Cost Law Commentary

Bills in taxable form

I have recently been looking at the circumstances in which a party can be required to provide a bill in taxable form.  The decision in Pacific Indemnity Underwriting Agency Pty Ltd v Maclaw No 651 Pty Ltd & Anor  is a decision of the Court of Appeal which, whilst its principal focus was the meaning of "reasonable costs" in the context of litigation arising out of an insurance policy, one of the subsidiary issues was the circumstances in which a bill of costs in taxable form should be required.

The case was an appeal from a VCAT decision, where the award of "reasonable" costs had been held to mean the costs which the party was actually paying to its lawyers.  No bill in taxable form had been delivered, but simply a schedule detailing the time recorded.  At first instance, the Member had refused an application seeking a bill in taxable form.

The Court of Appeal took a different approach to the interpretation of the costs order, but in any event, in considering the circumstances in which a bill of taxable form should be provided stated as follows (per Ormiston J) at paragraph 86:

"Generally speaking, moreover, even where costs are to be assessed or taxed on a solicitor/client or indemnity basis, that is no excuse for refusing to deliver a bill, unless the parties agree to the contrary or unless court or tribunal directs to the contrary. Every form of taxation may require consideration of items of detail, although the basis of taxation may qualify the kind of bills that should be delivered, as may specific rules or regulations on that subject.

In ordinary litigation, whether or not conducted in a tribunal, prima facie a bill should be delivered for consideration by opposing party and by court or tribunal. Even in the case of costs taxed on an indemnity basis, it is open to the unsuccessful party to object that particular items are unreasonable, just as on a solicitor/client basis it is for the judgment creditor to establish that items are reasonable, howsoever that may be achieved in particular circumstances. What is more important is that in considering costs below there was a failure to distinguish between the reasonableness of the rate charged per hour or the like, and the reasonableness of the items of work performed and the extent of time taken to perform them, to touch only on matters affected by hourly rates of payment. A bill is ordinarily required so that the parties and the court or tribunal can properly ascertain what properly has been done in the necessary enforcement of a party’s rights, so that particular items may be taxed off if they do not satisfy the relevant criterion. It is sufficient to say that a bill should have been directed in the present case."

The decision is important in the context of indemnity cost orders, where occasionally a party will simply seek to rely on a printout of time charged (as was the case in Maclaw). The issue really becomes one of whether a time printout is a sufficiently itemised to constitute a taxable bill.

The following passage (per Mann J) in Mallesons Stewart, Stawell and Nankivell v Williams  is often cited with approval in cases considering the delivery of itemised bills .

Courts have repeatedly held that a bill of costs must contain such details as will enable the client to make up his mind on the subject of taxation, and will enable those advising him to advise and effectively as to whether taxation is desirable or not."

The adequacy of a bill must be considered in light of the level of the client's sophistication and commercial experience and would it include "any agreement reached between the parties as to the basis of charge."  - Re Walsh Halligan Douglas's Bill of Costs (1990) QDR 288 at p 294.

Further, the client or party seeking further particulars in the bill must show that there is not a sufficient information, not simply on the face of the bill, but also the other information available to him, to enable those advising him to provide proper advice.  In other words, if the client or party had available to him through other means sufficient information to take an informed view on the bill, it will not be sufficient that an uninformed person would find the bill was not sufficiently particularised.  Ralph Hume Gary v Gwillim  (CA) [2002] EWCA Civ 1500; (2003) 1 WLR 510.

In the context of a practitioner/client dispute this question was considered in Clayton Utz Lawyers v P & W Enterprises Pty Ltd [2010] QDC 508.

In the Clayton Utz case, the proceedings before the court were an application by Clayton Utz under the Legal Profession Act 2007 (Qld) for assessment of its own legal costs.  The question for the court was whether the bills of costs, which appear to be detailed to the extent that they set out the individual time records, constituted "itemised bills" the purpose of the Legal Profession Act.   The defendant argued that many items charged in the bills were grouped items of work with a single lump sum charge and in respect of those it was not possible for the defendant to assess whether or not the charges for the individual items were proper.  The defendant argued that a bill must be sufficiently particularised to enable a client to "know the grounds on which it disputes the amount or liability to pay any particular item of costs".

Many of the descriptions in the bills of costs with very generalised with examples being given such as "various activities including letter to Dibbs Barker re Mitchell Brandtman report; prepare response to show cause notice; peruse affidavits and email to counsel re same."

Reid DC J held that such generalised descriptions would not enable "a reasonably experienced litigation solicitor" with the benefit of input from the client, to form an opinion as to the reasonableness of the work performed.  His Honour ordered the delivery of properly particularised bills.