ASH STREET PROPERTIES PTY LTD AND ORS v POLLNOW AND ORS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL HANDLEY JA 26 October 1992 [1992] NSWCA 11 Handley JA The notice of motion arises out of a decision given by the Court as long ago as 12 June 1987 in which it allowed an appeal from a decision of McLelland J given on 31 July 1985. The Court published its reasons for judgment on 12 June 1987 and made final orders on 18 July. Thereafter the claimant sought special leave to appeal to the High court but this was refused on 11 December 1987. The successful appellants in this Court were entitled to orders in respect of their costs of the appeal and the proceedings before McLelland J. No steps were taken to tax those costs until 9 June 1992 when the appellants' bill of costs for the proceedings in this Court was filed and served on the claimant. The bill relates to work done between 8 August 1985 and 4 November 1987. The following day the bill of costs for the proceedings in the Equity Division heard by McLelland J was also filed and served. It is clear from the evidence that the preparation of a bill of costs for taxation inevitably takes time, and involves considerable work and expense. Allowing for these matters the delay in proceeding with the taxation of the costs in this Court might be thought to commence in June 1988 or thereabouts. Accordingly there has been a delay of some four years. Some of that delay is explained, in a way which has been criticised by Mr Walker, by negotiations over about five months in 1991 which culminated in the execution of the deed of settlement of 6 June 1991. Mr Walker for the claimant submits that the overall delay, the reasons for it and the resulting prejudice to the claimant furnishes a ground for this Court to permanently stay the proceedings by the opponents to tax their costs under the order of this Court. The delay has not exceeded any relevant limitation period. RSC Pt44 R2(1) provides that a writ of execution to enforce a judgment shall not be issued without the leave of the Court where ten years or more have elapsed since the judgment took effect. At this stage, of course, the opponents are not in a position to issue a writ of execution for their costs. However if ten years had elapsed and the Court were minded to refuse leave a proper case for granting a permanent stay of the taxation would have been made out. S17 of the Limitation Act 1969 provides a limitation period of twelve years for Court judgments - Mr Walker submits that the inherent jurisdiction of this Court to stay proceedings on the ground of abuse of process is not confined by these provisions and I accept this submission. It is also necessary to consider the provisions of RSC Pt52 R55 which enable the party liable to pay taxed costs to take steps to compel the other party to proceed to taxation without delay. The claimant, understandably no doubt, did 2 UNREPORTED JUDGMENTS not invoke these procedures. Mr Walker submitted that the inherent jurisdiction of this Court is not excluded by these rules and again I agree with this submission. Nevertheless the facility which these rules provide for the party is a relevant consideration when the Court is asked to exercise its inherent jurisdiction to stay the proceedings. It is significant, in my opinion, that R55 subR(4) does not automatically deprive a defaulting party of the benefit of the order for costs but confers upon the taxing officer a discretion to allow or disallow those costs as appropriate in all the circumstances. It is necessary to consider the prejudice to the claimant as a result of the delay. The first ground of prejudice relied upon is that the solicitor who acted for him in the proceedings before McLelland J and in this Court retired from private practice in August 1987 and obtained employment in the corporate sector. He has remained employed in the corporate sector ever since. However Mr Chapman's retirement from private practice occurred before the claimant's application for special leave was refused. Since the relevant delay did not commence until June 1988 it is clear that any prejudice caused by Mr Chapman's retirement has not been caused by the opponents' delay. No doubt the delay after June 1988 has aggravated the claimant's problems because Mr Chapman's recollection would progressively fade and his capacity, in the limited time allowed by his corporate employers, to assist the claimant in relation to the taxation would be reduced. However, it seems to me that the inability or the reduced ability of Mr Chapman to assist the claimant in relation to the taxation cannot be a decisive factor on this application. The party entitled to the benefit of an order for costs is not to be deprived of that benefit merely because the solicitor on the other side dies or become unable or unwilling to act for or assist the party liable during the taxation proceedings. In any event, it seems to me that issues in a taxation of costs essentially turn upon the contents of the file of the solicitor for the successful party. Accordingly the claimant's present solicitor or his costs consultant, Mr Roger Ford, could obtain most of the information required by a timely inspection of Mr Kinsella's file. This can be made available to Mr McLaughlin or to Mr Ford and in these circumstances a great deal of the prejudice said to result from Mr Chapman's unavailability should not materialise. Another ground of prejudice relied on by Mr Walker is that taxing officers faced with different bills arising from the multifarious litigation involving these parties between 1983 and the present time may inadvertently allow more than once for the same work so that there could be double counting of charges in different bills. I say nothing as to this risk in relation to the costs of proceedings in the Equity Division. During the period covered by the appeal to this Court associated proceedings were continuing in the Equity Division before McLelland J, Kearney J and Hodgson J. While there may be some risk of duplication or double counting between those proceedings and the proceedings in this Court it seems to me that it is not significant. I have looked at the opponents' bill of costs relating to the proceedings in this Court. The taxing officer and the claimant's advisers will have access both to Mr Kinsella's file and to the other bills that have already been taxed. Moreover Mr Kinsella said in an affidavit that he kept separate files for UHH STREET PROPERTIES PTY LTD AND ORS v POLLNOW AND ORS (Handley JAB each proceeding. In these circumstances I have not been persuaded that the combined skills and vigilance of the taxing officer and the claimants' advisers will not avoid any double counting. Mr Walker also relied upon misconduct by Bay Road Properties Pty Ltd, the unsuccessful appellant to this Court and the trustee of a trust in which the claimant remained a beneficiary until June 1991. During the period of delay this company committed breaches of trust by failing to account to the claimant or treat him as a beneficiary. It is clear that the opponents refrained from taxing their costs of these proceedings in the hope that while they did so the claimant would not claim his entitlement under this trust, so that in the end an agreed set off might emerge. Mr Walker has established that there were breaches of equitable duty by this trustee during this period and that the opponents were implicated in those breaches so as to become liable with the trustee upon the principles established in Barnes v Addy (1874) 9 Ch Ap 244. However, breaches of equitable duty do not normally lead to the forfeiture of legal rights, in this case the right to tax the costs payable under the orders of this Court. The delay therefore was deliberate and was motivated in part at least by the desire of the opponents to obtain an improper advantage for the trustee as a result of its breaches of trust. While the fact that the delay was deliberate is factor, it does not seem to me that it can be decisive in the absence of material prejudice. An assessment of the prejudice suffered by the claimant must also take account of the benefits that have accrued to him because of the delay. Under s95(3) of the Supreme Court Act and RSC Pt40 R3(4) interest on the taxed costs will not start to run until the date of the certificate of taxation. The claimant therefore has had the benefit of five years' inflation in reducing the real value of the costs and will not be liable for interest during the same period. These are substantial benefits bearing in mind the interest and inflation rates which have operated during this period. Another factor which tends to diminish the claimant's prejudice is that the onus in the taxation of establishing any disputed item lies on the taxing party. If the taxing officer is not satisfied that some disputed item has been established, he or she will be bound to disallow it. Here again time may operate to the benefit of the claimant. Accordingly, I decline to order that the proceedings on the taxation be permanently stayed. I am not satisfied that there is any appreciable risk of overlapping between the costs incurred in this Court and the costs which may have been incurred concurrently in other proceedings in the Equity Division involving these parties. I therefore decline to order a stay of the taxation until all outstanding bills in the Supreme Court have been filed which would have enabled all bills to be taxed together. The notice of motion also seeks a further extension until 13 December 1992 of the time for lodgment of objections to items in the bill or in the alternative an order for leave until that date to amend the objections already filed. I think that the claimant is entitled to this relief. The notice of objection already filed was prepared by Mr Ford on the basis of the bill itself without access to the files of Mr Kinsella or Mr Chapman. I have been informed from the Bar table that Mr McLaughlin and Mr Ford may have access under reasonable arrangements to Mr Kinsella's file relating to the proceedings in this Court. lam informed that the bill of costs is not likely to be taxed for some six months or more. The opponents therefore will not be prejudiced if the claimant is given leave to amend its Notice of Objection. 4 UNREPORTED JUDGMENTS Accordingly I order that the time within which the claimant may amend its Notice of Objection be extended to 13 December 1992. I grant liberty to apply for orders in relation to discovery and inspection of Mr Kinsella's file covering the proceedings in this Court. I otherwise dismiss the notice of motion. JUDGMENT AS TO COSTS It remains for me to deal with the question of costs. The claimant has partially succeeded. However it appears that no request had been made before today for inspection of Mr Kinsella's file relating to the proceedings in this Court, and that some extensions of time had been granted previously. Mr Walker has relied upon the misconduct of the trustee and the opponents referred to in my reasons for judgment as a matter which might properly deprive the substantially successful parties of the costs of the motion. I do not consider that this misconduct provoked the present litigation or that it disentitles the opponents to an order for costs in their favour. The first request by the claimant for an extension of time was not made until 29 June, on the second last day under the rules for filing objections to the bill, and Mr Kinsella at that stage was only prepared to grant a fourteen day extension. After this motion had been filed and evidence in support had been served the opponents on 20 July properly consented to a further extension until 13 September. Despite the late request on 29 June for the first extension and the very long extension then sought, I consider that an extension for something more than fourteen days was then appropriate. Mr Kinsella should have foreseen that evidence of the kind which was later filed would be available to the claimant to support a much longer extension of time. Although the claimant acted unreasonably in waiting until the second last day to seek an extension, the fourteen days initially offered was unreasonably short and was bound to provoke litigation. I think a fair order in all the circumstances would be to order that the claimant pay three-quarters of the opponents' costs of the proceedings to date. Notice of motion dismissed. The claimant pay three-quarters of the opponent's costs of the proceedings to date.