Remely v O'Shea (No. 2)[2008] QSC 218

SUPREME COURT OF QUEENSLAND

[1] McMEEKIN J: On 28 August 2007 Dutney J ordered the applicant to pay the respondents costs in respect of an application for judicial review.[1] The amount of those costs was fixed by way of a default assessment under r 708 UCPR in the sum of $13,224.86.

[2] On 21 August 2008 I delivered reasons in relation to four applications brought by the applicant, Mr Remely.[2] The four applications made by Mr Remely in various ways sought to set aside that default assessment and prevent its enforcement.

[3] I dismissed three of those applications and I gave the parties leave to make submissions in relation to the fourth application which concerned the setting aside of the default assessment.  I stayed the enforcement warrant pending receipt of submissions. I have now received those submissions.

[4] The issue on which I gave the parties leave concerned the amount of the default assessment. I was concerned that $1,386.55 of the default amount related not to costs actually incurred but to costs prospectively to be incurred assuming a disputed assessment – they appeared under the heading “Anticipated Future Costs” and presupposed the filing of a Notice of Objection. The costs statement had been prepared some months before the default assessment and of necessity at a time when it was to yet known whether there would be a dispute. It then seemed to me that the respondent could not be entitled to costs, even on a default assessment, which had not in fact been incurred.

[5] Rule 708(3)(a) of the Uniform Civil Procedure Rules (“UCPR”), which deals with making a default assessment of costs, provides:

“The costs assessor must, on proof that the costs statement was served on the party liable for the costs —

(a) assess the costs without considering each item and by allowing the costs claimed in the costs statement”

[6] Subrule 708(4) continues:

“However —

(a) despite subrule (3)(a), the costs of attending the assessment of costs are not allowable; and

(b)subrule (3)(a) does not prevent the costs assessor correcting an obvious error in the costs statement”

[7] Mr Dickson who appears for the respondents submits that I should not deduct those prospective costs for these reasons:

(a) Costs were in fact incurred subsequent to the preparation of the costs statement which were in relation to items substantially similar to or identical with several at least of those claimed. He refers to items 212, 213, 216, 217, 218, 219, 223, 224, 226, 227, 228, 229, 230, 231, 232, 233 and 234 of the costs statement;

(b) The costs assessor’s fee for the default assessment which was not referred to in the costs statement ought in justice be included – an amount of $330;

(c) There is no provision in the rules for a supplementary or amended bill. Effectively there is a hiatus in the rules – it is only just that the respondents get their costs incurred in enforcing the costs order even if by the default procedure. But those costs cannot be included in the costs statement unless by the mechanism adopted here when of necessity the precise likely future sequence of events cannot be known. If it is necessary to re-serve a new costs statement and restart the process to obtain costs incurred subsequent to the service of the statement on the responding party then the bill is never complete;

(d) There is a tension between r 708(3)(a) and r 708(4)(b). If the assessor is not to consider each item then how can he or she decide on obvious errors – especially where, as here, it would be evident at the time of the assessment that work had been done and costs incurred (and normally properly claimable) since the costs statement was prepared;

(e) The purpose of the revised rules is to provide for an easy and cost efficient and speedy assessment procedure – there should be no attempt at “undue precision”. The approach taken here by the assessor facilitates those purposes.

[8] Mr Remely has filed a submission prepared by Mr GJ Robinson of counsel. He submits that however one interprets the term “obvious error” in r 708(4)(b) it could not justify allowing a claim for costs which had no basis in fact. He cites as an example from the subject costs statement the claim for perusal of the notice of objections, which of course could not have occurred here because there was no such notice. He concedes that several items in the costs statement under the heading prospective costs ought to have been allowed – items 216, 218, 223, 224, 228, 229, 231, 232, 233 and 234 and with a $13 reduction in item 230. Effectively he submits that of the $1,386.55 claimed there should have been a reduction of $956.50.

[9] The question before me is essentially two-fold – whether the assessor was entitled to assume that all costs under the heading “Anticipated Future Costs” were included as an “obvious error” and so should be disallowed without further examination; and secondly if the assessor was required to undertake a further examination whether the assessor was obliged to carry out the exercise that Mr Robinson has.

[10] As to the first point, my initial impression as expressed in my earlier reasons[3] was that the inclusion of costs that commenced from a false premise (that there would be a notice of objection filed) must of necessity be an obvious error and so should not have been allowed. On reconsideration of the issue and in the light of submissions now received I am of a different view.

[11] Presumably it was evident to the drafters of the rule that costs were liable to be incurred after service of the costs statement – r 708(4)(a) expressly provides that one such amount is not to be allowed. The fact that the assessor is directed not to allow such an item indicates that the rule presupposes that anticipated costs to be incurred subsequent to the preparation of the costs statement are likely to be included in the costs statement. That would be consistent with the long standing practice of practitioners in this field, as I understood it, and as Mr Robinson, who has considerable experience in the field, confirms it to be.

[12] A further conclusion is open from the express reference to one such item of costs. Direction not to allow one such item strongly suggests that other anticipated items can be allowed subject to the stricture in r 708(4)(b).

[13] Thus my initial impression as expressed in my earlier reasons now seems to me to be wrong. It now seems to me that the assessor was not entitled merely to assume that all items under the heading “Anticipated Future Costs” were liable to be disallowed as an obvious error. Some further examination at least was required.

[14] As to the second point, counsel has been unable to refer me to any decision on the meaning and effect of the term “obvious error” in the rule. To my mind an obvious error is one that should be evident from a reading of the costs statement without the need for argument or analysis, or close consideration of the liability for the amount or the quantum claimed. Niceties in interpretation or approach are not called for.

[15] It needs to be borne in mind that the assessor carries out the default assessment without the benefit of any objection and without the benefit of any appearance or argument to better enable him or her to appreciate points of difference. There is a deal of force in Mr Dickson’s submissions that it could hardly have been intended that the assessor be concerned with “undue precision”.

[16] There were two possible approaches open to the assessor – one was to accept that in a general sense work of the type claimed had been undertaken and so allow the items claimed as directed by r 708(3)(a). The alternative was to approach the exercise as Mr Robinson has done and consider and analyse each item.

[17] The difficulty with the latter approach is that rule 708(3)(a) says not to consider each item. Plainly, to perform the duty imposed on the assessor to disallow obvious error, it was necessary to read enough of the document to determine whether there were present obvious errors. Such an approach here would have shown – as Mr Robinson’s analysis indicates – that some of the items, at least, should have been allowed. Accepting his concessions would result in an allowance of about $430 together with the assessor’s fee of $330 – a total of $760.

[18] However it is by no means clear that all Mr Robinson’s arguments are right. Some items are merely argumentative – for example item 212 which is a claim for $29.50 for instructions to proceed with the assessment. I am not at all sure it is right to say, as Mr Robinson submits, that no instructions were necessary. Any solicitor would be well advised to have express instructions before engaging the court processes. I was told that a fee of $330 was charged by the assessor. Again a client might not accept liability to pay the fee without having authorised the default process. What if the prospective payer was not financial? It seems to me that the rule is framed such that an assessor does not have to consider such arguments.

[19] Item 235 is objected to. It is a claim for $240 for general care and consideration. Mr Robinson’s submission is that an amount had already been claimed in the bill for care and consideration and no further amount was warranted. Although an amount for care and consideration was claimed in the bill up to the time of the preparation of the costs statement I can see no good reason why a further modest amount could not have been allowed for the work subsequently required. It was apparent that some work had been in fact required – including an attendance on the registrar for directions. Mr Remely attempted to adjourn that directions hearing. Attendance at a hearing where there is dispute must of necessity involve factors that legitimately attract such a fee.

[20] Adding those two items alone brings the amount to be allowed over the $1000 mark. There remain disputes in respect of items 217, 219, 226 and 227. They total nearly $200. It will be recalled that the total of the amounts claimed under the heading “Anticipated Future Costs” came to $1,386.55. If the second respondents are right in claiming these amounts then the difference between what ought to have been allowed and was allowed by the default process was very modest.

[21] I observe that this all needs to be judged in the context of a bill for $13,224.86.

[22] I am in no position to determine the disputes without further argument and that is precisely what the rules do not require or permit. However the question is whether the assessor was required to go through this exercise. I think not. It seems to me that an experienced assessor was obliged to do no more than sum up the situation broadly. The assessor would be aware that work of the general kind claimed had been required. Whatever the appropriate amounts that could be claimed might be he or she should, in a general sense, determine whether those amounts would differ significantly from the amounts in fact claimed. If so satisfied the assessor should allow the costs claimed, as the rule directs.

[23] The detailed examination undertaken here indicates that such an approach would have resulted in the default assessment standing.

[24] I am satisfied that there should be no alteration to the costs allowed by the default assessment. There is no other reason to stay the execution of the warrant. It follows that I must refuse Mr Remely’s third application.

Costs

[25] I turn now to the question of costs in relation to the four applications.

[26] Mr Remely has failed in relation to those applications. There is no good reason why costs should not follow the event. The only issue is whether the costs should be on the indemnity basis.

[27] The ordinary rule is that costs should be on the standard basis unless there is some special circumstance of the case that warrants departure from the ordinary rule.

[28] Colgate Palmolive Co & Anor v Cussons Pty Ltd[4]is often cited as summarising many of the significant factors relevant to the exercise of the discretion as to whether to award indemnity costs. Amongst the factors mentioned in that case, and they are not exhaustive, are two that are relevant here – undue prolongation of the case by groundless contentions and an imprudent refusal of an offer to compromise.

[29] As to the first matter, my reasons for dismissing the three applications on 21 August 2008 make plain that Mr Remely’s contentions were misconceived and groundless. The hearing took the better part of a full day. The matter that eventually concerned me was not argued, hence the need for further submissions. The only matter that deserved argument was the one that I raised and that was relevant only to one of the applications - the possible variation of the default assessment.

[30] As to the second matter on 26 September 2007 the second respondents offered to compromise the costs in the sum of $5,000. The offer was plainly not accepted by Mr Remely. No evidence or submission was advanced – and I suspect none could be - to show why the refusal to accept that offer could be described as anything but imprudent. Even on the best case that Mr Remely advanced he had to concede costs owing in a sum greater than the offer.[5] It is relevant to note that the offer was not renewed subsequent to 26 September 2007.

[31] Both factors favour the granting of costs on the indemnity basis save that the third application merited argument (albeit on a different basis to that advanced by Mr Remely) and I think the ordinary rule should apply.

[32] I should record that despite my direction to make such submissions as he may be advised in relation to costs I have received no submissions from Mr Remely concerning costs.

Orders

[33] I order that the application filed 30 June 2008 be dismissed.

[34] I order that the stay of the warrant of execution of 15 May 2008 ordered by me on 28 August 2008 be removed.

[35] I order that the applicant pay the costs of the second respondents in respect of the applications filed 6 March 2008, 31 March 2008 and 14 July 2008 to be assessed on the indemnity basis.

[36] I order that the applicant pay the costs of the second respondents in respect of the application filed 30 June 2008 to be assessed on the standard basis.