N8198
	
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 556 OF 2016

BETWEEN
OLIVER TASTE LIMITED
Applicant/Plaintiff

AND
GRAHAM ELIPAS
First Defendant

AND
NOEL MAGUNA
Second Defendant

AND
YANJOL APIN AS ACTING REGISTRAR
OF TITLES
Third Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani:  Thompson J
2019: 21st November
2020: 20th February

COSTS - Application for review of taxed costs –party/party basis- reasonableness of costs - set-off to be allowed

Counsel:

Herman Leahy, for the Plaintiff
John Napu, for First Defendant

1.	THOMPSON J:	On 22 August 2018 these proceedings were dismissed by the National Court for being a duplication of other proceedings, and the Plaintiff was ordered to pay the 1st Defendants’ costs.
2.	In the absence of any order for solicitor/client or indemnity costs, then this meant costs on a party/party basis.
Facts
3.	On 4 April 2019 the 1st Defendant served a Bill of Costs in Taxable Form on the Plaintiffs’ lawyers, claiming K621,896.00, which was set for hearing on 11 April 2019.  There did not appear to be any Application for Taxation, in breach of Order 22 Rule 46.  The parties attended at that date, the taxation was adjourned by the Taxing Officer, (“TO”) and on 4 June 2019 the Plaintiff filed its Objection to the 1st Defendant’s Bill of Costs.  When the parties appeared, the 1st Defendant’s lawyer said that he wished to provide a written response to the Plaintiffs’ Objections.  The parties then agreed with the TO’s proposal that after the 1st Defendant filed his response to the Plaintiff’s Objections, the TO would conduct his own review on the documents, without hearing from the parties, and would issue a written decision.
4.	The 1st Defendant filed a Reply to the Objections on 17 June 2019.  On 24 July 2019 the Plaintiff received the TO’s written decision and Certificate of Taxation dated 19 July 2019, in the sum of K388,906.00.  The Certificate of Taxation was duly filed on 24 July 2019.
5.	On 30 July 2019 the Plaintiff filed an Application pursuant to Order 22 Rule 60 to review the TO’s decision, which was within the 14 day period allowed by Order 22 Rule 60 (2).  
6.	The Plaintiff had various objections to the taxed costs, which were annexed to the affidavit of the Plaintiffs’ lawyer filed on 30 July 2019, at the same time as the Notice of Motion.
Issues
7.	The 1st Defendant objected to the Plaintiff’s Motion.  First, he submitted that the Motion was incompetent because the supporting affidavit did not attach a copy of the Plaintiffs Notice of Change of Lawyers.  
8.	This argument was based on a misconception of Order 4 Rule 44, which provides that a Motion founded on facts shall be supported by an affidavit setting out those facts.  The identity of the lawyer acting for the Plaintiff is not a fact which founds the Motion to review the taxation.  The identity of the lawyer is set out in the Notice of Change of Lawyers filed on 30 July 2019, which forms part of the court record, and which was served with the Affidavit and Notice of Motion.  There was no breach of Order 4 Rule 44.
9.	The 1st Defendant’s next submission was that the Plaintiff’s supporting affidavit did not show the date of the Certificate of Taxation or attach a copy of the Certificate, and was therefore scandalous. 
10.	The affidavit had annexed a copy of the TO’s written decision, including his Certificate of Taxation set out at the end of his decision dated 19 July 2019.  It was not necessary to attach a copy of the subsequent entered certificate, and in any event, that Certificate was on the court file and forms part of the court record.  That submission is rejected.  
11.	The 1st Defendant’s lawyer also said that because the copy of the Certificate was not attached to the affidavit, the court could not calculate the 14 day period for review.  That argument is rejected.  The court does not calculate a review period from documents annexed to affidavits. It calculates the review period from the documents which form the court record on the court file.  In any event, there was no issue regarding the calculation of the review period, as the Motion was filed well within time.
12.	The 1st Defendant submitted that pursuant to Order 22 Rule 60 (1), a party who is dissatisfied with the allowance or disallowance of any item by the TO, or with the amount allowed by the TO for any item, may apply to review the decision, and appeared to be saying that the Plaintiff therefore needed to make different objections to those made on the taxation. 
13.	That argument is rejected.  The affidavit supporting the application for review contained 26 pages of objections in writing specifying the items to which the Plaintiff objected, and stating the grounds for each objection.
14.	Having found that the Plaintiffs’ Application complies with the Rules, I now proceed to deal with the merits of the Application.
Proof of Payment
15.	First, the Plaintiff objected that none of the costs should have been allowed, because  the 1st Defendant did not provide evidence that he had rendered or been paid invoices for the total amounts claimed.  No authority was cited in support of this proposition, and I have not been able to find any authority on that specific point.  
16.	However, there are many case authorities which say that a bill of costs must show the actual costs which the party has paid or is liable to pay.  In relation to disbursements, Order 22 Rule 49 provides that where a liability to make a disbursement has been incurred, the disbursement may be included in the bill notwithstanding that it has not been paid, but (with the exception of Matrimonial proceedings) the disbursement shall not be allowed unless paid before the taxation is completed.   There is no similar Rule for the lawyer’s costs. (see Jack Patterson v NCDC (N2145) and John Wena and ors v the State (2016) PGNC 331).
17.	The Applicant must therefore show the actual costs which the party has either paid or is liable to pay, as well as proof of actual payment of disbursements. A lawyer cannot simply produce a bill of costs unsupported by evidence of a liability to pay.  As was stated in Pius Sankin and ors v PNG Elcom (2002) PGNC 77:  
“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 litigation to which the order relates.   ... I consider this very important to show that the amounts claimed is in fact reimbursement of the costs the party entitled has incurred in either defending or prosecuting a claim ... and is not a claim for profiting at the expense of the other party”.
18.	In relation to a party’s liability to pay, there is a presumption that if a party has a lawyer on the record, that party is liable to pay the lawyer’s costs.  He does not have to adduce evidence to support that presumption, unless he has been put on notice of a genuine issue as to the party’s obligation to pay.   (See Civil Costs, 4th Ed, Sweet and Maxwell, Hurst P,2007).  In the absence of a written fee agreement, the amount of the party’s liability to pay costs, can be determined by reference to the National Court Scale.
19.	The 1st Defendant’s lawyer did not produce either a fee agreement, or copies of invoices or receipts showing the actual costs or disbursements rendered and/or paid by the 1st Defendant.  However, in relation to costs, I do not consider that bills are the only way of proving the actual costs which a party is liable to pay.   If this was a taxation of costs on a solicitor/client basis, the absence of paid invoices or a costs agreement, could be fatal.  However, where the taxation is for party/party costs, I consider that the amount of costs which the party is liable to pay, can be determined by reference to the Scale of Costs in the Rules.  Application of the Scale ensures that the amounts claimed are in fact solely reimbursement of costs incurred, and not a claim for profiting at the expense of the other party.
20.	For instance, the 1st Defendant’s lawyer produced no evidence that the 1st Defendant had agreed to pay him and so had a liability for K1,600.00 per hour.  However, this is not a solicitor/client taxation of costs.  Whatever amount the 1st Defendant agreed to pay his lawyer, he is only entitled to recover “... 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”, as prescribed by Order 22 Rule 24.
21.	Insofar as the Plaintiff’s objection refers to the failure to prove payment of costs rendered by his lawyer, the objection is rejected.  Insofar as the objection refers to the failure to prove payment of disbursements, it is upheld.

Hourly rate
22.	There was objection to the hourly rate allowed by the TO.  The rate had been claimed at K1,600.00, the Plaintiff objected that it should be K300.00, and the TO allowed K1,500.00.  In my unreported decision in OS (JR) 721 of 2004 The State v National Lands Commission and ors delivered on 2 October 2018, I set out the factors to be taken into account when determining an hourly rate, which include the seniority of the lawyer, the degree of skill involved, and the expenses and overheads which he incurs in providing his legal services.  For instance, a sole practitioner working from home with few overheads, cannot justify the same hourly rate as a lawyer in a firm renting commercial office space with high overheads.  I applied those principles in the case of Steven Sike v Jerome Sawin and ors N7969 delivered on 23 August 2019, when considering the hourly rate charged by the same lawyer in that case, as is appearing in this present case.  The TO allowed K1,200.00 per hour for the lawyer, and I found no basis for interfering with that figure.  
23.	I consider the same matters now, namely, that Mr. Napu is a lawyer of some seniority, the proceedings were ordinary judicial review proceedings which did not proceed to a substantive hearing, and it was not a matter which involved calling witnesses, or difficult areas of law.  I also take into account that several years have passed since the work was done in that earlier case, in which I found hourly rates of K1,000.00 – K2,000.00 may be allowed as being appropriate in 2017 - 2018.  Here the work was performed in 2016 – 2018. Although K1,500.00 per hour may be at the high end of the range, the TO has a wide discretion, and I find no basis for interfering with his figure of K1,500.00 per hour.
Description of items and nature of work
24.	In relation to the way in which the items are shown in the Bill, this made it almost impossible for the TO to determine the work which was done and the time spent in that work.  Without knowing the time spent on each item, the TO could not apply the hourly rate to the time. 
25.	The Plaintiff objected that most of the matters set out in Part 1 for Preparation of Documents were duplicated in Part 7 – preparation for trial, and again in various other items.  Further, the items in Part 1 included more than preparation of documents, they included separate charges for filing and separate charges for serving.  
26.	The charges include matters which are not for prescribed documents, such as letters, and they charge copying on top of the preparation fee, when Schedule 2 Table 1 Part 1 says that the preparation fee includes preparing, issuing, filing and service, and includes 3 copies.
27.	In relation to Other Documents such as affidavits, Schedule 2 Table 1 says that the charge is K6.00 per page for the first five pages, and K2.00 per page thereafter.  In item 21, the Bill charges K45.00 for preparing and filing an affidavit of service, plus K36.00 for copying it.  This affidavit comprised a front sheet, one page, and one annexure.  Even allowing for the front sheet (although the Guidelines issued with the Costs Rules when they were first introduced, indicated that the front/back sheet was not to be included), the correct charge should have been K18.00, with no further charge for copying as no more than 3 copies were required.  This was repeated with all the similar items.
28.	Further, the documents referred to in Items 1-16 were prepared before the 1st Defendant’s lawyers filed a Notice of Intention to Defend the Proceedings on 13 March 2017 (“NOITD”). Pursuant to O 7 R 2, a person shall not take any step in the proceedings unless he has given an NOITD.  All work done and expense incurred by the lawyer before 13 March 2017 was unnecessarily or improperly done in breach of the Rules, and could not be recoverable on a party/party basis.
29.	After his 2016 Motion to dismiss was itself dismissed, the 1st Defendant filed another Motion to dismiss which was set for hearing on 4 May 2017.  The court file does not show what happened to that Motion, except that costs of its adjournment were awarded against the 1st Defendant, and in any event, it was not granted.  He filed another Motion to dismiss on 22 May 2017.  After several adjournments, for which costs were awarded against the 1st Defendant, he withdrew the Motion, with costs against him.  On 11 August 2017 he filed yet another Motion, which was also subsequently withdrawn, with costs.   He filed another Motion on 21 August 2017, but the court file does not show what happened to it.  In any event, it was not granted.  He filed another one on 30 October 2017, and the court file does not show what happened to it.   He filed another Motion on 14 February 2018, and after numerous adjournments, it was finally heard in June 2018.
30.	The 1st Defendant filed six unsuccessful Motions for the same application over a period of more than a year, and then took a further 4 months to move his final Motion.  Some of the costs were improperly incurred, such as the Motion filed months before he filed an NOITD.    Other costs incurred before the final Motion were unnecessarily incurred, and should not be recoverable on a party/party basis.  This includes the costs associated with repeatedly filing the same application, preparing the same Motions, repeating the preparation of the supporting affidavit, serving the documents and preparing affidavits of service.  This means that a large number of the documents from Item 2 to Item 77 were unnecessarily prepared.
31.	Again, the items include more than the required item for appearances, which do not extend to perusal of the file, further research, or consolidation of instructions.
32.	In relation to item 118, this appearance was solely to receive the decision, it did not require perusal of the file, further research, consolidation of instructions or preparation for hearing.  Further, Schedule 2 Table Part 3 prescribes a fixed fee of K30.00 for taking a judgment, while the 1st Defendant has charged K4,800.00.
33.	The Bill also claimed a Block Allowance for Preparation of Documents in Part 2.   As was pointed out in the decision in Steven Sike’s case, Table 1 Part 2 specifies that the Block Allowance is an alternative charge to the previous charges in Part 1.  It is not in an addition to them, and should not have been allowed.
34.	Part 3 - Counsel’s fees.  	Most of the appearances referred to in this Part, were for six unnecessary Motions.  Five of the appearances were before the Defendant’s lawyer had filed an NOITD on 13 March 2017.  Most of the costs for items 96 – 105 were unnecessarily incurred, and were not required for the attainment of justice or for defending the 1st Defendant’s rights.  Some of the costs were actually wrong.  The TO noted that the 1st Defendant had appeared 23 times but only claimed for 22, and so he allowed all of them.  However, the TO did not note that five of those appearances in Items 96-100 were improper, before the NOITD had been filed;   three of the appearances in Items 106-108 were when the 1st Defendant actually had costs ordered against him; one charge on Item 114 was for when the 1st Defendant did not appear; and most of the other appearances were for mere adjournments, for no apparent reason.
35.	Each item includes five different types of items which have not been separately particularised and charged.  This Part is intended to cover only court appearances. Charges for perusing documents, or research or taking instructions, must be separately itemized and claimed in the appropriate Part.  The fee was also not in accordance with the scale.  For instance, Item 96 was for a court appearance on an interlocutory matter, it did not require the taking of instructions or research into law and facts, and the scale fee set out in Part 3 of the National Court Scale of Costs in Schedule 2 Table 1, allows a maximum of K275.00 for a contested interlocutory application, or K150.00 for a contested adjournment, but the bill claimed K4,800.00. This was repeated for each of over 20 interlocutory appearances.
36.	Of course, a practice has developed whereby the TO uses the discretion under Order 22 Rule 36 to allow a higher amount than in the Scale, in view of the outdated nature of the scale fees.  Nevertheless, that discretion must be exercised consistently with the classification of the prescribed items in the Schedule so that the fee for an uncontested adjournment is less than for a contested hearing, and so on.  The discretion must be also exercised in accordance with Order 22 Rule 24 (2), whereby the costs have to be necessary and proper for enforcing rights.  
37.	It was not necessary for the 1st Defendant’s lawyer to research the law or take instructions on the majority of the court appearance dates.
38.	In the case of Joseph Sange Kumba v Mann, UPNG and ors (2018) PGNC 50, the court found that Applications for Leave for Judicial Review, Directions Hearings and other interlocutory applications should be allowed at 30 minutes.  I respectfully agree, although this is always subject to the particular facts, which may show that the application was contested or for some other reason took much longer.
39.	In relation to Part 4 – Counsels Travelling Expenses, none of these costs were allowable.  Schedule 2 Table 1 Part 4 only applies to travel from the town where the lawyer practises, to the town where he has to appear in court.  These items were correctly disallowed by the TO.
40.	In relation to Part 5 – Attendances, the Schedule clearly restricts these items to attending on examination of witnesses, attending on counsel in conference, (“counsel” is defined in the Schedule as being a lawyer practising solely as a barrister) and attending the hearing as a second lawyer.  None of those matters are applicable in this case. There were no examinations of witnesses, there was no counsel, no second lawyer, and no substantive hearing.  This Part does not apply to attendances on the client.  While the TO reduced the amount claimed from K110,400.00 to K34,500.00, in fact none of the items were allowable under Part 5.
41.	Part 7 is the appropriate section for taking instructions from the client and issuing correspondence.  It does not contain any specific reference to research, as a lawyer is expected to know the general law.  If the item had identified any particular difficulty or skill required for an unusual problem, an allowance for research could have been made.  However, this was an ordinary judicial review which was dismissed at an early stage for being a duplication of other proceedings, and no particular research was required.  Every lawyer, particularly one of ten years experience, is required “... to have a reasonable knowledge of his work and cannot charge for learning his own business.”(Tolom Abai and others v the State (1998) PGNC 92, and Kumba v Mann, supra.)
42.	The 1st Defendant has separately charged K75,200.00 for research into the law (in addition to research charged with other items).  This is grossly excessive.  The court file discloses that very little research could have been required, because the 1st Defendant’s application to dismiss was simply based on the factual point that the proceedings were a duplicate of earlier proceedings, and so struck out.  There is also a further charge in Item 189 of K9,600.00 for research into the Teaching Services and Public Services Acts.  This was unnecessary because the merits of the Plaintiffs’ claim were not relevant when the proceedings were simply a duplicate of earlier proceedings.
43.	Further, the Bill duplicates items such as Item 194 where he has charged K125.00 plus K36.00 copying for preparing the affidavit of service of the 1st Defendant’s affidavit, while in Item 9 he had already charged the Scale fee of K45.00 plus K36.00 for copying for the same document, which in any event was work unnecessarily incurred because the lawyer was not entitled to take any step in the proceedings until he had filed an NOITD in March 2017.  This duplication was repeated for each of the documents.  Further, a large number of the items relate to the preparation of documents for the unnecessary Motions.
44.	Most of the charges were excessive.  For instance, Item 330 charges K1,600.00 for perusing an affidavit of Dorothy Misitom for one hour.  The court file shows that the affidavits of Dorothy Misitom were simply administrative affidavits setting out the exchange of correspondence between the party’s lawyers, and which were not lengthy.  The affidavit would not have taken an hour to read.   The same applies to perusing other affidavits and documents.
45.	In Items 167-171 and 203, the 1st Defendant charged K41,600.00 for research before he even filed an NOITD.  In Items 239 and 246 he charged K22,400.00 for preparing submissions.  In Items 243, and 340-344, he has charged a further K33,600.00 for research, as well as a further K12,800.00 for preparing submissions.  Generally speaking, the charges for taking instructions, research and preparing submissions, were grossly excessive.  
46.	Similarly, it was improper and  excessive to charge in Items 179 and 188 K11,200.00 and K3,200.00 to prepare  the 1st Defendant’s affidavits before the NOITD was filed, followed by  K11,200.00  in Item 213, and K6,400.00 in Item 222 for his further affidavits. A lawyer should not have taken over 21 hours to prepare simple affidavits, and if he did, he should not be charging at a senior lawyer’s rate. It was improper and excessive to charge K8,000.00 in Item 190 to prepare the affidavit of Alex Tabie before the NOITD,  followed by K6,400.00 in Item 227 and K4,800.00 in Item 248 for his further affidavits. 
47.	In relation to photocopying, the prescribed charge in the Schedule is 50t per page.  The TO may use his discretion to increase this.  However, I consider K6.00 per page to be excessive, and K1.00 or K2.00 per page would be reasonable.
Other relevant matters
48.	When exercising his discretion under Schedule 2 Part 7, in determining which costs were properly and necessarily incurred, the TO is required under Item 12 to have regard to the nature of the work which was done, and any particular difficulties of fact or law, or any special skill which was required.  
49.	In this case, the nature of the work showed that the matter did not proceed to a substantive hearing, it was struck out at an interlocutory stage, and there were no special difficulties involved or special skill required.  It was also relevant that when the Plaintiff obtained cost orders against the 1st Defendant arising out of two of the Motions, those costs were taxed in the relatively modest sum of K8,569.00.  By comparison, the 1st Defendant’s costs arising out of five Motions (excluding the two for which costs were awarded against him), were claimed at over K600,000.00.  This was quite disproportionate to the amount of work which was done, over about sixteen months, on an interlocutory basis, without witnesses or a trial, and which almost entirely involved the adjournments of improper or unnecessary Motions.  The figure was clearly exorbitant. 
50.	In relation to disbursements generally, the Plaintiff required the 1st Defendant to prove that the disbursements had been paid, and if this was not done, then pursuant to Order 22 Rule 49, the disbursements could not be allowed.  
51.	The 1st Defendant did not provide proof that he had paid the disbursements which were shown in the Bill of Costs, including a 10% charge of K34,180.50 for VAT, which had been allowed by the TO even though it was not claimed in the Bill.  As VAT is a disbursement, and as there was no proof that it had been paid, or even a TIN number or Certificate of Compliance provided by the 1st Defendant’s lawyer, it could not have been allowed.  
52.	None of the disbursements should have been allowed, in the absence of proof of payment.   Nevertheless, the TO had a discretion to make some allowance for disbursements when it could reasonably be inferred that they had been paid, such as some photocopying, and perhaps service fees.
53.	In relation to service fees, the Bill included numerous significant charges for filing and service of documents apparently carried out by the lawyer.  There was no reference to clerks.  If a lawyer, particularly one of some seniority, chooses not to engage a clerk but to file or serve the documents himself, he is not entitled to charge at a lawyer’s rate for that clerical work.  Order 22 Rule 49 says that where work is done by a clerk, it should be stated in the Bill.  If a clerk is engaged to file or serve, it should be shown as a disbursement, or if the clerk is employed, shown at an hourly rate.  In Kumba’s case, supra, the Court found that K25.00 per hour was an appropriate rate for copying, searching, filing and so on.  I respectfully agree with that figure, but extending it up to K75.00 per hour where appropriate. The 1st Defendant’s lawyer could only charge for filing and service at the appropriate clerical rate.
54.	The Plaintiff had earlier obtained a Certificate of Taxation for the costs arising out of interlocutory applications which had been awarded to it by the court, and which had been taxed in the sum of K8,569.00.  Pursuant to Order 22 Rule 58, where a party entitled to be paid costs is also liable to pay costs, the TO may set off the amount allowed against the amount entitled to be paid.  There was no reason why this should not have been done. The TO should have offset this amount from the 1st Defendant’s costs, and certified the amount of the balance. 
55.	In relation to the costs of the taxation, more than 1/6thof the bill was taxed off.  Pursuant to Order 22 Rule 56 (2), the 1st Defendant was therefore not allowed to recover the costs of preparing the bill and attending the taxation.   The TO should not have allowed K2,000.00, or any figure, for costs.
Conclusion
56.	When taxing a Bill of Costs, it is the role of the Taxing Officer to go through each item on the Bill, and make a decision on each item.  During this process, he will be exercising his discretion.   On a review of those taxed costs, the court will only interfere with the Taxing Officer’s decisions where the discretion has been exercised wrongly or the amount allowed is exorbitant (Re Glassfurd (1910) 7ALR 276).  Pursuant to Order 22 Rule 61, the Court is given a wide discretion.
57.	After taking into account each of these matters, I have reviewed the Taxing Officer’s Taxed Bill of Costs as follows:
Item	Amount as taxed by TO	Amount now allowed by Court	
Hourly rate	K1,500.00	K1,500.00	
Part 1 Items 1 – 94	K4,230.00 costs
K4,153.00 disbursement	K3,000.00
K   750.00	
Part 2
Block allowance	
K300.00	
Nil	
Part 3 Items 96-118	K57,500.00	K19,500.00	
Part 4 Items 119 -141	Nil	Nil	
Part 5 Items 142-164	K34,500.00	Nil	
Part 7 Items 166-357	K205,825.00	K15,000.00	
Part  9 Item 359	K2,000.00	Nil	
TOTAL	(K304,355.00 but shown as K342,805.00)	K38,250.00	
VAT 10%	K34,180.50	Nil	
Disbursements	K11,920.50	K    750.00	
TOTAL	K388,906.00	K38,250.00	

58.	Pursuant to Order 22 Rule 60, the sum of K8,569.00 for taxed costs liable to be paid by the 1st Defendant, is set off against the taxed costs payable to the 1st Defendant and now reviewed in the sum of K38,250.00, leaving a balance of K29,681.00 being certified for costs payable by the Plaintiff to the 1st Defendant pursuant to the Court Order of 22 August 2018.
59.	Each party is to pay its own costs of and incidental to this Review.
___________________________________________________________
Pacific Legal Group Lawyers:   Lawyers for the Plaintiff 
Napu & Company Lawyers:  Lawyers for the Defendant