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Cloudy Bay Sustainable Forestry Ltd v Pako F & C Holding (PNG) Ltd [2023] PGSC 41; SC2396 (17 March 2023)

SC2396

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 56 OF 2020

CLOUDY BAY SUSTAINABLE FORESTRY LIMITED
Appellant

V

PAKO F & C HOLDING (PNG) LIMITED
Respondent

Waigani: Cannings J
2023: 16^th, 17^th March

COSTS – review of taxed costs – Supreme Court Rules, Order 12 rule 37 – extent of discretion of taxing officer where no notice of objection to a bill of costs is filed.

A party aggrieved by a decision of a taxing officer as to the certified costs of an appeal applied by notice of motion for review of the decision under Order 12 rule 37 of the Supreme Court Rules.

Held:

(1) A review of a taxing officer’s decision as to the amount of certified taxed costs is a de novo hearing, thus the Judge conducting the review has all powers of the taxing officer. However, the Judge conducting the review should only overrule the decision of the taxing officer where the officer has acted on a mistaken or wrong principle.

(2) Here the taxing officer, in deciding to tax off K55,345.00 from the bill of costs of K88,745.00 and certify costs in the sum of K33,400.00, did not give sufficient or any weight to the fact that there was no notice of objection to any item on the bill of costs filed by the opposing party under Order 12 rule 35 of the Rules and that the opposing party did not appear at the taxation hearing.

(3) The taxing officer’s discretion as to what amounts, if any, could be taxed off the bill of costs was constrained by Order 12 rule 36(7): the taxing officer ought to have been satisfied that there were “exceptional circumstances”.

(4) No decision was made that there were exceptional circumstances; nor could any such decision be made on the evidence before the Court. The taxing officer erred in law in failing to apply Order 12 rule 36(7).

(5) In those circumstances, it was decided on review that the bill of costs in the sum of K88,745.00 should be the amount of taxed costs.

Cases Cited

The following cases are cited in the judgment:

Bank of South Pacific Ltd v Serowa (2014) SC1373
Barava Ltd v Mamalau (2013) SC1301
Luke v Maribu (2012) SC1188

Counsel

M Adadikam, for the Respondent

17^th March, 2023

1. CANNINGS J: Pako F & C Holding (PNG) Ltd is the respondent in this Supreme Court appeal proceeding. The appeal was withdrawn with the leave of the Court on 3 September 2021 and the Court ordered that the appellant, Cloudy Bay Sustainable Forestry Ltd, pay the respondent’s costs of the appeal.
   
2. The respondent filed a bill of costs in the sum of K88,745.00 and served the bill on the appellant. There was no objection filed to any item on the bill, which then went to the taxing officer for taxation.
   
3. The taxing officer, Mr D Gonol, taxed off K55,345.00 from the bill of costs and certified costs in the sum of K33,400.00
   
4. The respondent has applied by notice of motion for review of that decision under Order 12 rule 37 of the Supreme Court Rules, which states:
   
   • (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 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.
     
5. The review of a taxing officer’s decision as to the amount of certified taxed costs is a de novo hearing, thus the Judge conducting the review has all powers of the taxing officer. However, the Judge conducting the review should only overrule the decision of the taxing officer where the officer has acted on a mistaken or wrong principle (Luke v Maribu (2012) SC1188, Barava Ltd v Mamalau (2013) SC1301, Bank of South Pacific Ltd v Serowa (2014) SC1373).
   
6. The respondent argues that the taxing officer did apply a wrong principle as he reassessed all items on the bill of costs in the absence of any objection by the appellant.
   
7. I uphold this argument due to Order 12 rule 35 of the Supreme Court Rules, which states:
   
   • (1) A party on whom a bill is served, may, by notice, object to any item in the bill.
     
   • (2) The notice shall list each item or part thereof in the bill which is objected to and shall also state concisely and specifically the nature and grounds of objection to each item or part objected to and the amount which it is contended should be taxed off.
     
   • (3) The notice shall be filed and served on the party in whose favour the bill is to be taxed and on any other interested party not less than 7 days before the day appointed for taxing the bill..
     
   • (4) A party on whom a notice is served under sub-rule (5) must prepare a written statement of response to each item or part of an item of the bill objected to, stating concisely and specifically, the basis on which it is claimed the item or part is allowable and the reason the objection cannot be sustained, including references to any authorities relied on.
     
   • (5) The statement of response shall be filed and served on the party on whom the bill was served not less than 3 days before the day appointed for taxing the bill.
     
   • (6) Oral submissions may be made at the taxation conference:

(a) subject to the discretion of the taxing officer; and

(b) only for the purpose of explaining or clarifying an objection set out in a notice under sub-rule (3) or a response to an objection set out in a statement under sub-rule (4).

(7) Subject to the discretion of the taxing officer to be exercised in exceptional circumstances, on taxation of the bill:

(a) no amount is to be taxed off, nor any ground of objection to an item or part of an item of a bill allowed, unless each amount, ground, item or part, is specifically set out in a notice under sub-rule (2) [emphasis added]; and

(b) no amount is to be allowed in respect of an item or part of an item of a bill which is objected to in a notice under sub-rule (2) if no response to the objection has been made under sub-rule (4).

(8) The taxing officer has a discretion:

(a) To tax the costs of a notice under sub-rule (2), a response under sub-rule (4), and of any other objections, and:

(i) add them, or a part of them, to; or

(ii) deduct them, or a part of them, from;
any sum payable by or to a party to the taxation; or

(b) to fix a lump sum in respect of the costs of the notice or other objection and add to it, or deduct it from any sum payable by or to a party to the taxation.

(9) If, on the taxation of any costs, one-sixth or more of the amount of the bill for those costs is taxed off, the lawyer whose bill it is, shall not be allowed the fees to which, apart from this Rule, he would be entitled, for preparing the bill and for attending on the taxation.

8. The key provision is rule 35(7)(a). If there is no objection to any item, the taxing officer’s discretion is limited: no amount is to be taxed off unless the taxing officer decides that there are exceptional circumstances.
   
9. Here, there was no objection to any item (and the appellant did not attend the taxation hearing), so the taxing officer was not permitted to tax off any item unless he decided that there were exceptional circumstances; and he could only properly decide that there were such circumstances if he recorded that decision and stated what the exceptional circumstances were.
   
10. The taxing officer did not make and record any determination of exceptional circumstances. Nor could such a decision be made on the evidence before the Court. I uphold the respondent’s argument that in making his final decision, the taxing officer acted on a wrong principle. He did not give any weight to the fact that there was no notice of objection to any item on the bill of costs filed by the opposing party under Order 12 rule 35 of the Rules and that the opposing party did not appear at the taxation hearing.
    
11. I uphold the review. The taxing officer’s decision will be quashed. The bill of costs does not appear to be manifestly unreasonable. The appeal was lodged on 21 July 2020. The appellant was granted leave to appeal, then the appeal was withdrawn on 3 September 2021. It was substantial litigation and the respondent’s costs have been itemised and appear, in my assessment, unremarkable. I will order that a substitute certificate of taxed costs be issued in the full amount of the bill of costs filed by the respondent.
    
12. The respondent will have its costs of the application for review, which I fix in the sum of K3,000.00.
    

ORDER

1. Pursuant to Order 12 rule 37(2) of the Supreme Court Rules, leave is granted for review of the taxing officer’s decision of 20 September 2022.
   
2. The review is granted and the decision of the taxing officer of 20 September 2022 and the certificate issued pursuant to it are quashed.
   
3. A substitute certificate of taxed costs shall be issued forthwith in the sum of K88,745.00.
   
4. The appellant shall, in addition, pay the respondent’s costs of the application for review in the fixed sum of K3,000.00.
   

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Holingu Lawyers: Lawyers for the Respondent