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Patterson trading as Pattersons Lawyers v Teachers Savings and Loans Ltd [2004] PGNC 243; N2516 (19 February 2004)

N2516

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MP 589 of 2002

BETWEEN

JACK LIVINAI PATTERSON trading as
PATTERSONS LAWYERS
Plaintiff

AND

TEACHERS SAVINGS & LOANS LIMITED
Defendant

Waigani : Sevua, J
2003 : 17th July
&
2004 : 19th February

LAWYERS – Bill of costs – Bill in taxable form – Lawyers cannot sue to recover if bill not in taxable form – Bill must be in taxable form.

Lawyers – Suit for payment of fees – Suit dismissed – Res judicata – Whether applicable.

Lawyers Act, ss. 62, 63, 64
National Court Rules – Order 22 Rules 47, 49

Counsel:
A. Kwimberi for Defendant

19th February 2004

SEVUA, J: This is an ex parte application by the defendant to review taxation of the plaintiff’s costs on 11th April 2003 in which the Taxing Officer had allowed the plaintiff’s solicitor/client costs at K99,588.45. The taxation of costs was dealt with ex parte.

In view of the apparent legal irregularities involved in this case, it is my view that a factual background of this case be set out so that it may become necessary to appreciate the basis of the conclusion reached in this matter.

Some of the facts, which are not in dispute, since the plaintiff did not appear in this application to object to the application are set out in the applicant’s affidavit and reiterated in its submissions.

From January to April 2001, the plaintiff’s firm acted for the respondent in a number of matters. Sometime in June 2001, the plaintiff, by way of a letter forwarded to the respondent, submitted a bill of costs in the sum of K123,891.00. The respondent did not settle that bill because the memorandum of costs failed to sufficiently particularize the kind of legal services rendered, the time spent on each service and the rate charged.

In about May 2001, the plaintiff then instituted proceedings in WS 583 of 2001, where it claimed the sum of K123,891.00. Upon a perusal of WS 583 of 2001, the plaintiff had on 9th May 2001, filed a writ claiming the sum of K123,891.00 for unpaid legal fees. On 31st August 2001, the Teachers Savings and Loans Society Limited filed an application for the claim to be dismissed for disclosing no reasonable cause of action as the plaintiff had failed to render its bill of costs in taxable form as required by the Lawyers Act 1996.

On 19th September 2001, the Court dismissed the plaintiff’s claim in WS 583 of 2001 with costs. This Court notes that, paragraph 1 of the order taken out on 25th September 2001, but made on 19th September 2001 reads: "The plaintiff’s statement of claim filed on 09th May 2001 is dismissed for being an abuse of process of Court pursuant to Order 8 Rule 27 of the National Court Rules".

The plaintiff then appealed against the decision of the National Court of 19th September 2001. The respondent says that the appeal was successfully defended and it was dismissed. However, it is suggested that the plaintiff had withdrawn or discontinued its appeal.

After this appeal, the plaintiff filed its application to have its costs taxed under the current proceedings, MP 589 of 2002 on 23rd October 2002. The Court has noted that the plaintiff’s four bills of costs taxed by the Registrar came to a total of K99,588.45 inclusive of VAT and disbursements. The actual costs allowed on these bills was K89,344.50, and the total amount taxed off came to K56,485.00. It is to be noted that the total amount of fees that the plaintiff had applied to be taxed was K148,841.00. This amount was not the same as the fees claimed in WS 583 of 2001, which was K123,891.00. There is a difference of K24,950.00. It therefore appears that the bill sent to the defendant was far less than the total amount which the plaintiff wanted taxed. It is obvious the defendant did not know this difference and there seems to be something sinister here.

The respondent has therefore made this application, somewhat belatedly, to review the decision of the Taxing Officer on 11th April 2003 and have it set aside.

The application is made under Order 22 Rule 60(2) of the National Court Rules, which provides for an application for review of the taxation to be made within 14 days after the decision or within such time the Court may allow. I have allowed this application to be made this late because of the merits of the case.

The defendant’s objection to taxation sets out five grounds of the objection, which I wish to set out as they are of some concerns to the Court because it seems, that some lawyers are still suing on their bill of costs without due regard to the requirement of the Lawyers Act and the National Court Rules. Besides these concerns I alluded to a little earlier on, there are matters that need to be addressed, otherwise the Court and the judicial system will be sanctioning what is not proper in law.

The grounds of objections are:

1. The matter was and is ‘res judicata’ in that the National Court in WS. No. 583 of 2001, refused the plaintiff’s claim for cost for failing to comply with Section 62 (1), (2) and (4)(b) of the Lawyers Act 1996, which decision was appealed against but was upheld by the Supreme Court, in SCA No. 88 of 2001, on 11th October 2002.
   
2. That the plaintiff failed to particularize and provide details of his cost pursuant to Section 62(2) of the Lawyers Act 1996 and also failing to comply with Order 22 Rule 49 of the National Court Rules.
   
3. That the plaintiff failed to also comply with Sections 62(1) and (4)(b) of the Lawyers Act 1996.
   
4. That proceedings is an abuse of the process of the Court in that in the first instance this matter should have been disallowed by the Deputy Registrar/Taxing Officer for failure to comply with the Lawyers Act 1996.
   
5. The above grounds of objections were communicated to the Taxing Officer and the plaintiff by letters of 5th November 2002, 17th December 2002 and 10th April 2003.
   

The objection was filed on 13th June 2003.

Despite the fact that the objection was filed outside the 14 days time limit required by Rule 60(2), it is the Court’s view that the significance of the substantive law in this application must override the issue of the time limit. As I said earlier, this application is allowed this late on its own merit.

The plaintiff had failed to comply with Section 62(2) of the Lawyers Act and Order 22 Rule 49 National Court Rules. That is the first concern this Court has in this matter. Mr. Patterson is a lawyer who knows the requirements of the law on the issue of taxation of a lawyer’s bill of costs. As a matter of law therefore, he is required to render his legal fees to his client in taxable form. Section 62(2) of the Lawyers Act states that, "a bill shall contain the particulars required by the Rules of Court" (my emphasis).

Then we go to the National Court Rules and find that Order 22 Rule 47 relates to application for taxation of costs under s.63 of the Lawyers Act. Rule 49(1) sets out what should be contained in the bill. The bill must contain particulars such as, the work done by the lawyer or his servants and agents, disbursements and charges for the work done. In other words, the bill must set out itemized costs for each kind of service rendered.

Despite such a failure, the plaintiffs proceeded with legal proceedings in WS 583 of 2001 to recover the sum of K123,891.00 from the defendant. That suit in my view was totally unnecessary. The defendant did not refuse to pay. It requested the plaintiff to itemise its costs in a manner required by law. The plaintiff failed to provide proper particulars of its services and charges and decided to sue the defendant. Clearly that was an abuse of the process of the Court. A lawyer cannot sue for recovery of his legal fees when he has not issued to his client a bill of costs in taxable form. In the present case, the plaintiff did not comply with the Lawyers Act and the National Court Rules therefore the presiding Judge dismissed the plaintiff’s claim in WS 583 of 2001.

It is trite law that the respondent is entitled to a proper bill of costs, meaning, a bill that conforms to legal requirements like His Honour, Justice Pratt held in Marsh v. Hay [1981] PNGLR 392:

"A solicitor’s client has a right to demand, receive and have taxed a proper bill of costs in taxable form before being sued for non-payment".

The Court is of the opinion therefore that the plaintiff in WS 583 of 2001, not only acted contrary to sound legal principles, but proceeded unethically and unprofessionally. His claim was dismissed and that was the end of that matter. Until he complies with the requirements of the law relating to his bill of costs, he has no right to sue or take any other action to pursue his unpaid bills.

In Philip Mamando v. Lumusa Local-Level Government Council, N.1752, 13th August 1998 (unreported), Justice Woods said at page 5 of his judgment:

"For the purposes of the Lawyers Act and the Rules of the National Court, the memorandum should contain the relevant particulars of the work done and how the costs accrue for the items similar to a Bill as rendered for taxation".

The law is therefore clear. A lawyer must provide a bill of costs in taxable form. The plaintiff in this case failed to comply therefore he cannot claim his fees until he has met the legal requirements pertaining to his bill of costs.

The defendant says that the Taxing Officer should not have proceeded to taxing the plaintiff’s costs because the matter was res judicata in that the Court in WS 583 of 2001, had dismissed the plaintiffs suit because the Court had found that the plaintiff had failed to comply with the Lawyers Act therefore found the plaintiff’s action an abuse of the process of the Court. An appeal against that decision was withdrawn.

There is no dispute that the application by the plaintiff in this action (MP 589 of 2002) was in respect of the plaintiff’s bill of costs, the subject of the suit in WS 583 of 2001. The actual application for taxation of costs, undated, but filed on 23rd October 2002 by the plaintiff is testimony to that. By order of the Court made on 19th September 2001, WS 583 of 2001 was dismissed "for being an abuse of process of Court.............."

The Court is satisfied that the plaintiff failed to comply with the requirements of the Lawyers Act and the National Court Rules in regard to his bill of costs which he remitted to the defendant. Non compliance with s.62 of the Lawyers Act and Order 22 Rule 47 of the National Court Rule does not entitle the plaintiff to sue for recovery of his fees. The defendant has the right to demand a bill of costs in taxable form from his lawyer. There is no way the plaintiff could proceed to recover his fees without complying with the law as alluded to above.

The Court had already dismissed the plaintiffs action to recover his fees and the manner in which he had gone to the Registrar to have his costs taxed was quite improper and irregular. Whilst he could apply for taxation under s.63 (1) of the Lawyers Act, the plaintiff must first render his bill in a taxable form.

The Court is therefore satisfied that grounds 2, 3, 4 and 5 of the review has been made out.

In respect of the issue of res judicata, I consider that it does not apply here. It is true that WS 583 of 2001 has been dismissed. The application for taxation is not a claim to recover the costs the subject of WS 583 of 2001. It would be res judicata in my view, if the plaintiff had returned to Court in a fresh writ of summons claiming the same amount of K123,891.00.

It is therefore the opinion of the Court that res judicata does not apply in this case. Res judicata is a Latin expression which means, "matter that has been decided". The Oxford Dictionary of Law defines it as, "the principle that when a matter has been finally adjudicated upon by a Court of competent jurisdiction, it may not be reopened or challenged by the original parties or their successors in interest". Except on appeal, the plaintiff could not return to Court in another action to recover the sum of K123,891.00, which had been previously dismissed by the Court.

I think the statement by His Honour, Fullager. J, of the High Court of Australia in Jackson v. Goldsmith [1950] HCA 22; (1950) 81 CLR 446 at 466 clearly demonstrated the law as to res judicata. His Honour said:

"The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been brought and judgment entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This is not, to my mind correctly classified under the heading of estoppal at all. It is a broad rule of public policy based on the principles expressed in the maxims "interest republicae ut sit finis litium" and "nemo debet bis vexari pro eadem causa"."

The defendant therefore cannot successfully raise the issue of res judicata in this application.

It is my view that the plaintiff’s action in applying for taxation was improper and irregular. It is also an abuse of the process. The Court must not sanction this kind of improper and irregular processes by the plaintiff. In my view, to allow the taxation to remain, would mean that the Court is sanctioning, not only improper and irregular conduct of the plaintiff, but sanctioning the continued abuse of its process by the plaintiff. It is trite law that the Court has the power to stop an abuse of its process.

Furthermore, there is evidence that objections to taxation had been raised by the defendant through correspondence. The Taxing Officer was therefore aware that the defendant was opposing taxation of the plaintiff’s costs. Yet the Registrar overlooked the defendant’s concerns and proceeded to taxation, even without informing the defendant. This is another reason the taxation cannot stand.

I consider that the Taxing Officer should have refused to conduct taxation of the costs because of the apparent impropriety, irregularity and the abuse of process by the plaintiff. That is, he should have declined the application for taxation. Under Order 22 Rule 61 the Court has the power to exercise the powers and discretions vested in the Taxing Officer. In my view, it will be in order for this Court to exercise certain of those powers.

For these reasons, the defendant’s application for review is granted and I order that the taxation of the plaintiffs costs be quashed. Costs are to be borne by the plaintiff.
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Lawyer for Defendants : Goma & Kwimberi