SC1188

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 1 OF 2009

BETWEEN:

HII LUKE
Appellant

AND:

RICHARD MARIBU
Respondent

Waigani: Injia, CJ
2012: 12th May

SUPREME COURT - Appeals – Costs – Application for review of taxed costs - Practice & Procedure – Compliance with procedural requirements – Supreme Court Rules 1987 (as amended), O 12 r 37.

SUPREME COURT - Costs – Practice and Procedure – Costs awarded by full Court – Taxation of costs – Application for review of taxed costs - Single Judge has jurisdiction - Hearing de novo – Exercise of discretion – Principles - Supreme Court Rules 1987 (as amended), O 12 r 37(1) & (2).

Cases cited:

Tolom Abai v The State (2000) SC632

Counsel: 

G Kaore, for the appellant
Respondent in person

12th May 2012

1. INJIA, CJ: The Respondent (applicant) seeks leave to review the Taxing Officer's decision to tax his bill for costs. The application is made under O 12 r 37 of the Supreme Court Rules 1987 (as amended). In that decision, the Taxing Officer disallowed K24,708.50 from a bill of K27,738.50, thereby allowing K3,030.00. In percentage terms, the Taxing Officer disallowed 89 % of the bill. The applicant claims the disallowance for each items of costs is excessive or unreasonable.

2. This may be the first application for review of taxed costs under the new Supreme Court (Costs) Rules 2010. For this reason, I intend to publish my short ruling for guidance of future conduct of similar proceedings.

3. The new costs rules is incorporated in O 12 of the Supreme Court Rules. Order 12 Rule 37 is in the following terms: 

"37. Review of Taxation

(1)	A Court or a Judge may review the decision of a Taxing Officer, only if the taxing officer has given a certificate in accordance with that decision.

(2)	A party aggrieved by the taxed costs may, within 14 days from the date of the issue of the Certificate of Taxation, apply to the Court or a Judge, for leave to review the taxing officer's decision, such application to be supported by affidavit and shall be served on the other party, 3 clear days before the date of moving the application.

(3)	The application shall be made by Notice of Motion and supported by affidavit which shall, amongst other things, specify the list of items to which the applicant objects and must state concisely the nature and grounds of each objection."
 
4. I am satisfied that the Respondent has complied with the procedural requirements for making the application prescribed by O 12 r 37, as follows:

(1)	There is jurisdiction vested in a single judge of the Supreme Court to deal with this application: see O 12 r 37 (2) & (3). Although the costs the subject of the bill that was taxed was awarded by the full Court, it is open for a single judge of the Supreme Court to assume jurisdiction under O 12 r 37 (1) &(2). 
(2)	The Taxing Officer conducted a taxation of the bill and issued a Certificate of Taxation on 26 January 2011. 
(3)	The Respondent filed this application within 14 days from the issue of the Certificate of Taxation.
(4)	 The application is made by notice of motion filed on 4 February 2011.
(5)	The application is supported by two affidavits filed by the applicant. 
(6)	The appellant has been duly served with the application. There are several affidavits of service filed which confirm due service of the application. The applicant was granted leave to make the application exp parte, after the appellant, failed to appear in Court to defend the application upon due service of the application.
(7)	The affidavit field on 21 May 2012 specifies the list of items of costs to which he objects to and concisely states the nature and grounds of each objection. 

5. With regard to the principles, a hearing on a review from taxed costs under O 12 r 37 is not in the nature of an appeal but a hearing de novo. Order 12 makes no mention of a hearing de novo, however, the tenor of O 12 r 37 (2) & (3), in requiring fresh affidavit to be filed in support of the application implies a hearing de novo. The Court is considering afresh the Taxing Officer's decision based on the material placed before the Taxing Officer and any other relevant material that may be placed before the Court in the supporting affidavit, and, making its own decision on the matter. 

6. The applicant is entitled to costs of and incidental to the conduct of the proceedings, that are necessarily, fairly and reasonably incurred in the conduct of the proceedings. In deciding what is necessary, fair and reasonable; a good starting point is to approach costs allowed or disallowed, item by item. For that purpose, it is necessary for the Court to have recourse to the Taxing Officer's allowance or disallowance for each item of costs. If it is possible for the Court to assess reasonable costs for each specific item of costs, that approach may suffice. For the purpose of this exercise, the allowable costs for specific items of costs set out in the Scale of Costs in O 12 r 37, Schedule 1 (Costs Schedule) may be used for general guidance.

7. In most cases which involve multiple items of cost, it may be necessary to review the global sum allowed for all items against the total sum of the bill, to arrive at a reasonable amount of costs for the whole of the proceedings. The global figure may be adjusted upwards or downwards to arrive at a reasonable costs. Often, the reasonableness of the global amount may be viewed in percentage terms; that is, percentage of the total sum disallowed from the total bill of costs, as was done by the Supreme Court in Tolom Abai v The State (2000) SC632. In that case, the Court held that the National Court's review of taxing officers' taxation by reduction of 70% of the bill, was unreasonable; a more reasonable reduction would have been by 50%. 

8. It is also well established principle that the Taxing Officer has a very wide discretion to assess costs. Usually, the Court will not interfere with the exercise of that discretion except in cases where the Taxing Officer acted on wrong or mistaken principle. The exercise of discretion on quantum of costs per each item of costs or the global amount for all items is almost non -reviewable except in very exceptional circumstances; such as where the discretion was exercised in a manner that was "manifestly wrong or the amount allowed or disallowed is exorbitant": see Tolom Abai v The State, supra. 

9. I have perused the respondent's bill of costs which was submitted for taxation, the appellant's objection to the bill and particulars of disallowances made on the applicant's bill. I have also perused the particulars of objection, item by item, as deposed to in the applicant's affidavit sworn and filed on 21 May 2012. I have also considered the applicant's detailed written submissions on the law and each item of costs. My response to those matters is embodied in the body, of this, my ruling. 

10. With regard to the specific item for costs in the bill, costs were claimed under seven parts, as follows:

Part I Preparation of Court Documents 	-	K11, 175	
Part II Perusal of Documents	-	K900	
Part III Preparing Short Letters	-	K475	
Part IV Photocopying and Printing	-	K3,988	
Part V Attendance by Phone	-	K300	
Attendance at Call-over	-	K900	
Part VI Appearance in Court	-	K3,600	
Part VII Preparing Bill of Costs	-	K 6,400	
Total:		K 27,738	

11. The appeal proceedings for which costs could be claimed relates to the conduct of the substantive appeal and three interlocutory applications that were filed by the applicant. The first interlocutory application was a notice of objection to competency. It was heard and dismissed by the full Court. No order for costs was made. In the absence of a specific order for costs, costs should follow the event: see O 12 r 24. The applicant is not entitled to claim and receive costs associated with the notice of objection. The second was an application to dismiss the appeal for want of prosecution. The application was heard and dismissed by the full Court. Costs was awarded against the applicant. The applicant is not entitled to claim and receive costs associated with that application. The third was an application for security for costs. There is no evidence or record of this application being prosecuted. No costs can be claimed and awarded for this application. In respect of the substantive appeal, the full Court heard and dismissed the appeal after a hearing on the merits. The Court awarded costs against the appellant. The applicant is entitled to claim and receive cost in the appeal.
 
12. The thrust of this application is primarily based on the award of quantum of costs for each item. The Taxing Officer did not give any reasons for his exercise of discretion in respect of each item of costs; or, costs allowed or disallowed as a whole. The Taxing Officer simply crossed out the amount claimed for each item and replaced them with new figures. However this does not prevent this Court from invoking relevant principles on costs in determining the reasonableness of the certified costs. 

13. In dismissing the objection to competency, the Court made no order for costs in relation to that application. Pursuant to O 12 r 24, costs for that notice of objection would be in the cause of that particular interlocutory application. The Taxing Officer allowed reduced costs for Part I, Items 1 – 6; and, Part 6, Item 40 & 42 which concern costs in relation to the notice of objection to competency. In this review, although there is no contest on the Taxing Officer's allowance of reduced costs in relation to the prosecution of the notice of objection, principles of reasonableness, equity and good conscience militates against allowing costs for those items. Those items are Part I, Items 1 - 6, Part 6, Item 40 & 42. 

14. The applicant claimed and was allowed a reduced amount for application for security for costs that was filed on 9 March 2009. There is no record in the Court file of this application actually being prosecuted and an order for costs made in the applicant's favour. In the circumstances, principles of reasonableness, equity and good conscience militates against allowing costs for this item. Those are Part I, Items 7, 8 & 9.

15. The remaining items relate to costs in relation to the preparation and in opposing the appeal, for which the Court awarded him costs. The applicant is entitled to reasonable and necessary costs for each item. 

16. Under Part I, the appellant claimed amounts between K75 to K600 for preparation of various court documents. He claimed K5,000 for preparing written submissions under Item 20. Under Item I of the Scale of Costs, the average charge per hour for preparation of major document items such as affidavits is in the vicinity of K250 per hour. The applicant did not specify in the bill of costs the hours spent on preparing those documents. The taxing officer allowed only K15 to K25 per each major item. In my view, the amounts disallowed for each item is clearly excessive. I consider a reasonable disallowance for each item would be by 50% for items 10 – 19 and K4,000 for item 20. The total amount I would allow under Part I, Items 10 – 20, is therefore K 2,290.00. 

17. Under Part II, the applicant claimed K450 each for perusing the Notice of Appeal and the Amended Notice of Appeal; a total K900.00. The maximum amount allowed under the Costs Schedule is K450 per hour. The applicant did not specify in the bill the time spent in perusing those documents. The Taxing officer disallowed K350 for each item. I consider such disallowance to be excessive. 

18. The appeal was from an interlocutory ruling in which the proceedings were struck out. The appeal grounds did not raise any complex issues on appeal. I do not think the two documents would have required lengthy time to peruse and analyze. I would allow K200 for perusing the notice of appeal and K100 for perusing the amended notice of appeal. The total amount allowable under Part II, Items 21-22, is therefore K 300.00.

19. Under Part III, the applicant claimed amounts ranging from K10 – 75 for items relating to preparing short letters. The Taxing Officer allowed K10.00 for most items. Under the Costs Schedule, the amount allowable is K50 per short letter. The letters written were done in person and would have been below standard. Disallowance by K40 for each item is excessive. I would allow K20 for each letter. The total amount allowable under Item III is K180.00.

20. Under Part IV, the main claim was for copying and filing court documents in five sets. The applicant claimed K3,940 for a total of 985 pages at K4.00 per page. The Taxing Officer allowed only K250.00. Under the Costs Schedule, the amount allowable is K4.00 per page. It is not clear from this item which of those documents relate to the appeal itself and which relate to the three interlocutory applications that the applicant filed. The applicant is not entitled to claim and receive costs for those interlocutory applications. In respect of the remaining items, I consider the allowance of K250 to be inadequate. I consider a reasonable figure for copying and serving the items specified under Part I, Items 10 -20, to be K600. 

21. Under the first part of Part V, the applicant claimed K50 for six items of telephone attendances. The applicant did not indicate the length of time for various attendances. Under the Costs Schedule, K50 and K75 are allowable for telephone attendances of 10 minutes or over, respectively. The Taxing Officer allowed K15 for each item. I consider the disallowance of K35 to be excessive. I would allow K20 for each item. I allow a total sum of K120 for telephone attendances.

22. Under the second part of Part V, the applicant claimed K450 for attendance at the Call-Over conducted by the Registrar. The applicant did not specify the time taken for that attendance. Under item 14 of the Costs Schedule, the amount allowable is K150 – K450 per hour. The Taxing Officer allowed K50 for this item. I consider the disallowance of K400 to be excessive. I would allow K200 for this item. 

23. Under Part VI, the applicant claimed K3,000 for attendance at the hearing of the appeal which lasted 2 hours. Under the Costs Schedule, Item 15, the amount allowed is K150 .00 – K450.00 per hour. The Taxing Officer allowed K50.00. I consider such disallowance to be excessive. I would allow K400.00 at K200 per hour.

24. Under Part VII, the applicant claimed K6,400 for preparing bill of costs at 16 hours at K400 per hour. It is reasonable to expect a non-lawyer to take that amount of time to prepare a 2 ½ page bill. Under the Costs Schedule, Item 24, a sum of K150 to K350 per hour is allowed for preparing bill and attendance at taxation. For a lay person preparing a 2 ½ page bill, a reduced sum is appropriate. The Taxing Officer allowed K1,500.00. I consider this amount to be reasonable. 

25. Though not specified in the bill, the Taxing Officer should have allowed a sum for attendance at taxation. The bill was contested and written objections and submissions were exchanged between the parties. I would allow an additional sum of K500 for attendance on taxation. The total amount I would allow under this item is K2,000.00.

26. In summary, in terms of the percentage of the bill allowed/disallowed, I consider the disallowance by 90% of the bill to be grossly excessive or exorbitant. On review, I have allowed a global sum of K 6,070.00, on the allowable costs (K22,438) which is a disallowance by 72% from the total amount of the bill, to be reasonable. I should decrease the percentage disallowed to 65 % in order to strike a more equitable balance, in percentage terms, because the conduct of appeal proceedings in Waigani by someone who comes from another provincial location,such as the applicant, is often done at additional inconvenience, hardship and at greater financial costs than the costs under those items reflected in the itemized bill of costs. 

27. I would have allowed a higher percentage in favour of the applicant if the standard of documentation were of professional standard and quality comparable to those generated by a lawyer. Many of the documents prepared were of sub- standard quality and many were unnecessary to be filed in an appeal. 

28. In any event, in all the circumstances, I consider the global sum awarded herein to be a fair representation of costs necessarily, fairly and reasonably incurred by the applicant in successfully opposing the appeal. 

29. The applicant seeks costs of this application and interest on costs. I award a nominal sum of K500 for costs of the application. 

30. The total judgment on costs shall be K8,353.30. Interest shall run at 8% per annum from the date of service of this judgment until the adjudged sum is fully paid.

31. I grant liberty to either party to apply for correction of any anomalies or errors in the computation of figures in costs allowed or disallowed by this Court, within seven (7) days.
 _________________________________________ 

18th May 2012

32. Following the delivery of the above judgment, both parties applied for variation of the judgment. After hearing, parties agreed that the appellant paid the respondent K3,000.00 in satisfaction of the taxed costs. This payment was not factored in the Court's judgment. A deduction by this amount leaves a balance of K5,353.30 to be paid. 

33. The Court also determined that pursuant to s 2 of the Interest on Judicial Proceedings (Debts and Damages) Act, the respondent was entitled to interest on judgment on costs in the period from the date of the order for costs (14th February 2009) and date of judgment on costs (15th May 2012) at 8% per annum. Interest was assessed at K1,000.00. 

34. The end result is that paragraph 29 of the judgment was varied to read as follows:

(1)	The total judgment on costs shall be K5,353.30.

(2)	Interest on judgment on costs at 8% per annum calculated from the date of the order for costs (14th February 2009) and date of judgment on costs (15th May 2012) at 8% per annum; that is the sum of K1,000.00.

(3)	Interest at 8% per annum shall run the date this judgment until the judgment on cists is paid in full.

 ___________________________________
Kaore Lawyers: Lawyer for the appellant
Respondent appeared in person.