Cachia v Hanes and Another

179 CLR 403

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(Decision by: Toohey J, Gaudron J)

Cachia
vHanes and Another

Court:

Judges: Mason CJ
Brennan J
Deane J
Dawson J

Toohey J
Gaudron JMcHugh J

Legislative References:
Supreme Court Act 1970 (NSW) - s 76(1)
Litigants in Person (Costs and Expenses) Act 1975 (UK) - s 1(1)
Supreme Court Act 1970 (NSW) - s 19
Judiciary Act 1903 (Cth) - The Act

Case References:
-

Hearing date: 16 June 1993
Judgment date: 13 April 1994

Canberra

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Decision by:
Toohey J
Gaudron J

This appeal concerns the costs which the appellant is entitled to recover from the respondents, consequent upon an order for costs in his favour made by the Supreme Court of New South Wales.

Questions have arisen as to that entitlement because the appellant was unrepresented in the Supreme Court. In the Court of Appeal Kirby P observed: ^[20] "Litigants in person are an increasing phenomenon in the superior courts of this State at this time.'' No doubt that observation applies to the other States; certainly it applies to this court. ^[21]

The litigation

The appellant was the defendant in proceedings brought by the respondents seeking an order that the appellant restore structural support to their land at Castle Hill. The respondents' claim was dismissed and costs were awarded against them. The appellant claimed party and party costs in the sum of $9415.63; costs were allowed at $1179.35. The appellant contested the items disallowed and there were hearings before the taxing officer and a master. This court is not concerned with the details of all the items claimed because special leave to appeal was confined "to the claim for costs in relation to loss of earnings and out of pocket expenses being travelling expenses''. Even as to those items, argument focused on the entitlement to costs rather than on the actual sums involved.

As to the claim for costs in relation to loss of earnings, the taxing officer identified four categories:

1.

Work done in the preparation of the appellant's defence, being work which would have been done by a solicitor had the appellant been represented.

2.

Attendances by the appellant at court to supervise the conduct of the case.

3.

Work done by the appellant in preparation of the case which is not of a legal nature and for which an expert in the field would otherwise have been retained.

4.

Attendances by the appellant at court to give evidence as an expert witness.

The appellant, who is a consulting engineer, claimed for loss of earnings at the rate of $85 an hour, his usual charge for professional services. As to the disputed claims for travelling expenses, these related to expenses incurred by the appellant as a litigant in person because those travelling expenses incurred as an expert witness were allowed. The expenses were incurred in travelling from the appellant's home in Carlingford, an outer suburb of Sydney. In some cases the appellant paid his wife a fee, including travelling expenses, for tasks such as filing or serving a document, but these claims were allowed and are not the subject of this appeal. The taxing officer allowed (at a reduced rate) the appellant's claims for loss of earnings and travelling expenses incurred in his capacity as an expert witness. ^[22] However, those items claimed for loss of earnings for preparation and conduct of the case were disallowed in full as were any associated travelling expenses. ^[23] That decision was upheld by the master and by a majority in the Court of Appeal (Clarke and Handley JJA, Kirby P dissenting).

In the Court of Appeal Handley JA, with whom Clarke JA agreed, said ^[24] that the weight of authority compelled him to the conclusion that "fees, charges ... and remuneration'' in s 19 of the Supreme Court Act 1970 (NSW) "refer to remuneration for the exercise of professional legal skill''. This interpretation, his Honour said, "has been settled for centuries''. ^[25] On the other hand, Kirby P, while recognising the force of the common law approach, said ^[26] that "it is the rules of the court, if they apply by their terms, to which the court must ultimately return in order to decide the entitlement of a party to costs''.

The legislation

In truth any relevant statute or subordinate legislation must be the starting point for a consideration of the appellant's entitlement to costs. That is not to say that the interpretation of any statutory provision or rule of court should be divorced from the historical context in which it was introduced or from the understanding of the time. But the ultimate question is one of interpretation.

While s 19 of the Supreme Court Act defines costs as including "fees, charges, disbursements, expenses and remuneration'', the source of the power to award costs is to be found in s 76(1) ^[27] which provides that:

(a)

costs shall be in the discretion of the Court;

(b)

the Court shall have full power to determine by whom and to what extent costs are to be paid; and

(c)

the Court may order costs to be taxed or otherwise ascertained on a party and party basis or on any other basis.

Part 52 r 23(2) of the Supreme Court Rules 1970 (NSW) reads:

On a taxation on a party and party basis ^[28] there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed.

The first and most obvious comment to make about these provisions regarding costs is that they draw no distinction between litigants who are represented and litigants who are not. Nor was any such distinction drawn in the Statute of Gloucester ^[29] which first accepted in England the rule that a successful party might recover costs. It did so in language which related to the real actions referred to in the statute:

And whereas before Time, Damages were not taxed, but to the Value of the issues of the Land; ... it is provided, That the Demandant may recover against the Tenant the Costs of his Writ purchased, together with Damages abovesaid.

Coke ^[30] treated the provision as entitling the successful party to all the costs of the suit other than the "costs and expences of his travell and losse of time''.

The authorities

Because of the emphasis placed by Handley JA and by counsel for the respondent on what was said to be the settled state of authority, it is necessary to look at some of the decisions which have contributed to the situation. So far as the Court of Appeal was concerned, an earlier judgment of that court in Cachia v Isaacs ^[31] had held that a litigant in person is not entitled on taxation to recover compensation for time spent in preparing and conducting the proceedings, other than sums properly allowable as witness' expenses. In the present case Clarke JA and Handley JA declined to enter into an argument that Cachia v Isaacs had been wrongly decided.

In Cachia v Isaacs Samuels JA, with whom Clarke JA agreed, said: ^[32]

There is a well established line of authority in England and Australia which establishes the proposition that a litigant in person, who is not a solicitor, is not entitled to claim costs in respect of the time expended in preparing and presenting his or her case, but may recover only out-of-pocket expenses.

The usual starting point in this discussion is London Scottish Benefit Society v Chorley . ^[33] It was there held that where an action is brought against a solicitor who defends it in person and obtains judgment, the solicitor is entitled on taxation to the same costs as if he had employed a solicitor, except in respect of items which the fact of his acting directly renders unnecessary.

Because the litigant in that case was a solicitor, the decision is not directly in point. But it has been argued inferentially that, had the litigant not been a solicitor, he would not have been entitled to be indemnified "not merely for the time he must necessarily expend as a witness in his own case, but also for the pains, trouble, and skill which he has to incur and to exercise in order to bring it to a successful conclusion''. ^[34]

A decision directly in the respondents' favour is Buckland v Watts . ^[35] Mr Buckland was awarded the costs of an action which he had conducted in person. He sought to recover for the time he had spent looking up the law, preparing documents and attending court. The Court of Appeal held that he was not entitled to costs in respect of the time he had spent in preparing his case, but only his out of pocket expenses. The matter was put this way by Danckwerts LJ, ^[36] with whom John Stephenson J and Sir Gordon Willmer agreed:

[T]he principle is well settled that though a solicitor who acts in person for himself can claim to be remunerated for his professional services in so far as they are not rendered unnecessary or impossible -- as, for instance, with regard to consultations with himself and that kind of thing -- and such costs are recoverable by the solicitor, in the case of a layman who is not a skilled legal person he can only recover his out-of-pocket expenses.

In Buckland v Watts the Court of Appeal took the position of the litigant in person rather for granted although Chorley had not dealt directly with that situation. In that regard there is much force in the comment of the Law Reform Commission of British Columbia ^[37] quoted by Kirby P in Cachia v Hanes : ^[38]

Buckland v Watts involved a lay litigant in person, with respect to whose position all the statements in Chorley were obiter dicta, since Mr Chorley was not a lay litigant. Moreover, the basic rule, to which the case of the solicitor-litigant was treated in Chorley as an exception, was in that case assumed. It was one which, so far as appears, had never been directly litigated, although it was no doubt reflected in the practice of the courts. Indeed, Buckland v Watts was the first case in which the point had been squarely presented. Nevertheless, the English Court of Appeal in the later case somewhat strangely concluded that it was bound by the earlier decision.

Likewise, in Guss v Veenhuizen (No 2 ), ^[39] upon which Handley JA relied, the point at issue was the entitlement to costs of a solicitor who was a party to litigation and who acted assolicitor on the record, instructing counsel. Through error his name was not entered in the register of practitioners as required by the Judiciary Act 1903 (Cth). By majority (Gibbs ACJ, Jacobs and Aickin JJ, Mason and Murphy JJ dissenting), he was held entitled to his professional costs. The majority, after referring to Chorley and other English decisions, said: ^[40]

Those authorities establish that the litigant in person does not recover such costs in such circumstances in the capacity of a solicitor, but because, he happening to be a solicitor, his costs are able to be quantified by the court and its officers.

But to the extent that that statement identifies the position of an unrepresented litigant who is not a solicitor, it must be regarded as obiter dicta since the decision turned primarily on the operation of the Judiciary Act.

Petrunic v Barnes ^[41] is not directly in point. The parties were represented. What was at issue was a claim by the successful defendant, a medical practitioner who was sued for negligence, for costs for the time spent by him instructing counsel or being in court ready to instruct counsel. The claim was disallowed by the Taxing Master but, on appeal, was upheld by Murphy J. The relevance of the decision is the primacy Murphy J gave to the language of the relevant rule of court ^[42] which provided:

All costs shall be allowed as are necessary and proper for the attainment of justice or for enforcing or defending the rights of any party.

His Honour considered various decisions touching the question whether costs may be allowed to a party other than in his or her capacity as a witness. Murphy J observed: ^[43]

In my opinion, the appropriate approach that should be taken by the Taxing Master is to consider whether the attendance of the party or witness was necessary or proper for the attainment of justice or for enforcing or defending the rights of any party.

To approach the matter with a preconception that a party is not entitled to claim expenses save for time that he or she spends as a witness ready to give and giving evidence is not correct.

But directly in point is the recent decision of the Federal Court (Sheppard, Hill and Cooper JJ) in Secretary, Department of Foreign Affairs and Trade v Boswell . ^[44] The respondent, who was unrepresented, succeeded in an appeal brought by the appellant against a decision in the respondent's favour. The Full Court gave the respondent liberty to apply for an order that the appellant pay her costs of the appeal. She exercised that liberty. The Full Court's view was that authority dictated that the respondent might recover out of pocket expenses but not remuneration for work done in the preparation of her case or for appearing in court to present it. The Full Court considered that the Federal Court Rules envisaged the taxation of bills of costs and fees payable to legal practitioners only. ^[45] It is apparent that the Full Court had considerable sympathy for the position of the respondent and that it did not share the view of Handley JA in Cachia v Hanes that any principle that entitled litigants in person to be remunerated for time spent in preparing and conducting their own cases would be mischievous in practice. ^[46] In the end the Full Court made a special order that the appellant pay to the respondent "her out of pocket expenses necessarily and reasonably incurred in relation to the appeal, such out of pocket expenses to include earnings (if any) actually lost as a result of the need to prepare her case and to attend court to present it''. ^[47]

In making this order the Full Court took a broad view of out of pocket expenses, saying: ^[48]

We can find nothing in the cases which obliges this court to hold that a litigant in person who has had to have time away from his or her employment or business in order to prepare a case or to attend court to present it should not recover an indemnity for any loss of earnings suffered in consequence. That is not to permit a litigant in person to charge a sum in the nature of professional costs; rather it is to provide an appropriate indemnity against loss of earnings incurred whether in the preparation of a case or in actual attendance at court. Of course the touchstone is that of what was necessary and reasonable in all the circumstances. So long as this is the approach, no injustice can result.

While Clarke JA had considerable sympathy for the financial position of the unrepresented litigant who is successful, his Honour was of the view ^[49] "that if the law is to be changed then this must be done by the High Court or by parliament''. ^[50] But the law is not so entrenched as these observations would suggest. Rather, as Kirby P said in the Court of Appeal: ^[51]

The principle that a lay litigant in person is not entitled to costs beyond out of pocket expenses is borne more of a curious course of judicial presumption rather than "a long line of authority''.

The quantification issue

Underlying the principle expressed or assumed in the cases is the difficulty of quantifying the costs, other than out of pocket expenses, of a litigant in person. Undoubtedly there are difficulties in quantifying such costs, particularly as there is no scale of costs directly applicable. In Cachia v Hanes Handley JA saw the difficulty in this way: ^[52]

The taxation of costs is ordinarily an accounting assessment. In the case of litigants in person it could become the equivalent of a Local Court or District Court trial.

But difficulties of quantification should not obscure any principle which is reflected in statute or subordinate legislation. If, as in the case of Pt 52, r 23(2) of the Supreme Court Rules (NSW), "there shall be allowed all such costs as were necessary or proper'' and if "costs'' is defined to include "fees, charges, disbursements, expenses and remuneration'', it is hard to see the justification for a rule that an unrepresented litigant may recover no more than out of pocket expenses.

Assessment of costs

So far as principle is concerned, the matter is determined in this case by the Act and the rules of court. Of course the question arises immediately as to what is meant by necessary and proper costs. We do not underestimate the difficulties which may arise on taxation. In that regard it is important that there be some guiding method of approach. The Law Reform Committee of South Australia thought that the successful lay litigant should be entitled to reimbursement for money lost in taking off time from work in the necessary preparation of a case, "provided however that the total cost involved does not exceed the alternative expense of employing a solicitor to act in the matter''. ^[53] The Law Reform Commission of British Columbia rejected this approach as turning too much on the employment position of the litigant at the time. ^[54] That body recommended applying the scale of costs applicable to the litigation and awarding "whatever the tariff allows for those activities covered by the tariff upon proof that the activities were actually undertaken''. ^[55] Kirby P preferred this approach.

Either approach could be accommodated within the principle expressed in Pt 52, r 23(2) of the Supreme Court Rules that there shall be allowed "all such costs as were necessary or proper''. However, subject to one qualification, we are persuaded, as was Kirby P, by the views of the Law Reform Commission of British Columbia. The qualification is that the total costs awarded should not exceed the total detriment involved in consequence of the various steps and actions necessarily and properly involved in the preparation and conduct of the trial. It will be for the taxing officer to determine by what means that qualification should be given effect in the particular case. In this regard, it must be acknowledged, as in the British Columbia Report, although in a different context, ^[56] that "this is a situation in which purity of principle should give way to administrative convenience and practicality''. ^[57]

As mentioned at the outset of these reasons, this court is not concerned with the details of the appellant's claim for costs. It would seem, however, that the items presently in dispute can be dealt with by reference to Sch G. But, in the end, that must be a matter for the taxing officer. It is enough for present purposes that the appeal be allowed and that an order be made as envisaged by Kirby P, namely: ^[58]

Items 1, 3, 5, 9, 10, 11, 12, 13, 16, 18, 20, 21, 22, 23, 27, 29, 31, 33, 35, 37, 40, 42, 44 and 45 to be remitted to the taxing officer to be assessed in accordance with the Supreme Court Rules.