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Canonizado v Sun System Engineering Ltd [2011] PGNC 126; N4382 (22 September 2011)

N4382

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 511 OF 2009

BETWEEN:

NAPOLEON CANONIZADO
First Plaintiff

AND:

SUN SYSTEM ENGINEERING LIMITED
Second Plaintiff

AND:

KAPU RAGEAU, LIONEL MANUA & HUBERT KIKIRA trading as RAGEAU MANUA & KIKIRA LAWYERS
Defendants

Waigani: Thompson, AJ
2011: 15 – 22 September

COSTS – Review of plaintiff's costs taxed and certified by taxing officer- rules require application for review by motion within 14 days – costs on a party to party basis require payment of all costs applied in enforcing rights of a party – notice of objection to costs filed by defendants – objections based on three grounds of which is the award to recover all other costs and for being arbitrary and excessive - Taxing Officer had a discretionary power under Part 7 to award more than the scale figures provided in Parts 1 – 6 - no evidence that taxing officer exercised discretion wrongly – application dismissed – order 22 rule 24 National Court Rules

Facts: The defendants made an application to review the costs awarded to the plaintiff which was taxed and certified by the taxing officer. They objected to the award of the costs on three grounds. The first ground is that the plaintiffs were only entitled to recover the costs of the hearing and no other costs. The second ground is that the amounts awarded by the Taxing Officer were arbitrary. Thirdly the defendants objected that the amounts awarded were excessive.

Held:

1. The use of the word "costs" is a short way of saying "costs of and incidental to" the application, thus what is recoverable on an order for "costs" is clearly set out in Order 22 Rule 24 (2), namely, all such costs as were necessary or proper for the attainment of justice or for enforcing the rights of the party. Therefore the Taxing Officer did not err in assessing the Plaintiff's costs on this basis, by including all the costs which were necessary or proper.
   
2. The assessment by the Taxing Officer proceeded in accordance with the Scale of Costs set out in Schedule 2 of the National Court Scale of Costs. As that is the scale figure, it can not in any way be said to be arbitrary.
   
3. The Taxing Officer had a discretionary power under Part 7 to award more than the scale figures provided in Parts 1 – 6. There is no evidence that he exercised his discretion wrongly.
   
4. Application for review dismissed
   

Cases Cited:
Pius Sankin & Ors v. PNG Electricity Commission (2002) N2257

Counsel:
Ms. J. Nandape, for the Plaintiffs
Mr. T. Cooper, for the Defendants

22 September, 2011

DECISION

1. THOMPSON AJ: This is an application by the Defendants for Review of the Plaintiffs' costs which were taxed and certified by the Taxing Officer on 26 July 2011.

2. The Rules require an application for review to be made by motion to a judge within fourteen days, and require a list of objections to be delivered to the Taxing Officer. The Defendants' application was not filed within time, but they have filed an Affidavit explaining that the document was lodged in time, but was unable to be filed because the Court file could not be located. I therefore extended the time for compliance, and dispensed with the requirement for delivery of the objections to the Taxing Officer.

3. Order 22 Rule 24 provides that on a taxation on a party and party basis, there shall be allowed all such costs as were necessary or proper for the attainment of justice or for enforcing the rights of the party.

4. In relation to the costs orders, the Court file shows that the following costs orders were made in favour of the Plaintiffs:

29 September 2009 – "costs of the application are awarded to the plaintiff"

6 May 2010 – "the Plaintiffs costs ... at K280.00 shall be paid by the Defendant ..."

15 June 2010 – "cost is awarded against the Defendant ... at K225.00 ..."

23 February 2011 – "cost awarded to Plaintiff for attendance in Court"

24 February 2011 – "costs be in the cause"

31 May 2011 – "the Defendants shall pay the costs that have been awarded in this proceeding prior to the date of mediation ..."

5. Pursuant to these various orders, the Plaintiffs were entitled to receive payment of costs, and as there was no agreement, the costs were taxed.

6. The Notice of Objections by the Defendants, essentially contains three grounds of objection.

7. The first ground is that when the Court ordered the Defendants to pay the Plaintiff's costs, if the Court did not use the words "costs of and incidental to" the application, then the Plaintiffs were only entitled to recover the costs of the hearing, but no other costs.

8. First, the use of the word "costs" is usually just a short hand way of referring to "costs of and incidental to" the application. Secondly, and in any event, what is recoverable on an order for "costs" is clearly set out in Order 22 Rule 24 (2), namely, all such costs as were necessary or proper for the attainment of justice or for enforcing the rights of the party. I therefore find that the Taxing Officer did not err in assessing the Plaintiff's costs on this basis, by including all the costs which were necessary or proper.

9. The second ground was that the amounts awarded by the Taxing Officer were arbitrary. The assessment by the Taxing Officer proceeded in accordance with the Scale of Costs set out in Schedule 2 of the National Court Scale of Costs. For instance, the taxing officer awarded K30.00 for taking a deferred judgment. As that is the scale figure, it can not in any way be said to be arbitrary. The same process was followed in relation to each of the items in the Bill of Costs.

10. The third ground was that the amounts awarded were excessive. It was submitted that the costs for preparation of documents etc should have been assessed solely by reference to the scale figures in Part 1 relating to preparation of Documents. For instance, Part 1 allows a fee of K6.00 per page for the first five pages, and K2.00 per page thereafter, for preparation of an Affidavit. On taxation, the Taxing Officer allowed for instance K600.00 for preparation of an Affidavit. I consider that the Taxing Officer exercised his discretion under Part 7, which allows him to award a discretionary amount for work which was necessarily or properly done and not otherwise provided for. The Taxing Officer has proceeded on the basis that the Part I figure of K6.00 and then K2.00 per page represents the administrative cost of preparing those pages, but does not represent the other costs involved in the preparation of an Affidavit, including research, perusing documents and so on.

11. The Taxing Officer had a discretionary power under Part 7 to award more than the scale figures provided in Parts 1 – 6. I find that there is no evidence that he exercised his discretion wrongly.

12. The Defendants further submitted that copies of letters and facsimiles were not produced to the Defendants at the taxation. The Plaintiffs' evidence was that all the Plaintiffs' files were present at the taxation, but that the Defendants did not request production of any document. If the Defendants had requested production of letters or facsimiles, they were available there for immediate inspection.

13. In relation to the two fixed costs orders made by the Court, for which one order was included in the taxation, the Defendants say that they paid both amounts. This was denied by the Plaintiffs. As there was no evidence to prove that the payment had been made, the amount was correctly included in the taxation.

14. The final issue raised by the Defendants, is their objection to the Taxing Officer including GST in the amount of the taxed costs. The procedure followed by the Taxing Officer was to assess the costs pursuant to the National Court scale, and then add 10% to the total figure. Counsel did not refer me to any relevant GST legislation or case authorities.

15. As the National Court said in Pius Sankin & Ors v. PNG Electricity Commission (2002) N2257, "an order for costs is not an order for the party entitled to it, to profit from. Instead, it is merely an order for that party to recover what it may have been forced to incur on account of the litigation to which the order relates."

16. The GST is a tax which is applicable to the provision of all services, including legal services. The Taxing Officer included it in the total amount. As GST is payable on legal services provided by a lawyer to his client, the Plaintiffs in the present case have been forced to incur the cost of GST on the legal expenses which they have been forced to incur on account of the litigation. It would not therefore be any form of unjust enrichment for the Plaintiffs to recover the amounts which they have been forced to incur. Those amounts include GST. In the absence of any case law to the contrary, I find that there is no evidence that the Taxing Officer wrongly exercised his discretion to include GST as a cost which was necessarily incurred by the Plaintiffs in enforcing their rights and conducting the litigation.

17. I find no error in the way in which the Plaintiffs' costs were assessed by the Taxing Officer. The Objections by the Defendants are not made out, and the Certificate of Taxation of 26 July 2011 is affirmed.

18. In relation to costs, the amount in dispute following from the Defendant's Objections, is relatively small. The original amount of the bill of costs, excluding GST, was K7,035.00, of which less than one sixth was taxed off. The Defendants did not specify in their Notice of Objection the amounts which they considered should have been assessed, but clearly, having regard to the total quantum, the amounts could not have been significant. Notwithstanding the relatively small amounts involved, the Defendants did not reach agreement on the amount of the Plaintiff's costs, required them to proceed by way of taxation, and then proceeded by way of an Objection. It is likely that the costs incurred by both parties substantially exceeded the amounts in dispute.

19. For these reasons, there is no basis for not following the provisions of Order 2 Rule 11 whereby costs shall follow the event unless the Court otherwise orders. The Defendants are to pay the Plaintiffs' costs.
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Name of Law firm: Lawyers for the Plaintiff
Name of Law firm: Lawyers for the defendants