Independent State of Papua New Guinea v National Lands Commission [2018] PGNC 596; N8194 (2 October 2018)

N8194

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS(JR) 721 OF 2004

APPLICATION FOR JUDICIAL REVIEW PURSUANT TO ORDER 16 (3) OF THE NATIONAL COURT RULES

AND
IN THE MATTER OF THE NATIONAL LAND REGISTRATION ACT (CHAPTER 357)

BETWEEN
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Applicant

AND
NATIONAL LANDS COMMISSION
First Respondent

AND
NATHANIAS MARUS sitting as the COMMISSIONER, NATIONAL LANDS COMMISSION
Second Respondent

AND
ANDREW TERRY
Third Respondent

AND
THADDEUS KAMBANEI, SECRETARY FOR DEAPARTMENT OF FINANCE
Fourth Respondent

Waigani: Thompson J
2018: 2^nd October

COSTS - Application for Review of taxed costs-Bill of Costs filed 10 years after judgment for costs- Costs on solicitor/client basis-Appropriate hourly rate.

Cases Cited
Jacob Sanga Kumbu v Mann & UPNG and Ors (2018) N7126
Pius Sankin and Ors v PNG Elcom [ 2002] PNGLR 38
Tolom Abai & Ors v The State (1998) PGNC92

Counsels
Mr. L Kaindi, for the Applicant/Plaintiff
Mr. M Murray, for the Third Defendant

2^nd October, 2018

1. THOMPSON J: The applicant has applied for Review of the Third Respondent’s Bill of Costs taxed and certified by the Taxing Officer on 3^rd September 2018 in the total sum of K876,793.50.
   
2. The order for the Certificate of Taxation was entered on 20^th August 2018, and the application for Review was filled on 29^th August 2018.
   
3. Both parties proceeded on the basis that the Taxed Officer should have been a party to the Review Proceedings. That is not correct, and the Taxing Officer rightly refused the Applicant’s request for him to appear and take part in the proceedings.
   
4. The Applicant made 3 preliminary objections. First, it was submitted the Bill of Costs should have been served on the Applicant’s lawyers, and not on the Applicant. The documents show that the proceedings were determined by a judgment given in 2006, and MS Wagambie lawyers filed A Notice of Change of Lawyers in 2009. The Third Respondent denied that it had been served with this Notice, and there is no evidence that it was served on the Third Respondent. Service of the Bill of Costs and Application for Taxation was made on the Applicant, and over a year then elapsed before the Taxation proceeded. The Applicant had plenty of time and opportunity to give the documents to M S Wagambie Lawyers and ask them to conduct the matter. They did not do so, and instead, they sent their own lawyer to appear and oppose the Taxation.
   
5. I do not accept the Applicant’s submission that there was an obligation on the Taxing Officer to ensure that the documents had been served on M S Wagambie Lawyers, where there was no proof of service of the notice of Change of Lawyers, and there was proof that the documents had been served on the Applicant, who was appearing and opposing the application. I therefore reject the submission that the Taxing Officer had no jurisdiction to proceed with the Taxation.
   
6. Secondly, it was submitted that the Bill was not in a proper form and should have been rejected.
   
7. It is true that the Bill was not in the form commonly used for Taxations, and it contained confusing headings, descriptions and charges. Fees and disbursements were reversed, engrossing was used to mean ‘considering’, the hourly rate was inconsistently calculated, and there was no separation of clerical from legal work performed.
   
8. Nevertheless, there is no prescribed form for a bill of costs and it has to include the matters required by O 22 R 49. The Taxing Officer made no error in finding that the Bill did include the matters required by O 22 R 49, and that it was sufficient to enable the Taxation to proceed.
   
9. Thirdly, it was submitted that the Bill of Costs should not have been accepted because it was filed so many years after the judgment for costs.
   
10. The judgment including the order for costs was made on 30^th December 2006. It is not clear from the file when the Bill was first filed, but it appears mostly likely to have been in 2016, and the Taxation itself proceed in 2018, nearly 12 years after the judgment.
    
11. However, none of the Rules referred to by the Applicant show that there is any time limit on filing the Bill for Taxation. Unlike the Supreme Court Rules or the Lawyers Act on requirements in relation to bills being taxed between lawyers and clients, no limit is prescribed in the National Court Rules. Order 22 Rule 55 provided that where a party does not apply to have his costs taxed within a reasonable time after service on him of a written request to do so, the Taxing Officer may subsequently disallow his costs. However, there is no evidence that the Applicant ever gave written notice to the Third Respondent to have his costs taxed.
    
12. I have considered the Frauds and Limitations Act. However, and application for taxation of costs is not an action founded on contract or tort or any of the other matters specified in s 16(1). It is also not one of the actions referred to in s.16 (2-4) or (6-8). It is an action brought upon a judgment, and under s 16 (5), there is a 12 year time limit. This application for taxation was brought within the 12 years limit.
    
13. Although the Third Respondent has certainly delayed in applying for a Taxation, I must reject the submission that this was in breach of any prescribed time-limit.
    
14. I turn next to the more specific objections raised by the Applicant to the Taxation. The main objection was to the lawyer’s hourly rate. The Bill claimed for lawyer’s time at K4000.00 per hour, which the Taxing Officer reduced to K2000.00 per hours.
    
15. I agree with Taxing Officer that in my 39 years of experience, I have not seen a rate allowed of over K2000 per hour. The Taxing Officer correctly noted that in Election Petitions the rate does not exceed K1500.00, although that is the daily rate, not the hourly rate, and that is even though Election Petitions would be considered as the most difficult and complex type of case to conduct. In the Supreme Court, the hourly rate can be K450.00 and up to K3000 per day. The present case was for judicial Review and although it involved a large number of parties, it did not involve any usually difficult issues, just the usual issues of the decision-maker acting ultra vires or in breach of natural justice and so on. The Taxing Officer considered a number of matters before deciding on an appropriate hourly rate, including the seniority of the lawyer, and his own experience of comparable rates charged by other lawyers before deciding on K2000 per hour.
    
16. However, there are two relevant matters which I consider that the Taxing Officer failed to take into account. The first was the fact that the work was performed in 2005-2006, and not 2018. Hourly rates of K1000-K2000 may be allowed as being appropriated in 2017-2018, but were not appropriate in 2005-2006. Based on my own experience, solicitor-client hourly rates 12-13 years ago were around K850.00. In the 2002 case of Pius Sakin and Ors v PNG Elcom PGNC77, the Court reviewed a taxation on a solicitor/client basis, and confirmed a rate of K250.00 per hour for work done in 1999-2001. In the 2018 case of Jacob Sanga Kumbu v Mann, UPNG and Ors PGNC 50, the Court accepted that the appropriate hourly rate for a junior lawyer in 2012 was K250.00.
    
17. The Bill of Costs contains a statement that the Third Respondent’s lawyer usually charges K1200- K1700 per hour to his commercial clients, which is presumably his top rate. The Bill contains no reason why the lawyer had charged K4000.00 per hour to his client in a Judicial Review matter. When asked, he said that it was because he considered that he was worth that rate.
    
18. In Pius Sankin’s case, the Judge followed the same procedure as in Tolom Abai & Ors v The State (1998) PGNC92, and found that if the hourly rate was agreed by the client, in accordance with O 22 R 35. He found that an order for solicitor/ client costs must not be used as a means of profiting for the party, as opposed to reimbursement of costs which the party actually incurred.
    
19. An hourly rate for 2005-2006 of K4000 prima facie appears unreasonable. The Third Respondent produced no evidence that this rate was agreed by the client. Even if it had been agreed, it is still open to the Taxing Officer and to the Court to consider the reasonableness of the rate. As the Court said in Tolom Abai’s case, where the client himself is not going to pay the rate but a third party is, it is incumbent on the Court and officers of the Court to consider the reasonableness of the rate. A client cannot agree to unreasonable costs when he knows that a third party is to bear those costs.
    
20. This leads to the second point which was not taken into account. The hourly rate of a lawyer is not just based on his seniority, it is based on the expenses which he has to incur in order to provide his services to his client. Lawyers in big firms based in Town, incur far higher expenses than lawyers who operate as or small practitioners from their house, or even sometimes out of the boot of a car. The big firms are paying high commercial rents for office space including meeting rooms which can be up to K2000.00 per square meter, they are employing legal and non legal staff ,paying staff salaries together with group tax, Nasfund contributions, Workers Compensation insurance and so on, they purchase computers, printers, copiers and other office equipment, and they therefore need to charge high hourly rates to cover these overheads. A lawyer in a big firm who charges K1500.00 per hour does not actually receive K1500.00 per hour, because usually about 70% of that figure is used to pay for overheads. By contrast, a sole practitioner who employs no staff and who works from home, could not justify charging the same rate of K1500 per hour, as he has virtually no overheads. His hourly rate should be much lower.
    
21. There is no direct evidence in this case of the overheads or other expenses incurred by the Third Respondent’s lawyer as the cost of providing legal services to his client. However, it is reasonable to infer that he did not rent large office space with meeting rooms, as his Bill refers to meetings being conducted in the Court car park and at hotels. It is reasonable to infer that he did not employ clerical or secretarial staff or a driver, as his Bill refers to him doing that work himself (and indeed he confirmed this when asked).
    
22. It is not reasonable, and nor is it in a client’s best interest, for a lawyer not to employ a clerk who would perform work at a clerk’s rate, but instead employ no one and do the non-legal work himself, and then charge the client at the senior lawyers hourly rate. A lawyer may choose to perform non-legal clerical or driving work, but he cannot then charge the client at a lawyers rate, particularly a senior lawyers rate.
    
23. In Jacob Sanga Kumbu’s case, Makail J considered the issue of charges for non-legal work. He found that copying, conducting file searches and so on, was work usually done by clerks and secretaries, and he determined that K25 per hour was the appropriate rate for that type of work.
    
24. In relation to the hourly rate for legal work, that rate can be justifiably high, where, in addition to having a high level of seniority and skill, the lawyer also incurs high overheads in providing the service. It is not easy to justify when there are low or no overheads incurred.
    
25. After taking these two matters into account, as well as the rates which have been allowed in other cases, and the other matters taken into account by the Taxing Officer, I consider that a reasonable rate for legal work performed by a senior lawyer in 2005-2006 would be from K850-K1200. In the absence of evidence of high overhead costs being incurred in performing the services, I consider a rate of K1000 per hour would be reasonable for legal work performed by a senior lawyer in 2005-2006.
    
26. Having regard to the impracticability of attempting to separate each of the charges in the Bill for non-legal work charged at the lawyers rate, but bearing in mind the significant difference between the two types of rates, I will reduce the charges for the 50 items which include non-legal work, by a total of K5000.
    
27. The taxing Officer allowed the total time set out in his schedule at K2000 per hour. After halving that to reflect the rate of K1000 per hour, and deducting K5000 for the time spent on non-legal work, the total comes to K308,412.50 plus K2156 for the allowed disbursements, making a total of K310,568.50 plus GST, making a final total of K341,625.35
    
28. The Third Respondent’s costs are taxed and certified in the sun of K341.625.35.

________________________________________________________________
MS Wagambie Lawyers: Lawyer for the Applicant
Murray and Associates Lawyers: Lawyers for the Respondents