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Karl v Nationwide Microbank Ltd [2018] PGNC 26; N7102 (9 February 2018)

N7102

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 864 OF 2014

WESLEY KARL
Plaintiff

V

NATIONWIDE MICROBANK LIMITED
Defendant

Madang: Cannings J
2018: 1, 9 February

COSTS – application by dissatisfied party for review of decision of taxing officer to certify costs – National Court Rules, Order 22, Rule 60 (application for review of taxation); Order 22, Rule 61 (review).

The defendant was dissatisfied with the decision of the taxing officer to certify costs in the sum of K44,882.60, comprising: preparation of documents, K7,882.60 + counsel’s fees, K5,000.00 + preparation for trial, K32,000.00 + taxation of costs, 0. The defendant applied by motion for review of the decision, the primary ground of objection being that the amounts allowed by the taxing officer were excessive and unreasonable. The plaintiff opposed the application, arguing that the decision of the taxing officer was reasonable in light of the considerable number of appearances of counsel and the amount of work involved in obtaining default judgment.

Held:

(1) In determining an application for review of taxed costs, the Court may exercise all the powers and discretions as are vested in the taxing officer and has the discretion to “for good reason” allow further evidence (other than what was before the taxing officer) to be received and allow the applicant to raise grounds of objection other than those set out in the notice of objection.

(2) Having reviewed the decision of the taxing officer, in light of the grounds of objection, the application for review was granted and the decision of the taxing officer was quashed and the Court decided that a certificate of taxed costs shall be deemed to be made under Order 22, Rule 59 of the National Court Rules in the sum of K4,625.00, comprising: preparation of documents, K625.00 + counsel’s fees, K2,000.00 + preparation for trial, K2,000.00 + taxation of costs, 0. The parties were ordered to bear their own costs of the application.

Cases cited

The following cases are cited in the judgment:

Bank of South Pacific Ltd v Thomas Serowa (2014) SC1373
Barava Ltd v Augustine Mamalau (2013) SC1301
Hii Luke v Richard Maribu (2012) SC1188
Napoleon Canonizado v Kapu Rageau (2011) N4382

REVIEW OF DECISION OF TAXING OFFICER

This was an application for review of a decision of the taxing officer to make a certificate of taxed costs.

Counsel

W Akuani, for the Plaintiff, with leave of the Court
S Gor, for the Defendant

9^th February, 2018

1. CANNINGS J: The defendant, Nationwide Microbank Ltd, applies for review of a decision of the taxing officer, the Registrar, Mr I V Augerea, who certified legal costs in favour of the plaintiff, Wesley Karl, in the sum of K44,882.60.

2. The certification of taxed costs arose out of my order at Madang on 2 December 2015 under which, in a breach of contract action, default judgment was ordered against the defendant, which was ordered to “pay the plaintiff’s costs”. The following events then occurred.

3. On 4 July 2016 the plaintiff filed a bill of costs, claiming K78,882.60.

4. On 13 April 2017 the bill of costs was taxed by the taxing officer who decided to tax costs in the sum of K44,882.60.

5. A trial on assessment of damages was conducted and on 22 July 2017 judgment was ordered in favour of the plaintiff in the sum of damages of K106,000.00 plus interest of K13,737.60, being a total judgment sum of K119,737.60. The parties were ordered to bear their own costs of the trial on assessment of damages.

6. On 31 August 2017 the taxing officer issued a certificate of taxation in the sum of K44,882.60.

7. On 12 January 2018 the defendant gave written notice to the taxing officer of its objections to his decision, the primary ground of objection being that the amounts allowed by the taxing officer were excessive and unreasonable, given that only the order for costs in relation to the default judgment order were to be taxed.

8. On 17 January 2018 the defendant filed an application, by notice of motion, further time being allowed to do so, for review of the taxing officer’s decision under Order 22, Rule 60 (application for review of taxation) of the National Court Rules, which states:

(1) Any party to any taxation proceedings who is dissatisfied with the allowance or disallowance in whole or in part of any item by the taxing officer, or with the amount allowed by the taxing officer in respect of any item, may apply on motion to a Judge to review the decision in respect of that item.

(2) An application for review of the taxing officer's decision shall be made within 14 days after the date of the decision objected to or within such further time as the Court may allow.

(3) Every applicant for review under this Rule must at the time of making his application deliver to the taxing officer objections in writing specifying the list of items to which the applicant objects and must state concisely the nature and grounds of each objection.

(4) An applicant for review under this Rule shall serve a copy of the objections on each other party (if any) who attended the taxation of those items and any other person whom the taxing officer directs shall be served.

9. Mr Akuani submitted on behalf of the plaintiff that the decision of the taxing officer was reasonable in light of the considerable number of appearances of counsel and the amount of work involved in obtaining default judgment.

POWER OF COURT ON REVIEW

10. In determining these sorts of applications the Court enjoys the powers of the taxing officer under Order 22, Rule 61 (review) of the National Court Rules, which provides:

(1) On the review, unless the Court for good reason otherwise directs

(a) no further evidence shall be received; and

(b) a party shall not raise any ground of objection not stated in the statement of objections delivered to the taxing officer.

(2) Subject to Sub-rule (1), on the review the Court may exercise all such powers and discretions as are vested in the taxing officer in relation to the subject matter of the application.

11. The Court has the discretion to “for good reason” allow further evidence (other than what was before the taxing officer) to be received and allow the applicant to raise grounds of objection other than those set out in the notice of objection. An application for review under Order 22, Rule 60 can properly be described as a hearing de novo, ie a fresh hearing of the question of what costs should be certified. It is not an appeal against the taxing officer’s decision. This is the approach that has been taken under the equivalent provision, Order 12, Rule 37 of the Supreme Court Rules 2012, in relation to review of decisions of the taxing officer on certified costs in Supreme Court proceedings, which I respectfully adopt (eg Hii Luke v Richard Maribu (2012) SC1188 (Injia CJ), Barava Ltd v Augustine Mamalau (2013) SC1301 (Makail J), Bank of South Pacific Ltd v Thomas Serowa (2014) SC1373 (Makail J)).

12. The order for costs of 2 December 2015 did not specify the basis on which costs were awarded. In such a situation it is presumed, as pointed out by Thompson AJ in Napoleon Canonizado v Kapu Rageau (2011) N4382, that costs were awarded on a party-party basis, in which case the key provision of the Rules is Order 22, Rule 24(2) (party and party basis), which states:

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 or defending the rights of the party whose costs are being taxed.

DETERMINATION

13. With those considerations in mind and having had regard to the submissions of Mr Akuani, for the plaintiff, and Mr Gor, for the defendant, I set out in the following table the four categories of costs that were taxed by the taxing officer (in columns 2 and 3), the amounts submitted by the defendant to be appropriate (in column 4) and the amounts that I have decided to allow (in column 5).

14. With respect, the taxing officer’s method of calculation of costs and the explanation of what items were allowed and what items were disallowed or ‘taxed off’ were not clear. I agree with Mr Gor’s submission that there were some obvious arithmetic errors in the calculation. However, a certificate for K44,882.60 was issued and I have done the best I can to describe its components in a way that makes arithmetic sense.

CATEGORIES OF TAXED COSTS

15. I provide the following reasons for my determination.

(a) Preparation of documents

The amount proposed by the defendant is in accordance with the scale of costs in Schedule 2, Table 1 of the National Court Rules.

(b) Counsel’s fees

The amount allowed by the Registrar is unreasonable, given that it was only counsel’s fees for a motion for default judgment that was involved. I allow K2,000.00 under Item 6 of the scale of costs.

(c) Preparation for trial

The amount allowed by the Registrar is unreasonable, given that it was only preparation for a motion for default judgment that was involved. I allow K2,000.00 under Item 12 of the scale of costs.

(d) Taxation of costs

A claim for costs involved in preparing a bill of costs can be made under Item 14 of the scale of costs, which provides that the following costs are allowable and are “discretionary”:

(a) Taxation: Obtaining the reference, preparing bill of costs and copies and attending to lodge; attending taxation; vouching and completing bill, paying taxing fee and lodging for certificate or order

(b) Review: Preparing and filing notice of motion to review decision of taxation officer; preparing and delivering objections or answers to objections, including copies for service and filing and considering opponent's answers on objections as the case may be; attending hearing of review.

16. However, the discretion of the taxing officer is constrained by Order 22, Rule 56(2) of the National Court Rules, which states:

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

17. The taxing officer properly allowed nothing for Item 14 costs as he had taxed off K34,000.00, which is 43.1% of the amount (K78,882.60) of the bill of costs, well over the one-sixth (16.7%) threshold. On my taxation I have taxed off the sum of K74,257.60, which is 94.1% of the bill of costs. Therefore nothing is allowed for Item 14.

ORDER

1. The application for review is granted.
   
2. The decision of the taxing officer and the certificate issued pursuant to that decision are quashed.
   
3. A certificate of taxed costs is deemed to be made in the sum of K4,625.00, comprising the amounts set out in the schedule.
   
4. The parties will bear their own costs of the application for review.
   

SCHEDULE

Judgment accordingly.

______________________________________________________
William Akuani Lawyers: Lawyers for the Plaintiffs
Fiocco & Nutley Lawyers: Lawyers for the Defendants