have mounted an argument that for one reason or another, the gross sum method of taxation was inappropriate.  But having elected not to avail itself of this course, it nevertheless instructed its solicitors to carry out a futile examination of every aspect of the billing guide that was used by Auspine’s solicitors (and which is described in some detail later in these reasons).  As a result the Court was presented with approximately eighty pages of detailed calculations of costs and classifications of professional services.  The extent of the work that must have been undertaken would have almost approximated, in my opinion, the work involved in a formal and conventional taxation.  Once the respondent had made its decision to accept the concept of a gross sum taxation, it became inappropriate to present the type of detail that was contained in those eighty pages, even though, arguably, the information might have been pertinent to the outcome of the dispute.  As it is, most of the work that was performed by ANM’s solicitors has not been utilised because it would have defeated the purpose of a gross sum taxation to descend into the detail that is contained in those eighty pages.  Having reflected on the matter, it seems to me that the course of action that ANM should have adopted would have been to submit to the Court that the applicant’s claim for an amount of $360,186.86 was excessive – that the respondent’s assessment of the correct amount was almost $170,000 less and that such a disparity warranted a formal taxation.  The Court could then have ruled on that issue as a preliminary issue and the matter could have, thereafter, proceeded, either on a formal taxation or on a gross sum taxation, depending upon the outcome of the Court’s ruling.

17                  On the hearing of this application, Mr Norman appeared on behalf of Auspine and Mr Cogan appeared for ANM.  Neither had previously been involved in this litigation.  They each filed affidavits and written submissions.  Each is an acknowledged expert in the field of legal costing and I was materially assisted by their involvement in these proceedings.  Mr Norman, who was admitted to practice in 1972, has, since 1976, specialised in the area of legal costs.  Since 1990 he has been the co-author of Butterworth’s “Legal Costs South Australia”, a loose-leaf reference work, specialising in the field of legal costing.  Mr Cogan, who was admitted to practice in 1974, has practised in the area of legal costing since 1988; he estimates that in the last five years, this area of speciality has accounted for 60 per cent of his work.  He is the immediate past chairman of the Costs Committee of the Law Society of South Australia Inc.

18                  As ANM did not submit that the gross sum approach should not be applied in this case, I will proceed to assess costs on that basis.  In my opinion, it is an appropriate course to adopt.

19                  In the preparation of its submissions for this application, Auspine subdivided its claim into eight broad headings.  Save in respect of one item, a claim for agent’s fees of $200, ANM initially challenged some entries in each of the remaining seven submissions.  However, during the course of argument a few of the disputed items were resolved by agreement.  The following tabulation shows the amounts that were claimed Auspine and the amounts that ANM was initially prepared to concede.

                  Item                                              Amount claimed by the        Amount allowed by the

                                                                                Applicant                          Respondent

20                  The internal costing procedures in the office of Messrs Piper Alderman, the solicitors for Auspine, are computer based.  They operate on a time-charging basis whereby all work is recorded by numerical units.  A unit represents six minutes of time.  Every fee earner, from the senior partner to the junior clerk, records every occasion of his or her time in the form of a contemporaneous fee note and, from those primary records, entries are made into the computer.  The fee notes cover all areas of work that relate to a subject file.  Thus the computer is able to generate, in respect of a given matter, a billing guide that incorporates every aspect of the work in progress that has been performed by any fee earner during the life of a particular file.

21                  Mr Norman submitted that the billing guide that had been compiled by Messrs Piper Alderman should be used as the basis for Auspine’s claim for party and party costs; that guide is exhibit PJN1 to his affidavit that was sworn on 29 September 1998.  Mr Norman stated in par 7 of his affidavit that it was possible for him to extract information with respect to selected topics from his perusal of the billing guide.  The topics include:

·                 details of the work undertaken by each solicitor and each clerk;

·                 identification of categories of work such as conferences, preparation of documents, attendances at Court, travelling time, correspondence and so on;

·                 the charges recorded for such work on a solicitor and client basis;

·                 photocopying, including the number of pages and the rate charged; and

·                 general office disbursements recording costings for court fees, couriers fees, travelling expenses and the like.

22                  On the other hand, Mr Norman noted that the billing guide, helpful though it may be as a starting point, had to be adjusted so that the calculations for a gross sum in lieu of formal taxation would more closely accord with the items of permissible charges as contained in the second schedule.  For example the billing guide records the time spent and the consequential cost (based on that time) for drawing and engrossing a document, whereas the second schedule allows separately for drawing fees and engrossing fees based on the number of folios in a document:  it pays no regard to the amount of time that may have been expended in the preparation of the document.  Mr Norman also acknowledged that the charge out rates in the billing guide were based on a solicitor and client basis and that they exceeded the hourly rates that appear in the second schedule.

23                  Even though there is (and has been for at least the last twenty years) determined attempts by some members of the legal profession to move towards “time/costing” it should always be remembered that that method can favour inefficiency and excessive caution.  On the other hand, a fee for the drawing and engrossing of a document on a folio basis favours the efficient, the experienced, the knowledgeable practitioner, and can thereby save the client money.

24                  Notwithstanding these difficulties, Mr Norman submitted that he had been able to achieve what he called a “conversion”.  He assessed the identity of each fee earner, the amount of the time recorded against the name of each fee earner and a conversion showing the value of such time using the applicable scale rates as contained in the second schedule.  He also extracted the number of pages of photocopying and the number of facsimile transmissions that were sent by the applicant’s solicitors, converting them, in each case, to the applicable scale rate in the second schedule.  Finally, this exercise allowed Mr Norman to compile schedules of different categories of disbursements, of counsel fees and of witness fees.  These submissions are to be borne in mind when considering each of the eight subject areas of costing.

1.         Solicitors’ costs

25                  As I have said, Mr Norman has acknowledged in his affidavit that the billing guide contains elements of charging that would, more properly, be categorised as solicitor and client charges.  It would seem, however, that this particular issue has been substantially addressed.  To draw a proper comparison between the amount that Messrs Piper Alderman charged their client and the amount that Auspine seeks to recover from ANM on a party and party taxation, it is necessary to make special mention of the role of Mr Selley.  Mr Selley is a junior legal practitioner who is employed by Messrs Piper Alderman.  However, he acted as junior counsel in this matter from inception.  The value of his professional services, even though they were substantially counsel fees, was included in the charges that were rendered by Messrs Piper Alderman to Auspine.  Hence the composition of the sum of $248,697 that Messrs Piper Alderman charged their client included an amount of $113,061 which was attributed to Mr Selley.  Upon the basis that his fees are said to be counsel fees, this would mean that the resultant solicitors’ charges were $136,636 but the amount sought for solicitor’s costs on a party and party costs is $92,341.60, some $44,000 or 32 per cent less.  In addition to the concessions that Mr Norman made, Mr Cogan added some further justifiable criticisms with respect to the use of the billing guide as a base or starting point for the calculation of solicitors’ costs on a party and party basis.  Those criticisms included the following factors: amounts have been claimed for:

·                 clerks’ attendances on administrative work such as organising files and attending on solicitors to be instructed in their duties;

·                 solicitors’ attendances on clerks in order to instruct them;

·                 solicitors’ attendances to review files; and

·                 legal research.

In my opinion, none of these items are chargeable.

26                  Mr Cogan also complained that the billing guide included entries for “attendances of multiple personnel at Court during the trial” and “internal conferences between solicitors”.  Unlike his first mentioned complaints, these complaints would have to be the subject of closer assessment for in a given case it may be appropriate to have “multiple personnel” present in Court.  But from my position as trial judge, it did not seem to me that either side were guilty of using “multiple personnel”.

27                  In challenging the amount claimed by Auspine for solicitors’ costs ($92,341), Mr Cogan identified three main areas of complaint; first he calculated that, at scale rates, the amount charged for attendances at Court should be reduced by $4,400.  Next, he claimed that costs of conferring with counsel should be reduced by $5,840 and finally he pointed to items of charging (such as a solicitors attendance on a clerk to instruct the clerk) which are not properly chargeable items according to the scale.  Such items of charging were said to amount to $8,289.60.  The total of these three figures, $18,529.60, reduced the amount which, according to ANM, should be allowed for solicitors’ charges to $73,821.60. However, Mr Cogan added back to that figure an amount of $18,400 so that the solicitors’ charges returned to $92,221.60 – almost to their starting point.  This figure of $18,400 was Mr Cogan’s calculation of the value of the services that Mr Selley performed and which, according to Mr Cogan, are properly classified as the work of a solicitor.  Naturally, the performance of this exercise meant that the value that Mr Cogan would attribute to Mr Selley’s work as counsel was commensurately reduced.

28                  As against Auspine’s claim of $92,341.60, Mr Cogan submitted that the various factors to which reference has been made under this heading warranted a reduction or discounting of 35 per cent; this would reduce the figure to $60,022.04.  However, over and above the figure of $92,341.60, Auspine has also claimed an additional twenty five per cent (or $23,085.40) for “care and conduct”, thereby making a total claim under these two headings of $155,427.  As to this, Mr Cogan conceded, on the one hand, that the case was one that warranted an allowance for “care and conduct” but, on the other hand, he submitted that a mark up of 15 per cent was sufficient.  However, he then submitted that an allowance for a fifteen per cent mark up had been included in his figure of $60,022.04.  This would mean, of course, that Mr Cogan had reduced the claim for solicitors’ costs by far more than 35 per cent.  I cannot agree with Mr Cogan’s approach.  Even though it is a gross sum taxation, the subject of “care and conduct” is a discrete topic.  It is to be dealt with separately from solicitors’ costs for it is always necessary first to make a primary finding whether the case is one where a claim for care and conduct is justified.  There is, therefore, in my opinion, a fundamental flaw in the approach that Mr Cogan has taken; if his reduction of solicitors’ fees by $18,529.60 is justified and if it is further justifiable to make another reduction of 35 per cent against solicitor’s fees, the resultant figure should stand and then an amount of 15 per cent for “care and conduct” should be added.

29                  In my opinion the various factors to which reference has been made warrant some diminution in the amount claimed by way of solicitors’ costs.  I would allow $78,500 which represents a reduction of about 15 per cent.

2.         Care and Conduct

30                  Auspine submitted that, having regard to the facts and circumstances of this case, it would be appropriate to include in the calculations of a gross sum a component of 25 per cent for “care and conduct”.  ANM did not submit that this was a case where a charge for “care and conduct” was unwarranted: it conceded that some loading was appropriate, but it challenged the applicant’s methodology.

31                  The right for a successful litigant to charge for “care and conduct” is found in item 41 in the second schedule as it applied from 1 September 1995 to 14 July 1998; it provides:

“41.     If the case or circumstances warrant it, an allowance may be claimed under this item, in addition to any item which appears in this scale, for general care and conduct (if appropriate) including the following:-

(a)       the complexity of the matter and the difficulty and novelty of the questions raised or any of them;

(b)       the importance of the matter to the party and the amount involved;

(c)        the skill, labour, specialised knowledge and responsibility involved in the matter on the part of the solicitor;

(d)       the number and importance of the documents prepared or perused without regard to length;

(e)        the time expended by the solicitor;

(f)         research and consideration of questions of law and fact.”

32                  The opening words, “[i]f the case or circumstances warrant it…” show, quite clearly, that this item of charging is not automatic; it is a discretionary charge in all respects and it is only available if the taxing officer is satisfied that the nature of the case warrants it.  I do not consider that the matters that are mentioned in pars (a) to (f) are exhaustive but they are strong indicators of the matters that should exist to warrant a successful party invoking this item of charge.

33                  There were aspects of this litigation that were complex; it is not appropriate to think of it as a routine commercial matter.  It is true that some of the complexities were occasioned because of the breadth of the applicant’s claims - and some of them were found to be unwarranted.  However, an allowance has already been made in favour of ANM to cover the fact that Auspine did not wholly succeed; it is to receive only 90 per cent of its costs.  It is not therefore to be penalised twice by discounting what would otherwise be a fair mark-up because some of the complexities were found wanting.

34                  The subject of care and conduct was considered in Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd (unreported, judgment delivered 14 April 1986: Waddell CJ in Eq. Supreme Court of New South Wales).  Clause 41 in Appendix A to Table 1 in Schedule G to the Rules of Court of the Supreme Court of New South Wales allowed on taxation an amount for “skill, care and responsibility”.  The amount is in the discretion of the taxing officer and, because of this, clause 41 was marked “discretionary”.  Rule 67(3) provided (among other things) that a taxing officer when exercising his or her discretion “in respect of any item marked “discretionary” in Schedule “G”, shall have regard to the several matters that are there set out; they differ from the matters that appear in item 41 but, with one exception, the differences are not very significant; the exception is that the New South Wales Rules do not make an allowance for “research and consideration of questions of law and fact”.

35                  One critical matter of importance is a determination of what is the base figure upon which a mark-up for “care and conduct” is to be calculated.  It seems to be unreal to have a mark-up on such mundane matters as a clerk’s attendance to file a document.  But the pursuit of this line of thinking would destroy the practicality of a gross sum taxation; it would mean that it would be necessary to have too much regard to individual items of costing before a proper assessment could be made of those items to determine whether a mark-up is appropriate.  In my opinion, the preferred approach is to have regard to the fact that there will always be minor items of costing and trivial matters that do not justify a mark-up and to fashion the appropriate mark-up, based on the allowed solicitor’s fees, accordingly.  Indeed, that approach is also to be advocated on a formal taxation of costs for it affords the advantage of reducing, to a substantial degree, areas of dispute about what items are and are not to be the subject of a mark-up.  In Southern Cross Exploration NL v Fire & All Risks Insurance (which was a review of a taxing officer’s decision on a Bill of Costs that had been presented in taxable form) Waddell CJ in Eq. said:

“The words ‘skill, care and responsibility’ seem to me to have an application to everything which is done by a party’s solicitors in the conduct of proceedings.  I do not think that it is either practicable or correct to attempt to isolate particular items in respect of which profit costs have been allowed as having no relationship to the exercise of care, skill or responsibility.  In a proceeding such as this the management and supervision of the work of the [successful party’s] solicitors was of great importance and I think that work done such as photocopying and filing documents was work which had a relationship to the exercise of care and skill in and the acceptance of responsibility for the conduct and management of the case.  Clearly enough, the allowance made under item 41 should have a relationship to the total work done.  Once this is accepted there is, I think, justification for assessing the allowance as a percentage or proportion of the other profit costs.”

36                  I endorse what his Honour has said, although I note that in this case the applicant has voluntarily and knowingly chosen to limit its mark-up to costs relative to the work done by the solicitors and their clerks.

37                  There is, in the history of this litigation, one particularly important aspect which favours Auspine in a determination of the mark-up for care and conduct: it is the speed and expedition with which these proceedings were instituted and prosecuted.  I have no doubt that ANM has been saved a substantial amount of money for costs, in part because it participated in a plan to have the action brought on for trial quickly – but also in part because its opponent moved with equal speed.  Proceedings were instituted on 24 March 1997 and the trial commenced three months later on 30 June of that year.  The usual interlocutory warfare, so common in cases of this nature, was missing with a consequential substantial saving in costs.  That the case could be prepared for trial so quickly reflects to the credit of both firms of solicitors but the applicant should not be deprived of any of its costs because of its solicitors’ knowledge and expertise.

38                  In Beach Petroleum NL v Johnson (see above), von Doussa J decided that it was appropriate to have gross sums fixed by order of the Court.  Branson J came to a similar conclusion in Brookfield v Davey Products Pty Ltd (unreported: judgment delivered 19 December 1997).  Von Doussa J also fixed a gross sum for costs in Sparnon v Apand Pty Ltd (unreported: judgment delivered 4 March 1998).  Each of those three cases affords a measure of assistance when considering some of the issues that are to be resolved in this case.  For example, in Beach Petroleum NL v Johnson the successful applicant sought a mark-up of 45 per cent for care and conduct.  His Honour considered that to be “excessive by a large margin”.  He said:

“The need to give this litigation special attention and to cater for its urgency was dealt with by assigning a team of solicitors and counsel to the task.  As all their services are charged out in the bill, and often for many hours beyond 8 in a day, the occasion for a generous allowance for care and consideration does not arise.”(164)

39                  His Honour did not nominate a specific mark-up in place of the 45 per cent that had been sought: but he did address the issue in the course of discounting the amount claimed.  In attempting to draw any comparisons between this case and the facts in the Beach case, it is well to remember that the trial in Beach extended over fourteen months, there were in excess of two million pages of photocopying, and the costs sought exceeded $9m.

40                  The nature of the case and the length of the trial (24 days) in Brookfield v Davey Products more closely resemble the present case.  Branson J assessed the purpose of item 41 in this way:

“In my view, item 41 of Schedule 2 is principally intended to ensure that a scale of costs which is based overwhelmingly on specified fees or rates for items of work does not result in solicitors who represent clients in complex or novel matters being under-rewarded in comparison with those who are involved in more routine matters.”

Her Honour added that where a bill is based “principally on time costing, the scope of operation of item 41” will be limited.  Probably her Honour meant to say “time charging” and in that case I would agree with her.  “Time charging”, if not properly controlled, can favour incompetence in some, excessive caution in others.  Time costing on the other hand, can penalise efficiency, knowledge and brilliance unless adequate compensation is implemented through an item of costing such as general care and conduct.  Indeed, Branson J discounted the amount claimed under the head of solicitors’ fees to take account of its having been calculated on the time spent – i.e. the time charging basis.  Her Honour then proceeded to allow what she described as “a modest allowance” of 7 per cent for general care and conduct.

41                  In Sparnon v Apand, von Doussa J described the availability of item 41 in these terms:

“…but in a complex case involving long and difficult questions of great importance to a client it is not difficult to envisage that the item based scale may not sufficiently compensate for the degree of skill, specialised knowledge and responsibility necessary to properly present the case.  Item 41 is intended to cover that type of situation, and the subject matter of paragraphs (a) to (f) identify factors of the kind that may warrant an allowance over and above costs assessed solely in accordance with the item based scale.  These factors are also ones which are likely to attract the degree of attention to detail and close servicing of the client which, in more straightforward litigation, would be described as over-cautious, excessive, or a luxury of litigation.”

42                  In his consideration of the subject of care and conduct, von Doussa J, whilst recognising that such an item was available to the successful party, nevertheless chose to make no special allowance for it; instead, he decided that the appropriate course to follow was to retain the solicitors’ fees at a much higher level than that advocated by the respondent.  The solicitors’ fees had been compiled and presented on a time charging basis.  His Honour’s decision reflects the proposition that care and conduct, as an item of charge, bears a direct relationship to items of costing in the second schedule.  If, on the other hand, a litigant presses successfully for its costs on a time charging basis, it must be recognised that all those additional matters that are intended to be covered and protected by item 41 will be found in the solicitors’ billing guide; to retain the full amount claimed in the billing guide and then to seek an item 41 charge could amount, in part, to double dipping.

43                  Care must be exercised when considering the United Kingdom authorities on this subject.  Quite often they refer to mark-ups of 100 per cent and more.  However, their system of taxation is quite different as is apparent from the comments of Brightman J in Re Eastwood (dec’d), Lloyds Bank Ltd v Eastwood [1975] Ch 112 at 120 where his Lordship explained that the taxation of solicitors’ costs invariably proceeded upon a basis whereby the solicitors particularised the amount of time that had been spent on the matter by each employee and each partner.  The solicitors who were seeking a taxation of their costs then submitted their costs per hour of time having regard to a reasonable estimate of overhead expenses including where appropriate, the reasonable salary of any employee who had worked on the matter and an amount that represented a notional salary for the relevant partner.  Additionally the solicitors submitted what they considered to be a proper additional sum to be allowed over and above the hourly costings – this last mentioned amount was intended to be their profit costs.  A new system of taxation of costs was introduced in the United Kingdom in 1986.  The two components of costs to which I have just referred were thenceforth described as the “Part A” element and “Part B” – Part B being commonly described as “uplift” or “mark-up” and expressed as a percentage of the Part A figure: Johnson v Reed Corrugated Cases Ltd [1992] 1 All ER 169 at 172 per Evans J.  Nevertheless, both the old and the new systems had the common approach of not including any “profit” element in the base hourly rate.  As a result, the mark-up for care and conduct is substantially higher than the percentage rate that would be considered appropriate in Australia.

44                  Furthermore, the United Kingdom Rules of the Supreme Court differentiate between “care and conduct” (Items 1, 2, 3 and 5 in App 2 Pt II of O 62) and “general care and conduct” (Item 4).  The latter rate is usually the higher because what is being considered is “the general conduct of the proceedings as a whole”: Quick on Costs Vol 2 par 5.2660: see also Practice Direction (No 2 of 1992) Supreme Court Taxing Office [1993] 1 All ER 263.  In these proceedings I am only concerned with “the general conduct of the proceedings as a whole”.

45                  On the other hand, the principles that affect the quantum of the mark-up are the same in both countries and, in this area, assistance can be gained from the United Kingdom authorities.  For example in Johnson v Reed Corrugated Cases Ltd (see above), Evans J, who was reviewing the decision of a taxing officer, had to decide the general mark-up or allowance for care and conduct in respect of eleven claims that had been instituted by the individual plaintiffs against their employer.  Their claims were for personal injuries that were collectively described as tenosynovitis.  In the course of his judgment, Evans J alluded to issues that would or might affect the amount of a mark-up in a given case.  For example, the plaintiffs had claimed that there had been a “pioneering nature of the allegations of strain injuries”; and there had been “much research into the medical aspects” and the need to consult with expert engineering witnesses.  As against these claims, the defendants relied principally on the small amounts that had been accepted by the plaintiffs as damages: all except one had been within or close to the limits of the County Court jurisdiction.  His Lordship, after noting that the taxing officer had taken the view that the case merited more than a “run-of-the-mill” mark-up, said that:

“…[T]his litigation is not above mid-scale in its degree of complexity and difficulty, being neither straightforward, on the one hand, nor as burdensome as many cases, particularly heavy ‘test’ cases, sometimes are…”

His Lordship then explained that in the United Kingdom, the usual mark-up for non-exceptional or “run-of-the-mill” cases was 50 per cent, increasing:

“… above 50% so as to reflect a number of possible factors – including the complexity of the case, any particular need for special attention to be paid to it, and any additional responsibilities which the solicitor may have undertaken towards the client, and others, depending on the circumstances…”

46                  There are, of course, numerous other factors that are to be taken into account: expedition, extraordinary responsibility and brilliance are three examples that are mentioned in Cook on Costs (1991) at pp 29-31.  As the author pointed out, a fee earner might otherwise be penalised for his or her ability and expedition if proper allowance were not made for these abilities.  In like manner, they are entitled to be recognised and rewarded in a taxation of costs in this Court.  However, because of the markedly different approach in the two systems of taxation, there should not be any mark-up in the Federal Court for care and conduct in cases that are properly described as non-exceptional or run-of-the-mill.

47                  Mr Norman submitted that an appropriate amount for “care and conduct” could be calculated by applying a factor of 25 per cent to the amount allowed for solicitors’ and clerk’s fees.  He claimed that there is a traditional approach whereby a rate is applied, not merely to solicitors’ fees, but also to clerks’ times and out-of-pocket expenses such as photocopying and facsimile transmissions costs.  However, he stressed that his client was merely seeking the loading for care and conduct on solicitors’ and clerks’ fees.

48                  The Federal Court Scale of Costs does not give any indication of the percentage loading that should be applied to care and conduct.  In support of his submission that 15 percent would be adequate, Mr Cogan pointed to the fact that there were numerous examples of solicitors’ charges exceeding the rates prescribed in the scale.  For example, items 35 and 37 address solicitor’s costings when conferring with counsel and when attending Court.  An attendance on a conference is chargeable at the rate of $88 per hour but an example of Mr Walsh’s charges (taken at random) showed a two hour conference being charged at $312 or $156 per hour; a solicitor’s attendance in Court for a hearing with counsel is not to exceed $650 per day but there are examples where Mr Walsh has charged at the rate of $1,248, and up to $1,404 for daily attendances at Court.  Mr Walsh is a senior partner in Messrs Piper Alderman and he had overall charge of the litigation.

49                  Rather than making an individual examination of numerous items of charging (which would defeat the purpose of a gross sum charging) the identification of these items that I have referred to has already given sufficient cause to apply a discounting factor to the solicitor’s charges.  Any mark-up for “care and conduct” will therefore be based on the discounted amount.  There is no need to make a reduction in the mark-up rate that is to be used for “care and conduct”.

50                  The alternative would be to leave the charges as claimed but to make an appropriate (and heavier) reduction in the loading for “care and conduct”.  I propose to adopt a middle course; I have discounted the amount claimed for solicitors’ costs but not, in my opinion, harshly so on the basis that my approach to those costs has been reasonably generous, I think that a mark-up of 15 per cent for “care and conduct” would then be appropriate.  The amount allowed for care and conduct is $11,775.

3.                  Office Disbursements

51                  The amount claimed by Auspine under this heading was broken up into various segments.  The details of the applicant’s claim and ANM’s response (after making some concessions during the course of the hearing) are as follows:

                    Amount claimed by the Applicant                            Amount Allowed by the

                                                                                                            respondent

Facsimile Transmissions

52                  Prior to the introduction of the new rate of charge, with effect from 14 July 1998, Item 24 of the second schedule allowed a charge for a “facsimile copy” at $41.  There was a qualification that “the fee to be allowed is an amount that is reasonable in circumstances.”  Mr Norman accepted that charging for a facsimile copy could not be justified, merely on the ground of commercial efficiency.  But stressed the urgency of this litigation; he asked the Court to bear in mind that it was a fact that the litigation arose in this matter in early 1997 as a result of the letter in which ANM said that it would not take deliveries of woodchip after 31 March.  The matter was before the Court on an application for an interim injunction in early March and the trial proper commenced in the following June.  Next he submitted that there was a strong interstate element in this case.  The cause of action arose in Tasmania and several witnesses were based in Tasmania.  Auspine’s headquarters were based in South Australia and hence the South Australian Registry was used for the institution of the proceedings.  ANM’s operations, so far as they were affected by this litigation, were in Tasmania but it chose (as was its right) to use New South Wales solicitors and counsel.  Those New South Wales solicitors sought and obtained the approval of the solicitors for the applicant not to use an Adelaide agent.  All of these factors in their totality build up a strong case for the use of facsimile transmissions.

53                  Mr Cogan’s submission on this issue can be usefully summarised by quoting the following passage from par 22 of his affidavit dated 1 December 1998:

“In my experience, on party/party taxations, costs for faxes are allowed only in cases of urgency.  I submit that not all faxes reflected urgency.  It is, in my experience, common in commercial litigation, for faxes to be used for much correspondence simply as a matter of efficiency rather than urgency.  In my submission, a reduction should be made to reflect this.”

However, in the particular circumstances of this case, it would seem that the utilisation of facsimile transmissions can be traced back to the solicitors for the respondents.  By letter dated 1 April 1997, (Ex LGW 1 to the affidavit of Mr Walsh dated 11 December 1998) they wrote Messrs Piper Alderman saying:

“Given that the court has expedited the hearing of these proceedings, we propose, in order to avoid delays in communications between this firm and your firm, not to appoint an Adelaide agent to act as an address for service.

Would you please let us know if you have any objection to this.”

Mr Walsh replied by letter dated 4 April agreeing to the proposition.  Although the correspondence did not address the subject of facsimile transmissions, it does indicate that both firms of solicitors were attuned to the urgency of the matter and, in my opinion, the use of facsimiles was the logical extension of the need to expedite the matter.

54                  In my opinion the amount claimed for facsimile transmissions should be allowed.

Debits Tax and Financial Institution Duties

55                  This matter was not pursued by the applicants and need not be discussed any further; they will be deducted from the amount claimed by the applicant.  As a result of what I have discussed under the heading of “Office Disbursements”, only the amounts of $17 and $238.51 for Debits Tax and Financial Institution duty are to excised, leaving an allowable claim of $15,320.35.

4.         Counsel Fees – Federal Court Scale

56                  Item 42 of the second schedule is entitled “Counsel Fees”.  It provides as follows:

“It is proper for a solicitor to incur an amount for counsel’s fees that appears to be fair and reasonable according to the circumstances of the case and the seniority of counsel and the fees incurred may be claimed as a disbursement.”

57                  Item 43 covers the situation where a solicitor briefs another solicitor as counsel when it would be appropriate to brief counsel.  That item covers the participation of Mr Selley in this action as junior counsel.  Item 43 is also relevant because it directs the taxing officer to have regard to the local practice in the Supreme Court of the relevant State.  The item and the contents of O 62 r 35 direct that the taxing officer may allow such sum as a counsel’s fee as the taxing officer, in his or her discretion, thinks just and reasonable “having regard to the practice of allowing such fees as are permitted by the Supreme Court Rules of the State or Territory concerned”.

58                  The amount claimed by the applicant under this heading was based on the fees that were rendered by four counsel.  The individual details in respect of each counsel, showing the amount now claimed by Auspine and the ANM’s response are as follows:

              Name of counsel                   Amount claimed by           Amount allowed by

                                                               the Applicant                   the Respondent

59                  Mr Cogan accepted that it was appropriate for the applicant to retain two counsel; he also agreed that it was appropriate that leading counsel be Queen’s Counsel.  His challenge was directed to the quantum of their fees.

60                  A great part of the counsels’ fees in this matter have been charged on a “time” basis, even though this method has been rejected by the Registrar of the High Court: see The Legal Reporter Vol 7 No 7 15 April 1986.  Traditionally, in a party and party taxation, such costs are covered by the fee on brief, which in appropriate cases, can be increased to make an allowance for cases of extreme complexity.  Under O 62 r 32, provision is made for refresher fees for every four and one half-hours occupied by the trial.  The traditional method is accepted as being that described by Fullagar J in Magna Alloys & Research Pty Ltd v Coffee (No 2) (1982) VR 97 at 112:

“The time honoured basis of charging counsel’s fees in respect of a court hearing remains the basis of a brief fee and refreshers of two-thirds of that fee, and prima facie this is the basis upon which counsel’s fees will be taxed as between party and party.  There must, in my opinion, be an onus upon the party who seeks a departure on taxation from that traditional and usual basis, and the onus must be one of satisfying the taxing officer that the traditional method of fee marking could not reasonably have been followed in all the circumstances of the case.”

Forster J in this Court followed Magna Alloys and used the basis of a fee on brief with refreshers of two-thirds in Ralkon Agricultural Company Pty Ltd v Aboriginal Development Commission (unreported: judgment delivered 11 July 1986).  In Lumley Life Ltd v IOOF of Victoria Friendly Society (unreported: judgment delivered 23 April 1992) Lockhart J was of the opinion that a taxing officer could not be criticised for following this line of authority; however, his Honour also noted that the modern tendency was for counsel to charge a flat fee on a daily basis for both preparatory work and time spent in court.  In Brookfield v Davey Products (see above) the scheme of a flat fee was used.  Branson J noted the modern tendency for counsel to move towards the “time/cost” basis.  After referring to the decision of Lockhart J, Branson J said that she considered it “a satisfactory approach”.

61                  There is an additional factor, in South Australia at least, that supports the concept of a flat fee; in 1994, the Supreme Court Guides to Counsel Fees were upgraded and materially altered in some respects.  As the introductory note to the Guides explains, it is not a scale of fees to be charged by counsel; its aim is to provide an indication of the range of counsel fees which taxing officers will regard as being within proper and reasonable limits.

62                  The fees set out in the Guides are neither the minimum nor the maximum which may be allowed.  In all cases, the fees charged and allowed should be fair and reasonable having regard to the time occupied, the complexity of the matter and the standing and experience of counsel.  The concept of a fee on brief and refresher has been abolished.  Instead a daily fee is now allowed (Item 1) together with a fee for preparation (Item 2).  The daily fee is calculated by reference to each five-hour period; it applies to the first day and it includes a reasonable amount for preparation, including reading the first 150 pages of the brief.  The on-going daily fee also includes an allowance for one conference, reading time and noting up evidence overnight, including preparation for the evidence to be adduced on the following day and for addresses

63                  Item 2 (conference and preparation time and other time necessarily and reasonably engaged) is not intended to permit counsel to charge for legal research and related work.  No separate fee will be allowed for such work in addition to the daily fee.  Furthermore, in those cases where it is appropriate to allow for “care and conduct” research will be taken into account when considering an appropriate mark-up.

64                  The Guides do not have any statutory force but are said to be “based upon inquiries and experience as to current levels of counsel fees”: c.f. the like position in New South Wales: see Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (see above).

65                  Auspine presented its calculations for counsel fees in accordance with the 1994 Guides.  I think that it would be advantageous for members of the profession in South Australia if the Federal Court, when dealing with matters in the South Australian Registry, adopted a practice that affords consistency.  The Federal Court does not have its own Guide; by adopting the Supreme Court Guides the subject of counsel fees will have a consistent basis in South Australia and consistency, wherever possible, is to be encouraged.

66                  In the United Kingdom there is a Guide for the hourly rates that are properly chargeable by solicitors for their professional services.  It was compiled as a consequence of a survey that was conducted in 1991 by the London Solicitors Litigation Association (the LSLA).  The value of the LSLA survey as a source of information has been recognised in the United Kingdom Courts.  In Re a Company (No 004081 of 1989) [1995] 2 All ER 155 at 166 Lindsay J observed:

“if … the proper guide is that of the average solicitor employed by the average firm in the area concerned, then the Central London Law Societies’ survey, whilst not necessarily a perfect indication of that average, is, on the evidence in this case, the closest approach we have to that average.”

These observations were quoted with approval by Auld J in KPMG Peat Marwick McLintock v HLT Group Ltd [1995] 2 All ER 180 at 187.  With appropriate adaptations, they also apply to the South Australian Supreme Court Guides to Counsel Fees; they emphasise that there is a need for the taxing officers of the Court to have regard to the forces and demands in the market place.

67                  The Supreme Court Guides allow counsel fees of between $200 and $250 per hour for senior counsel for conferences.  All three leading counsel, Mr Sulan QC, Ms Powell QC and Mr Anderson QC claimed $300 per hour.  Whilst Mr Cogan acknowledged that, within the market place, there is a range of $200 - $300 per hour for senior counsel in conference, he submitted that the circumstances of this case warranted only $200 per hour.

68                  On the subject of counsel fees for attendances in Court, Mr Cogan put forward the following propositions:

·                 They should be charged at the lower rate in the scale because of the presence of junior counsel; the higher rate should be kept for those cases where senior counsel appears without a junior counsel or where the matter is sufficiently complex.  I do not agree with this proposition as a matter of principle.  To impose such a rule would be a fetter on the judicial discretion.  There is nothing in the Supreme Court Guides, nor was I taken to any authority, to justify such a proposition.  The only test that can be advanced as a matter of principle is that every case must be the subject of individual assessment and a decision must be made by having regard to all relevant facts.  In that context, it goes without saying that the number of counsel retained by a party would be a relevant factor.  My assessment of this matter is that two counsel were warranted:  the presence of a junior counsel will not detract from the fee properly chargeable by senior counsel.

·                 The nature of this case was a routine commercial case.  I disagree.  The case was quite complex and lengthy.

·                 In August 1994 there was a marked increase in the Supreme Court Guides to accord with the demands on the market place.  In an earlier judgment (Canvas Graphics Pty v Kodak (Australasia) Pty Ltd: unreported, judgment delivered 23 January 1998) I said that for some years, since the decision of Forster J in Ralkon Agricultural Company Pty Ltd v Aboriginal Development Commission (see above), it had been the practice of taxing officers in this Registry to allow larger counsel fees than those that were set out in the Supreme Court Guides.  My understanding of the position, at the time, was that the Federal Court recognised that the earlier Guides were lagging behind the forces of the market place and did not accurately reflect the fees that counsel were charging.  In that case, I was considering the question of a gross sum for costs in respect of proceedings that were instituted in 1991 and in which judgment had been published in May 1994.  Both Mr Norman and Mr Cogan agreed that the 1994 Guides had corrected this earlier imbalance and that it was no longer necessary, in a taxation of costs in this Registry, to increase the amount of counsel fees over and above that set out in the Supreme Court Guides.  I accept their submission.

Counsel Fees – Mr Sulan QC and Ms Powell QC

69                  Mr Sulan QC submitted two memoranda of fees dated 1 April and 16 May 1997 in the sums of $3,200 and $750 respectively.  Neither memoranda contains any details of time.  My assessment of the time, based on a reading of the narrative in each memorandum, is that it could have been as high as about thirteen hours and three hours respectively.  If those time calculations are correct it suggests that Mr Sulan charged at the rate of about $250 per hour  (and perhaps $300 per hour if my estimates of time are excessive); I would regard the charges as reasonable.  I would allow the amounts for the counsel fees that were charged by Mr Sulan.

70                  Ms Powell QC rendered one memorandum of fees dated 2 June 1997 in the sum of $1,375.  The times referred in the narration in her memorandum amounted to 4½ hours suggesting that she charged at about $300 per hour.  As I understand it, Ms Powell was engaged because of Mr Sulan’s appointment as a Judge of the District Court.  There would have therefore been an element of reworking of the file by virtue of the briefing of fresh counsel.  In fact, Mr Norman acknowledged that there would have been a measure of duplication because, first Mr Sulan and then Ms Powell were forced to return their briefs.  The respondent is not to bear that cost.  Applying a broad axe, I would allow Ms Powell’s fees at $750.

Counsel Fees – Mr T R Anderson QC

71                  Mr Anderson QC ultimately accepted the brief as counsel and he thereafter remained as leader.  He has charged conferences including preparatory work at the rate of $300 per hour and has charged daily fees of $2,500.  The range of the daily trial fee for senior counsel in the Supreme Court Guides to counsel fees is $1,350 to $2,500.

72                  The following chronology assists in summarising the work carried out by Mr Anderson in this matter:

73                  Mr Cogan pressed for a daily fee of $2,000 but I have come to the conclusion that the daily fee of $2,500 is reasonable and should be allowed.  Mr Anderson is a senior practitioner and one of the leaders of the South Australian Bar; he was required to master a complex piece of litigation in a very short period of time.  All in all, the nature of the case warrants a counsel fee at the top end of the scale.  On the other hand, whilst I do not question the amount of time that was spent in conferences and for preparation, I do not believe that it should all be visited on the respondent.  Putting to one side the eight hours that was spent in the preparation for final addresses (which I think was reasonable) the figures set out above add up to ninety four hours for conferences, preparation and attendances on interlocutory hearings.  I am of the opinion that the respondent should not have to bear the full brunt of such costs.  Wielding a broad  axe, I would reduce the claimable time by thirty hours which, at $300 per hour means a reduction of $9,000.00 in the counsel fees that will be allowable for preparatory work and conferences.  I acknowledged that the exercise that I have performed is arbitrary; I have attempted to make due allowance for attendances at interlocutory hearings and I have attempted to make some allowance for the speed with which the matter was brought to trial.  I am also aware that, on occasions, urgency can mean that there is a need to spend more – rather than less – time in preparatory work for the parties have not had time to refine and resolve some of the issues that are in dispute.  But the compensating factor for a gross sum taxation in a case of this magnitude is that it avoids the exceptionally heavy costs of a formal taxation.  Finally, it is necessary to make a short comment about Mr Anderson’s fees for his attendance in Brisbane to make final submissions.  His charge for a total of 2½ days (which included travelling and waiting time) was $6,150.  This is the equivalent of $2,460 per day.  Effectively it means that Mr Anderson virtually charged travelling and waiting time at the same rate as court time and that, I think, is excessive.

74                  In the Supreme Court Guides to counsels’ fees, waiting time (Item 9) for senior counsel is $125 whilst note 9 to the Guides suggests that $90 per hour is the appropriate rate for travelling.  I have decided that the 2½ days should be broken up as follows:

This is a reduction of $2,430 but I have made allowance for this reduction in coming to my decision to make an overall reduction of $9,000 in Mr Anderson’s counsel fees.

75                  I have, as a result of these deliberations still allowed substantial amounts of time for conferences and preparatory work.

76                  In Ralkon Agricultural Company Pty Ltd v Aboriginal Development Corporation (see above) Forster J stated his views on the issue of conferences with counsel.  His Honour said:

 “In matters of greater complexity two or perhaps even three conferences would be allowed on taxation between party and party.  The propriety of allowing any more than one, two or possibly three conferences would be examined very closely indeed.”

With respect, I do not consider that the remarks of his Honour reflect the actualities of today’s complex commercial litigation.  It comes as no surprise to me that counsel spent the amount of time in preparing for this case that is reflected in Mr Anderson’s memoranda of charges.

The decision to reduce the amount claimed for Mr Anderson’s counsel fees by $9000 reduces this head of the claim to $71,100.

Mr Selley’s counsel fees

77                  Mr Selley assumed the role of “in house” counsel and attended with Mr Anderson QC as junior counsel throughout the whole of the trial.

78                  The retainer of Mr Selley as junior counsel in the trial does not mean – merely because he was an employee of the applicant’s solicitors – that his role as junior counsel is diminished in importance or that his entitlement to charge counsel fees is something less than that of a member of the independent bar.  Because of the fused profession in South Australia the role of Mr Selley is not unusual.  However, care must be taken, when costing the professional services performed by a person in the position of Mr Selley.  At times, it is impractical for “in-house” counsel to adhere to lines of demarcation between the work of a solicitor and the work of a junior counsel.  Because of the fact that Mr Selley was part of the workforce of the applicant’s solicitor, care must be taken in two particular areas: first, were services, that were performed by Mr Selley, the services of a junior counsel, justifying the higher charge for counsel fees?  Or were they, in fact, the work of a solicitor?  Secondly, when Mr Selley conferred with another member in the workforce of the applicant’s solicitor, was that conference necessary in a party and party taxation climate or did it represent an example of undue caution, excessive attention to detail, unnecessary duplication and so on?  These matters can occur in any solicitor’s office – particularly where, as is the case here – there is a rush to prepare the matter for trial.  The fact that they might occur casts no reflection on the legal practitioner.  On the contrary, such events are quite understandable.  That does not mean, however, that the costs are to be met by the losing party.  Then again, on occasions, casual discussions between practitioners may not even be truly chargeable items on a solicitor and client basis.  Much will depend on the circumstances of the case.

79                  Mr Cogan made a detailed analysis of Mr Selley’s charges; he divided them into various classifications such as drawing documents, writing letters and taking instructions on the basis that each of these classifications was the work of a solicitor, Mr Cogan’s calculations, by using the lower rates applicable to the work of a solicitor, brought about a reduction of an amount slightly in excess of $2,300.00.  Whilst I accept Mr Cogan’s submissions on this subject I must point out that his exercise was a contradiction to the concept of a gross sum taxation; it represented attention to detail that would normally be reserved for a formal taxation.

80                  Mr Norman acknowledged that there were entries in Mr Selley’s charges where he had conferred with another legal practitioner in Messrs Piper Alderman in terms which suggest that it did not amount to a chargeable item.  There are several such examples:  two occurred on 8 July 1997:

“Internal conference:  with LW re legal issues                          $72.00

Internal conference:  with MT re document organisation        $90.00”

Another area of concern with respect to Mr Selley’ charges are entries such as:

“10/04/97 Perusal, Consideration:  File administration            $72.00”

If such an items is chargeable, it would only be on a solicitor/client basis.

81                  In my opinion, an examination of the detail of the work performed by Mr Selley establishes that on many occasions the work that he performed was more correctly described as that of the work of a solicitor than that of counsel.  The significance of that statement rests, of course, in the fact that the charging rate per hour as permitted by the scale is less for a solicitor than it is for counsel.  There is always this difficulty in the fused profession when instructing solicitor and counsel are members of the same firm.

82                  Mr Selley initially charged at the rate of $180 per hour for conferences; but towards the end of the period of his retainer he was charging $190 per hour.  The recommended scale for junior counsel in the Supreme Court Guides to Counsel Fees is $130 - $200 per hour.  Having regard to Mr Selley’s relatively junior status I am of the opinion that a more appropriate rate would lie towards the bottom of the scale, or (say), $150 per hour.

83                  Mr Selley charged a daily fee at the base rate of $1,500 per hour.  This exceeds the maximum recommended in the Supreme Court Guides to Counsel Fees – the range being $650 to $1,350.  I think a more appropriate rate would be $1,200.00.  That was the figure proposed by Mr Cogan.

84                  To examine, in detail, the breakdown of the charges that were rendered by Mr Selley would defeat the object of assessing a lump sum in lieu of a formal taxation.  Nevertheless, as I have come to the conclusion that there has to be a substantial reduction in the amount allowable in respect of his charges, it is desirable to offer some examples in support of my decision.  I list, at random, an extract of his costs for the three consecutive days 15, 16 and 17 July 1997.  The trial of the action was in progress on each of those days.  Mr Selley raised the following charges:

85                  Relying on the Supreme Court Guides, no additional amounts are chargeable for general conferences, nor for review of documents, for preparation for cross-examination and for review of transcript; each of those items is expected to be covered by the daily brief fee (which, as I have indicated should be fixed at $1200).  This exercise has the effect of reducing this bracket of charges from $5,776 by 37 per cent to $3,600.

86                  An examination of the “time sheets” attributed to Mr Selley also reveals several items of charging for work described as “research”.  The guide to counsel fees specifically notes that such an item of charging is not allowed for in the guide.  My quick calculations from scanning some twenty-five pages of entries suggests that an amount in excess of $2,400 has been charged for “research”.

87                  The factors that I have mentioned point to the need to make a material reduction in the fees that were attributed to Mr Selley as counsel fees; those factors are sufficient, in my opinion, to wield the broad axe and to reduce the amount claimed.  My initial reaction was to reduce the amount charged by Mr Selley by approximately 30 per cent.  Applying that percentage rate to a figure of $107,000 one arrives at $74,900 which I round up to $75,000.  I then thought to approach the question from a different perspective.  Another method by which Mr Selley’s counsel fees can be assessed is to note that his total charges were approximately $107,000 and his rate of charge was mostly $180 per hour but rising to $190 per hour in the latter stages of the trial.  Dividing $180 into $107,000 suggests about 595 hours work, but that figure should be reduced down to say 580 hours to allow for the hours that were charged out at the higher rate of $190 an hour.  An appropriate rate of charge is, in my opinion, $150 an hour and this gives a figure of $87,000.  However, from this calculation it is necessary to make a further substantial reduction so as to excise the total of the amounts charged for conferences during the course of the trial, and for that work which is properly attributable to the work of a solicitor.

88                  There is yet another way of looking at Mr Selley’s charges.  Mr Cogan, and those instructing him, did a substantial amount of work analysing Messrs Piper Alderman’s billing guide for the purpose of identifying the nature of the work that was performed by Mr Selley.  As an employed legal practitioner in that firm, his time was recorded in units of six minutes in the firm’s billing guide in the same manner as all legal practitioners in the firm recorded their times.  This analysis revealed the following categories of work:

                           CATEGORY                                                                 HOURS           FEE

89                  Mr Cogan did not challenge the categorisation of items 1 to 9 and item 14:  he accepted them as matters properly attributable to the work of counsel.  However, items 11, 12 and 13, which were for drawing documents, writing letters and taking instructions were, so he submitted, more properly the work of an instructing solicitor.  I agree; those items have been incorrectly identified as the work of counsel; the charges must thereby be reduced to an appropriate rate per hour for a solicitor.  Allowance must also be made for the fact that in the case of “drawing documents” and “letters” there is a fixed rate as distinct from a time rate for these items.  As charged in the above summary, Items 11, 12 and 13 total $20,702.  I would reduce them by approximately 40 percent, that is, by $8,302 to (say) $12,400.

90                  The time that was spent by Mr Selley in drawing submissions (Item 9) was challenged by Mr Cogan.  Despite Mr Norman’s claims that it was reasonable for a case of this nature, I agree with Mr Cogan.  A substantial amount of time for the preparation of submissions has been allowed to senior counsel.  Although there would still have been ample work for junior counsel to have performed, I would have thought that three days – or 24 hours – would have been reasonable.  I would therefore reduce this item of charging to 24 x $150 = $3,600:  that is, a reduction of $3,180.

91                  As to item 10, “Review of Transcript”, $1,225 - Mr Cogan submitted that this should not be allowed as it was part of the daily counsel fee.  I agree; this submission accords with the Guides to Counsel Fees.  Mr Cogan also maintained that there should be no allowance for items 15, 16 and 17 – “instructions to clerk”, “organising documents” and “press release”.  I see a role for counsel in perusing and approving the contents of a press release and I would allow that particular item.  I agree, however, with Mr Cogan that nothing should be allowed for “instructions to clerk”or for “organising documents”.

92                  These discrete reductions amount to $17,869.  But, in my opinion, Mr Selley’s charges would have to be further reduced.  Consistent with the approach that I adopted with Mr Anderson I would make an arbitrary reduction in the number of hours for preparation and conferences; as to this, I will use the same period of thirty hours, which at $180 per hour amounts to $5,400.  I will also reduce his charges by a further $5,000 to cover the remaining subjects to which reference has already been made and for which no specific reduction has been made.  In all, this would reduce Mr Selley’s account by $28,300 down to (say) $80,000.

93                  Having regard to all these matters and the resulting figures from these three different approaches I allow an amount of $83,500 for Mr Selley’s counsel fees.

5.         Agent’s Fees

94                  An amount of $200 was claimed.  As it is not disputed, I will allow that figure.

6.         Witness Fees - Mr Noakes of Mascourt Pty Ltd

95                  Mr Cogan did not challenge the primary submission that Mr Noakes spent a total of fifteen days on this matter in his capacity as an expert witness:  nor did he challenge Mr Noakes qualifications as an expert.  The challenge that was mounted on behalf of ANM was limited to the fee of $1,250 per day that was charged by Mr Noakes.

96                  Item 44 in the second schedule relates to witnesses’ expenses.  The entry is as follows:

“44.     Witnesses called because of their professional, scientific or other special skill or knowledge – for each day - $116 to $578.”

That was the rate to which both counsel referred, but that rate appears in the scale that applies to costs incurred in the Federal Court from 15 July 1998.  These particular costs were incurred prior to that date and at a point of time when the figures in Item 44 were $104 to $518; it is upon those last mentioned figures that this item is to be considered.  There is no dispute between the parties that Mr Noakes’ time in court was limited to 2½ days; the rest of the time in respect of which his charges were raised related to conferences, the preparation of an extensive report and to him qualifying himself to give evidence.  Mr Norman submitted that the Court is not bound to limit itself to the figures contained in Item 44 of the second schedule.  He referred to an unreported decision in the Supreme Court of South Australia in the matter of Burford v Allen where a US medical expert had been allowed $3,000 a day by a Taxing Master; that amount was not amended on a review by Matheson J.  However there were two distinguishing factors as Mr Norman conceded; apparently no-one in Australia possessed the measure of medical expertise that the witness possessed and the Supreme Court scale does not have a ceiling such as that which appears in Item 44.

97                  In so far as Mr Norman sought to differentiate between Mr Noakes’ time as a witness and his time as an expert in qualifying himself to give evidence, in conferring with officers of Auspine and its solicitors, and in preparing his report, Mr Cogan said that there should be no difference between the types of work.  I agree with Mr Cogan.  Although Mr Cogan conceded that the Court would have a discretion to override the scale, should the circumstances of the particular case required it, he said that in this case there was no mandate to depart from the scale.  It seems to me that the arguments advanced by counsel have addressed three discreet issues.

            1.         Does the scale of fees as contained in Item 44 of the second schedule apply only to the fees payable to an expert in respect of the days upon which he or she attends court for the purpose of giving evidence?  Or does the item include the time reasonably spent by an expert in the preparation for trial?   I would think that the Item must, by implication, extend to the time taken for preparatory work.  It is not readily apparent how a witness who is possessed of “professional, scientific or other special skill or knowledge” could be utilised by a party without recourse to preparatory work such as conferences, reports and advices.

            2.         The second question, which both counsel answered in the affirmative, was whether the Court could override the scale?  I accept that to be the case.

3.         The third question will then be:  is this a case to override the scale?  I do consider that this is a case where the Court should override the scale.  Having regard to Mr Noakes expertise and the relevance of his expertise to the issues that had to be resolved I feel that his fee of $1,250 per day was reasonable.  I would allow it. The Court is not equipped to inquire into Mr Noake’s activities; in any event that is the respondent’s responsibility.  It is for the respondent to raise a challenge and to advance grounds in support of that challenge.  Admittedly the amount claimed exceeds the maximum sum that is allowed by the scale but it is obvious to me that the figures contained in this item of the scale are out of kilter with the market place.  No expert in any discipline would be available for $578; that represents only $72 per hour.  Professionals (other than members of the legal profession) might look askance at fee scales which allow the best of the legal profession to charge $2,500 whilst they are only allowed $578 a day.

7.         Other disbursements

98                  The solitary subject that was debated in this section related to the subject of airfares.  There are two issues involved here.  The first issue related to two lawyers from Messrs Piper Alderman visiting Tasmania at an early stage to take instructions in the matter.  One was Mr Walsh, who, as I have said, was a partner in the firm and a senior practitioner; the other was Mr Selley.  The initial instructions would have required urgent attention in the preparation of the application for a mandatory injunction.  I would have thought two lawyers were justified.  Mr Cogan pointed out that although Auspine was seeking the airfares of two lawyers, Mr Selley had not charged for his time whilst in Tasmania.  Whether this was an oversight or not, is not known, but I do not consider that it affects my ultimate decision which is to the effect that two lawyers were justified.

99                  The second issue related to an attendance in Brisbane.  Other commitments required me to be present in Brisbane on Full Court matters but I had one day available and the parties needed one day to conclude this matter.  Rather than postponing the conclusion of the case for an indeterminate period of time, both parties agreed to attend at Brisbane to present their closing submissions.  As Mr Anderson QC, Mr Selley and Mr Walsh attended on behalf of Auspine, there is a consequential claim for three airfares.  Mr Cogan argued that it would have been sufficient for two practitioners only to attend.  I consider that there are two answers to that argument.  First, it is a fact that throughout the whole trial in Adelaide, there were three practitioners in attendance on behalf of Auspine - senior and junior counsel and an instructing solicitor.  It would therefore be consistent for the same three parties to be present on the final day for submissions.  Secondly, the fact that the court had moved to Brisbane actually increased the need for the instructing solicitor to be present.  In Adelaide his absence from Court would not have been critical; he would have been available at the end of a telephone and he could have been brought to Court in a short time; that was not so in Brisbane.  In my opinion all three fares to Brisbane were justified.  I would allow the full amount of the claim for airfares.  This means that I would allow the full amount of $48,853.03 that has been claimed under this heading.

Costs of this application

100               During the course of argument, Mr Cogan withdrew his complaints with respect to these charges.  I therefore allow the amount claimed of $7,104.40.

Conclusion

101               As a result of the decisions that I have reached, I allow the applicant a gross sum for costs pursuant to O 62 r 4(2), which is calculated in the following manner:

102               There will be an order accordingly.

Associate:

Dated:              21 May 1999