FEDERAL COURT OF AUSTRALIA Boys v Australian Securities Commission [2001] FCA 1440 COSTS – review of taxation by a judge – role of judge upon review – relevance of State Supreme Court scale of costs for counsel fees – whether amounts claimed for counsel fees appear to be fair and reasonable according to the circumstances of the case and the seniority of counsel. Legal Practitioners Act 1893 (WA) Schweppes' Ltd v Archer (1934) 34 SR (NSW) 170 referred to Stack v Commissioner of Patents [1999] FCA 148 referred to Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 referred to Pacific Dunlop Ltd v Australian Rubber Gloves (unreported, Federal Court of Australia, Judgment No 562 of 1993) referred to Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR referred to ALAN HAROLD BOYS & ORS v AUSTRALIAN SECURITIES COMMISSION, ERNST & YOUNG (A FIRM), PHILLIPS FOX (A FIRM), PETER REYMOND QUIGLEY and KEVIN LEE CHRISTENSEN WAG 123 of 1994 CARR J 12 OCTOBER 2001 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAG 123 OF 1994 BETWEEN: ALAN HAROLD BOYS, RONALD GEORGE HOWARD, DESMOND FRANK CRAWLEY, ANTHONY HAYES DOUGLAS-BROWN, ANTHONY HOWARD LEIBOWITZ Applicants AND: AUSTRALIAN SECURITIES COMMISSION First Respondent ERNST & YOUNG (A FIRM) Second Respondent PHILLIPS FOX (A FIRM) Third Respondent PETER REYMOND QUIGLEY Fourth Respondent KEVIN LEE CHRISTENSEN Fifth Respondent JUDGE: CARR J DATE OF ORDER: 12 OCTOBER 2001 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The order of the taxing officer made on 19 July 2001 allowing the costs of the second to fifth respondents in the sum of $102,140.95 be set aside. 2. The costs of the second to fifth respondents in these proceedings, [other than the costs of the motion filed on 20 July 2000 ("the First Review Motion") which were the subject of the taxing officer's order of 24 August 2001 and the costs of the motion filed on 17 August 2001 ("the Second Review Motion")] are allowed at $113,815.95. 3. The applicants pay the respondents' costs of the Second Review Motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY WAG 123 OF 1994 BETWEEN: ALAN HAROLD BOYS, RONALD GEORGE HOWARD, DESMOND FRANK CRAWLEY, ANTHONY HAYES DOUGLAS-BROWN, ANTHONY HOWARD LEIBOWITZ Applicants AND: AUSTRALIAN SECURITIES COMMISSION First Respondent ERNST & YOUNG (A FIRM) Second Respondent PHILLIPS FOX (A FIRM) Third Respondent PETER REYMOND QUIGLEY Fourth Respondent KEVIN LEE CHRISTENSEN Fifth Respondent JUDGE: CARR J DATE: 12 OCTOBER 2001 PLACE: PERTH REASONS FOR JUDGMENT 1 This is a motion on notice by the second to fifth respondents ("the respondents") for review of the decision of a taxing officer in respect of eleven items (counsel's fees) in the taxation of the respondents' costs. factual and procedural background 2 The hearing of the principal application took place over a period of 7 days in April and May 1997. Judgment was reserved. On 13 June 1997 I delivered my reserved judgment. I ordered that the application be dismissed and that the applicants pay the respondents' costs. On 10 May 1999 a Deputy District Registrar, having directed that the respondents' bill of costs not be taxed, issued an estimate of those costs. The respondents did not accept that estimate and sought taxation of their costs. The taxation was completed on 21 December 1999. On 31 January 2000 the respondents filed a notice of objection. After their attention had been drawn to the requirement that such an objection should be by way of notice of motion, such a notice of motion was eventually filed on 20 July 2000. The applicants consented to an extension of time for the filing of that notice of motion which was [pursuant to Order 62 rule 43(4)] for reconsideration by the Taxing Officer of her decision in respect of the items of counsel's fees to which objection was taken. The matter proceeded by way of written submissions from both sides. On 19 July 2001 the Deputy District Registrar handed down her reasons in relation to the reconsideration. The Deputy District Registrar increased the total of the amounts previously allowed by a figure of $8,100. 3 Particulars of the eleven items are as follows: (Senior Counsel) Amount claimed Amount taxed off at initial taxation Amount allowed 1010 Considering brief, telephone attendances on solicitor, letter of advice, reviewing interrogatories, discovered documents, draft statement of facts, revised statement of agreed facts, preparation and appearance before Carr J, conference $6,000 $4,800 $1,200 There was no adjustment of this item by the Deputy District Registrar on reconsideration 1644 Trial preparation, telephone attendances on solicitor, conferences and Day 1 of hearing $10,000 $6,500 Amount allowed at initial taxation $3,500 Amount allowed on reconsideration: $8,200 1662 Days 2-7 $18,000 $4,000 $14,000 1683 There was no adjustment of this item by the Deputy District Registrar on reconsideration 1699 1707 1711 1715 (Junior Counsel) 1261 Telephone attendances on solicitor, perusing and suggesting amendments to draft answers to interrogatories, conferences, appearing on directions hearings, perusing and providing comments on draft documents, preparation and appearing on hearing of interlocutory applications $3,300 $2,575.00 $725.00 There was no adjustment of this item by the Deputy District Registrar on reconsideration Telephone attendances on counsel, solicitor, perusing documents, advising, conferences, trial preparation $7,000 $4,500 Amount allowed at initial taxation 1718 $2,500 Amount allowed by Taxing Officer on reconsideration $5,900 1719 Refreshers: 6 days @ $1750/day $10,500 $500 $10,000 There was no adjustment of this item by the Deputy District Registrar on reconsideration The regulatory regime 4 Order 62 rule 11 of the Federal Court Rules provides: "Every taxation of costs and every decision of a taxing officer shall be subject to review by a Judge." 5 There is specific provision in Order 62 rule 44 for review of a decision of the taxing officer on reconsideration. 6 Order 62 rule 44(4) relevantly provides that on such review, unless the Court by order otherwise directs, further evidence shall not be received and that a party shall not raise any ground of objection not either stated in a statement of objection or raised before the taxing officer. 7 Order 62 rule 44(5) relevantly provides that subject to sub-rule (4), on the review, the Court may: "(a) exercise all of the powers and discretions of the taxing officer in relation to the subject matter of the review; (b) make orders for the alteration of the certificate; (c) make orders for the remission of any item to the same or any other taxing officer for taxation; and (d) make such other orders as the nature of the case requires." 8 The Second Schedule of the Federal Court Rules contains the scale of costs. Item 42 of that scale provides: "Item 42: 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. The fees incurred may be claimed as a disbursement." 9 Although this is not a case in which the respondents' solicitors briefed another solicitor as counsel, I think that it is useful to refer to Item 43 of the same Schedule. Relevantly it reads as follows: "If a solicitor briefs another solicitor as counsel, when it would be appropriate to brief counsel the taxing officer may allow a sum as a counsel's fee that the taxing officer thinks just and reasonable having regard to the practice of allowing these fees that are (sic) permitted by the Supreme Court Rules of the State or Territory concerned (Order 62, rule 35)." The role of a Judge upon review of costs in the Federal Court of Australia 10 The principles applied on the review of a taxation of costs are reflected in the following passage from the judgment of Jordan CJ in Schweppes' Ltd v Archer (1934) 34 SR (NSW) 170 at 183-184: "In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances … but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case." 11 I think that the position in this Court is somewhat different. I have not been cited any direct authority for the proposition that a taxation of costs in the Federal Court is an exercise of the judicial power. I note that even the exercise of a statutory power to award costs has been held not to constitute the exercise of judicial power: Stack v Commissioner of Patents [1999] FCA 148. 12 I am inclined to the view that when the function of taxation of costs is carried out by the Federal Court this is an exercise of judicial power – see Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245 at 267. 13 The significance of this is, of course, that if the view to which I have just indicated I am inclined is correct then the review of the Taxing Officer's decision must be a review de novo. 14 In any event, I do not think it is necessary to decide the point, because in my view, that is the approach which Order 62 rules 44(4) and (5) require. 15 I do not think that the intention of the Rules is that the taxing officer's decision is to be treated as an administrative decision subject to judicial review in accordance with the normal principles of judicial review of administrative action. Nor do I think that the intention is that the review should be by way of an appeal in a strict sense. Mr J Garas, counsel for the applicants referred me to the decision of Forster J in Ralkon Agricultural Co v Aboriginal Development Commission (unreported, Federal Court of Australia, 11 July 1986 No G50 of 1981) where his Honour held that the review should be regarded as an appeal in a strict sense. 16 In Pacific Dunlop Ltd v Australian Rubber Gloves (unreported, Federal Court of Australia, Judgment No 562 of 1993) Olney J said this [at 10]: "The rules of court entitle a dissatisfied party to have a taxation of costs and every decision of a taxing officer reviewed by a judge. A review is not an appeal and in the absence of any guidance from the rules it is appropriate that the review be conducted as if the judge were the original decision-maker. This is particularly so in the case of the exercise of power pursuant to Federal legislation in view of the constitutional limitations on the exercise of Federal judicial power." 17 I respectfully agree with Olney J and will adopt the same approach in this matter i.e. I shall decide, in relation to the eleven items of counsel's fees, what would appear to be fair and reasonable according to the circumstances of the case and the seniority of counsel. Mr D J Garnsworthy, counsel for the respondents, submitted that the Deputy District Registrar had made two errors of principle and thus it was appropriate for the amounts allowed in respect of the items in question to be corrected on this review. He also submitted, in the alternative, that that course was open even if there had been no errors of principle. In view of what I consider to be the role of a judge in this Court upon such review, it is not necessary for me to decide whether the taxing officer made any error of principle. 18 However, in conducting the review, I have taken into account the reasoning and the materials referred to by the taxing officer. 19 Although there are eleven items in issue, they boil down to (a) the fee on brief and (b) the refreshers, in respect of each counsel. the parties' contentions and my reasoning 20 The essence of the respondents' complaint about the taxing officer's reasoning was that she had fallen into error because, having previously stated that the matter could be described as complex, raising constitutional issues and also dealing with a complex factual background, it was, so it was put, inappropriate not to apply an amount which was at or near the relevant maximum amount under the then current determination made by the Legal Costs Committee under the Legal Practitioners Act 1893 (WA) and entitled "Legal Practitioners (Supreme Court) (Contentious Business) Determination 1996 ("the Determination"). 21 The Determination was in evidence before me. Clause 5(1)(g) of the Determination indicates that the Legal Costs Committee conducted a survey of members of the Western Australian Bar Association (Inc) to ascertain the hourly and daily rates charged by members of that association. Clause 5(2) records the satisfaction of the Committee that the existence of competition for the supply of services to parties involved in litigation made it safe to adopt the rates charged by practitioners as a guide to the rates to be used in this Determination. 22 There is authority to the effect that it is appropriate, in the context of taxing costs in this Court, to derive guidance from publications such as the Determination – see Auspine Ltd v Australian Newsprint Mills Ltd (1999) 93 FCR at [65], a decision of O'Loughlin J. 23 In Auspine the relevant document was known as the "Supreme Court Guides to Counsel Fees" which was not a scale of fees to be charged by counsel, but was a document whose aim was stated as being to provide an indication of the range of counsel fees which taxing officers would regard as being within proper and reasonable limits. 24 It is true that Auspine was a case in which his Honour was assessing a gross sum of costs in lieu of taxed costs. However, in my view, the approach should be the same in relation to a taxation of costs. 25 In fairness to the taxing officer it should be said that she expressly stated that she had had regard to the amounts shown in the scale in the Determination when assessing what was fair and reasonable in respect of counsel's fees in the present matter. The taxing officer did so, noting that that scale only indicated maximum amounts rather than a range of counsel fees and might not be a true reflection of the range of counsel fees allowed on taxation. 26 Mr Garas submitted that I should have regard to the scale of costs for counsel fees which applied in the Supreme Court of Western Australia between 1 April 1991 and 31 January 1997 i.e. the scale which was replaced by the Determination. This was because, so it was put, it might be inferred that the increases effected by the Determination were considered by the Committee to have been substantial enough to endure for some years. The relevant work carried out by counsel in this case was only a few months later. He pointed out that the Committee, when it revised the Determination in 1999, had elected to leave counsel fees unchanged, so that the same rates applied today as those which were introduced on 1 February 1997. 27 I would not regard those factors as irrelevant to the task in hand. However, I note that the former scale had been in force for just short of six years. It must also be remembered that the former scale and the scale provided by the Determination are only indications. Accordingly, I do not attach very much weight to the particular submissions which I have just summarised. 28 Before I turn to some of the details of the Determination, I should note that the Schedule in which the scale is contained provides that it is subject to the provisions of the Rules of the Supreme Court. As I understand the position, this means that, in a particular case, a judge of that Court would be at liberty to make a special costs order whereby counsel's fees were assessed at a higher rate than that provided in the Determination. 29 From Item 14 of the Schedule it can be seen that the fee on brief for counsel is calculated on the basis of three days preparation and the first day of trial. In respect of Queen's Counsel, the fee on brief is not to exceed the maximum of $14,000. This reflects a daily rate of $3,500. The comparable fee for junior counsel is a maximum of $9,200 which reflects a daily rate of $2,300. 30 I propose to approach the matter on the following basis. First, as I was the trial judge I know that the matter was extremely complicated both as to matters of fact and law. There was a very great amount of documentation and there were several long witness statements. 31 Senior counsel's memorandum of fees is in evidence before me. It covers the period from 11 March 1997 to 30 April 1997 i.e. the period of preparation for the trial and the trial itself. The total of those fees is $64,102. It can be seen, and I so infer, that senior counsel charged the respondents at a rate of $7,000 per day and that included 3.2 days of preparation. 32 I think that in the case of senior counsel items 1010 and 1644 should be assessed together as a fee on brief. The same should be done, in relation to junior counsel, in respect of items 1261 and 1718. I consider that 3 days preparation would be reasonable. The matter warranted retaining counsel of the considerable degree of seniority which was then enjoyed by senior counsel for the respondents. Shortly after this trial he was appointed to be a Judge of this Court. Junior counsel was then in the more senior ranks of junior counsel with very extensive experience. 33 In my view, a figure of $3,500 per day for senior counsel and $2,300 per day for junior counsel would be fair and reasonable. 34 When items 1010 and 1644 are consolidated, the amount allowed should be $14,000 comprising 3 days of preparation and the first day of trial @ $3,500. This is one half of the rate of the fees actually charged by senior counsel. 35 Similarly, in respect of junior counsel, items 1216 and 1718 should be allowed at $9,200 being 4 days @ $2,300 per day. 36 I now turn to the refreshers which (in the case of senior counsel) are to be found in items 1662, 1683, 1699, 1707, 1711 and 1715 and, in the case of junior counsel, in item 1719. The taxing officer allowed six refreshers at $2,333.33 per day in respect of senior counsel and the same number of refreshers for junior counsel at $1,666 per day. 37 I think that it is reasonable for there to be some discount in respect of the days after the first day of trial. This seems to be common ground. 38 I do not think that it would be reasonable for the discount in this case to be as much as a third, as used to be the case when a global brief fee was charged to include the first day and refreshers were charged at 2/3rd of that fee – see Magna Alloys & Research Pty Ltd v Coffee (No 2) [1982] VR 91 at 112, a case cited by the Deputy District Registrar in her reasons. 39 The respondents claimed $3,000 per day for refreshers for senior counsel and I consider that to be reasonable according to the circumstances of the case and the seniority of counsel. The same applies, in my view, to the rate of $1,750 per day claimed in respect of junior counsel. 40 Accordingly, the respective items (a collection of items in respect of senior counsel) will be amended to allow $18,000 in total for refreshers in relation to senior counsel and $10,000 in respect of junior counsel. 41 The total increase in the taxed costs will thus be the sum of $11,675. The applicants should pay the costs of the motion. There will be orders accordingly. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Justice Carr. A/g Associate: Dated: 12 October 2001 Counsel for the Applicants: Mr J Garas Solicitor for the Applicants: Messrs Mallesons Stephen Jaques Counsel for the Respondents: D J Garnsworthy Solicitor for the Respondents: Messrs Tottle Christensen Date of Hearing: 12 October 2001 Date of Judgment: 12 October 2001