Titan v. Babic

[1995] FCA 813

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(Judgment by: Finn J)

Titan
v Babic & Others

Court:

Judge:
Finn J

Judgment date: 11 October 1995

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Judgment by:
Finn J

REASONS FOR JUDGMENT

This is a motion under the Federal Court Rules O62 r44 for review of the decision of the taxing officer, a certificate having been given by him pursuant to O62 r43.

The circumstances from which this motion emerges need to be stated, albeit relatively briefly. The appellant, Mr Titan, was plaintiff in an action for damages for personal injuries commenced in the Supreme Court of the Australian Capital Territory. In 1984 he obtained an interlocutory judgment in default of defence. In 1991 damages were assessed by the Master of the Supreme Court in the sum of $61,500. Of this sum only $1000 was awarded for loss of income earning capacity. His claim on that account was for $650,000.

Mr Titan appealed from this judgment to the Full Court of the Supreme Court of the Australian Capital Territory. Though contained in numerous grounds, that appeal had two principal foci. The first was that the Master erred in his evaluation of the evidence and in the findings that provided the bases for the assessment of damages. The second was that the Master committed a procedural error in allowing the matter to be heard to finality when justice required that the hearing be vacated or adjourned to enable Mr Titan to marshall witnesses and to obtain evidence which was not able to be adduced at the hearing. Leave was sought to adduce fresh evidence. This was denied for the reasons that the evidence was not fresh and that the failure to call it at the hearing was not adequately explained. The appeal was dismissed in June 1992.

In July 1992 Mr Titan appealed to the Full Court of this Court from the decision of the Full Court of the Supreme Court. His appeal as presented expressed two principal areas of complaint. The first was that the Master had prevented him from calling medical witnesses to give evidence on his behalf by failing to grant him an adjournment for that purpose on the day of the hearing of the assessment of damages. The second was that the Full Court of the Supreme Court had declined to accede to an application to call further evidence from witnesses who could support a claim for loss of earning capacity. An application again was made to adduce fresh evidence in the appeal. The appeal itself was dismissed as was that application. The appellant was ordered to pay the respondents' costs of the appeal. The motion before me had its genesis in this order.

It needs to be noted that Mr Titan has conducted his own case in all of the hearings I have mentioned including that before me. Save for the hearing before me, the second and third respondents have been represented throughout by senior and junior counsel.

The O62 r44 review

The place of the review procedure in the scheme of the Federal Court Rules O62 has been considered in detail in judgments of this Court: see Pacific Dunlop Ltd v Australian Rubber Gloves, a decision of Olney J in the Federal Court, of 17 August 1993. Suffice it to say here that the review function of the Court is activated as follows. A party who objects to a decision of a taxing officer to allow or disallow (in whole or in part) any item in a bill of costs may, in accordance with O62 r42, seek the taxing officer's reconsideration of his decision. When moved so to do, the taxing officer is required (i) to reconsider his decision; (ii) to give his certificate accordingly; and (iii) if requested by any party, to state "by reference to the objections to his previous decision, his reasons for his decision on reconsideration": O62 r43. It is then open to any party interested to seek this Court's review of the taxing officer's decision on reconsideration: O62 r44.

Subject to a possible qualification I will note below, the principles applied in the review of costs are uncontentious and have been reaffirmed in many cases: see e.g. Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621 at 627-628; Magna Alloys & Research Pty Ltd v Coffee (No. 2) [1982] VR 97. The most commonly cited formulation of them is that of Jordan CJ in Schweppes' Ltd v Archer (1934) 34 SR(NSW) 178 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.

The possible qualification I foreshadowed was alluded to by Olney J in Pacific Dunlop Ltd v Australian Rubber Gloves, above. It is that, because of constitutional limitations on the exercise of Federal judicial power, the review should be conducted in this Court as if the judge were the original decision-maker. Because of the view I have arrived at on the motion before me, it is unnecessary for me to express any opinion on this matter.

Of the various rules in O62 governing the conduct of the taxation of a bill of costs two are of present relevance. These are O62 r19 and r22. They provide:

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.

22. (1) In the case of a fee or allowance which is discretionary it shall, unless otherwise provided, be allowed at the discretion of the taxing officer.

(2) The taxing officer in the exercise of his discretion shall take into consideration:

(a)

the other fees and allowances to the solicitor and counsel, if any, in respect of the work to which such a fee or allowance applies;

(b)

the nature and importance of the proceeding;

(c)

the amount involved;

(d)

the principle involved;

(e)

the interest of the parties;

(f)

the fund, estate or person to bear the costs;

(g)

the general conduct and cost of the proceeding; and

(h)

all other relevant circumstances.

Between them these rules give some structure to the function and to the discretion given the taxing officer. To that extent they also provide some measure of judgment of the determinations he may make.

The Present Motion

The bill of costs taxed in this matter was, as I have noted, a consequence of Mr Titan's unsuccessful appeal to the Full Court of this Court. The objections he made to items of the bill fell under three general headings. The first related to the employment of senior counsel; the second, to the inclusion of a certain document in the Appeal Book; and the third, to the allowance of 15 per cent on the bill for "General Care and Conduct" - the allowance being made under the Federal Court Rules, Second Schedule, Item 41 (the terms of which are set out below).

The taxing officer in his decision on reconsideration rejected all of the objections made by Mr Titan, although an unrelated error was detected by the taxing officer and corrected. For present purposes it is convenient to consider his decision and the attack mounted on it under the three general headings of objection I have noted.

1. The Employment of Senior Counsel

I have already indicated the nature of the original claim made and its course through the courts. The taxing officer in his reasons set out these matters. He pointed out that the reason given for engaging senior counsel was that the "plaintiff's credit was very much in issue and [the respondents] felt the need for him to be subjected to rigorous cross-examination."

He then noted (a) that the plaintiff had been ordered to pay the respondents costs both of the hearing before the Master ($65,000 had been paid into court prior to the trial) and of the appeal to the Full Court of the Supreme Court; (b) that the taxing officer of that Court had allowed fees for senior counsel; and (c) that that allowance was subsequently upheld by Gallop J on review.

In relation to the continuing engagement of senior counsel for the purposes of the appeal to the Full Court of this Court, the taxing officer reasoned:

Although the quantum claimed by the plaintiff in the Supreme Court would not of itself justify the respondents briefing senior counsel at the appellant's expense on the appeal to this Court, that quantum, the fact that the respondents had been represented by two counsel including one of senior counsel throughout the proceedings in the Supreme Court and their interest in protecting and maintaining the position they were in at the conclusion of the appeal in the Supreme Court, it was in my opinion proper and not extravagant for them to brief two counsel including one of Queen's Counsel to conduct the appeal to this Court.

Accordingly the objection was disallowed.

The issue before the taxing officer, as it was before me, was whether in the circumstances the engagement of senior counsel with its associated costs was "necessary or proper for the attainment of justice or for maintaining or defending the [respondents'] rights" - to use the language of O62 r19.

Whatever might now be the case where only two junior counsel are engaged - compare Bush v Condon & Barrett Pty Ltd [1975] 1 NSWLR 260 and Pacific Dunlop Ltd v Australian Rubber Gloves, above - the principles to be applied in cases where the engagement of senior counsel have been called into question on taxation are not open to serious doubt. As Barwick CJ indicated in Stanley v Phillips (1966) 115 CLR 470 at 479:

the taxing master is to allow the fees of more than one counsel where he is satisfied that the nature and circumstances of the case are such that the services of two counsel are required if the case is to be presented to the court in such a manner that justice can be done between the parties.

Earlier in the same case the Chief Justice had observed, at 478, that:

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.

The appellant's submissions before me were based on the general terms of O62 rr19 and 22 which I have set out earlier. The conclusion he invited me to reach was that the costs incurred through the engagement of senior counsel were the product of the respondents' "over-caution".

For their part the respondents accepted that the relevant principles are stated in Stanley v Phillips. They submitted that the onus is on the applicant to satisfy me that the taxing officer's discretion has miscarried and that this has not been demonstrated.

It is important to note that the issue before me does not relate to the engagement of senior counsel either at the initial hearing before the Master or on the appeal to the Full Court of the Supreme Court. It has already been determined by Gallop J, as I understand the taxing officer's reasons, that those engagements were appropriate. What is before me is the question whether, at the stage of the appeal to this Court and given both what was then known and what had by then transpired, the continuing engagement of senior counsel was justifiable for the purposes of party and party costs.

The initial reason given for engaging senior counsel in the matter - i.e. for the purpose of "vigorous cross- examination" of the plaintiff - would seem, for practical purposes, to have been long since spent. As I have noted, the taxing officer relied on three factors as nonetheless justifying the continuing engagement of senior counsel. These were (i) the quantum of the original claim, (ii) the fact of the prior representation by senior counsel, and (iii) the respondents' interest in maintaining their position. In my view these do not (individually or cumulatively) warrant the cost of that engagement being at the respondents' "opponent's expense".

Whatever may have been the uncertainties earlier on, by the time of the appeal to this Court, it was clear that the case was not one of significant complexity in law or fact. The issues, no matter how imperfectly raised and expressed by the appellant, fell now within a confined compass and were themselves predictable. The first appeal to the Full Court of the Supreme Court itself served a chanelling function in this regard. The appellant's self-representation may well have required additional attention to be given to the preparation of the appeal - I will return to self-representation below. Whatever may previously have been said about the quantum of the claim for economic loss - the method of its computation in the Statement of Particulars was clearly untenable: see Tilbury, Civil Remedies, Vol II, 21ff - it could not now of itself have justified the dual representation. This the taxing officer acknowledged.

It is difficult to resist the conclusion - and this is consistent with the taxing officer's reasons - that past need and success, rather than present exigencies in the litigation, contrived the course taken by the respondents in the appeal. In my opinion the form of representation persisted in had, by this time, gone beyond what was necessary or proper (cf O62 r19) for party and party costs purposes. At best, in the language of Barwick CJ, it represented steps taken "to ensure the maximum of success". These should not be at the "opponents' expense".

The one obviously distinctive factor throughout has been that Mr Titan has represented himself. This, as is now well- known, is a growing phenomenon in our courts. It can pose additional difficulties for those conducting a case against such an opponent. But save in circumstances where those difficulties are themselves so distinctive in character as demonstrably to require special steps to be taken by an adversary, self-representation by one party cannot of itself justify an augmented representation by the other. Were it otherwise, the implications for access to justice in our courts would be severe.

I conclude, then, that the engagement of senior counsel was not a necessary or proper expense and that the objection made to it should have been allowed.

2. Inclusion of the Interlocutory Judgment in the Appeal Book

Because the appellant obtained judgment in default of defence in the Supreme Court, he objected to the inclusion of the form of the interlocutory judgment in the Appeal Book on the basis that it was an irrelevant document. He explained this to mean that it had not been used in the court below. He further objected to its inclusion on the basis that it had been prepared by solicitors who were there representing him, without his knowledge of it.

The taxing officer disallowed the objection on reconsideration. His reason was that the "form of interlocutory judgment formed an integral part of the record of the proceedings in the Supreme Court" and for that reason was properly included in the Appeal Book.

The decision of the taxing officer to include the interlocutory judgment in the Appeal Book was itself a proper one under the Rules of this Court (see O52 rr26-28). It was, therefore, a necessary expense incurred. The appellant's objection was rightly disallowed.

3. The Award of 15 per cent for "General Care and Conduct"

The Federal Court Rules, Second Schedule, Item 41 provides:

General Care and Conduct

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 (where 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.

The most troubling aspect of this review has concerned the allowance made for general care and conduct. Some level of allowance is, doubtless, appropriate. And, where matters of quantum are concerned, there has been a distinct and understandable reticence shown by judges in interfering and this for the reason that a review is being made of the:

determinations of an officer whose peculiar province it is to investigate and judge of such matters, by judges whose special or particular province or training it certainly is not.: Magna Alloys & Research Pty Ltd v Coffee (No. 2), above at 103 per Fullagar J.

That sentiment is one with which I have understandable sympathy.

The taxing officer's reasons for granting an allowance of 15% against Mr Titan's objection are contained in the following paragraph:

A very brief history of the course of this matter and an outline of the amount of money which the appellant claimed as plaintiff in the Court below is set out in the first paragraph of the reasons herein in respect of the objection indicated "A" above [i.e. engaging senior counsel]. In view of those matters, I am of the view that an allowance for general care and conduct of 15% of the total professional costs allowed on taxation is appropriate in this matter. I therefore disallow this objection.

The applicant submitted that when one had regard to the considerations referred to in Item 41 that award was unjustifiable. The argument of the respondents in the event took a somewhat more circuitous course.

At the hearing before me it was submitted that two broad paths were followed in superior courts in relation to the allowance for general care and conduct. The one was to mark up only those items which carry a content of legal skill and responsibility, but to mark them up generally by 50 per cent. The other was to mark up the entire bill by an amount of 15 per cent (as was done in this case). The rationale for the latter is that it will produce a like result to the first method I have noted but without the need to dissect items as that method requires.

Given the requirements of O62 r22 as to the matters which a taxing officer is obliged to take into account in the exercise of his discretion, I felt unable to accept the respondents' submission in this form. Accordingly, after the hearing I recalled the parties for the purpose of providing the respondents with the opportunity either to justify the practice on which they relied in their original submission, or else the particular percentage adopted by the taxing officer.

The respondents then sought, and were granted, leave under O62 r44(4) to file an affidavit of a Mr Travers, the principal of a legal cost consultancy firm, as to his understanding of the practices on taxation in the Federal Court and the Supreme Court of the A.C.T. While swearing that, in conformity with practice of the Federal Court in New South Wales, a percentage for general care and conduct was given on all the work set out in the bill, that percentage ordinarily was in the range of 10 per cent to 20 per cent. The variation in the range exists so as to accommodate the discretion the taxing officer is obliged to exercise.

I should add that I gave leave to file this affidavit over the objection of Mr Titan. Its deponent, Mr Travers, had in fact appeared on behalf of the respondents on the reconsideration. It was unfortunate that he was engaged to provide expert evidence in these circumstances. Mr Titan's opposition to it was wholly understandable. Nonetheless I was prepared to allow the affidavit in evidence. It confirmed both my own understanding of taxation practice in this Court and my objection to the respondents' submission in its original form.

In light of the affidavit the respondents then submitted that the percentage selected by the taxing officer was within the range available to him and for that reason should be left unaltered, irrespective of whether the percentage selected is not one that a judge might have adopted.

I am prepared to accept the utility of the practice (adopted in this instance) of calculating general care and conduct as a percentage of the bill - provided always that the range itself is not seen as an inflexible one and that, consistent with O62 r22 and Item 41, a genuine discretion is exercised in each instance in the percentage selected.

To accept the practice is one thing. To apply it to the particular circumstances of a case is another. One would have expected, for example, that those considerations which in the case of trial were likely to enhance the allowance made, would be less prominent in the usual appeal with the result that the appropriate allowance would, ordinarily, be at the lower end of the range. Equally the role played by counsel in the matter at the appellate stage may have some direct bearing on the actual care and conduct exhibited. Contrarily there may be factors, of which dealing with a self-representing opponent may be one in a given case, that may heighten the care required. But be these matters as they may, I cannot discern from the one sentence in the taxing officer's reasons in which he justifies the particular percentage chosen adequate or sufficient explanation of that figure. To adopt the comment made of reasons provided under a not dissimilar English rule, those given here are "unduly uniformative": Eaves v Eaves & Powell [1956] P154 at 157.

O62 r43(1)(a) requires the taxing officer on request to "state ... his reasons for his decisions on reconsideration". In relation to this particular objection that requirement has not, in my view, been satisfied adequately. The reasons, for example, do not advert either to the factors referred to in Item 41 or, in terms, to any of the considerations referred to in O62 r22. Notwithstanding the matters both required and appropriate to be taken into account, I simply am left in the dark as to how, if at all, any of these contributed to or justified either the selection of the particular figure chosen or the disallowance of the objection to it.

The obligation to give adequate reasons is an important one to uphold if public confidence - but more importantly the confidence of litigants - is to be maintained in our courts and their processes. The decisions of appellate courts in this country leave no room for doubt on this score in relation to the decisions of judges: see e.g. Apps v Pilet (1987) 11 NSWLR 350; Sun Alliance Insurance Ltd v Massoud [1989] VR 8; Bennett and Bennett (1991) FLC 78, 251.

The general criteria now being applied to judicial reasons are, in my view, appropriate for the Court to apply to its own officers where reasons are required to be given as a prelude to the exercise of a review of the decision of such an officer: cf Sun Alliance Insurance Ltd v Massoud, above, at 18 on those criteria. The effectiveness of the review process itself depends on the sufficiency of the reasons given.

As Megarry V-C observed in Re Gibson's Settlement Trusts, Mellors v Gibson [1981] 1 All ER 233 at 243:

The duty to give reasons is plainly most important. The reasons are needed initially to enable the unsuccessful party to decide whether to carry matters further. If he does bring the taxation before a judge for review, the reasons are needed to enable the parties to know the propositions they have to attack or defend, and also to enable the judge to understand why the taxing officer did what he did....[t]he duty of the taxing officer is to make a full statement of all his reasons, and this duty may well entail stating specifically whether or not a matter complained of was taken into account.

The taxing officer in his decision referred (by reference back) to the genesis and history of this litigation and to the quantum of the claim made. The relevance of either of these matters to the taxation being undertaken is unexplained. I cannot on the basis of this material discern how and why it was concluded as a matter of judgment that 15 per cent was an appropriate figure in the circumstances. In these circumstances I consider it necessary to remit this matter to the taxing officer with the direction that he again make a determination as to the appropriate allowance for general care and conduct and that he provide reasons therefor to the appellant.

I should emphasise that I am not encouraging prolixity. Neither am I endorsing the adoption of a mechanical, check- list approach to the exercise of discretion in light of O62 r22 and of Item 41. What I am suggesting is that when a taxing officer's reasons are considered in the light of that rule and that item, one should be able readily enough to discern what are the factors and considerations which provide the basis for the decision and, to the extent that specific objections have been raised to the percentage selected, what was the process of reasoning that has led to their allowance or disallowance.

I should also emphasise that I am remitting this aspect of the matter to the taxing officer for a reason which was not the explicit subject of argument before me. Given that Mr Titan is conducting his own case and did object to the figure selected, given the unsatisfactory course argument on this allowance has so far taken, given the changing character of the respondents' submissions as the review has proceeded and as new material has been put before me, and given that this Court is being asked to review a decision which in my view clearly is inadequate in its reasons, I am of the opinion that this matter should now be regularised. As a matter of basic fairness, Mr Titan should be given adequate reasons for the decision rejecting his objections. Armed with these, he then, if so minded, can challenge the decision from a position of understanding. Little purpose would have been served in my view to yet again recall the parties to make further submissions about the allowance where the justification given for it despite objection, is itself inadequate - the more so because a submission attacking the decision on the ground of inadequacy of reasons would have been irresistible and, as I understand the position, it would have been my responsibility to alert Mr Titan to his rights in this regard: see Neil v Nott (1994) 121 ALR 148 at 150.

Conclusions and Orders

My conclusions are first, that the objection to the engagement of senior counsel on the appeal be allowed; and secondly, that insufficient reasons have been given by the taxing officer to justify his disallowance of the appellant's objection to the 15 per cent allowance for general care and conduct.

Pursuant to O62 r44(5) I order that the certificate of the taxing officer be set aside. I direct the taxing officer (i) to tax the bill of costs on the basis that objection to the engagement of senior counsel should be allowed; and (ii) to reconsider the allowance to be made for general care and conduct and to provide the appellant in his certificate or some other document, his reasons for decision on that reconsideration.

I certify that this and the preceding 20 pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn.

Associate:

Dated: 11 October 1995