Scanruby v Caltex Petroleum & Anor [1999] NSWSC 1242

New South Wales Supreme Court CITATION : Scanruby v Caltex Petroleum & Anor [1999] NSWSC 1242 CURRENT JURISDICTION : Common Law FILE NUMBER(S) : 11327/1999 HEARING DATE(S) : 10 December 1999 JUDGMENT DATE : 16 December 1999

Scanruby Pty Limited (Plaintiff) PARTIES : v Caltex Petroleum Pty Limited (First Defendant) Caltex Australia Petroleum Pty Limited (Second Defendant) JUDGMENT OF : Master Malpass

LOWER COURT JURISDICTION : Costs Assessment LOWER COURT FILE NUMBER(S) : 9071/1999 LOWER COURT JUDICIAL OFFICER : Mr Cohen

COUNSEL : Mr S Coleman (Plaintiff) N/A (Defendants) SOLICITORS : Williams The Law Firm (Plaintiff) Middletons Moore & Bevins (Defendants) CATCHWORDS : Determination by Costs Assessor; appeal and leave to appeal; costs payable as result of an order; "party/party"costs. ACTS CITED : Legal Profession Act 1987, Pt 11 Div 6 Subdiv 3, s 202, s 208F (2) and (3), s 208L, s 208M. Supreme Court Rules 1970, Pt 52A r 2. CASES CITED : Turner v Pride (1999) NSWSC 850. DECISION : See paragraph 21.

THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

MASTER MALPASS

THURSDAY 16 DECEMBER 1999

11327/1999 SCANRUBY PTY LIMITED v CALTEX PETROLEUM PTY LIMITED & ANOR JUDGMENT 1 The plaintiff and the defendant had a dispute concerning a large service station at Wyong. The plaintiff sought an injunction in the Equity Division of this Court. The application was heard by Cohen J. The application was unsuccessful. 2 On 4 September 1998, the following orders were made:- "1. That the Plaintiff's application for an injunction be refused; 2. That for the purpose of submitting an application to the Court of Appeal, the injunction granted on 29 June 1998 be extended up to and including 7 September 1998; 3. That the Plaintiff pay the Defendants' costs of the Application for an injunction." 3 Between 4 and 7 September 1998, there were inter alia negotiations between the parties and a deed was prepared. On 7 September 1998, the injunction was not extended and the plaintiff did not proceed with any appeal. 4 The defendant gave a Bill of Costs purporting to relate to costs payable as a result of the court order. An application for assessment of the costs was made pursuant to s 202 of the Legal Profession Act 1987 (the Act). The assessment was referred to a costs assessor (Mr Cohen). He carried out an assessment pursuant to Subdivision 3 of Division 6 of Part 11 of the Act. He received submissions from the parties (including a notice of objection and a response). He made a determination (the Certificate of Determination issued on 5 May 1999). 5 The bill had been in the order of $92,000. The effect of the determination was to reduce the bill by sum of about $26,000. 6 On 27 May 1999 pursuant to a request to do so, the Costs Assessor provided reasons for his assessment. There is no challenge as to the sufficiency of the reasons. 7 These proceedings were commenced by Summons filed on 2 June 1999. The plaintiff seeks relief pursuant to both s 208L and s 208 M. Section 208L enables the bringing of an appeal as to a matter of law arising in the proceedings to determine the application for assessment. Section 208M enables the appropriate court to grant leave to appeal against the determination. 8 Section 208L provides a very narrow avenue of appeal against a decision of a costs assessor. It is confined to a matter of law. Section 208M confers a discretionary power on the court to grant leave to appeal. The discretion is exercised having regard to the relevant circumstances of the particular case before the court and so that justice is best served between the parties. The plaintiff bears the onus of demonstrating an entitlement to relief under either of the two sections. 9 The Summons was heard on 10 December 1999. The evidence fell within a small compass. The plaintiff tendered documentation which is referred to in paragraph 1 of an affidavit sworn by Mr Williams. The defendant relied on an affidavit sworn by Mr Doble. Both sides have prepared written submissions supplemented by oral argument. 10 In substance, the plaintiff says that there has been error on the part of the Costs Assessor (error of both law and fact) and that the costs allowed by the Costs Assessor should be reduced by a further sum (in the order of $15,000). Despite the relatively modest amount in dispute, the proceedings have generated great enthusiasm and a disproportionate volume of work from the legal practitioners. 11 The court has been referred to a number of decided cases Many of the cases were decided when the taxation regime had application. This regime was replaced by the assessment process when the Act came into force. For present purposes, it is not necessary to go to any of those cases. It seems to me, that these proceedings can be dealt with on their own particular facts. 12 The case for the plaintiff was put in the most general terms. In making that observation, I do not mean to be critical of counsel. He did the best he could with a very weak case (part of which appeared to be founded on misconception of provisions of the Act and the Supreme Court Rules 1970 (the Rules) ). 13 I shall do my best to recapitulate the substance of what was put on behalf of the plaintiff. Broadly speaking, there were two principal aspects to the submissions. It was said was that the Costs Assessor erred by allowing what have been described as post judgment costs (reference was made to items 413 and 429 - 449). These were said to be extraneous to the costs of the case itself. These were items which related inter alia to the negotiations and the deed. This error was said to be an error of law. These costs were identified as being in the order of about $3,500. Further error was alleged to arise from inconsistency in approach (he is said to have disallowed costs because they were not party/party costs yet has allowed costs which were the same as those disallowed) and allowing items which were excessive or unnecessary. In submissions inter alia reference was made to items 237, 245 and 456. As an overall submission in relation to the matters put, it was said that there had been error by reason of failure to allow only what might be described as party/party costs (which was said to be the basis recognized by the Act). It was further said that costs in the nature of solicitor/client costs had been allowed. 14 For completeness, I should mention that although the ground specified in the Summons was that of failing to take into account objections, this ground was not in fact argued. 15 In this case, the assessment was one governed by the provisions of Subdivision 3 of Division 6 of Part 11 of the Act. The Subdivision has the somewhat misleading heading "Assessment of party/party costs" (see Turner v Pride (1999) NSWSC 850). The expression party/party costs does not appear in the body of the provisions contained in Division 6. Subdivision 3 operates in relation to "costs payable as a result of an order made by a court or a tribunal". The second reading speech reveals that the intention was to abolish the distinction between party/party costs (those which are necessary and proper) and solicitor/client costs (all costs save those which are of an unreasonable amount or have been unreasonably incurred) and to impose a new criterion (for awarding those costs which are reasonably incurred). The intention was to remove injustice and confusion and to alleviate the problem of the successful litigant (who has been awarded costs) being left out of pocket for a significant amount. 16 The expression "party and party basis" is retained in the Rules (Pt 52A) and is defined therein (r 2). It means the basis of assessment set out in Division 6 of the Act. 17 In determining the costs payable as the result of an order, the Costs Assessor is required to assess the amount of the costs that in his or her opinion is a fair and reasonable amount (s 208F (2) ). If the costs are ordered to be assessed on an indemnity basis, the Costs Assessor must assess costs on that basis (s 208F (3) ). 18 In my view, the plaintiff has failed to demonstrate either an error of law or an error of fact. In my view, the complaints raised in this case are all referrable to questions of fact. 19 In my view, the Costs Assessor made a determination which was open to him in the light of the material that had been made available to him. I am not satisfied that any matter has been demonstrated which would justify the granting of leave to appeal. I am not satisfied that the interests of justice would be best served by the granting of such leave. 20 It may be helpful if I make some additional observations. The reasons reveal that the Costs Assessor has disallowed many items for the reasons of either "Not Party/Party" or "Excessive" (the expression "solicitor/client costs" does not appear). It could be expected that an experienced costs assessor would be using "Party/Party" in the sense afforded to it by the Rules. If this is not the case, and it has been used in its former sense, then the plaintiff may have substantially benefited from the application of a less generous test (than that of reasonableness) to the defendants' Bill of Costs. In those circumstances one might have thought that the defendant may have had ground for complaint (but not the plaintiff). 21 I dismiss the Summons. The plaintiff is to pay the costs of the Summons. The Exhibits may be returned. **********