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Neel v Blake [2005] VUSC 121; CC 073 2002 (25 October 2005)

IN THE SUPREME COURT
OF THE REPUBLIC OF VANUATU
(Civil Jurisdiction)

Civil Case No. 73 of 2002

BETWEEN:

TROY NEEL
First Claimant/Judgment Debtor

AND:

JASMINE NEEL
Second Claimant/Judgment Debtor

AND:

ERAKOR ISLAND RESORT
Third Claimant/Judgment Debtor

AND:

GARRY BLAKE
First Defendant/Judgment Creditor

AND:

NIGEL MORRISON
Second Defendant/Judgment Creditor

AND:

EDWARD NALIAL
Third Defendant/Judgment Creditor

AND:

JOHN RIDGWAY
Fourth Defendant/Judgment Creditor

Coram: Justice P.I. Treston

Mr. Malcolm for Judgment Debtors
Mr. Ozols for Judgment Creditors

Date of Hearing: 21 November 2005
Date of Judgment: 25 October 2005

DETERMINATION OF JUDGMENT CREDITORS' COSTS

HISTORY

Judgment in favour of the Judgment Creditors was delivered in this claim on 3 October 2003. That judgment ordered that the Judgment Debtors pay costs to the Judgment Creditors on a standard basis.

The Judgment Debtors appealed the decision to the Court of Appeal and in a decision of 10 June 2004 the appeal was dismissed.

The Judgment Creditors subsequently applied to this Court to have costs fixed and it because common ground that they were not limited to costs on a standard basis.

In a ruling dated 2 September 2004, the Court ordered as follows: -

(a) Costs payable to the fourth Judgment Creditor,(John Ridgway) were payable on a standard basis up to 11 June 2002 and on an indemnity basis thereafter;

(b) Costs payable for the claims abandoned at trial, were payable on a standard basis up to 23 January 2003 and on an indemnity basis from that date until the commencement of the trial on 1 September 2003;

(c) The Judgment Creditors' costs were payable on a standard basis until 14 July 2003 an indemnity basis thereafter; and

(d) Only costs of leading counsel in Vanuatu were payable.

That ruling was not subject to any appeal.

SUBMISSIONS

The Judgment Creditors repeated the submissions made by them for the purposes of the costs ruling and submitted that the Court must determine costs on the basis of the Civil Procedure Rules No. 49 of 2002 ("the Rules") and that in general the amount of costs must be "a fair and reasonable amount".

The Judgment Creditors submitted that the case was of great objective importance as it involved the professional reputation of the Judgment Creditors and it was submitted that the Judgment Debtors contributed to the costs in the way that they conducted the proceedings particularly in relation to a substantial part of the case being abandoned on the first morning of trial.

The Judgment Creditors submitted that basis of charging was reasonable in that there was a sliding scale of charges-out rates which was set out in the submissions.

It was submitted that the Judgment Creditors retained Juris Ozols & Associates (Ozols) to conduct their defence but also instructed them to obtain Australian solicitors to manage the defence of the claim. Complex novel and difficult issues were raised and there was no duplication of work performed by Ozols and the Australian firm of Ebsworth & Ebsworth ("Ebsworths"). It seems that the substantial work and preparation of the affidavit of Mr. Gary Blake was carried out by Ebsworths and an attempt was made in the submission to show how there was no duplication of work.

The Judgment Creditors submitted that there was a retainer between Ozols and Ebsworths and it was not a matter of agency. References was made to the decision of Ebbage v Ebbage (2001) VUSC 60 which held that as a consequence of section 12 of the Legal Practitioner's Act, Australian solicitors' costs were not recoverable because they were not admitted to practice in Vanuatu which involved being subject to the Court 's discipline and control. The Judgment Creditors submitted that that case has no bearing on the present case for the following reasons: -

(a) In this case Ozols were the clients of Ebsworths and were not Ebsworths agent;

(b) Accounts were rendered to the Judgment Creditor by Ozols and Ebsworths' costs appeared on those bills as disbursements; and

(c) Mr. Williams and Ms. Osborne were admitted to practice in Vanuatu for the purposes of the hearing and thus subject to the discipline and control of the Court.

It was argued that it was reasonable for the Judgment Creditors and Ozols to engage Ebsworths to manage the defence of this claim in the light of Justice Coventry had said in the Ebbage case as follows:-

"Had the defendant instructed the Vanuatu solicitors directly to deal with the Vanuatu matters and those solicitors had carriage thereof, the problem would not have arisen. The Vanuatu solicitors could have utilized the Australian solicitors to carry out work which conveniently and economically would be done by them ...charges for that work could have been recoverable as disbursement under the costs order".

Details were given of the role of various solicitors and counsel in the preparation for the trial and it was submitted that the volume of material to be handled, the number of witnesses, the nature of cross-examination, the anticipated length of the trial, the complexity, the extent of preparation, the level of Court in which the matter was heard, the importance of the outcome to the parties, the imputation of personal integrity were all matters that weighed in favour of two counsel being briefed for the hearing of the matter. That would have been the case in the Australia under the principles of Gallagher v Gallagher (1965) N.S.W.R. 409. It was conceded that Ebsworths did the bulk of preparatory work and research for the hearing and that it was furthermore reasonable to have a third solicitor attend at the hearing namely Mr. Newton to manage documents for the hearing to assist counsel generally. (As I have indicated above that issue was already ruled upon in my earlier decision)

It was submitted that Ebsworths and in particular Ms. Osborne were experienced in and specialized in the defence of professional negligence cases against solicitors.

It was submitted that the proceedings involved complex, novel and difficult issues of fact and law necessitating the consideration of decisions in other jurisdictions.

The amount of money involved was significant approximately AUD$1,500,000.

The level of expertise was submitted as being appropriate for the case.

It was submitted that the majority of legal service were provided in Australia and that the costs were fair and reasonable.

The outcome of the proceedings was totally in favour of the Judgment Creditors.

Detailed submissions were given as to the factual matters and competence of various persons involved in the litigation and the volume of material of counsel's briefs were stressed as involving 23 volume of Lever Arch Binders.

Ultimately it was submitted that the costs which the Judgment Creditors claimed met the requirements of the Rules and in each case it was reasonable to carry out the work to which the costs related and that the costs were fair and reasonable.

The Judgment Creditors did not claim for the costs of Ozols' attendance during the week of the trial on the basis of a concession that the presence of two solicitors at the hearing did involved some duplication of work. (That seems to have overlooked that there were already two solicitors, Ms. Osborne and Mr. Newton, involved at the hearing.)

The total amount of costs claimed by the Judgment Creditors amounted to AUD$398,934.39 made up as follows: -

LIST OF ACCOUNTS

Account dated 7 November 2002

Juris Ozols & Associates Period 15.5.02 - 31.10.02

Professional Fees and Disbursements A$ 4,454.00

Ebsworth & Ebsworth Period 16.05.02 - 18.10.02

Professional Fees and Disbursements A$28,809.24

A$33,263.24

Account dated 6 June 2003

Juris Ozols & Associates Period 4.11.02 - 20.5.03

Professional Fees and Disbursements A$20,757.00

Ebsworth & Ebsworth Period 28.10.02 - 9.5.03

Professional Fees and Disbursements A$124,786.49

Overseas Counsel A$ 5,485.00

A$151,028.49

Account dated 22 September 2003

Juris Ozols & Associates Period 26.5.03 - 09.09.03

Professional Fees and Disbursements A$22,307.81

Ebsworth & Ebsworth Period 12.05.03 - 24.08.03

Professional Fees and Disbursements A$60,098.25

A$82,406.06

Account dated 2 October 2003

Ebsworth & Ebsworth Period 25.08.03 - 15.09.03

Professional Fees A$41,661.00

Disbursements (incl. Witness expenses) A$29,590.86

Overseas Counsel A$35,612.50

A$106,864.36

Account dated 25 November 2003

Ebsworth & Ebsworth Period 16.09.03 - 17.10.03

Professional Fees A$ 4,100.00

Disbursements A$ 6,892.24

Overseas Counsel A$ 14,380.00

A$25,372.24

TOTAL A$398,934.39

The Judgment Debtors submitted that it was unnecessary to have 4 lawyers, two legal firms and a barrister attending to a trial in Vanuatu. No-one other than the barrister made a submission or asked any questions. Detailed submissions were made as to the costs of delay, Calderbank letters, timetable orders, the use of Australian solicitors and a barrister for the trial and that all that should be limited to the reasonable fees of counsel.

The Judgment Debtors submitted that no costs should be awarded for the Australian solicitors and briefing solicitors in Vanuatu and that the entire Ebsworth bill was opposed as they were Australian lawyers with no discipline or control by the Courts in Vanuatu.

It was submitted that there was a large amount of double charging details of which were set out.

In summary the Judgment Debtors agreed to pay the amount of AUD$134,248.30 made up as follows: -

[a] Ebsworths account $0.00

but on an allowance for help with

sworn statements, say AUD$50,000.00

[b] Ozols

Total

[1] $4,454 being VT230,000 VT 115,000

Disbursement VT64, 926 VT 64,926

[2] $20,757 being VT930,000 (accepted) VT 502,000

Disbursement VT502, 864 VT 502,864

[3] $22,307 being VT1,355, 500 VT 1,355,500

Disbursement VT203, 374 VT 203,374

[4] David Williams $ 45,207.25

[5] Brian Cox $ 19,536.40

[6] M. Nicholas $ 271.87

[7] Airfares for the above

3 at normal class $ 3,000.00

Total in Costs AUD$100,415.00

VT2,706,664 @ 80 Disbursement AUD$ 33,833.30

AUD$134,248.30

=============

LAW

Costs are covered in part 15 of the Rules and, where it is necessary for the Court to determine costs, the matters the judge must take into account are set out in Rule15.8 which provides as follows: -

"15.8 (1) In determining an amount of costs, the judge must consider:

(a) whether it was reasonable to carry out the work to which the costs relate; and

(b) what was a fair and reasonable amount of costs for the work concerned.

(2) The judge must determine the amount of costs that, in his or her opinion, is a fair and reasonable amount.

(3) In determining what is a fair and reasonable amount of costs, the judge may have regard to:

• (a) the skill, labour and responsibility shown by the party's lawyer; and
  
• (b) the complexity, novelty and difficulty of the proceeding; and
  
• (c) the amount of money involved; and
  
• (d) the quality of the work done and whether the level of expertise was appropriate to the nature of the work; and
  
• (e) where the legal services were provided; and
  
• (f) the circumstances in which the legal services were provided; and
  
• (g) the time within which the work was to be done; and
  
• (h) the outcome of the proceeding."
  

In the Ebbage case much was made of the fact that in general terms under wider policy considerations:

"The overseas solicitor is not subject to the disciplinary and other controls of the Vanuatu Courts. The position must be considered of the overseas solicitor who does virtually everything whilst the "on record" Vanuatu solicitor is little more than a puppet"

His Lordship went on to hold that the bills of the Australian solicitors in that case could not be allowed because the admission process in consideration was more than simple certification and although the Australian solicitors were practicing within the jurisdiction of Vanuatu they were not qualified and their costs could not be allowed.

In Hurley v Law Council of the Republic of Vanuatu [2000] VUCA 10, the Court of Appeal said:-

"In the year 2000 and considering the strength and experience of practitioners permanently within the Republic we are satisfied that the starting point must now be that the additional costs and disbursements of Overseas Counsel will not be allowed unless or until it is established that such is truly justified and supported by a certificate of the Court."

FINDINGS

I turn to the specific provisions of the Rules in determining what is a fair and reasonable amount of costs.

THE SKILL LABOUR AND RESPONSIBILITY SHOWN BY THE PARTIES' LAWYER

There can be no quibble that these aspects were demonstrated by the Australian firm of Ebsworths but it cannot be overlooked that, until the barrister Mr. Williams and his junior Ms. Osborne were admitted to practice in Vanuatu on the morning of the first day of trial, all the Australian solicitors were not qualified to act within the jurisdiction of Vanuatu. It is clear from my examination of the file that carriage of the matter was largely in the hands of the Ebsworths in Australia and effectively Mr. Ozols was a "puppet" as referred to in the Ebbage case. Clearly the carriage of the matter was in the hands of Ebsworths and the majority of the work was done by them. Mr. Ozols conceded at the hearing that, for example, he could not point to any correspondence or file note which confirmed that he appointed the barrister Mr. Williams to be counsel who would act at the trial and it is significant that junior counsel to Mr. Williams was Ms. Osborne who was a partner in Ebsworths and if it were true that Mr. Ozols was the instructing solicitor then one would expected him to appear as junior at the trial. The Judgment Creditors submitted that "Catherine Osborne" was "the partner with principal responsibility for managing the claim..." and that the third solicitor who was present at the hearing for the defence Mr. Newton was also a solicitor employed by Ebsworths.

THE COMPLEXITY, NOVELTY OR DIFFICULTY OF THE PROCEEDINGS

I agree that the proceeding was somewhat complex but hardly novel in the context of professional negligence claims against solicitors.

THE AMOUNT OF MONEY INVOLVED

It is accepted and I have regard to the fact that there was a significant amount of money involved in the claim.

THE QUALITY OF WORK DONE AND WHETHER THE LEVEL OF EXPERTISE WAS APPROPRIATE TO THE NATURE OF THE WORK

I agree that it was appropriate for Mr. Williams, an experienced barrister in the field, to defend the claim and his level of expertise was appropriate to the nature of the work. I also find from my examination of the records and the way the case was run there were elements of duplication.

WHERE THE LEGAL SERVICES WERE PROVIDED

I am of the view and have regard to the fact that most of the legal services were in fact provided in Australia by lawyers who were not qualified in Vanuatu. No certification for their work was ever obtained.

THE CIRCUMSTANCES IN WHICH THE LEGAL SERVICES WERE PROVIDED

From what I have already said I am of the view and have regard to the fact that most of the legal services were provided in circumstances where those doing so were not admitted in Vanuatu. Ozols and Ebsworths endeavour to place themselves within the ambit of the exception referred to in the Ebbage case but failed to do so and the endeavour to establish that Ebsworths were agents of Ozols was a device in an attempt to charge for unqualified (in Vanuatu terms) solicitors doing the work. I find that it was Ebsworths who were the principal solicitors for the Judgment Creditors.

THE TIME IN WITHIN WHICH THE WORK WAS TO BE DONE

I have regard to the fact that some of the delays in bringing the matter to hearing were due to the circumstances beyond control of the parties.

THE OUTCOME OF THE PROCEEDING

I have regard to the fact that the Judgment Creditors succeeded in successfully defending all claims.

In relation to overall considerations, I earlier found that it was unnecessary for 3 counsel from Australia to be involved in the defence of this claim. If Mr. Williams was to have a junior, I am of the view that it could have been Mr. Ozols but I also consider that a barrister of Mr. Williams' experience and expertise could have handled the claim on his own with Mr. Ozols assisting him out of Court if necessary. That was very well demonstrated by the fact that Mr. Williams had the total carriage of the hearing and was the only one who made submissions or carried out any cross-examination or re-examination.

DETERMINATION

It is my view that the Judgment Debtors have adopted a reasonable approach to the question of costs and have not sought to reduce the amount claimed by Mr. Williams and have conceded that a charge out rate for Mr. Ozols at VT20,000 per hour in the circumstances is not unreasonable despite the comments of the Court of Appeal about charge out rates in Hurley's case. It was reasonable to carry out some of the work to which the costs relate but certificate for the Australian solicitors should have been obtained in advance as the Court of Appeal has stipulated.

In summary I disallow Ebsworths attendance when they were clearly acting as principals but were unqualified Vanuatu Solicitors outside the jurisdiction. I allow further sum of AUD$20,000 approximately over and above the sum submitted by the Judgment Debtors to recognize a further allowance for Ebsworths agency attendance and for Ozols' attendance at the hearing which were earlier not claimed by the Judgment Creditors. I am thus of the view that a fair and reasonable amount of costs for the work concerned, taking into account my earlier ruling, is AUD$155,000.00 inclusive of all disbursements and I determine that that is the amount that the Judgment Debtors must pay to the Judgment Creditors. I shall fix an enforcement conference date upon the delivery of this determination.

Dated AT PORT VILA on 25 November 2005

BY THE COURT

P. I. TRESTON
Judge